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REGISTRATION NO. 333-[ ]
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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FOSTER WHEELER LTD.
(Exact Name of Registrant as Specified in its Charter)
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BERMUDA 1600 NOT APPLICABLE
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
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PERRYVILLE CORPORATE PARK
CLINTON, NEW JERSEY 08809-4000
TELEPHONE: (908) 730-4000
FACSIMILE: (908) 730-5300
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
THOMAS R. O'BRIEN, ESQ.
C/O FOSTER WHEELER LLC
PERRYVILLE CORPORATE PARK
CLINTON, NEW JERSEY 08809-4000
TELEPHONE: (908) 730-4000
FACSIMILE: (908) 730-5300
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code of Agent for Service)
Foster Wheeler Ltd. maintains its registered offices at Clarendon House, 2
Church Street, Hamilton HM CX, Bermuda, and its principal executive offices at
Perryville Corporate Park, Clinton, New Jersey 08809. The executive offices of
the subsidiary which supervises Foster Wheeler Ltd.'s subsidiaries' activities
are located at Perryville Corporate Park, Clinton, New Jersey 08809. The
telephone number there is (908) 730-4000.
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COPIES TO:
TIMOTHY B. GOODELL, ESQ.
ROBERT L. CLARE III, ESQ.
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036
(212) 819-8200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the merger contemplated by the Agreement and Plan of Merger, dated
as of , 2001, described in the enclosed proxy statement/prospectus, have
been satisfied or waived.
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If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number the earlier effective registration statement for
the same offering. / /
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO MAXIMUM OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PRICE PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE(3)
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Common stock of par value $1.00 per
share (including associated
rights)(4)............................ 40,730,168 shares $4.25 $173,103,214 $45,699.25
</TABLE>
(1) Based upon the assumed number of shares that may be issued in the merger
described herein. Such assumed number is based upon the number of common
shares of par value $1.00 per share of the Registrant expected to be issued
on the closing date of the merger based on an exchange ratio of one Foster
Wheeler Ltd. common share for each share of the common stock, par value
$1.00 per share, of Foster Wheeler Corporation.
(2) Estimated solely for the purpose of computing the registration fee. Computed
in accordance with Rule 457(f) under the Securities Act of 1933, as amended
(the "Securities Act"), based upon the market value of the shares of Foster
Wheeler Corporation to be converted in the merger ($4.250 per share, which
was the average of the high and low sales price thereof on December 20,
2000, as reported on the New York Stock Exchange).
(3) The registration fee of $45,699.25 was calculated pursuant to Rule 457(f)
under the Securities Act, as follows: .000264 multiplied by the proposed
maximum aggregate offering price.
(4) Includes associated rights to purchase one one-hundredth of a share of
Foster Wheeler Ltd. Series A Junior Participating Preferred, par value $1.00
per share. Until the occurrence of certain prescribed events, the rights are
not exercisable. Also until the occurrence of certain prescribed events, the
rights are only evidenced by the certificates representing Foster
Wheeler Ltd. common shares and will be transferred only with such shares.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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NOTICE OF ANNUAL SHAREHOLDER MEETING
FOSTER WHEELER CORPORATION
PERRYVILLE CORPORATE PARK
CLINTON, NEW JERSEY 08809-4000
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NOTICE OF 2001 ANNUAL MEETING OF SHAREHOLDERS APRIL 23, 2001
------------------------
The annual meeting of shareholders of Foster Wheeler Corporation will be
held at the Hunterdon Hills Playhouse, 88 Route 173 West, Hampton, New Jersey,
on Monday, April 23, 2001, at 10:30 a.m. for the following purposes:
1. To approve and adopt the Agreement and Plan of Merger, dated as of
, among Foster Wheeler Corporation, Foster Wheeler LLC and Foster
Wheeler Ltd., a Bermuda company, whereby Foster Wheeler Corporation will
effectively change its domicile from New York to Bermuda by merging with
Foster Wheeler LLC, with Foster Wheeler LLC being the surviving entity and
an indirect wholly-owned subsidiary of Foster Wheeler Ltd. and with all
shares of Foster Wheeler Corporation automatically converting into shares of
Foster Wheeler Ltd. with all current stockholders in Foster Wheeler
Corporation becoming shareholders in Foster Wheeler Ltd. (the
"Reorganization");
2. To elect four directors;
3. To ratify the appointment of PricewaterhouseCoopers LLP as Foster
Wheeler Corporation's independent accountants for 2001; and
4. To address any other matters that properly come before the annual
meeting and any adjournments or postponements of the annual meeting.
The board of directors has fixed the close of business on March 5, 2001, as
the record date for determination of stockholders entitled to notice of, and to
vote at, the annual meeting or adjournments thereof.
Admission to the meeting will be by ticket only. If you are a stockholder of
record and plan to attend, please check the appropriate box on the proxy card.
The ticket attached to the proxy card will admit you to the meeting. If you are
a stockholder whose shares are held through an intermediary such as a bank or a
broker and you plan to attend, you may request a ticket by writing to the office
of the Secretary, Foster Wheeler Corporation, Perryville Corporate Park,
Clinton, New Jersey 08809-4000, and including proof of beneficial ownership,
such as a bank or brokerage firm account statement or a letter from the broker,
bank or nominee holding your stock.
YOUR VOTE IS VERY IMPORTANT. TO ENSURE THAT YOUR SHARES ARE REPRESENTED, YOU
SHOULD COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING. IF
YOU EXPECT TO ATTEND THE ANNUAL MEETING YOU SHOULD CHECK THE APPROPRIATE BOX ON
THE PROXY CARD. YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON IF YOU DECIDE TO
ATTEND THE MEETING.
By Order of the Board of Directors
/s/ LISA FRIES GARDNER
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Lisa Fries Gardner
VICE PRESIDENT & SECRETARY
[March 16, 2001]
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(SUBJECT TO COMPLETION DECEMBER 21, 2000)
THE INFORMATION IN THIS PROXY STATEMENT/PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROXY STATEMENT/
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
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FOSTER WHEELER CORPORATION
PROXY STATEMENT FOR 2001 ANNUAL MEETING OF STOCKHOLDERS
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FOSTER WHEELER LTD.
PROSPECTUS FOR
XXXXXXXXX COMMON SHARES
OF FOSTER WHEELER LTD.
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We are furnishing this proxy statement/prospectus to you in connection with
the solicitation of proxies by the board of directors of Foster Wheeler
Corporation for use at the 2001 Annual Meeting of Foster Wheeler Corporation
stockholders to be held at the Hunterdon Hills Playhouse, 88 Route 173 West,
Hampton, New Jersey on April 23, 2001 at 10:30 a.m., local time (or at any
adjournments or postponements thereof). This proxy statement/prospectus relates
to:
1) the proposed corporate reorganization whereby pursuant to the
Agreement and Plan of Merger, dated as of , among Foster Wheeler
Corporation, Foster Wheeler LLC and Foster Wheeler Ltd., a Bermuda company,
Foster Wheeler Corporation will effectively change its domicile from New
York to Bermuda by merging with Foster Wheeler LLC, with Foster Wheeler LLC
being the surviving entity and an indirect wholly-owned subsidiary of Foster
Wheeler Ltd. and with all shares of Foster Wheeler Corporation automatically
converting into shares of Foster Wheeler Ltd. with all current stockholders
in Foster Wheeler Corporation becoming shareholders in Foster Wheeler Ltd.
(the "Reorganization");
2) the election of Eugene D. Atkinson, E. James Ferland, Joseph J.
Melone and Richard J. Swift as directors of Foster Wheeler Corporation; and
3) the ratification of the appointment of PricewaterhouseCoopers LLP as
independent accountants of Foster Wheeler Corporation for the year 2001.
The Reorganization will be effected pursuant to an Agreement and Plan of
Merger among Foster Wheeler Corporation, Foster Wheeler LLC and Foster
Wheeler Ltd. Upon consummation of the merger, each outstanding share of common
stock, par value $1.00, of Foster Wheeler Corporation will be automatically
converted into one share of common stock, par value $1.00, of Foster
Wheeler Ltd. Foster Wheeler Ltd. will be governed in accordance with the Bermuda
Companies Act 1981, and the terms of its memorandum of association and bye-laws.
Foster Wheeler Corporation, along with its current subsidiaries, including
Foster Wheeler Ltd. and Foster Wheeler LLC, are sometimes collectively referred
to herein as "we", "us" or the "Company".
Foster Wheeler Corporation common stock is currently traded on the NYSE
under the symbol "FWC" and, immediately following the Reorganization, Foster
Wheeler Ltd. common shares will be traded on the NYSE under the same symbol
("FWC"). The last reported sale price for the Foster Wheeler Corporation common
stock on the NYSE on March , 2001 was $ .
We are mailing this proxy statement/prospectus and the form of proxy to
shareholders of Foster Wheeler Corporation on or about March 16, 2001.
Foster Wheeler Corporation's board of directors recommends that you:
(i) vote "FOR" the Reorganization, (ii) elect Eugene D. Atkinson, E. James
Ferland, Joseph J. Melone and Richard J. Swift as directors of Foster Wheeler
Corporation, and (iii) ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants of Foster Wheeler Corporation for the year 2001.
The date, time and place of the meeting is contained in the attached
notices.
This document provides you with detailed information about the
Reorganization and the shareholder meeting. We encourage you to read carefully
this entire document and the documents incorporated by reference.
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Richard J. Swift
Chairman of the Board, President and Chief Executive
Officer Foster Wheeler Corporation
</TABLE>
Some financial and other information about Foster Wheeler Corporation is
available on (i) the Securities and Exchange Commission's World Wide Web site
located at http://www.sec.gov which contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Securities and Exchange Commission, and (ii) Foster Wheeler
Corporation's world wide web site located at http://www.fwc.com. Please note
that the information on these world wide web sites is not incorporated by
reference into this proxy statement/ prospectus.
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this proxy statement/prospectus. Any representation to
the contrary is a criminal offense.
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS MARCH , 2001.
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THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE. SEE
"WHERE YOU CAN FIND MORE INFORMATION" AND "INCORPORATION BY REFERENCE" FOR A
LISTING OF DOCUMENTS INCORPORATED BY REFERENCE. DOCUMENTS ARE AVAILABLE TO ANY
PERSON, INCLUDING ANY BENEFICIAL OWNER, UPON REQUEST DIRECTED TO THE OFFICE OF
THE SECRETARY, FOSTER WHEELER CORPORATION, PERRYVILLE CORPORATE PARK, CLINTON,
NEW JERSEY 08809-4000, TELEPHONE (908) 730-4000. TO ENSURE TIMELY DELIVERY OF
THESE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MARCH , 2001. THE EXHIBITS TO
THESE DOCUMENTS WILL GENERALLY NOT BE MADE AVAILABLE UNLESS THEY ARE
SPECIFICALLY INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This document contains or incorporates by reference forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 with respect to our financial condition, results of operations and
business. This Act protects public companies from liability for forward-looking
statements in private securities actions if the forward-looking statement is
identified and is accompanied by meaningful cautionary statements identifying
important factors that could cause actual results to differ materially.
Forward-looking statements by their nature involve a degree of risk and
uncertainty. All statements regarding the expected benefits of the
Reorganization are forward-looking statements. The forward-looking statements
may include statements for the period following completion of the
Reorganization. You can find many of these statements by looking for words such
as "believes," "expects," "anticipates," "estimates," "continues," "may,"
"intends," "plans" or similar expressions in this document or in the documents
incorporated by reference. You should be aware that any forward-looking
statements in this document only reflect current expectations and are not
guarantees of performance.
We have identified factors that could cause actual plans or results to
differ materially from those included in any forward-looking statements. These
factors include, but are not limited to:
-- an inability to realize expected benefits of the Reorganization within
the anticipated time frame, or at all;
-- costs or difficulties related to the Reorganization and related
transactions, which could be greater than expected;
-- changes in the rate of economic growth in the United States and other
major international economies;
-- changes in investment by the energy, power and environmental industries;
-- changes in regulatory environments;
-- changes in project schedules;
-- changes in trade, monetary and fiscal policies worldwide;
-- currency fluctuations;
-- outcomes of pending and future litigation;
-- protection and validity of patents and other intellectual property
rights;
-- increasing competition by foreign and domestic companies;
-- changes in capital needs; and
-- changing rates of inflation and other economic or business conditions.
Actual results may differ materially from those expressed or implied by
forward-looking statements. As you make your decision how to vote, please take
into account that forward-looking statements speak only as of the date of this
document or, in the case of documents incorporated by reference, the date of any
such document.
i
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TABLE OF CONTENTS
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PAGE
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QUESTIONS AND ANSWERS ABOUT THE REORGANIZATION.............. 1
SUMMARY..................................................... 4
Parties to the Reorganization............................. 4
The Reorganization........................................ 4
Reasons for the Reorganization............................ 5
Conditions to Consummation of the Reorganization.......... 5
US Federal Income Tax Considerations...................... 5
Rights of Shareholders.................................... 6
Stock Exchange Listing.................................... 6
Market Price.............................................. 6
Rights of Dissenting Shareholders......................... 6
Accounting Treatment of the Reorganization................ 6
Annual Meeting............................................ 7
Recommendations of the Board of Directors................. 7
Votes Required............................................ 7
Proxies................................................... 8
Election of Directors of Foster Wheeler Corporation....... 8
Directors of Foster Wheeler Ltd........................... 8
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA............. 8
SUMMARY PRO FORMA FINANCIAL INFORMATION..................... 8
RISK FACTORS................................................ 9
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS............. 10
THE REORGANIZATION (ITEM 1)................................. 10
Structure of the Reorganization........................... 10
Background and Reasons for the Reorganization............. 10
Automatic Share Conversion................................ 11
Amendment or Termination.................................. 12
Conditions to Consummation of the Reorganization.......... 12
Effective Time............................................ 12
Management of Foster Wheeler Ltd.......................... 13
Required Vote for Reorganization.......................... 13
Rights of Dissenting Shareholders......................... 13
Dividends................................................. 14
Stock Compensation Plans.................................. 14
Stock Exchange Listing.................................... 14
Accounting Treatment of the Reorganization................ 14
Subsequent Restructuring.................................. 14
DESCRIPTION OF AUTHORIZED SHARES OF FOSTER WHEELER LTD...... 15
Authorized Share Capital.................................. 15
Voting.................................................... 15
Change to Rights of a Class or Series..................... 15
Quorum for General Meetings............................... 15
Dividend Rights........................................... 15
Rights Upon Liquidation................................... 16
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ii
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Sinking Fund.............................................. 16
Liability for Further Calls or Assessments................ 16
Pre-emptive Rights........................................ 16
Redemption and Conversion................................. 16
Repurchase................................................ 16
Restrictions On Transfer.................................. 16
Other Classes or Series of Shares......................... 17
Compulsory Acquisition of Shares held by Minority 17
Holders.................................................
Transfer Agent............................................ 17
Anti-Takeover Provisions.................................. 17
COMPARISON OF RIGHTS OF SHAREHOLDERS........................ 19
Quorum; Meetings of Shareholders.......................... 19
Advance Notice Requirements for Shareholder Proposals and 19
Director Nominations....................................
Distributions and Dividends; Repurchases and 20
Redemptions.............................................
Amendment of the Certificate of Incorporation............. 20
Amendment of Bylaws....................................... 21
Indemnification of Directors and Officers................. 21
Limited Liability of Directors............................ 21
Interested Director Transactions.......................... 22
Shareholders' Suits....................................... 22
Shareholder Approval of Business Combinations............. 23
Dissenters' Rights........................................ 24
Inspection of Books and Records........................... 24
Removal of Directors; Vacancies on the Board of 24
Directors...............................................
Shareholder Rights Plans.................................. 25
INCOME TAX CONSIDERATIONS................................... 27
U.S. Federal Income Taxation.............................. 27
Tax Consequences of the Reorganization.................... 28
Foster Wheeler Ltd. Common Shares......................... 29
Sale or Exchange of Common Shares......................... 29
Bermuda Tax Consequences.................................. 31
ANNUAL MEETING.............................................. 32
Time, Place and Date...................................... 32
Proposals................................................. 32
Quorum.................................................... 32
Record Date............................................... 32
Voting Procedure.......................................... 32
Proxies................................................... 33
Revocation................................................ 33
Validity.................................................. 33
Solicitation of Proxies................................... 33
Requisite Vote............................................ 34
ELECTION OF DIRECTORS OF FOSTER WHEELER CORPORATION (ITEM 34
2)........................................................
Nominees for Election..................................... 34
Similar Information on Continuing Directors............... 35
Ownership of Common Stock By Directors and Executive 37
Officers................................................
Amount and Nature of Beneficial Ownership................. 37
Section 16A Beneficial Ownership Reporting Compliance... 37
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iii
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Certain Beneficial Owners............................... 38
Compensation of Directors................................. 38
Compensation of Executive Officers........................ 39
Report of the Executive Compensation Committee.......... 39
Base Salary............................................. 39
Annual Incentive........................................ 39
Long-Term Incentives.................................... 39
Compensation Committee.................................. 40
Incentive Plans......................................... 40
Audit Committee Report.................................... 41
Audit Committee........................................... 41
Committees of the Board................................... 41
Summary Compensation Table................................ 43
Options Granted........................................... 43
Performance Stock Options................................. 44
Aggregate Options Exercises............................... 44
Defined Benefit Plans..................................... 45
Performance Graph......................................... 45
Comparison of Five-Year Cumulative Total Returns.......... 45
Change of Control Arrangements............................ 46
Compensation Committee Interlocks and Insider 47
Participation...........................................
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS (ITEM 47
3)........................................................
EXPERTS..................................................... 47
LEGAL MATTERS............................................... 47
PROPOSALS OF SHAREHOLDERS................................... 48
WHERE YOU CAN FIND MORE INFORMATION......................... 48
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. 49
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ANNEX I -- AGREEMENT AND PLAN OF MERGER..................... I-1
ANNEX II -- MEMORANDUM OF ASSOCIATION OF FOSTER
WHEELER LTD............................................... II-1
ANNEX III -- BYE-LAWS OF FOSTER WHEELER LTD................. III-1
ANNEX IV -- AUDIT COMMITTEE CHARTER......................... IV-1
PROXY CARD..................................................
</TABLE>
iv
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QUESTIONS AND ANSWERS ABOUT THE REORGANIZATION
HOW WILL THE REORGANIZATION BE ACCOMPLISHED?
Foster Wheeler Corporation will merge into Foster Wheeler LLC, with Foster
Wheeler LLC surviving as a wholly-owned, indirect subsidiary of Foster
Wheeler Ltd., a Bermuda company. Pursuant to the Reorganization, the current
shares of Foster Wheeler Corporation will automatically convert into shares of
Foster Wheeler Ltd. This procedure allows you to become a shareholder in Foster
Wheeler Ltd., the new Bermuda parent company of the entire Foster Wheeler group.
After the Reorganization, you will continue to own an interest in a holding
company which, together with its subsidiaries, will be engaged in the same
business that Foster Wheeler Corporation and its subsidiaries were engaged in
before the Reorganization. YOUR PROPORTIONATE OWNERSHIP AND RELATIVE VOTING
RIGHTS WILL NOT CHANGE AS A RESULT OF THE REORGANIZATION.
WHAT ARE THE BENEFITS TO THE COMPANY OF COMPLETING THIS REORGANIZATION?
We believe that a significant portion of our business is, and will be,
generated from non-U.S. markets. The Reorganization will allow us to avail
ourselves of financial and other business advantages that are not available
under our current corporate structure. By aligning our structure with our
business operations, we hope to promote operational efficiencies, including
improvements in our global cash management. The Reorganization should provide a
more favorable corporate and regulatory structure for expansion of our current
business and for future business opportunities. The Reorganization may also
facilitate our access to financing sources outside of the United States and
broaden our investor base by making our stock more attractive to non-U.S.
investors. In addition, the Reorganization will give us greater flexibility over
the long-term in seeking to improve our worldwide effective tax rate. See "The
Reorganization--Background and Reasons for the Reorganization" on page 10 in the
accompanying proxy statement/prospectus.
WILL THE REORGANIZATION DILUTE MY OWNERSHIP INTEREST?
The Reorganization will not dilute your ownership interest in the Company.
After the Reorganization is consummated, you will own the same percentage of
Foster Wheeler Ltd. as you currently own of Foster Wheeler Corporation.
HOW DO THE SHAREHOLDERS BENEFIT FROM THE REORGANIZATION?
Our objective in the Reorganization is to enhance long-term shareholder
value. In the short term, we cannot predict what impact, if any, the
Reorganization will have.
WILL FOSTER WHEELER CORPORATION STOCKHOLDERS BE TAXED AS A RESULT OF THE
REORGANIZATION?
Generally, shareholders that are United States persons and certain foreign
persons will recognize gain, if any, but not loss, on the receipt of Foster
Wheeler Ltd. common shares in connection with the Reorganization for U.S.
federal income tax purposes. Accordingly, such a holder should recognize gain
equal to the difference, if any, between the fair market value of the Foster
Wheeler Ltd. common shares received pursuant to the conversion of Foster Wheeler
Corporation common stock and the holder's adjusted tax basis in his shares of
Foster Wheeler Corporation common stock. Generally, any such gain will be
capital gain. Shareholders with a loss on their shares of Foster Wheeler
Corporation common stock will not be able to recognize that loss as a result of
the Reorganization, but their aggregate basis in the Foster Wheeler Ltd. common
shares should be equal to the aggregate basis of their shares of Foster Wheeler
Corporation common stock. Thus, any loss should be preserved.
We urge you to consult your own tax advisors regarding your particular tax
consequences.
1
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WILL FOSTER WHEELER CORPORATION BE TAXED AS A RESULT OF THE REORGANIZATION?
Based upon our estimates of the fair market value of assets transferred in
connection with the Reorganization and upon an analysis of our tax attributes,
we believe the Company should not incur a material U.S. federal or foreign tax
payment obligation as a result of the Reorganization or the implementation of
the various steps associated with it.
HAS THE IRS RENDERED AN OPINION ON THE REORGANIZATION?
No. We are not requesting any ruling from the IRS.
WHY DO THE REORGANIZATION NOW?
As noted above, the Reorganization may be taxable to our U.S. shareholders.
We believe that current market conditions relating to our stock allow us to
minimize the negative tax impact to our shareholders. This is why we are
recommending acting now, rather than waiting.
WHY WAS BERMUDA SELECTED AS THE DOMICILE OF THE NEW PARENT COMPANY?
We chose Bermuda for its political stability, legal framework and business
friendly environment. The first international (i.e., not locally-owned) company
was incorporated in Bermuda in the 1930's, and there are currently many
companies domiciled there which are publicly traded on U.S. and European
markets. Bermuda has established screening policy to formally check on the
ownership of companies that request domicile there. In addition, despite certain
differences, the corporate legal system, based on English law, is such that your
rights as a Foster Wheeler Ltd. shareholder will be substantially unchanged from
your rights as a shareholder in Foster Wheeler Corporation. We encourage you to
read the section "Comparison of Rights of Shareholders" for a more detailed
description of the differences between your rights under New York law and under
Bermuda law.
WILL THE PROPOSAL AFFECT THE CURRENT OPERATIONS? WHAT ABOUT THE FUTURE?
The Reorganization, which will move the Company's domicile from New York to
Bermuda, will have no immediate impact on how we conduct day-to-day operations.
The location of future operations will depend on the needs of the business,
independent of our legal domicile.
WHY IS A LIMITED LIABILITY COMPANY INVOLVED IN THE PROPOSAL?
Under the terms of the agreements governing certain of our debt, we are
subject to restrictions on our activities. Specifically, we are not allowed to
merge with a foreign legal entity, unless we are the surviving entity.
Therefore, as part of the process of changing our domicile from New York to
Bermuda, we must merge with a U.S. legal entity. We have chosen a Delaware
limited liability company because of its flexible form.
WHAT VOTE IS REQUIRED TO APPROVE THE TRANSACTION?
In order for us to change our domicile, we need favorable votes from
two-thirds of all outstanding shares. SHARES FOR WHICH NO VOTES ARE CAST WILL BE
TREATED AS THOUGH THEY WERE VOTED AGAINST THE REORGANIZATION, SO IT IS VERY
IMPORTANT FOR ALL SHAREHOLDERS TO VOTE. See "Annual Meeting--Requisite Vote" on
page 34.
WILL THIS PROPOSAL RESULT IN A MORE COSTLY AND COMPLEX CORPORATE STRUCTURE?
Short term, the new corporate structure may impose some organizational
costs, but we do not expect these costs to be material. Long term, the
Reorganization may actually simplify our structure.
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IF THE REORGANIZATION IS APPROVED, WHEN WOULD IT BECOME EFFECTIVE?
We plan to make the Reorganization effective approximately two months after
the shareholders have approved the Reorganization at the Annual Meeting. See
"The Reorganization--Effective Time" on page 12.
WILL I BE ABLE TO TRADE MY SHARES DURING THE TIME IT TAKES TO COMPLETE THE
REORGANIZATION?
Yes. You will be able to trade your shares during the time it takes to
complete the Reorganization.
HOW DO I VOTE?
After you read this document, sign and mail your proxy card in the enclosed
prepaid return envelope as soon as possible, so that your shares may be
represented and voted at the applicable meeting. To assure that your vote is
obtained, please sign and mail your proxy as instructed on your proxy card even
if you currently plan to attend the annual meeting in person.
IF MY BROKER HOLDS MY SHARES IN "STREET NAME," WILL MY BROKER VOTE MY SHARES FOR
ME?
NO. IF YOU DO NOT PROVIDE YOUR BROKER WITH INSTRUCTIONS ON HOW TO VOTE YOUR
"STREET NAME" SHARES, YOUR BROKER WILL NOT BE PERMITTED TO VOTE THEM. You should
complete and return the enclosed proxy or be sure to provide your broker with
instructions on how to vote your shares.
WHAT DO I DO IF I WANT TO CHANGE MY VOTE?
Just send in a later-dated, signed proxy card to our transfer agent, Mellon
Investor Services LLC. Or you can attend the annual meeting and vote in person.
You may also revoke your proxy by sending a notice of revocation to Mellon
Investor Services LLC. The address for Mellon Investor Services LLC is P.O.
Box 1677, Church Street Station, New York, NY 10008-1677.
DO I HAVE TO CHANGE MY STOCK CERTIFICATES?
No. After the merger is completed, your stock certificates will
automatically represent Foster Wheeler Ltd. common shares. For further
information, please see "The Reorganization--Automatic Share Conversion" on page
11.
WHO DO I CONTACT WILL FURTHER QUESTIONS?
Please call Foster Wheeler Corporation's transfer agent, Mellon Investor
Services LLC, toll free at (800) 851-9677, our proxy solicitor, Georgeson
Shareholder Communications Inc., at or call us at (908) 730-4000 and
ask for the Office of the Secretary.
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SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROXY
STATEMENT/PROSPECTUS. IT DOES NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU. TO UNDERSTAND THE REORGANIZATION MORE FULLY, AND FOR A MORE
COMPLETE LEGAL DESCRIPTION OF THE REORGANIZATION, YOU SHOULD READ CAREFULLY THE
ENTIRE PROXY STATEMENT/ PROSPECTUS, INCLUDING THE ANNEXES. THE AGREEMENT AND
PLAN OF MERGER ATTACHED AS ANNEX I TO THIS PROXY STATEMENT/PROSPECTUS IS THE
LEGAL DOCUMENT THAT GOVERNS THE REORGANIZATION. WE ENCOURAGE YOU TO READ THAT
AGREEMENT.
PARTIES TO THE REORGANIZATION
FOSTER WHEELER CORPORATION
Foster Wheeler Corporation, a New York corporation, is a worldwide
industrial and engineering company. The business of Foster Wheeler Corporation
is carried on through various subsidiaries and falls within two business groups.
The Engineering and Construction Group ("E&C Group") designs, engineers and
constructs petroleum, chemical, petrochemical and alternative-fuels facilities
and related infrastructure, including power generation and distribution
facilities, production terminals, pollution control equipment and water
treatment facilities and process plants for the production of fine chemicals,
pharmaceuticals, dyestuffs, fragrances, flavors, food additives and vitamins.
Also, the E&C Group provides a broad range of environmental remediation
services, together with related technical, design and regulatory services. The
Energy Equipment Group designs, manufactures and erects steam generating and
auxiliary equipment for power stations and industrial markets worldwide. Steam
generating equipment includes a full range of fluidized bed and conventional
boilers firing coal, oil, gas, biomass and other municipal solid waste, waste
wood and low-Btu gases. Auxiliary equipment includes feedwater heaters, steam
condensers, heat-recovery equipment and low-NOx burners. Site services related
to these products encompass plant erection, maintenance engineering, plant
upgrading and life extension, and plant repowering. In addition, the Energy
Equipment Group provides research analysis and experimental work in fluid
dynamics, heat transfer, combustion and fuel technology, materials engineering
and solids mechanics.
FOSTER WHEELER LTD.
Foster Wheeler Ltd. is a Bermuda company and currently a wholly-owned
subsidiary of Foster Wheeler Corporation. After the Reorganization, you will be
a shareholder of Foster Wheeler Ltd. Prior to the Reorganization, Foster
Wheeler Ltd. will have no significant assets or capital and will not have
engaged in any business or activities other than in connection with the
Reorganization. The principal registered office of Foster Wheeler Ltd. is
located at Clarendon House, 2 Church Street, Hamilton HM CX, Bermuda.
FOSTER WHEELER LLC
Foster Wheeler LLC is a Delaware limited liability company. It has
transacted no business to date except in connection with the Reorganization and
related transactions. All interests in Foster Wheeler LLC are currently held
indirectly by Foster Wheeler Ltd.
The principal executive offices of each of the parties to the Reorganization
are located at Perryville Corporate Park, Clinton, New Jersey 08809-4000. The
telephone number of each party at that address is (908) 730-4000.
THE REORGANIZATION (SEE PAGE 10)
The Reorganization is a transaction that will result in you owning shares in
a Bermuda corporation rather than a New York corporation. The Reorganization
will effectively change our place of
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incorporation from New York to Bermuda. After completion of the Reorganization,
Foster Wheeler Ltd.'s subsidiaries will continue to conduct the business that
Foster Wheeler Corporation's subsidiaries now conduct.
The Reorganization involves the following steps:
1. Foster Wheeler Corporation will merge with Foster Wheeler LLC.
Foster Wheeler LLC, an indirect, wholly-owned subsidiary of Foster
Wheeler Ltd. will be the surviving entity.
2. The outstanding shares of Foster Wheeler Corporation will
automatically convert by operation of law into shares of Foster
Wheeler Ltd.
3. The current shareholders of Foster Wheeler Corporation will own
shares of Foster Wheeler Ltd. in the same percentages as they currently own
in Foster Wheeler Corporation.
4. Most of the assets previously held by Foster Wheeler Corporation
will be contributed to two newly formed Delaware subsidiaries by Foster
Wheeler (Delaware) LLC.
We anticipate that if the Reorganization is approved at the annual
shareholder meeting, it will become effective approximately two months
thereafter.
The new shareholders of Foster Wheeler Ltd. who owned shares in Foster
Wheeler Corporation, will be able, at their option, to exchange their share
certificates for share certificates evidencing ownership in Foster Wheeler Ltd.
as set out on page 11.
Following the Reorganization, we plan to restructure our operations in a
manner that helps us achieve our business objectives.
REASONS FOR THE REORGANIZATION (SEE PAGE 10)
International activities are a significant portion of our current business.
We anticipate that a substantial portion of our future business will also be in
international markets. We believe that reorganizing as a Bermuda corporation
will give us advantages in pursuing and exploiting these opportunities and will
be more consistent with our business operations.
We expect that the Reorganization may increase our access to international
capital markets, increase attractiveness to non-U.S. investors, improve global
cash management, improve global tax position and result in a more favorable
corporate structure for expansion of our current business.
CONDITIONS TO CONSUMMATION OF THE REORGANIZATION (SEE PAGE 12)
The consummation of the Reorganization is conditioned on several factors,
including the approval of shareholders holding two-thirds of the shares of
Foster Wheeler Corporation's outstanding stock and that none of the parties to
the Agreement and Plan of Merger is subject to any authority which prohibits the
consummation of the Reorganization.
For additional factors, please see "The Reorganization--Conditions to
Consummation of the Reorganization" on page 12.
U.S. FEDERAL INCOME TAX CONSIDERATIONS (SEE PAGE 27)
TAXATION OF SHAREHOLDERS
Generally, shareholders that are United States persons and certain foreign
shareholders will recognize gain, if any, but not loss, on the receipt of Foster
Wheeler Ltd. common shares in connection with the Reorganization. Accordingly,
each such holder should recognize gain equal to the difference, if any, between
the fair market value of the Foster Wheeler Ltd. common shares received pursuant
to the conversion of Foster Wheeler Corporation common stock and the holder's
adjusted tax basis in such
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holder's Foster Wheeler Corporation common stock. Generally, any such gain will
be capital gain. Such shareholders with a loss on their Foster Wheeler
Corporation common stock will not be able to recognize that loss as a result of
the Reorganization, but their aggregate basis in the Foster Wheeler Ltd. common
shares should be equal to the aggregate basis of their Foster Wheeler
Corporation common stock. Thus, any loss should be preserved.
WE URGE YOU TO CONSULT YOUR OWN TAX ADVISORS REGARDING YOUR PARTICULAR TAX
CONSEQUENCES.
TAXATION OF FOSTER WHEELER CORPORATION
For U.S. federal income tax purposes, we will be required to recognize gain,
but not loss, on any assets retained by Foster Wheeler LLC and not contributed
to certain newly-formed Delaware subsidiaries. Currently, we do not anticipate
retaining any asset formerly held by Foster Wheeler Corporation in Foster
Wheeler LLC that has a fair market value significantly in excess of the tax
basis in such assets. Thus, we should not recognize any material gain with
respect to the assets retained by Foster Wheeler LLC as a result of the
Reorganization. In addition, if the Reorganization is approved, it is expected
that we will recognize taxable gain as a result of a transfer of certain assets
to an affiliate outside the United States. Based on our current estimates of the
fair market value of these transferred assets and the amounts of our tax
attributes, we believe that the Company will not incur a material U.S. federal
income tax payment obligation as a result of this particular transaction.
A more detailed discussion of the principal tax consequences of the
Reorganization is set out under "Income Tax Considerations." on page .
RIGHTS OF SHAREHOLDERS (SEE PAGE 13)
The principal attributes of the Foster Wheeler Corporation common stock and
the Foster Wheeler Ltd. common shares will be similar. There are differences,
however, between the rights of shareholders under New York law and Bermuda law.
In addition, there are differences between our current certificate of
incorporation and by-laws and Foster Wheeler Ltd.'s memorandum of association
and bye-laws. We encourage you to read the section titled "Comparison of Rights
of Shareholders" on page for a more detailed discussion.
STOCK EXCHANGE LISTING (SEE PAGE 14)
Immediately following the Reorganization, Foster Wheeler Ltd. shares will be
listed on the New York Stock Exchange under the symbol "FWC", the same symbol
under which Foster Wheeler Corporation shares are currently listed.
MARKET PRICE
The closing price per share of our shares on the New York Stock Exchange was
$ on March , 2001. The high and low sales prices of Foster Wheeler
Corporation shares on the New York Stock Exchange were $4.562 and $4.375 on
November 28, 2000, the last trading day before the public announcement of the
Reorganization.
RIGHTS OF DISSENTING SHAREHOLDERS (SEE PAGE 13)
Shareholders voting against the Reorganization will not be eligible for
appraisal rights.
ACCOUNTING TREATMENT OF THE REORGANIZATION (SEE PAGE 14)
The Reorganization will be accounted as a reorganization of entities under
common control which will not result in changes in our historical carrying
amount of assets, liabilities and consolidated financial statements.
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ANNUAL MEETING (SEE PAGE 32)
TIME, DATE, PLACE AND PURPOSE. The annual meeting of shareholders will be
held at 10:30 a.m., local time, on April 23, 2001, at the Hunterdon Hills
Playhouse, 88 Route 173 West, Hampton, New Jersey. At the annual meeting, you
will be asked to vote on:
1. the approval of the Reorganization, which will result in you holding
shares of Foster Wheeler Ltd., a Bermuda corporation, instead of shares
in Foster Wheeler Corporation, a New York corporation;
2. the reelection of four nominees as directors to serve three-year terms;
3. the ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for 2001; and
4. any other matters that may properly come before the annual meeting.
RECORD DATE. Only shareholders of record at the close of business on
March 5, 2001, as shown in our records, will be entitled to vote, or to grant
proxies to vote, at the annual meeting.
QUORUM. The presence, in person or by proxy, of shareholders holding a
majority of our outstanding shares entitled to vote at the annual meeting will
constitute a quorum.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF FOSTER WHEELER CORPORATION UNANIMOUSLY APPROVED
THE REORGANIZATION AND RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE
REORGANIZATION.
THE BOARD OF DIRECTORS OF FOSTER WHEELER CORPORATION UNANIMOUSLY RECOMMENDS
THAT YOU VOTE TO RE-ELECT MR. ATKINSON, MR. FERLAND, MR. MELONE AND MR. SWIFT AS
DIRECTORS OF FOSTER WHEELER CORPORATION.
THE BOARD OF DIRECTORS OF FOSTER WHEELER CORPORATION UNANIMOUSLY RECOMMENDS
THAT YOU VOTE TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS FOSTER
WHEELER CORPORATION'S INDEPENDENT ACCOUNTANTS FOR 2001.
VOTES REQUIRED (SEE PAGE 34)
Approval of the Reorganization requires the affirmative vote of shareholders
holding two-thirds of the votes of all outstanding shares entitled to vote at
the annual meeting. Abstentions and broker non-votes will therefore be counted
as votes against the Reorganization. As of the March 5, 2001 record date, there
were [40,705,552] Foster Wheeler Corporation shares outstanding and entitled to
vote. As of the record date, our directors and executive officers and their
affiliates directly owned, in the aggregate, approximately XXXXXX Foster Wheeler
Corporation shares, which represents approximately XX% of the outstanding Foster
Wheeler Corporation shares. These persons have informed us that they intend to
vote their shares in favor of the proposal to approve the Reorganization.
The election of directors requires a plurality of the votes cast at the
annual meeting, assuming a quorum has been reached. Abstentions and broker
non-votes will have no effect on the outcome of the election of directors.
The affirmative vote of a majority of the votes cast at the meeting by the
holders of shares entitled to vote thereon is required to approve the
ratification of the Company's independent accountants. Abstentions and broker
non-votes will have no effect on the ratification of the Company's independent
accountants.
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PROXIES (SEE PAGE 8)
GENERAL
A proxy card is being sent to each holder of Foster Wheeler Corporation
shares as of the record date. If you held Foster Wheeler Corporation shares on
the record date, you may grant a proxy by marking the proxy card appropriately,
executing it in the space provided and returning it to us. If you hold your
Foster Wheeler Corporation shares in the name of a bank, broker or other
nominee, you should follow the instructions provided by your bank, broker or
nominee when voting your shares. To be effective, a proxy card must be received
by us prior to the beginning of voting at the annual meeting.
REVOCATION
A proxy card may be revoked at any time prior to the time the proxy is voted
at the annual meeting by any of the following methods:
- giving written notice of the revocation to the transfer agent or the
inspectors of election;
- appearing and voting in person at the annual meeting; or
- properly completing, executing and delivering a later-dated proxy to the
transfer agent or the inspectors of election.
ELECTION OF DIRECTORS OF FOSTER WHEELER CORPORATION (SEE PAGE 8)
The certificate of incorporation of Foster Wheeler Corporation divides the
board of directors into three classes, with one class of directors elected each
year for a three-year term. The term of directors in one class expires in 2001.
The nominees for election at this meeting are: Eugene D. Atkinson, E. James
Ferland, Joseph J. Melone and Richard J. Swift.
The proxy agents for the board of directors intend to vote for the nominees
named above, unless otherwise instructed.
DIRECTORS OF FOSTER WHEELER LTD.
The current directors of Foster Wheeler Corporation will be appointed as
directors of Foster Wheeler Ltd., upon the approval of the Reorganization.
(please see the biographies of these individuals under the headings, "Election
of Directors--Nominees for Election" and "Election of Directors--Description of
Continuing Directors"). Their terms as directors of Foster Wheeler Ltd. will run
concurrently with their current terms as directors of Foster Wheeler
Corporation.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
We have not included data for Foster Wheeler LLC or Foster Wheeler Ltd.
because these entities did not conduct business during any of the periods shown
below.
SUMMARY PRO FORMA FINANCIAL INFORMATION
Pro forma consolidated financial statements for Foster Wheeler Ltd. are not
presented in this proxy statement/prospectus because the historical financial
statements of Foster Wheeler Corporation as of December 29, 2000 are not
affected by the reorganization. Therefore such financial statements would be
identical to those of Foster Wheeler Corporation. The historical financial
statements are included in Foster Wheeler Corporation's Annual Report on
Form 10-K for the year ended December 29, 2000.
Costs incurred in connection with the Reorganization have been expensed as
incurred.
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RISK FACTORS
THE REORGANIZATION AND RELATED TRANSFERS OF ASSETS COULD RESULT IN A TAXABLE
GAIN.
In connection with the Reorganization and related transfers, Foster Wheeler
LLC intends to contribute most of the assets that were previously held by Foster
Wheeler Corporation to certain newly-formed Delaware subsidiaries. We will be
subject to U.S. federal income tax on the gain, if any, on any asset that is
retained by Foster Wheeler LLC. In determining the amount of gain, if any, on
the assets retained by Foster Wheeler LLC, the value of those assets will be
determined by the Company. Any such determination will not be binding on the tax
authorities who may determine that the value of the retained assets and, thus,
the taxable gain, is larger than we determined. Moreover, while we expect that
the Company should not incur a material U.S. federal income tax liability as a
result of the contribution of assets to certain newly-formed Delaware
subsidiaries, this conclusion is not free from doubt.
Further, if the Reorganization is approved, it is expected that we will
recognize taxable gain as a result of a transfer of certain assets to an
affiliate outside the United States. In determining the amount of gain on these
transferred assets the value of those assets will be determined by appraisal.
Any such determination will not be binding on the tax authorities who may
determine that the value of the transferred assets and, thus, the taxable gain,
is greater than determined.
Finally, changes in the tax laws or Treasury regulations could adversely
affect the tax consequences to all parties.
THE ENFORCEMENT OF JUDGMENTS IN SHAREHOLDER SUITS AGAINST FOSTER WHEELER LTD.
MAY BE MORE DIFFICULT.
Foster Wheeler Ltd. is a Bermuda company. As a result, it may be difficult
for you to effect service of process within the United States or to enforce
judgments obtained against Foster Wheeler Ltd. in United States courts. Foster
Wheeler Ltd. will irrevocably agree that it may be served with process with
respect to actions based on offers and sales of securities made in the United
States by having Foster Wheeler LLC, Perryville Corporate Park, Clinton, New
Jersey 08809-4000, be its United States agent appointed for that purpose.
Foster Wheeler Ltd. has been advised by its Bermuda counsel, Conyers Dill &
Pearman, that a judgment for the payment of money rendered by a court in the
United States based on civil liability would not be automatically enforceable in
Bermuda. Foster Wheeler Ltd. has also been advised by Conyers Dill & Pearman
that a final and conclusive judgment obtained in a court in the United States
under which a sum of money is payable as compensatory damages may be the subject
of an action in the Supreme Court of Bermuda under the common law doctrine of
obligation. Such an action should be successful upon proof that the sum of money
is due and payable, and without having to prove the facts supporting the
underlying judgment, as long as:
(i) the court that gave the judgment was competent to hear the action in
accordance with private international law principles as applied by the
courts in Bermuda; and
(ii) the judgment is not contrary to public policy in Bermuda, was not
obtained by fraud or in proceedings contrary to natural justice of Bermuda
and is not based on an error in Bermuda law.
A Bermuda court may impose civil liability on Foster Wheeler Ltd. or its
directors or officers in a suit brought in the Supreme Court of Bermuda against
Foster Wheeler Ltd. or such persons with respect to a violation of U.S. federal
securities laws, provided that the facts surrounding such violation would
constitute or give rise to a cause of action under Bermuda law.
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ANTI-TAKEOVER PROVISIONS IN FOSTER WHEELER LTD.'S BYE-LAWS AND ITS SHAREHOLDERS
RIGHTS PLAN WILL MAINTAIN CERTAIN EXISTING ANTI-TAKEOVER PROVISIONS OF FOSTER
WHEELER CORPORATION.
Provisions in Foster Wheeler Ltd.'s bye-laws and shareholders rights plan,
which replicate current provisions of Foster Wheeler Corporation's certificate
of incorporation, by-laws and the New York Business Corporation Law could
discourage unsolicited takeover bids from third parties or the removal of
incumbent management. As a result, it may be less likely that you will receive
premium prices for your shares in an unsolicited takeover by another party.
These provisions include:
-- two-third of all shareholders must vote in favor of any merger;
-- a classified board of directors; and
-- the possible dilution of a potential acquiror's interest in Foster
Wheeler Ltd. as a result of the operation of the shareholders rights
plan.
The board of directors of Foster Wheeler Ltd. also may issue preferred
shares and determine their rights and qualifications. The issuance of preferred
shares may delay, defer or prevent a merger, amalgamation, tender offer or proxy
contest involving Foster Wheeler Ltd. This may cause the market price of Foster
Wheeler Ltd. shares to significantly decrease.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
Certain statements contained herein that are not related to historical facts
may contain "forward looking" information, as that term is defined in the
Private Securities Litigation Reform Act of 1995. Such statements are based on
the Company's current beliefs as to the outcome and timing of future events, and
actual results may differ materially from those projected or implied in the
forward looking statements. Further, certain forward looking statements are
based upon assumptions of future events which may not prove to be accurate. The
forward looking statements involve risks and uncertainties including, but not
limited to, the risks and uncertainties referred to under "Risk Factors" and
elsewhere herein.
THE REORGANIZATION
STRUCTURE OF THE REORGANIZATION
The board of directors has unanimously approved and recommends that you
approve the Reorganization. As part of the Reorganization, Foster Wheeler
Corporation will merge into Foster Wheeler LLC, with Foster Wheeler LLC
surviving as a wholly-owned, indirect subsidiary of Foster Wheeler Ltd. The
current shares of Foster Wheeler Corporation will automatically convert into
shares of Foster Wheeler Ltd. This procedure allows you to become a shareholder
in Foster Wheeler Ltd., which will then be the new parent company of the entire
Foster Wheeler group.
After the Reorganization you will continue to own an interest in a holding
company which, through its subsidiaries, will be engaged in the same business
that Foster Wheeler Corporation and its subsidiaries were engaged in before the
Reorganization. Your proportionate ownership and relative voting rights will not
change as a result of the Reorganization. The Reorganization will be effected
pursuant to the Agreement and Plan of Merger, which is the legal document that
governs the Reorganization. A copy of that agreement is attached to and is part
of this proxy statement/prospectus as ANNEX I. We encourage you to read that
agreement carefully.
BACKGROUND AND REASONS FOR THE REORGANIZATION
International activities are a significant part of our business. We believe
that a substantial portion of future opportunities for our business lie outside
the United States. The Reorganization is intended to position us to benefit from
those opportunities. We believe that organizing Foster Wheeler
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Corporation as a Bermuda company will give us competitive advantages not
available to a U.S. company. In particular, we believe the Reorganization:
- Will align our structure with our business growth.
- Will allow us to improve worldwide cash management.
- May result in more favorable corporate structure for expansion of our
current business through creation of foreign joint ventures and future
acquisition opportunities.
- Will allow us the flexibility to restructure our business to achieve
operational efficiencies.
- May allow us to grow our subsidiaries' businesses in a more favorable
regulatory environment.
- May increase our access to international capital markets.
- Could enhance our recognition by the international investment communities,
including investment banks and financially oriented media, which may
result in an increased level of investment by non U.S. investors.
Distributions with respect to stock in a U.S. corporation to nonresident
aliens could be subject to withholding taxes under the Internal Revenue Code. In
addition, estate taxes are payable in some cases in respect of the value of
shares in a U.S. corporation owned by a non-U.S. investor. As we will be a
non-U.S. corporation following the Reorganization, these taxes will generally no
longer be applicable to non-U.S. investors. As a result, non-U.S. investors may
be more receptive to an investment in Foster Wheeler Ltd. shares.
Foster Wheeler Ltd. will be indirectly subject to U.S. tax on income earned
from its U.S. business much as we are now. Also, because we plan to continue to
own our existing foreign subsidiaries through U.S. entities, there will be no
material savings of U.S. tax on dividends paid by existing foreign subsidiaries.
However, the Reorganization:
- Will give us greater flexibility over the long term in seeking to improve
our worldwide effective tax rate.
- May facilitate foreign tax savings through a more flexible corporate
structure.
- May provide future U.S. tax savings to the extent that new foreign
businesses may be held by Foster Wheeler Ltd. without any intervening U.S.
owners.
Thus, although the transactions will not provide immediate U.S. cash tax
benefits the new corporate structure will give us greater flexibility over the
long term in seeking to lower our worldwide tax liability and effective tax
rate.
We cannot assure you, however, that the anticipated benefits of the
Reorganization will be realized.
AUTOMATIC SHARE CONVERSION
Our shares will automatically convert by operation of law into shares of
Foster Wheeler Ltd. upon the consummation of the Reorganization. You DO NOT need
to tender your shares in order to exercise your rights as a shareholder of
Foster Wheeler Ltd. Your share certificate representing Foster Wheeler
Corporation common stock will, at the effective time, automatically represent
the same number of Foster Wheeler Ltd. common shares.
If you hold Foster Wheeler Corporation common stock, you WILL NOT be
required to exchange your stock certificates as a result of the Reorganization.
If you desire to sell some or all your Foster Wheeler Ltd. common shares after
the effective date of the Reorganization, delivery of the stock certificate or
certificates which previously represented shares of Foster Wheeler Corporation
common
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stock will be sufficient. The Reorganization will not affect your right to sell
shares of Foster Wheeler Corporation before its effective date.
Following the Reorganization, certificates bearing the name of Foster
Wheeler Ltd. will be issued in the normal course upon surrender of certificates
bearing the name of Foster Wheeler Corporation for exchange or transfer. If you
surrender a share certificate, and request the new certificate to be issued in a
name other than the one appearing on the surrendered certificate, you must
endorse the share certificate or otherwise prepare it to be in proper form for
transfer. You will be required to pay Foster Wheeler Ltd. or its agents any
transfer taxes or other governmental charges required by reason of the issuance
of a certificate registered in a name other than that appearing on the
surrendered certificate and establish to the satisfaction of Foster
Wheeler Ltd. or its agents that those taxes or other governmental charges have
been paid.
AMENDMENT OR TERMINATION
The Agreement and Plan of Merger may be amended, modified or supplemented at
any time before or after its adoption. However, after adoption, no amendment,
modification or supplement may be made or effected that requires further
approval by our shareholders without obtaining that approval.
Our board of directors may terminate the Agreement and Plan of Merger and
abandon the Reorganization at any time prior to its effectiveness.
CONDITIONS TO CONSUMMATION OF THE REORGANIZATION
The Reorganization will not be completed unless, among other things, the
following conditions are satisfied or, if allowed by law, waived:
- the Reorganization is approved by the requisite two-thirds vote of our
shareholders;
- none of the parties to the Agreement and Plan of Merger is subject to any
decree, order or injunction that prohibits the consummation of the
Reorganization;
- the registration statement of which this proxy statement/prospectus is a
part is declared effective by the Securities and Exchange Commission and
no stop order is in effect;
- the Foster Wheeler Ltd. common shares to be issued pursuant to the
Reorganization are authorized for listing on the New York Stock Exchange,
subject to official notice of issuance;
- We receive all material third-party consents;
- We receive an opinion from White & Case LLP regarding, as of the effective
date of the Reorganization, certain matters discussed under "Income Tax
Considerations--United States Federal Income Taxation--Receipt of Foster
Wheeler Ltd. Common Shares"; and
- We receive an opinion from our special Bermuda legal counsel, Conyers
Dill & Pearman, confirming, as of the effective date of the
Reorganization, the matters discussed under "Income Tax
Considerations--Bermuda Tax Consequences".
We are parties to agreements that require the consent of third parties prior
to the implementation of the Reorganization. We believe that we will obtain all
material consents required prior to the Reorganization and that the failure to
obtain any other consents will not have a material impact on our business or our
ability to consummate the Reorganization.
EFFECTIVE TIME
We anticipate that the Reorganization will become effective within
approximately two months after the annual meeting. We will notify our
shareholders or announce as of the effective date that the
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Reorganization has been completed and that your your shares have converted. The
merger of Foster Wheeler Corporation into Foster Wheeler LLC, if approved by our
shareholders and not terminated by our board of directors, will become effective
upon the latest of (i) the filing of a certificate of merger in the office of
the Secretary of State of Delaware, and (ii) the filing of a certificate of
merger with the New York Department of State, unless a later effective time is
specified in the respective filings with those states.
MANAGEMENT OF FOSTER WHEELER LTD.
When the Reorganization is completed, our directors and substantially all of
our executive officers will become the directors and executive officers of
Foster Wheeler Ltd. Assuming the Reorganization is approved, the current
nominees for Foster Wheeler Corporation's board of directors will be appointed
to three year terms on Foster Wheeler Ltd.'s board of directors and the current
directors of Foster Wheeler Corporation will carry over their remaining terms of
office to Foster Wheeler Ltd..
REQUIRED VOTE FOR REORGANIZATION
Approval of the Reorganization requires the affirmative vote of the holders
of two-thirds of the outstanding shares of our common stock. Because of this
vote requirement, ABSTENTIONS WILL HAVE THE SAME EFFECT AS VOTES AGAINST THE
PROPOSAL TO APPROVE THE REORGANIZATION. THE FAILURE OF A SHAREHOLDER TO RETURN A
PROXY CARD WILL ALSO HAVE THE EFFECT OF A VOTE AGAINST THE REORGANIZATION. Under
the rules of the New York Stock Exchange, brokers who hold shares in street name
for customers have the authority to vote on many "routine" proposals when they
have not received instructions from beneficial owners. Under these rules,
brokers are precluded from exercising their voting discretion with respect to
proposals for non-routine matters like the Reorganization. THUS, ABSENT SPECIFIC
INSTRUCTIONS FROM YOU, YOUR BROKER IS NOT EMPOWERED TO VOTE YOUR SHARES WITH
RESPECT TO THE APPROVAL AND ADOPTION OF THE REORGANIZATION (I.E., "BROKER
NON-VOTES"). Since the affirmative vote of two-thirds of the outstanding Foster
Wheeler Corporation shares is required for approval of the Reorganization, A
BROKER NON-VOTE WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE REORGANIZATION.
As of the record date for the annual meeting, there were [40,705,552] shares
of Foster Wheeler Corporation common stock outstanding and entitled to vote. As
of the record date, our directors and executive officers owned, in the
aggregate, approximately shares of our common stock, which represents
approximately % of the outstanding Foster Wheeler Corporation common stock.
These persons have informed us that they intend to vote their shares in favor of
the proposal to approve the Reorganization.
The Reorganization also requires the affirmative vote of the holders of a
majority of the outstanding Foster Wheeler LLC interests. As Foster Wheeler LLC
is currently an indirect, wholly-owned subsidiary of Foster Wheeler Corporation,
we have instructed our subsidiaries which own interests in Foster Wheeler LLC to
vote in favor of the Reorganization.
RIGHTS OF DISSENTING SHAREHOLDERS
Under New York law, you will not have "dissenters' appraisal rights" in
connection with the Reorganization because, among other reasons, our common
stock is listed on the New York Stock Exchange.
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DIVIDENDS
We have paid quarterly cash dividends of $.06 per share since the fourth
quarter of 1999. Although Foster Wheeler Ltd. expects to continue to pay these
quarterly cash dividends following the Reorganization, any future declaration
and payment of dividends by Foster Wheeler Ltd. will be:
-- dependent upon its results of operations, financial condition, cash
requirements and other relevant factors;
-- subject to the discretion of its board of directors;
-- subject to its subsidiaries ability to pay dividends; and
-- subject to the reasonable belief by its board of directors that after
the payment is made, Foster Wheeler Ltd. would not be unable to pay its
liabilities as they become due or that the realizable value of Foster
Wheeler Ltd's assets would be less than the aggregate of its liabilities
and its issued share capital and share premium account.
The share premium account is made up of the excess of the consideration paid
on the issuance of shares over the aggregate par value of such shares. Share
premium may be distributed in certain limited circumstances, for example to pay
up unissued shares which may be distributed to shareholders in proportion to
their holdings, but is otherwise subject to limitation.
STOCK COMPENSATION PLANS
If the Reorganization is completed, we will amend and revise our employee
and director stock option and other stock-based plans and arrangements to
(1) provide that a U.S. subsidiary of Foster Wheeler Ltd. will assume
sponsorship of those plans, (2) provide that common shares of Foster
Wheeler Ltd. will be issued by Foster Wheeler Ltd. upon the exercise of any
options or the payment of any other stock-based awards under those plans and
arrangements and (3) otherwise appropriately reflect the substitution of common
shares of Foster Wheeler Ltd. for common stock of Foster Wheeler Corporation
under those plans and arrangements and related agreements. Your approval of the
Reorganization will also constitute approval of those amendments and revisions
to our stock option and other stock-based plans and arrangements providing for
future use of Foster Wheeler Ltd. common shares in lieu of common stock of
Foster Wheeler Corporation after the Reorganization.
STOCK EXCHANGE LISTINGS
Our common stock is currently listed on the New York Stock Exchange. There
is currently no established public trading market for the common shares of
Foster Wheeler Ltd. We have made an application so that, immediately following
the Reorganization, the common shares of Foster Wheeler Ltd. will be listed on
the New York Stock Exchange under the symbol "FWC", the same symbol under which
our common stock is currently listed.
ACCOUNTING TREATMENT OF THE REORGANIZATION
The reorganization will be accounted as a reorganization of entities under
common control which will not result in changes in our historical carrying
amounts of assets, liabilities and consolidated financial statements.
SUBSEQUENT RESTRUCTURING
Following the Reorganization, we plan to further restructure our business
operations in order to increase our ability to achieve the benefits previously
described. It is not expected that these actions will require your approval.
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DESCRIPTION OF AUTHORIZED SHARES
OF FOSTER WHEELER LTD.
The following discussion is a summary of Foster Wheeler Ltd.'s share
capital. This summary is not complete and is subject to the complete text of
Foster Wheeler Ltd.'s memorandum of association and its bye-laws as they will be
in effect on the date of the Reorganization. Foster Wheeler Ltd. is subject to
The Companies Act 1981 (Bermuda) (the "Companies Act"). Foster Wheeler Ltd.'s
memorandum of association is attached to this proxy statement/prospectus as
ANNEX II and its bye-laws are attached as ANNEX III. We encourage you to read
those documents carefully.
AUTHORIZED SHARE CAPITAL
Foster Wheeler Ltd.'s memorandum of association provides that its authorized
share capital is US$161,500,000 divided into 160,000,000 common shares, par
value $1.00, and 1,500,000 shares, par value $1.00 which shares may be
designated and created as shares of any other classes or series of shares with
the respective rights and restrictions determined by action of the board of
directors.
VOTING
The holders of Foster Wheeler Ltd.'s common shares (referred to as "members"
or "shareholders" under the Companies Act) will be entitled to one vote per
share other than on the election of directors.
With respect to the election of directors, each holder of Foster
Wheeler Ltd.'s common shares entitled to vote at the election will have the
right to vote, in person or by proxy, the number of shares held by such
shareholder for as many persons as there are directors to be elected and for
whose election that holder has a right to vote. The directors will be divided
into three classes, with only one class being up for election each year.
Directors will be elected by a plurality of the votes cast in the election.
Cumulative voting, for the election of directors, is prohibited under Foster
Wheeler Ltd.'s bye-laws.
There are no limitations imposed by Bermuda law or Foster Wheeler Ltd.'s
bye-laws on the right of nonresident shareholders to hold or vote their Foster
Wheeler Ltd. common shares.
CHANGES TO RIGHTS OF A CLASS OR SERIES
The rights attached to any class or series of shares of Foster
Wheeler Ltd., unless otherwise provided by the terms of that class or series,
may be varied only with the consent in writing of the holders of all of the
issued shares of that class or series or by a resolution passed by three-fourths
of that class or series at a separate general meeting of holders of the shares
of that class or series. Unless otherwise provided, the necessary quorum for
such meeting is the presence of holders of at least one-third of the shares of
such class or series. Each holder of shares of the class or series present, in
person or by proxy, will have one vote for each share of the class or series
held. Outstanding shares will not be deemed to be varied by the creation or
issue of shares that rank in any respect prior to or equivalent with those
shares.
QUORUM FOR GENERAL MEETINGS
The presence of shareholders, in person or by proxy, holding at least a
majority of the issued shares generally entitled to vote at a meeting is a
quorum for the transaction of business.
DIVIDEND RIGHTS
Subject to any rights and restrictions of any other class or series of
shares, the board of directors may, from time to time, declare dividends on the
shares issued and authorize payment of dividends as
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described in "COMPARISON OF RIGHTS OF SHAREHOLDERS--Distributions and Dividends;
Repurchase and Redemptions" see page 20. The board of directors may declare that
any dividend be paid wholly or partly by the distribution of shares of Foster
Wheeler Ltd. and/or specific assets.
RIGHTS UPON LIQUIDATION
Upon the liquidation of Foster Wheeler Ltd., after the full amounts that
holders of any issued shares ranking senior to the common shares as to
distribution on liquidation or winding up are entitled to receive have been paid
or set aside for payment, the holders of Foster Wheeler Ltd.'s common shares are
entitled to receive, pro rata, any remaining assets of Foster Wheeler Ltd.
available for distribution to the holders of shares of stock. The liquidator may
deduct from the amount payable in respect of those common shares any liabilities
the holder has to or with Foster Wheeler Ltd. The assets received by the holders
of Foster Wheeler Ltd. common shares in a liquidation may consist in whole or in
part of property. That property is not required to be of the same kind for all
shareholders.
SINKING FUND
Foster Wheeler Ltd.'s common shares have no sinking fund provisions.
LIABILITY FOR FURTHER CALLS OR ASSESSMENTS
Foster Wheeler Ltd.'s common shares to be issued in the Reorganization will
be duly and validly issued, fully paid and nonassessable.
PRE-EMPTIVE RIGHTS
Holders of common shares will have no preemptive or preferential right to
purchase any securities of Foster Wheeler Ltd.
REDEMPTION AND CONVERSION
Foster Wheeler Ltd. common shares will not be convertible into shares of any
other class or series or be subject to redemption either by Foster Wheeler Ltd.
or the holder of the common shares.
REPURCHASE
Under Foster Wheeler Ltd.'s bye-laws and subject to the solvency and minimum
capital requirements of the Companies Act, Foster Wheeler Ltd. may purchase any
issued common shares in the circumstances and on the terms as are agreed by
Foster Wheeler Ltd. and the holder of the common shares. Foster Wheeler Ltd.
may, from time to time, with the agreement of a holder, purchase all or part of
the holder's common shares whether or not Foster Wheeler Ltd. has made a similar
offer to all or any other of the holders of common shares.
RESTRICTIONS ON TRANSFER
Subject to the rules of any stock exchange on which the common shares may be
listed, the board of directors may refuse to recognize any instrument of
transfer unless it is accompanied by a duly executed instrument of transfer and
by the certificate in respect of the shares to which it relates, if a
certificate has been issued by Foster Wheeler Ltd. in respect of the shares to
be transferred, and by such other evidence as the board of directors may
reasonably require to show the right of the transferor to make the transfer.
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OTHER CLASSES OR SERIES OF SHARES
The board of directors is authorized, without obtaining any vote or consent
of the holders of any class or series of shares unless expressly provided by the
terms of issue of that class or series, to provide from time to time for the
issuance of other classes or series of shares and to establish the
characteristics of each class or series, including the number of shares,
designations, relative voting rights, dividend rights, liquidation and other
rights, redemption, repurchase or exchange rights and any other preferences and
relative, participating, optional or other rights and limitations not
inconsistent with applicable law.
COMPULSORY ACQUISITION OF SHARES HELD BY MINORITY HOLDERS
An acquiring party is generally able to acquire compulsorily the ordinary
shares of minority holders in one of two ways:
- By a procedure under the Companies Act known as a "scheme of arrangement."
A scheme of arrangement is made by obtaining the consent of Foster
Wheeler Ltd., the consent of the court and approval of the arrangement by
holders of common shares (1) representing a majority in number of the
shareholders present at the meeting held to consider the arrangement and
(2) holding at least 75% of all the issued common shares. If a scheme of
arrangement receives all necessary consents, all holders of common shares
of a company would be compelled to sell their shares under the terms of
the scheme of arrangement.
- By acquiring pursuant to a tender offer 90% of the common shares not
already owned by the acquiring party (the "offeror"). If an offeror has,
within four months after the making of an offer for all the common shares
not owned by the offeror, obtained the approval of or acquired 90% or more
of all the shares to which the offer relates, the offeror may, at any time
within two months after the end of that four month period, require by a
"Notice of Acquisition" any nontendering shareholder to transfer its
shares on the same terms as the original offer. In those circumstances,
nontendering shareholders will be compelled to sell their shares.
Nontendering shareholders have a one-month period from the date of the
Notice of Acquisition in which to convince a court to enjoin the company
acquisition.
TRANSFER AGENT
The transfer agent and registrar for the common shares will be Mellon
Investor Services LLC.
ANTI-TAKEOVER PROVISIONS
Foster Wheeler Ltd.'s bye-laws have provisions that could have an
anti-takeover effect. These provisions are intended to replicate provisions
currently in our certificate of incorporation and by-laws or protections
provided by New York law. These provisions are intended to enhance the
likelihood of continuity and stability in the composition of the board of
directors and in the policies formulated by the board of directors and to
discourage transactions that may involve an actual or threatened change of
control of Foster Wheeler Ltd.
The bye-laws provide that Foster Wheeler Ltd.'s board of directors will be
divided into three classes serving staggered three-year terms. Directors can be
removed from office only for cause, as defined in the bye-laws, by the
affirmative vote of the holders of two-thirds of the issued shares generally
entitled to vote. The board of directors does not have the power to remove
directors. Vacancies on the board of directors may only be filled by the
remaining directors and not by the shareholders. Each of these provisions can
delay a shareholder from obtaining majority representation on the board of
directors.
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The bye-laws provide that the board of directors will consist of not less
than nine nor more than twenty persons, the exact number to be set from time to
time by a majority of the whole board of directors. Accordingly, the board of
directors, and not the shareholders, has the authority to determine the number
of directors and could delay any shareholder from obtaining majority
representation on the board of directors by enlarging the board of directors and
filling the new vacancies with its own nominees until a general meeting at which
directors are to be appointed.
The bye-laws of Foster Wheeler Ltd. provide that, to be timely, a
shareholder's notice for a shareholder proposal must be received not less than
120 days prior to the first anniversary of the date on which Foster
Wheeler Ltd. first mailed its proxy materials for the preceding year's annual
general meeting.
Subject to the terms of any other class of shares in issue, any action
required or permitted to be taken by the holders of Foster Wheeler Ltd.'s common
shares must be taken at a duly called annual or special general meeting of
shareholders unless taken by written consent of all holders of common shares.
Special general meetings may only be called by a majority of the entire board of
directors. Under the Companies Act, shareholders holding at least 10% of the
outstanding voting shares of Foster Wheeler Ltd. may call a shareholder meeting
without the authorization of the board of directors; however the bye-laws of
Foster Wheeler Ltd. provide that any action to be taken at such shareholder
meeting would require the approval of 100% of the shares able to vote at such
meeting.
The board of directors is authorized, without obtaining any vote or consent
of the holders of any class or series of shares unless expressly provided by the
terms of issue of a class or series, to from time to time issue any other
classes or series of shares with the designations and relative powers,
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or terms or conditions of redemption as they
consider fit. The board of directors could authorize the issuance of preference
shares with terms and conditions that could discourage a takeover or other
transaction that holders of some or a majority of the common shares might
believe to be in their best interests or in which holders might receive a
premium for their shares over the then market price of the shares. No preference
shares have been established as of the date of this document.
As a Bermuda company, Foster Wheeler Ltd. is not subject to Section 912 of
the New York Business Corporation Law, which restricts business combinations
with interested shareholders. However, the bye-laws contain provisions that
largely mirror the intention of Section 912 and generally prohibit "business
combinations" between Foster Wheeler Ltd. and an "interested member."
Specifically, "business combinations" between an interested member and Foster
Wheeler Ltd. are prohibited for a period of five years after the time the
interested member acquires 20% or more of the outstanding voting shares, unless
the business combination or the transaction resulting in the person becoming an
interested member is approved by the board of directors prior to the date the
interested member acquires 20% or more of the outstanding voting shares;
"Business combinations" is defined broadly to include amalgamations or
consolidations with Foster Wheeler Ltd. or its subsidiaries, sales or other
dispositions of assets having an aggregate value 10% or more of the aggregate
market value of the consolidated assets, aggregate market value of all
outstanding stock, consolidated earning power or consolidated net income of
Foster Wheeler Ltd., adoption of a plan or proposal for liquidation and most
transactions that would increase the interested member's proportionate share
ownership in Foster Wheeler Ltd.
"Interested member" is defined as a person who, together with any affiliates
and/or associates of that person, beneficially owns, directly or indirectly, 20%
or more of the issued voting shares of Foster Wheeler Ltd.
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COMPARISON OF RIGHTS OF SHAREHOLDERS
Your rights as a shareholder of Foster Wheeler Corporation are governed by
New York law and Foster Wheeler Corporation's restated certificate of
incorporation, as amended and by-laws, as amended. After the Reorganization, you
will become a holder of common shares of Foster Wheeler Ltd., and your rights
will be governed by the Companies Act and Foster Wheeler Ltd.'s memorandum of
association and bye-laws. Please note the term "member" when used under the
Companies Act and the memorandum of association and bye-laws of Foster
Wheeler Ltd. is used interchangeably with the term "shareholder" herein.
The principal attributes of Foster Wheeler Corporation common stock and
Foster Wheeler Ltd. common shares will be similar; however, there are certain
differences between your rights as a shareholder under New York law and Bermuda
law, which is modeled after that of England. In addition, there are certain
differences between Foster Wheeler Corporation's certificate of incorporation
and by-laws and Foster Wheeler Ltd.'s memorandum of association and bye-laws. It
is our intent that your rights as a shareholder be substantially the same before
and after the Reorganization and, accordingly, the principal differences will
arise as a consequence of the differences between Bermuda law and New York law.
The following discussion is a summary of material changes in your rights as
a shareholder resulting from the Reorganization. We encourage you to read this
summary carefully. This summary does not purport to be complete or to cover all
of the respects in which Bermuda law may differ from laws generally applicable
to New York corporations and their shareholders and, while we believe that this
summary is materially accurate, this summary is subject to the complete text of
the relevant provisions of the Companies Act, the New York Business Corporation
Law ("NYBCL"), Foster Wheeler Corporation's certificate of incorporation and
by-laws and Foster Wheeler Ltd.'s memorandum of association and bye-laws.
QUORUM; MEETINGS OF SHAREHOLDERS
Under the NYBCL, shareholder meetings generally must be held annually, and a
special meeting of shareholders may be called only by the board of directors or
by persons authorized in the certificate of incorporation or the by-laws. The
certificate of incorporation of Foster Wheeler Corporation provides for the
calling of a special meeting of shareholders only by a majority of the board of
directors. As permitted by the NYBCL, the by-laws of Foster Wheeler Corporation
provide that a majority of shares entitled to vote, present in person or
represented by proxy, shall constitute a quorum at a meeting of shareholders.
Under the Companies Act, an annual general meeting must be convened at least
once in every calendar year. Under Bermuda law, a special meeting of
shareholders may be convened by the board of directors at any time and must be
convened upon the request of shareholders holding at least 10% of the paid-up
capital of a company carrying the right to vote at shareholders' meetings. The
bye-laws of Foster Wheeler Ltd., similar to the by-laws of Foster Wheeler
Corporation, provide that the holders of a majority of the shares issued and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business (including the approval of an amalgamation) except as otherwise
provided by the Companies Act.
ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
The by-laws of Foster Wheeler Corporation provide that shareholders seeking
to bring business before an annual meeting of shareholders or to nominate
candidates for election as directors at an annual meeting of shareholders must
provide timely notice thereof in writing. To be timely, a shareholder's notice
must be received by the Secretary of Foster Wheeler Corporation not less than
120 days prior to the anniversary of the date Foster Wheeler Corporation's proxy
statement was released to shareholders in connection with the preceding year's
annual meeting.
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The bye-laws of Foster Wheeler Ltd., similar to the by-laws of Foster
Wheeler Corporation, will provide that, to be timely, a shareholder's notice
must be received not less than 120 days prior to the first anniversary of the
date on which Foster Wheeler Ltd. first mailed its proxy materials for the
preceding year's annual general meeting.
In addition, the Companies Act provides that shareholders totaling at least
100 or holding at least 5% of the total voting rights can, at their own expense
(unless a company otherwise resolves), require a company to give notice of any
resolution which such shareholders can properly propose (and intend to propose)
at the next annual general meeting or to circulate a statement prepared by such
shareholders in respect of any matter referred to in a proposed resolution or
any business to be dealt with at a general meeting.
The NYBCL does not have shareholder proposal provisions similar to the
Companies Act provisions described in the paragraph above. Foster Wheeler
Corporation is currently, and Foster Wheeler Ltd. after the Reorganization will
be, subject to the Securities and Exchange Act of 1934, as amended, which
provides that a shareholder who continuously holds at least $2,000 in market
value or 1% of a company's voting securities for at least one year prior to the
submission of a shareholder proposal and through the shareholder meeting date
may, provided that certain conditions are met, present a proposal to be voted on
at a shareholder meeting.
DISTRIBUTIONS AND DIVIDENDS; REPURCHASES AND REDEMPTIONS
Under the NYBCL, a corporation may pay dividends only out of surplus, so
that the net assets of the corporation remaining after the dividend at least
equal the amount of stated capital. Surplus is defined in the NYBCL as the
excess of the net assets over stated capital. A New York corporation may
purchase or redeem shares of any class except when the corporation is insolvent
or would thereby be made insolvent. A corporation may purchase or redeem its
shares only out of surplus. Foster Wheeler Corporation's certificate of
incorporation prohibits redemption of Series A Junior Preferred Stock.
Under the Companies Act, the board of directors of Foster Wheeler Ltd. may
declare dividends out of profits of Foster Wheeler Ltd. available for that
purpose or make distributions out of contributed surplus as long as there are no
reasonable grounds for believing that Foster Wheeler Ltd. is, or after such
dividend or distribution would be, unable to pay its liabilities as they became
due or that the realizable value of Foster Wheeler Ltd.'s assets would thereby
be less than the aggregate of its liabilities and its issued share capital and
share premium accounts. In addition, under the Companies Act, it is possible for
a company to repurchase its own shares. However, the funds for such a repurchase
must be either (i) capital paid-up on the shares in question; (ii) proceeds of a
new issue of shares made for the purposes of the repurchase; or (iii) funds
which would otherwise be available for dividend or distribution. Furthermore,
any premium which is payable on the repurchase must be provided out of funds
which would otherwise be available for dividend or distribution or out of the
company's share premium account prior to the repurchase.
AMENDMENT OF THE CERTIFICATE OF INCORPORATION/MEMORANDUM OF ASSOCIATION
Under the NYBCL, the certificate of incorporation may be amended if (i) the
board of directors votes to authorize such amendment and (ii) the holders of at
least a majority of shares of stock entitled to vote thereon at the meeting of
shareholders approve the amendment, unless the certificate of incorporation
requires the vote of a greater number of shares. If the holders of the
outstanding shares of a class are entitled to vote as a class upon a proposed
amendment, the holders of a majority of the outstanding shares of such class
must also vote in favor of the amendment.
Under the Companies Act, amendments to the memorandum of association of a
Bermuda company must be approved by a majority of the shareholders voting on the
amendments and amendments to the company's objects (i.e., business purposes) may
require approval by the Bermuda
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Minister of Finance. Usually, the memorandum of association of a Bermuda company
contains only the name, purpose, duration and total share authorization of a
company.
AMENDMENT OF BY-LAWS
Under the NYBCL, the board of directors may amend by-laws if so authorized
in the certificate of incorporation or by-laws. The shareholders of a New York
corporation also have the power to amend by-laws. The certificate of
incorporation of Foster Wheeler Corporation authorizes the board of directors to
amend, repeal or adopt new by-laws if notice is given five business days prior
to the board meeting or such notice is unanimously waived by the directors.
Under the Companies Act, the bye-laws, which contain many of the provisions
found in a New York corporation's certificate of incorporation, may be amended
by a resolution of the board of directors and a resolution of the shareholders
approved by a majority of the shareholders voting on the amendment, unless a
greater shareholder vote is required under the bye-laws. The Foster
Wheeler Ltd. bye-laws require a unanimous vote of all shareholders voting on
resolutions presented without the prior approval of the board of directors.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Companies Act and the NYBCL have substantially similar provisions and
limitations regarding indemnification by a corporation of its officers,
directors, employees and agents. If the Reorganization is approved, the NYBCL
indemnification provisions will apply to acts or omissions that occur prior to
the effective time of the Reorganization and the Companies Act indemnification
provisions will apply to acts or omissions that occur after the effective time.
The following is a summary of Companies Act and NYBCL indemnification
provisions.
Under the NYBCL, a corporation is permitted to provide indemnification or
advancement of expenses, by certificate of incorporation or by-law provision or,
when authorized in the certificate of incorporation or by-laws, by resolution of
shareholders, resolution of directors or agreement, against judgments, fines,
reasonable expenses, including attorneys' fees, and amounts paid in settlement
actually and reasonably incurred by the person in connection with such
proceeding if such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation. The by-laws of Foster Wheeler Corporation provides for
indemnification to the fullest extent permitted by law.
Under the Companies Act, a company is permitted to indemnify any officer or
director, out of the funds of the company, against (i) any liability incurred by
him or her in defending any proceedings, whether civil or criminal, in which
judgment is given in his or her favor, or in which he or she is acquitted, or in
connection with any application under relevant Bermuda legislation in which
relief from liability is granted to him or her by the court and (ii) any loss or
liability resulting from negligence, default, breach of duty or breach of trust,
except for his or her fraud, dishonesty or willful misconduct. The bye-laws of
Foster Wheeler Ltd. will provide for the indemnity by Foster Wheeler Ltd. of the
officers and directors of Foster Wheeler Ltd. to the fullest extent permitted by
law.
LIMITED LIABILITY OF DIRECTORS
Under Section 402(b) of the NYBCL, a corporation's certificate of
incorporation may eliminate or limit the personal liability of directors to the
corporation or its shareholders for damages for any breach of duty in such
capacity. However, no such provision can eliminate or limit liability if (i) a
judgment or other final adjudication establishes that the director's acts or
omissions were in bad faith or involved intentional misconduct or a knowing
violation of law or that the director personally gained a financial profit or
other advantage to which the director was not legally entitled or such acts
violated certain provisions of the NYBCL or (ii) the act or omission occurred
prior to the adoption of the
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provision in the certificate of incorporation. Foster Wheeler Corporation's
certificate of incorporation limits the personal liability of its directors,
except to the extent such limitation is prohibited by law.
Under the Companies Act, a director must observe the statutory duty of care
which requires such director to act honestly and in good faith with a view to
the best interests of the company and exercise the care, diligence and skill
that a reasonably prudent person would exercise in comparable circumstances.
Directors are also subject to common law fiduciary duties which require
directors to act in what they reasonably believe to be the best interests of the
company and for a proper purpose. Bermuda law renders void any provision in the
bye-laws or any contract between a company and any such director exempting him
or her from or indemnifying him or her against any liability in respect of any
fraud or dishonesty of which he or she may be guilty in relation to the company.
The Foster Wheeler Ltd. bye-laws, similar to the Foster Wheeler Corporation
by-laws, will provide that no officer or director of Foster Wheeler Ltd. will be
personally liable to Foster Wheeler Ltd. or its shareholders for monetary
damages for any breach of fiduciary duty, except to the extent that such
limitation is prohibited by law.
INTERESTED DIRECTOR TRANSACTIONS
Under the NYBCL, no contract or transaction between a corporation and one or
more of its directors or officers, or between a corporation or another entity in
which one or more of its directors or officers have a substantial financial
interest, shall be void or voidable solely for such reason or solely because
such director or officer is present at or participates in such meeting which
authorizes the contract or solely because such directors' votes are counted for
such purpose if (i) the material facts of the relationship or interest are known
to the board and the board in good faith authorizes the contract by the
affirmative vote of the disinterested directors or (ii) the material facts of
the relationship or interest are disclosed in good faith and are known to the
shareholders and the contract or transaction is specifically approved by
shareholder vote. Common or interested directors may be counted in determining
the presence of a quorum at a meeting which authorizes the contract or the
transaction.
Under the Companies Act, without the consent of the holders of shares
carrying at least nine-tenths of the total voting rights or in certain other
limited instances, a company may not make a loan to or enter into any guarantee
or provide security in respect of any loan made to any person who is a director
(or certain related persons or companies) of such company or of its holding
company. In addition, a director who has an interest in any material contract or
proposed material contract (or in any person that is a party to such contract)
with the company or any of its subsidiaries and fails to disclose such interest
at the first opportunity at a meeting of the directors or by writing to the
directors commits a breach of such director's duty under Bermuda law.
SHAREHOLDERS' SUITS
Section 626 of the NYBCL requires that the shareholder bringing a derivative
suit must have been a shareholder at the time of the wrong complained of or that
the stock devolved to him or her by operation of law from a person who was such
a shareholder. In addition, the shareholder must be a shareholder at the time
the suit is brought.
The Bermuda courts ordinarily would be expected to follow English precedent,
which would permit a shareholder to commence a derivative action in the name of
the company to remedy a wrong done to the company only (a) where the act
complained of is alleged to be beyond the corporate power of the company or
illegal; (b) where the act complained of is alleged to constitute a fraud
against the minority shareholders by those controlling the company; provided
that the majority shareholders have used their controlling position to prevent
the company from taking action against the wrongdoers; (c) where an act requires
approval by a greater percentage of the company's shareholders than actually
approved it; or (d) where such an action is necessary in order that there not be
a violation of the company's memorandum of association or bye-laws.
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SHAREHOLDER APPROVAL OF BUSINESS COMBINATIONS
Under the NYBCL, there is no statutory restriction on a New York
corporation's ability to acquire the business of another corporation. Under the
NYBCL, a plan of merger or consolidation must be adopted by a two-thirds vote of
all outstanding shares of Foster Wheeler Corporation. A sale, lease, exchange or
other disposition of all or substantially all of the assets of the corporation
not in the usual and regular course of the corporation's business is required
under the NYBCL to be approved by the holders of two-thirds of all outstanding
shares entitled to vote thereon unless the certificate of incorporation provides
otherwise.
In addition, under the NYBCL, class voting rights exist with respect to
amendments to the certificate of incorporation that adversely affect the terms
of the shares of a class. Such class voting rights do not exist as to other
extraordinary matters, unless the certificate of incorporation provides
otherwise. The certificate of incorporation of Foster Wheeler Corporation does
not provide otherwise. In addition, Section 912(b) of the NYBCL generally
prohibits a New York corporation from engaging in a "business combination" with
an "interested shareholder" for a period of five years after the time of the
transaction in which the person became an interested shareholder, unless prior
to such time, the transaction or the business combination that resulted in the
shareholder becoming an interested shareholder is approved by the board of
directors of the corporation. After five years, these business combinations may
occur if approved by a majority of the outstanding voting stock not beneficially
owned by the interested shareholder or if specific fair price requirements are
met. The fair price requirements allow a corporation to engage in a business
combination with any interested shareholder when the cash and other
consideration to be received by the other shareholders is the higher of (x) the
highest per share price paid by the interested shareholder at a time when such
shareholder beneficially owned at least five percent of the outstanding voting
stock and within five years immediately prior to the date the business
combination is first announced, (y) the highest price paid by the interested
shareholder within the five years immediately prior to, or in, the transaction
in which he become an interested shareholder, and (z) the market value per share
of common stock on the date when the business combination is first announced or
on the date of the transaction in which the person became an interested
shareholder, plus, in each case, any accrued interest, and less, in each case,
any paid dividends. Such "business combinations" include mergers,
consolidations, asset sales and other transactions resulting in a financial
benefit to the interested shareholder. An "interested shareholder" is a person
who, directly or indirectly, beneficially owns (or within five years, did own)
20% or more of the corporation's voting stock.
The Companies Act permits an amalgamation between two or more Bermuda
companies (or between one or more Bermuda exempted companies and one or more
foreign corporations) subject, unless the bye-laws otherwise provide, to
obtaining a vote of three-fourths of the shareholders of each such company and
each class of such shares present and voting in person or by proxy at a meeting
called for that purpose at which the quorum shall be one-third of the issued
shares of the company or the class, as the case may be. Each share carries the
right to vote in respect of an amalgamation, whether or not it otherwise carries
the right to vote. Foster Wheeler Ltd.'s bye-laws provide that an amalgamation
(other than one to which the following sentence applies) requires the vote of
the holders of two-thirds of the issued shares present in person or by proxy and
entitled to vote at a meeting where the holders of a majority of all issued
shares entitled to vote thereat constitutes a quorum. The bye-laws also contain
provisions regarding "business combinations" with "interested members" that are
substantially similar in effect to the provisions of Section 912 of the NYBCL.
The Companies Act also provides that where an offer is made for shares in a
company by another company and, within four months of the offer, the holders of
not less than 90% in value of the shares which are the subject of the offer
accept, the offeror may by notice, given within two months after the expiration
of the said four months, require the dissenting shareholders to transfer their
shares on the
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terms of the offer. Dissenting shareholders may apply to a court within one
month of such notice objecting to the transfer and the court may give such order
as it thinks fit.
DISSENTERS' RIGHTS
Under the NYBCL, a dissenting shareholder has the right to receive the fair
value for his or her shares if such shareholder objects to certain (i) mergers
or consolidations, (ii) disposition of assets regarding shareholder approval,
(iii) share exchanges or (iv) amendments or changes to the certificate of
incorporation adversely affecting his or her shares. Dissenters' rights are also
available to any shareholder not entitled to vote with respect to a plan of
merger or consolidation, whose shares will be canceled or exchanged in the
merger or consolidation for cash or consideration other than shares of the
surviving or consolidating corporation or another corporation. However, no
dissenters' rights are available with respect to shares that, at the applicable
record date, were listed on a national securities exchange or designated as a
national market system security or an interdealer quotation system by the
National Association of Securities Dealers, Inc., as is presently the case with
Foster Wheeler Corporation.
Under the Companies Act, a dissenting shareholder of a company participating
in an amalgamation (other than an amalgamation between a company and its
wholly-owned subsidiary or between two or more subsidiaries of the same holding
company) may apply to the court to appraise the fair value of his or her shares.
INSPECTION OF BOOKS AND RECORDS
Under the NYBCL, any shareholder may inspect the corporation's books and
records for a proper purpose. Bermuda law provides the general public with a
right of inspection of a Bermuda company's public documents at the office of the
Registrar of Companies in Bermuda, and provides a Bermuda company's shareholders
with a right of inspection of such company's bye-laws, minutes of general
shareholders' meetings and audited financial statements. The register of
shareholders is also open to inspection by shareholders free of charge and, upon
payment of a small fee, by any other person. A Bermuda company is required to
maintain its share register in Bermuda but may establish a branch register
outside of Bermuda. A Bermuda company is required to keep at its registered
office a register of its directors and officers which is open for inspection by
members of the public without charge.
REMOVAL OF DIRECTORS; VACANCIES ON THE BOARD OF DIRECTORS
Under the certificate of incorporation of Foster Wheeler Corporation, any
director or the entire board may be removed only for cause by the holders of at
least 66 2/3% of the shares entitled to vote at an election of directors.
Vacancies on the board and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by the sole
remaining directors.
Under the Companies Act, unless otherwise specified in the bye-laws of the
company, the shareholders of a company may, at a special meeting called for that
purpose, remove a director provided that such director must receive at least
fourteen days notice of such meeting and is entitled to be heard thereat. The
bye-laws of Foster Wheeler Ltd. provide, like the Foster Wheeler Corporation
by-laws, that a director may only be removed for cause by the holders of at
least 66 2/3% of the shares entitled to vote at an election of directors. A
vacancy created by the removal of a director at a special general meeting may be
filled at that meeting by the election of another director in his or her place
or in the absence of any such election by the other directors. Under the
bye-laws of Foster Wheeler Ltd., like the Foster Wheeler Corporation by-laws,
vacancies and (with the authorization of the shareholders in general meeting)
newly created directorships resulting from any increase in the authorized number
of directors may be filled by the board of directors, and the directors so
chosen shall hold office until
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the next annual election and until their successors are duly elected and shall
qualify, unless sooner removed.
SHAREHOLDER RIGHTS PLANS
New York law permits corporations to issue stock purchase rights or adopt a
shareholder rights plan. Pursuant to its rights plan, Foster Wheeler Corporation
distributed a dividend of one right to purchase one one-hundredth of a share of
Foster Wheeler Corporation preferred stock for each share of Foster Wheeler
Corporation common stock outstanding on October 2, 1987. The rights are attached
to shares of Foster Wheeler common stock but will separate from Foster Wheeler
common stock following:
-- a public announcement that a person or group of affiliated or associated
persons has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding Foster Wheeler Corporation
common stock; or
-- the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 20% or more of such
outstanding Foster Wheeler Corporation common shares.
The rights are not triggered if the acquiring person is:
-- Foster Wheeler Corporation or any subsidiary of Foster Wheeler
Corporation (including Foster Wheeler LLC),
-- any employee benefit plan of Foster Wheeler Corporation or any
subsidiary of Foster Wheeler Corporation or any entity holding common
shares for or pursuant to the terms of any such employee benefit plan,
-- any person or group who gains beneficial ownership of 20% or more of the
outstanding shares by virtue of Foster Wheeler Corporation's reduction in
the total number of shares outstanding, or
-- or any person who inadvertently trips one of the triggers set forth
above and as promptly as practicable divest themselves of enough common
shares so that they no longer trigger.
When exercisable, each right will entitle its holder to buy one
one-hundredths of a share of Foster Wheeler Corporation series A junior
participating preferred stock at a purchase price of $175.00. If any person or
group of persons becomes the beneficial owner of 20% or more of Foster Wheeler
Corporation's common stock, then each right not owned by such person or group
will entitle its holder to purchase, at the right's then current exercise price,
shares of Foster Wheeler Corporation's common stock having a value of twice the
right's exercise price. If Foster Wheeler Corporation is acquired in a merger or
other business combination transaction or if 50% of Foster Wheeler Corporation's
assets or earning power is sold or transferred, in some circumstances, holders
of rights will be entitled to purchase a number of the acquiring company's
shares having a market value equal to twice the exercise price of the rights.
Before any person or group beneficially owns 20% or more of Foster Wheeler
Corporation's common stock, the rights are redeemable for $.02 per right at the
option of Foster Wheeler Corporation's board. If a person or a group becomes the
beneficial owner of 20% or more of Foster Wheeler Corporation's common stock and
until such person or a group beneficially owns 50% or more of Foster Wheeler
Corporation's common stock, Foster Wheeler Corporation's board may exchange each
right for one share of common stock of Foster Wheeler Corporation. The rights
will expire on October 2, 2007, unless earlier redeemed or extended by Foster
Wheeler Corporation.
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Bermuda law does not prohibit companies from issuing share purchase rights
or adopting a shareholder rights plan. The Foster Wheeler Ltd. rights plan, like
the Foster Wheeler Corporation rights plan, provides for the distribution of a
dividend of a right to purchase one one-hundredth of a Foster Wheeler Ltd.
preferred share for each outstanding Foster Wheeler Ltd. common share. The
rights will be attached to Foster Wheeler Ltd. common shares but will separate
from Foster Wheeler Ltd. common shares following one of the following events:
-- a public announcement that a person or group of affiliated or associated
persons has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding Foster Wheeler Ltd. common
stock; or
-- the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 20% or more of such
outstanding Foster Wheeler Ltd. common shares.
The rights are not triggered if the acquiring person is:
-- Foster Wheeler Ltd. or any subsidiary of Foster Wheeler Ltd.,
-- any employee benefit plan of Foster Wheeler Ltd. or any subsidiary of
Foster Wheeler Ltd. or any entity holding common shares for or pursuant
to the terms of any such employee benefit plan,
-- any person or group who gains beneficial ownership of 20% or more of the
outstanding shares by virtue of Foster Wheeler Ltd.'s reduction in the
total number of shares outstanding, or
-- or any person who inadvertently trips one of the triggers set forth
above and as promptly as practicable divest themselves of enough common
shares so that they no longer trigger.
When exercisable, each right will entitle its holder to buy one
one-hundredths of a share of Foster Wheeler Ltd. series A junior participating
preferred stock at a purchase price of $175.00. If any person or group of
persons becomes the beneficial owner of 20% or more of Foster Wheeler Ltd.'s
common stock, then each right not owned by such person or group will entitle its
holder to purchase, at the right's then current exercise price, shares of Foster
Wheeler Ltd.'s common stock having a value of twice the right's exercise price.
If Foster Wheeler Ltd. is acquired in a merger or other business combination
transaction or if 50% of Foster Wheeler Ltd.'s assets or earning power is sold
or transferred, in some circumstances, holders of rights will be entitled to
purchase a number of the acquiring company's shares having a market value equal
to twice the exercise price of the rights.
Before any person or group beneficially owns 20% or more of Foster
Wheeler Ltd.'s common stock, the rights are redeemable for $.02 per right at the
option of Foster Wheeler Ltd.'s board. If a person or a group becomes the
beneficial owner of 20% or more of Foster Wheeler Ltd.'s common stock and until
such person or a group beneficially owns 50% or more of Foster Wheeler Ltd.'s
common stock, Foster Wheeler Ltd.'s board may exchange each right for one share
of common stock of Foster Wheeler Ltd. The rights will expire on October 2,
2007, unless earlier redeemed or extended by Foster Wheeler Ltd.
The shares of Foster Wheeler Ltd. that you receive will be issued with this
right.
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INCOME TAX CONSIDERATIONS
UNITED STATES FEDERAL INCOME TAXATION
The following is a description of the principal U.S. federal income tax
consequences of (1) the receipt of Foster Wheeler Ltd. common shares by certain
holders of Foster Wheeler Corporation common stock pursuant to the
Reorganization and (2) the Reorganization to Foster Wheeler Corporation. This
description does not purport to address all of the tax considerations that may
be relevant to particular Foster Wheeler Corporation stockholders and, among
others, it might not be applicable to stockholders who, for U.S. federal income
tax purposes, are:
- dealers or traders in securities or currencies;
- tax-exempt entities;
- banks, financial institutions or insurance companies;
- grantor trusts;
- real estate investment trusts or regulated investment companies;
- holders who hold our common shares as part of a position in a straddle or
as part of a hedging or conversion transaction for U.S. federal income tax
purposes;
- investors whose functional currency is not the U.S. dollar;
- holders who acquired their Foster Wheeler Corporation common stock
pursuant to the exercise of employee stock options or otherwise as
compensation;
- holders that, for U.S. federal income tax purposes, are nonresident alien
individuals, foreign corporations, foreign partnerships, foreign trusts or
foreign estates; and
- holders who own, or are deemed to own, 10% or more, determined by voting
power or value, of Foster Wheeler Corporation common stock or Foster
Wheeler Ltd. common shares.
Further, except where specifically stated, this description does not address
any U.S. federal estate and gift or alternative minimum tax consequences or any
state, local or foreign tax consequences relating to the Reorganization or the
acquisition, ownership and disposition of Foster Wheeler Ltd. common shares.
Each Foster Wheeler Corporation stockholder is urged to consult its own tax
advisor as to the particular tax consequences of the receipt of Foster
Wheeler Ltd. common shares pursuant to the Reorganization contemplated by this
proxy statement/prospectus and the ownership and disposition of Foster
Wheeler Ltd. common shares.
The description is based on the Internal Revenue Code of 1986, as amended
(the "Code"), the Treasury regulations promulgated thereunder and judicial and
administrative interpretations thereof, in each case as in effect and available
on the date of this proxy statement/prospectus. All of the foregoing are subject
to change, which change could apply with retroactive effect and could affect the
tax consequences described below.
This description is also based on certain assumptions regarding the factual
circumstances that will exist at the time of the Reorganization, including
certain representations made or to be made by Foster Wheeler Corporation and
Foster Wheeler Ltd. This description assumes that Foster Wheeler Corporation
stockholders hold their Foster Wheeler Corporation common stock and will hold
Foster Wheeler Ltd. common shares as capital assets.
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For purposes of this description, a U.S. holder is a beneficial owner of
Foster Wheeler Corporation common stock that, for U.S. federal income tax
purposes, is:
- a citizen or resident of the United States;
- a corporation or partnership created or organized in or under the laws of
the United States or any State thereof, including the District of
Columbia;
- an estate, the income of which is subject to U.S. federal income taxation
regardless of its source;
- a trust, if such trust validly has elected to be treated as a United
States person for U.S. federal income tax purposes or if (1) a U.S. court
can exercise primary supervision over its administration and (2) one or
more United States person have the authority to control all of the
substantial decisions of such trust; or
- otherwise subject to U.S. federal income taxation on a net income basis on
their shares of Foster Wheeler Corporation common stock.
TAX CONSEQUENCES OF THE REORGANIZATION
FOSTER WHEELER CORPORATION
The merger of Foster Wheeler Corporation into Foster Wheeler LLC will be
characterized for U.S. federal income tax purposes as a tax-free reorganization
within the meaning of Section 368(a) of the Code. Since for U.S. federal income
tax purposes Foster Wheeler LLC is disregarded as an entity separate from its
owner, for tax purposes the merger will be considered to be a merger of Foster
Wheeler Corporation into a subsidiary of Foster Wheeler Ltd. Under Section 367
of the Code and related Treasury regulations, Foster Wheeler Corporation will be
treated as selling any assets that are retained by Foster Wheeler LLC and not
contributed to certain newly-formed, wholly-owned Delaware subsidiaries.
Consequently, Foster Wheeler Corporation will be required to recognize gain, but
not loss, on these assets. Foster Wheeler LLC does not anticipate retaining any
assets formerly held by Foster Wheeler Corporation that have a fair market value
significantly in excess of the tax basis in such assets. Further, although not
free from doubt, Foster Wheeler Corporation should not incur a material U.S.
federal income tax liability as a result of the contributions of assets to the
new subsidiaries. In addition, Foster Wheeler Corporation will recognize gain as
a result of the transfer of certain assets to an affiliate outside the United
States. Based on its current estimates of the fair market value of these assets
and the amounts of its tax attributes, Foster Wheeler Corporation believes that
it will not incur a material U.S. federal income tax payment obligation as a
result of this particular transaction.
RECEIPT OF FOSTER WHEELER LTD. COMMON SHARES
Foster Wheeler Corporation has received an opinion from White & Case LLP,
counsel to Foster Wheeler Corporation, that, assuming the Reorganization occurs
as described in this proxy statement/ prospectus, and conditioned on the
accuracy of certain representations made by Foster Wheeler Corporation and
Foster Wheeler Ltd., for U.S federal income tax purposes:
- gain, but not loss, should be recognized by a U.S. holder on the receipt
of Foster Wheeler Ltd. common shares pursuant to the Reorganization in an
amount equal to the excess, if any, of (1) their amount realized and
(2) such U.S. holder's adjusted tax basis in its Foster Wheeler
Corporation common stock exchanged for Foster Wheeler Ltd. common shares;
and
- the aggregate adjusted tax basis of Foster Wheeler Ltd. common shares
received by U.S. holders with a loss on their Foster Wheeler Corporation
common stock should be equal to the aggregate adjusted tax basis of the
Foster Wheeler Corporation common stock exchanged therefor.
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Neither Foster Wheeler Corporation nor Foster Wheeler Ltd. will request any
ruling from the Internal Revenue Service ("IRS") as to the U.S. federal income
tax consequences of the Reorganization. Opinions of counsel are not binding on
the IRS or the courts, and the IRS and the courts are not precluded from taking
positions contrary to those set out in opinions of counsel.
Generally, the amount realized would be the fair market value of the Foster
Wheeler Ltd. common shares received pursuant to the Reorganization. Moreover,
for U.S. holders that have a loss on their Foster Wheeler Corporation common
stock, it is unclear whether the holding period of the Foster Wheeler
Corporation common stock may be tacked on to the Foster Wheeler Ltd. common
shares received pursuant to the Reorganization. Because of the lack of any clear
authority, counsel is unable to render any opinion on this issue under these
circumstances. Accordingly, U.S. holders are urged to consult their own tax
advisors.
Any gain recognized will be capital gain and will be long-term capital gain
if the Foster Wheeler Corporation common stock has been held for more than one
year at the time of the Reorganization.
FOSTER WHEELER LTD. COMMON SHARES
DISTRIBUTION
Subject to the discussion below under "Passive Foreign Investment Company
Considerations," the gross amount of any distribution by Foster Wheeler Ltd. of
cash or property (other than certain distributions, if any, of common shares
distributed pro rata to all shareholders of Foster Wheeler Ltd.) with respect to
common shares will be includible in income by a U.S. holder as dividend income
to the extent such distributions are paid out of the current or accumulated
earnings and profits of Foster Wheeler Ltd. as determined under U.S. federal
income tax principles. Such dividends will not be eligible for the dividends
received deduction generally allowed to corporate U.S. holders. Subject to the
discussion below under "Passive Foreign Investment Company Considerations," to
the extent, if any, that the amount of any distribution by Foster Wheeler Ltd.
exceeds Foster Wheeler Ltd.'s current and accumulated earnings and profits as
determined under U.S. federal income tax principles, it will be treated first as
a tax-free return of the U.S. holder's adjusted tax basis in the common shares
and thereafter as capital gain. Foster Wheeler Ltd. will maintain calculations
of its earnings and profits under U.S. federal income tax principles.
The amount of any distribution of property other than cash will be the fair
market value of such property on the date of distribution.
Dividends received by a U.S. holder with respect to common shares will be
treated as foreign source income, which may be relevant in calculating such
holder's foreign tax credit limitation. For this purpose, dividends distributed
by Foster Wheeler Ltd. generally will constitute passive income, or, in the case
of certain U.S. holders, financial services income.
SALE OR EXCHANGE OF COMMON SHARES
Subject to the discussion below under "Passive Foreign Investment Company
Considerations," a U.S. holder generally will recognize gain or loss on the sale
or exchange of Foster Wheeler Ltd. common shares equal to the difference between
the amount realized on such sale or exchange and the U.S. holder's adjusted tax
basis in the common shares. Such gain or loss will be capital gain or loss. In
the case of a noncorporate U.S. holder, the maximum marginal U.S. federal income
tax rate applicable to such gain will be lower than the maximum marginal U.S.
federal income tax rate applicable to ordinary income if such U.S. holder's
holding period for such common shares exceeds one year. Gain or loss, if any,
recognized by a U.S. holder generally will be treated as U.S. source income or
loss for U.S. foreign tax credit purposes. The deductibility of capital losses
is subject to limitations.
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PASSIVE FOREIGN INVESTMENT COMPANY CONSIDERATIONS
A non-U.S. corporation will be classified as a passive foreign investment
company (a "PFIC") for U.S. federal income tax purposes in any taxable year in
which, after applying certain look-through rules, either (i) at least
75 percent of its gross income is passive income or (ii) at least 50 percent of
the gross value of its assets is attributable to assets that produce passive
income or are held for the production of passive income. Passive income for this
purpose generally includes dividends, interest, royalties, rents and gains from
commodities and securities transactions.
Based on certain estimates of its gross income and gross assets and the
nature of its business, Foster Wheeler Ltd. believes that it will not be
classified as a PFIC for its current taxable year. Foster Wheeler Ltd.'s status
in future years will depend on its assets and activities in those years. Foster
Wheeler Ltd. has no reason to believe that its assets or activities will change
in a manner that would cause it to be classified as a PFIC. If Foster
Wheeler Ltd. were a PFIC, a U.S. holder of common shares generally would be
subject to imputed interest charges and other disadvantageous tax treatment with
respect to any gain from the sale or exchange of, and certain distributions with
respect to, the common shares.
If Foster Wheeler Ltd. were a PFIC, a U.S. holder of common shares could
make a variety of elections that may alleviate the tax consequences referred to
above, and one of these elections may be made retroactively. U.S. holders should
consult their own tax advisors regarding the tax consequences that would arise
if Foster Wheeler Ltd. were treated as a PFIC.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING REQUIREMENTS
Currently, distributions with respect to Foster Wheeler Corporation common
stock and proceeds from the sale or redemption of Foster Wheeler Corporation
common stock are subject to United States backup withholding tax and information
reporting rules. After the Reorganization, it is anticipated that the same rules
will apply to distributions with respect to Foster Wheeler Ltd. common shares
and to proceeds from the sale or redemption of Foster Wheeler Ltd. common
shares.
Information reporting generally will apply to payments of dividends on, and
to proceeds from the sale or redemption of, common shares by a payor within the
United States to a holder of common shares (other than an exempt recipient,
including a corporation, a payee that is not a United States person that
provides an appropriate certification and certain other persons). A payor within
the United States will be required to withhold 31% of any payments of the
proceeds from the sale or redemption of common shares within the United States
to a holder (other than an exempt recipient) if such holder fails to furnish its
correct taxpayer identification number or otherwise fails to comply with such
backup withholding tax requirements.
Treasury regulations issued on October 6, 1997, as amended, would modify
certain of the rules discussed above generally with respect to payments on
common shares made after December 31, 2000. In particular, a payor within the
United States will be required to withhold 31% of any payments of dividends on,
or proceeds from the sale of, common shares within the United States to a holder
(other than an exempt recipient such as a corporation or a payee that is not a
United States person and that provides an appropriate certification) if such
holder fails to furnish its correct taxpayer identification number or otherwise
fails to comply with, or establish an exemption from, such backup withholding
tax requirements. In the case of such payments by a payor or middleman within
the United States to a foreign simple trust, a foreign grantor trust or a
foreign partnership (other than payments to a foreign simple trust, a foreign
grantor trust or a foreign partnership that qualifies as a withholding foreign
trust or a withholding foreign partnership within the meaning of such Treasury
regulations and payments to a foreign simple trust, a foreign grantor trust or a
foreign partnership that are effectively connected with the conduct of a trade
or business in the United States), the beneficiaries of the foreign simple
trust, the persons treated as the owners of the foreign grantor trust or the
partners of the foreign
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partnership, as the case may be, will be required to provide the certification
discussed above in order to establish an exemption from backup withholding tax
and information reporting requirements. Moreover, a payor or middleman may rely
on a certification provided by a payee that is not a United States person only
if such payor or middleman does not have actual knowledge or a reason to know
that any information or certification stated in such certificate is incorrect.
BERMUDA TAX CONSEQUENCES
Under present law, Bermuda will not impose on Foster Wheeler Ltd. or any of
its operations or the shares, debentures or other obligations of Foster
Wheeler Ltd., any tax computed on profits or income, or computed on any capital
asset, gain or appreciation, or any tax in the nature of estate duty or
inheritance tax. Foster Wheeler Ltd. will apply for and expects to obtain has
received a written assurance from the Minister of Finance of Bermuda an
assurance under The Exempted Undertakings Tax Protection Act, 1966 of Bermuda,
to the effect that in the event of there being enacted in Bermuda any
legislation imposing any such tax, then the imposition of such tax shall not be
applicable to Foster Wheeler Ltd. or to any of its operations or the shares,
debentures or other obligations of Foster Wheeler Ltd. until March 28, 2016. The
assurances are subject to the proviso that they are not construed so as to
prevent the application of any tax or duty to such persons as are ordinarily
resident in Bermuda (Foster Wheeler Ltd. is not currently so designated) or to
prevent the application of any tax payable in accordance with the provisions of
The Land Tax Act 1967 of Bermuda or otherwise payable in relation to the land,
if any, leased to Foster Wheeler Ltd. Foster Wheeler Ltd. is required to pay
certain annual Bermuda government and business fees. Under current rates, Foster
Wheeler Ltd. will pay a maximum fixed annual fee of $16,695. In addition, all
entities employing individuals in Bermuda are required to pay an employment tax.
Currently there is no Bermuda withholding tax on dividends that may be paid by
Foster Wheeler Ltd.
Under existing Bermuda law, there will be no Bermuda income or withholding
tax on dividends paid by Foster Wheeler Ltd. to its shareholders. Furthermore,
no Bermuda tax or other levy is payable on the sale or other transfer (including
by gift or on the death of the shareholder) of Foster Wheeler Ltd. common shares
(other than by shareholders resident in Bermuda).
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THE ANNUAL MEETING
TIME, PLACE AND DATE
The annual meeting of Foster Wheeler Corporation shareholders will be held
at 10:30 a.m., on Monday, April 23, 2001, at the Hunterdon Hills Playhouse, 88
Route 173 West, Hampton, New Jersey 08827. This proxy statement/prospectus
constitutes notice of the annual meeting as is required by Section 605 of the
New York Business Corporation Law and our by-laws.
PROPOSALS
At the annual meeting, you will be asked to vote upon the following:
1. A proposal to approve the Reorganization and by doing so approve and
adopt the Agreement and Plan of Merger attached as ANNEX I. This
Agreement and Plan of Merger is the legal document that governs the
Reorganization.
2. A proposal to re-elect each of the four nominees as directors to serve
three-year terms. These directors will be members of a class of directors
that will serve until the 2004 annual meeting of shareholders and until
their respective successors have been duly elected and qualified.
3. A proposal to ratify the appointment of PricewaterhouseCoopers LLP as
Foster Wheeler Corporation's independent accountants for 2001.
4. Any other matters that may properly come before the meeting.
We know of no other matters that are likely to be brought before the annual
meeting.
QUORUM
The presence, in person or by proxy, of shareholders holding a majority of
the outstanding shares of Foster Wheeler Corporation common stock entitled to
vote at the annual meeting will constitute a quorum. Abstentions and broker
"non-votes" will be counted as present for purposes of determining the presence
or absence of a quorum at the annual meeting for the transaction of business.
RECORD DATE
Only shareholders of record at the close of business on March 5, 2001, as
shown in Foster Wheeler Corporation's records, will be entitled to vote, or to
grant proxies to vote, at the annual meeting.
VOTING PROCEDURE
In 1992, we adopted a confidential voting policy in connection with Annual
Meetings of Stockholders. In essence, the policy provides for independent vote
tabulations and inspectors, and that, with exceptions, shareholder votes not be
disclosed to us.
Pursuant to the Securities and Exchange Commission Rules, boxes and a
designated blank space are provided on the proxy card for shareholders to mark
if they wish either to vote "for," "against" or "abstain" on a proposal, or to
withhold authority to vote for one or more of the nominees for director. New
York law and the Company's amended by-laws require the presence of a quorum for
the annual meeting, which is defined as a majority of the shares entitled to
vote at the Meeting. Abstentions and broker non-votes are counted for purposes
of determining the presence or absence of a quorum for the transaction of
business.
32
<PAGE>
PROXIES
A proxy card was sent to each Foster Wheeler Corporation shareholder who
held shares as of the record date. If you properly received a proxy card, you
may grant a proxy to vote on the proposals presented above by marking your proxy
card appropriately, executing it in the space provided, and returning it in the
enclosed postage paid envelope to Mellon Investor Services LLC, P.O. Box 1677,
Church Street Station, New York, NY 10008-1677. If you hold your Foster Wheeler
Corporation shares in the name of a bank, broker or other nominee, you should
follow the instructions provided by your bank, broker or nominee when voting
your shares.
If you have timely submitted a properly executed proxy card and clearly
indicated your votes, your shares will be voted as indicated. If you have timely
submitted a properly executed proxy card and have not clearly indicated your
votes, your shares will be voted FOR the proposal to approve the Reorganization,
elect the 4 nominees as directors and approve the ratification of
PricewaterhouseCoopers LLP as independent accountants.
If any other matters are properly presented at the annual meeting for
consideration, the persons named in the proxy card will have the discretion to
vote on these matters in accordance with their best judgment. Proxies voted
against the proposal to approve the Reorganization will not be voted in favor of
any adjournment of the annual meeting for the purpose of soliciting additional
proxies.
REVOCATION
You may revoke your proxy card at any time prior to its exercise by:
- giving written notice of the revocation to the transfer agent;
- appearing and voting in person at the annual meeting; or
- properly completing and executing a later-dated proxy and delivering it
to the transfer agent or the inspectors of election.
Your presence without voting at the annual meeting will not automatically
revoke your proxy, and any revocation during the meeting will not affect votes
previously taken. If you hold your Foster Wheeler Corporation shares in the name
of a bank, broker or other nominee, you should follow the instructions provided
by your bank, broker or nominee in revoking your previously granted proxy.
VALIDITY
The inspectors of election will determine all questions as to the validity,
form, eligibility, including time of receipt, and acceptance of proxy cards.
Their determination will be final and binding. The board of directors of Foster
Wheeler Corporation has the right to waive any irregularities or conditions as
to the manner of voting. Foster Wheeler Corporation may accept your proxy by any
form of communication permitted by New York law so long as Foster Wheeler
Corporation is reasonably assured that the communication is authorized by you.
SOLICITATION OF PROXIES
The expense of preparing, printing and mailing this proxy
statement/prospectus and the accompanying material will be borne by the Company.
Solicitation of individual stockholders may be made by mail, personal
interviews, telephone, facsimile, electronic delivery or other
telecommunications by officers and regular employees of the Company who will
receive no additional compensation therefor. In addition, the Company has
engaged [Georgeson Shareholder Communications Inc.] to
33
<PAGE>
solicit proxies from brokers and nominees at a cost of $ plus
out-of-pocket expenses. The Company will reimburse brokers and other nominees
for their expenses in forwarding solicitation material to beneficial owners.
REQUISITE VOTE
APPROVAL OF THE REORGANIZATION REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS
OF TWO-THIRDS OF THE OUTSTANDING SHARES OF FOSTER WHEELER CORPORATION COMMON
STOCK. ABSTENTIONS AND BROKER "NON-VOTES" WILL HAVE THE SAME EFFECT AS A VOTE
AGAINST THE REORGANIZATION. IF YOU WISH TO VOTE IN FAVOR OF THE REORGANIZATION
AND YOUR BROKER HOLDS YOUR SHARES IN STREET NAME, YOU MUST GIVE SPECIFIC
INSTRUCTIONS ON HOW TO VOTE TO YOUR BROKER.
Election of the nominees for director requires a plurality of the votes cast
at the annual meeting, assuming there is a quorum at the meeting. Abstentions
and broker non-votes will have no effect on the outcome of the election of
directors.
Ratification of the Company's independent accountants requires the
affirmative vote of a majority of the votes cast at the annual meeting by the
holders of shares entitled vote thereon. Abstentions and broker non-votes are
not counted in determining the number of votes cast in connection with the
ratification of the Company's independent accounts.
ELECTION OF DIRECTORS OF FOSTER WHEELER CORPORATION
The Restated Certificate of Incorporation divides the board of directors
into three classes, with one class of directors elected each year for a
three-year term. The term of directors in one class expires in 2001. The four
directors in this class have been nominated for election for terms expiring in
2004. The proxy agents of the board of directors intend to vote for the election
of the nominees named below, unless instructed otherwise. If any eligible
nominee becomes unable to accept nomination or election, proxies will be voted
for those remaining, and the board of directors will either reduce the size of
the board, or select substitute nominees after identifying suitable candidates.
The Restated Certificate of Incorporation provides that the board of directors
shall consist of not less than nine nor more than twenty directors as shall be
fixed from time to time by the board. The number of directors has been fixed at
ten.
Following is the principal occupation, age and certain other information, as
of March , 2001, for each director nominee and other directors serving
unexpired terms.
NOMINEES FOR ELECTION AT THIS MEETING:
EUGENE D. ATKINSON
Mr. Atkinson is a Managing Partner with RHJ Industrial Partners, a private
equity firm. He was previously a Limited Partner with Goldman, Sachs & Co.
(investment banking) and Chairman of Goldman Sachs (International) from
December 1990 to May 1999. Mr. Atkinson, who is 56 years old, became a director
of the Company in 1995.
E. JAMES FERLAND
Mr. Ferland has been Chairman of the Board, President and Chief Executive
Officer of Public Service Enterprise Group Incorporated and Chairman of the
Board and Chief Executive Officer of Public Service Electric and Gas Company
(utilities) since 1986. He is also a director of Public Service
34
<PAGE>
Enterprise Group Incorporated and HSB Group Inc. Mr. Ferland, who is 58 years
old, became a director of the Company in 1993.
JOSEPH J. MELONE
Mr. Melone is the former President and Chief Executive Officer of The
Equitable Companies Inc. and the former Chairman and Chief Executive Officer of
The Equitable Life Assurance Society of the United States (Insurance and
Financial Services). He is also a director of BISYS Group, Inc. Mr. Melone, who
is 69 years old, became a director of the Company in 1988.
RICHARD J. SWIFT
Mr. Swift has been Chairman, President and Chief Executive Officer of the
Company since April 1994. He formerly held several executive positions with the
Company and its subsidiaries. He is a director of Public Service Enterprise
Group Incorporated and Ingersoll-Rand Company. Mr. Swift, who is 56 years old,
became a director of the Company in 1993.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
ABOVE-NAMED NOMINEES.
SIMILAR INFORMATION ON CONTINUING DIRECTORS
Similar information concerning the directors whose terms of office continue
after the 2001 Annual Meeting is as follows:
LOUIS E. AZZATO
Mr. Azzato retired from the Company as the Chairman and Chief Executive
Officer in 1994. Mr. Azzato, who is 70 years old, became a director of the
Company in 1978. His current term will expire in 2002.
JOHN P. CLANCEY
Mr. Clancey is Chairman of Maersk Sealand, a transportation provider, and
has held such office since December 1999. From August 1991 to December 1999, he
was the President and Chief Executive Officer of Sea-Land Service Inc.
(transportation). He is also a director of UST Inc. Mr. Clancey, who is
55 years old, became a director of the Company in 1999. His current term will
expire in 2002.
DAVID J. FARRIS
Mr. Farris retired in June 1998 as Chief Operating officer of Beneficial
Corp. and President and Chief Executive Officer of Beneficial Management Corp.,
a financial services company. He held those positions since July 1987.
Mr. Farris, who is 65 years old, became a director of the Company in 1996. His
current term will expire in 2002.
MARTHA CLARK GOSS
Ms. Goss is the Chief Financial Officer of The Capital Markets Company, a
provider of global business and technology solutions. Previously she was Vice
President and Chief Financial Officer of Booz, Allen & Hamilton Inc., a
management consulting firm, from 1995 to 1999. Ms. Goss, who is 51 years old,
became a director of the Company in 1994. Her current term will expire in 2003.
35
<PAGE>
CONSTANCE J. HORNER
Ms. Horner has been a Guest Scholar at The Brookings Institution since 1993.
Previously she was Commissioner, U.S. Commission on Civil Rights, from 1993 to
1998. From 1991 to 1993, she was Assistant to the President and Director of
Presidential Personnel at the White House. She is a director of Ingersoll-Rand
Company, Pfizer, Inc. and Prudential Insurance Company of America. Ms. Horner,
who is 59 years old, became a director of the Company in 1996. Her current term
will expire in 2002.
JOHN E. STUART
Mr. Stuart is the former Chairman and Chief Executive Officer of
LogicStream, an internet managed services provider. From 1999 to June 2000 he
was Chief Executive Officer of StorNet, a nationwide value added systems
integrator. He previously was Chairman and Chief Executive Officer of IKON
Office Solutions (office products) from January 1997 to July 1998. Prior to that
time, he was Chairman, President and Chief Executive Officer of Alco Standard
Company, from August 1993 to December 1996. Mr. Stuart, who is 57 years old,
became a director of the Company in 1997. His current term will expire in 2003.
36
<PAGE>
OWNERSHIP OF COMMON STOCK BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth beneficial ownership of shares of Foster
Wheeler Corporation common stock by each director, by each executive officer
named in the Summary Compensation Table on page , and by all directors and
executive officers as a group, as of March 1, 2001. These shares represent in
the aggregate less than one percent of the outstanding shares.
<TABLE>
<CAPTION>
CURRENT
BENEFICIAL SHARES SUBJECT TO
NAME HOLDINGS(1) OPTIONS(2) STOCK UNITS(3) TOTAL
---- ----------- ----------------- -------------- ---------
<S> <C> <C> <C> <C>
Eugene D. Atkinson........................
Louis E. Azzato...........................
Henry E. Bartoli..........................
John C. Blythe............................
John P. Clancey...........................
David J. Farris...........................
E. James Ferland..........................
Martha Clark Goss.........................
Constance J. Horner.......................
Joseph J. Melone..........................
Thomas R. O'Brien.........................
Gilles A. Renaud..........................
John E. Stuart............................
Richard J. Swift..........................
All directors and executive officers as a
group (17 persons)......................
</TABLE>
------------------------
(1) The number of shares shown includes shares that are individually or jointly
owned, as well as shares over which the individual has either sole or shared
investment or voting authority. shares owned by the officers of the
Company have restrictions on the sale of such shares.
(2) Represents shares that may be acquired currently or within 60 days after
March 1, 2001 through the exercise of stock options pursuant to the
Company's 1984 Stock Option Plan, the 1995 Stock Option Plan and/or The
Directors' Stock Option Plan.
(3) Represents share units held under the Foster Wheeler Corporation Directors
Deferred Compensation and Stock Award Plan for non-employee directors
(referred to below under the caption "Compensation of Directors"). Only
non-employee directors are eligible to participate in the Foster Wheeler
Corporation Directors Deferred Compensation and Stock Award Plan.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
SECTION 16A BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and any persons who own more than 10% of the
Company's stock, to file reports of holdings and transactions in Foster Wheeler
Corporation stock with the SEC and the New York Stock Exchange. Based on our
records and other information, we believe that in 2000 our directors and
executive officers met all applicable SEC filing requirements.
37
<PAGE>
CERTAIN BENEFICIAL OWNERS
Foster Wheeler Corporation has been advised that as of December 31, 2000,
the following entities are beneficial owners of more than five percent of the
outstanding common stock of Foster Wheeler Corporation.
[Information to come]
COMPENSATION OF DIRECTORS
meetings of the board of directors were held during the last
fiscal year. Each director attended % or more of the total number of meetings
of the board and the Board Committees on which he or she served. Directors who
are employees of Foster Wheeler Corporation received no additional compensation
for their services as directors. Non-employee directors receive an annual
retainer of $26,000 and an annual deferred award of 300 share units in
accordance with the Foster Wheeler Corporation Directors Deferred Compensation
and Stock Award Plan (the "Director Deferral Plan") as set forth below. Each
non-employee director receive $1,200 for each board meeting attended. In
addition, each non-employee director receives $1,200 for each meeting of a
committee of the board attended; the Committee Chairman receives $2,000 for each
such meeting.
Under the Director Deferral Plan, each non-employee director receives a one
time deferred award of 1,000 share units of the Company's common stock upon
commencement of his or her board term and is credited annually with units
representing 300 shares of the Company's common stock, such credit being made to
an account maintained for each non-employee director (a "Deferred Compensation
Account"). The Director Deferral Plan also permits non-employee directors to
defer all or a portion of the retainer and meeting fees to which they are
entitled. The Company makes a supplemental contribution equal to 15% of the
retainer and meeting fees which are deferred and all such amounts are credited
to the director's Deferred Compensation Account. Each director is fully vested
in amounts credited to the director's Deferred Compensation Account, except that
the one time deferred award shall not vest until cessation of service on the
board (i.e., retirement or death) and the annual award shall vest upon cessation
from the board or the one-year anniversary of the award. The share units in the
Deferred Compensation Account or the equivalent cash amount, at the director's
option, are delivered to the director upon retirement or cessation of service on
the board for good cause.
In addition, under the Deferred Compensation Plan for Directors,
non-employee directors are permitted to defer all or part of their retainer or
board and Committee fees until their retirement or other termination of status
as a director. Deferred amounts accrue interest at an annual rate equal to the
rate charged by First Union National Bank for prime commercial loans of 90-day
maturity.
Under The Directors' Stock Option Plan, as amended, which was previously
approved by the shareholders, each director who is not an employee of the
Company or one of its subsidiaries receives, following the Annual Meeting each
year, a nonqualified option to purchase 3,000 shares of the Company's common
stock. Such options have ten-year terms and become exercisable beginning one
year after the date of grant at an option exercise price equal to the fair
market value of the shares on the date of grant.
Effective , 2000, for a term of one year, the Company has
obtained insurance policies through National Union Fire Insurance Company of
Pittsburgh, Pennsylvania and Continental Casualty Corporation in respect of
indemnification of directors and officers. The scope of these policies is
similar to coverage under prior policies held by the Company. The annual premium
for this coverage is $ .
38
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Plan (the "Plan") for executives of the Company
was approved and adopted by the Compensation Committee (the "Committee") and the
board of directors. The Plan is intended to meet two primary objectives: to
attract and retain highly qualified executives to manage the Company's business
and to reward those executives if their performance and the Company's results so
warrant. The Committee, subject to review by the board, is responsible for the
implementation and administration of all aspects of the Plan. Any payments made
under this Plan are ultimately at the discretion of the board. The Committee has
considered the effects of certain provisions of the federal income tax laws
relative to the deductibility of compensation to executive officers exceeding
$1 million. The Committee has determined that there is no material impact on the
Company at this time as a result of these provisions.
BASE SALARY
The first component of each executive's compensation is base salary. As part
of its consideration relative to salary, the Committee reviews data for
executives in similar positions in comparable companies as provided by an
independent consultant and by the Company's staff, and in consultation with the
Chief Executive officer establishes a salary range for each executive.
Comparable companies are those of similar size as well as those providing
similar services and products to similar markets and customers. The Chief
Executive Officer then proposes to the Committee a specific salary, within that
range, for each executive. The Committee considers that proposal, and then
recommends a salary for each executive to the board for its consideration and
approval. The Committee similarly recommends a salary within the appropriate
range for the Chief Executive Officer, but without the participation of the
Chief Executive Officer. In determining such salaries, the performance of each
such executive, his or her experience and the performance of the business unit
for which he or she is responsible, as well as performance of the Company as a
whole, are all taken into account. The Company does not have a policy to
predetermine specific compensation relative to the compensation paid by other
companies. Actual salaries of the Chief Executive Officer and other officers
were neither the highest nor lowest of salaries paid to officers of comparable
companies.
ANNUAL INCENTIVE
The second component of each executive's compensation is an annual incentive
payment. At the beginning of each year, corporate and business-unit earnings
targets are formulated by the Chief Executive Officer, then reviewed by the
Committee and, as proposed or modified, are recommended to the board for its
consideration and approval. The actual incentive payment is solely determined by
measurement of actual performance of the Company and each business unit against
the established targets. This payment can range from zero to 93.75 percent of
annual salary in the case of the Chief Executive Officer and from zero to
60 percent of annual salary in the case of other officers depending upon the
extent to which earnings targets are missed, achieved, or exceeded.
LONG-TERM INCENTIVES
The Plan also provides for long-term incentives comprised of long-term
performance units and stock options. Under the Plan, each executive is assigned
long-term performance units which are valued and payable at the end of a
three-year period. The value of a long-term unit is performance-based and is
determined by the growth in earnings and return on equity during the three-year
period. The number of performance units were determined in a manner such that
certain growth in earnings and returns on equity would result in an incentive
payment to the executives which together with salary and annual incentives would
provide competitive total compensation. The actual payout is determined by the
39
<PAGE>
achievement of considerable earnings growth combined with a reasonable return on
equity over a three-year cycle.
The Plan also provides for long-term incentives to executives in the form of
annual grants of stock options. Such options are granted at the per-share market
price of the Company's stock on the date of the award, vest in installments over
a three-year period and only become valuable if the market price of the
Company's stock increases.
As outlined above, pursuant to the Plan, the 2000 base salary for Mr. Swift
was determined by the Committee within a range of salaries paid to chief
executive officers of comparable companies, based on data provided by an
independent consultant and by the Company's staff, and then recommended to the
board for its consideration and approval. In accordance with the Plan, the
Committee recommended, and the board approved, a stock option grant to
Mr. Swift of 50,000 shares at the market price on July 25, 2000 which vests in
installments over a three-year period. In addition, the Committee recommended,
and the board approved, a Performance Stock Option grant to Mr. Swift of 60,000
shares at a price of $10.00 per share which cannot be exercised until certain
performance criteria are met. The terms of the Performance Stock Option grant
are described under the section entitled "Options Granted".
COMPENSATION COMMITTEE:
<TABLE>
<S> <C>
Joseph J. Melone, Chairman
Eugene D. Atkinson Martha Clark Goss
David J. Farris John E. Stuart
</TABLE>
INCENTIVE PLANS
As part of the long-term incentive portion of the Company's Executive
Compensation Plan, "performance units", which may pay out in cash upon
completion of a three-year cycle, are awarded annually to Corporate Officers.
The following table sets forth awards in 2000 to the named individuals, along
with the assumed values of the awards at the end of the three-year Plan cycle.
The ultimate value of the award will be based upon the Company's earnings growth
rate and return on equity. For a discussion of award criteria see the Long-Term
Incentives section of the "Compensation of Executive Officers Report of the
Executive Compensation Committee" which appears earlier in this proxy
statement/prospectus.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS
NUMBER OF SHARES, PERFORMANCE OR OTHER -------------------------------
UNITS OR OTHER PERIOD UNTIL THRESHOLD TARGET MAXIMUM
RIGHTS (#) MATURATION OR PAYMENT ($) ($) ($)
----------------- --------------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
R.J. Swift.................. 335 3 Years 0 $335,000 $670,000
G.A. Renaud................. 150 3 Years 0 $150,000 $300,000
H.E. Bartoli................ 150 3 Years 0 $150,000 $300,000
J.C. Blythe................. 150 3 Years 0 $150,000 $300,000
T.R. O'Brien................ 150 3 Years 0 $150,000 $300,000
</TABLE>
40
<PAGE>
AUDIT COMMITTEE REPORT
The Foster Wheeler Corporation Audit Committee ("Audit Committee") consists
of four directors, all of whom have no relationship to the Corporation that may
interfere with the exercise of their independence from management and the
Corporation. None of the Audit Committee members are former employees of the
Corporation or has a business relationship with the Corporation, or is a
partner, controlling shareholder or executive officer of an entity that has a
business relationship with the Corporation. In addition, there is no Audit
Committee member who is employed as an executive of another company where any of
the Corporation's executives serves on that company's compensation committee. No
member of the Audit Committee is an immediate family member of an individual who
is an executive officer of the Corporation or any of its affiliates.
Each member of the Audit Committee is financially literate, in accordance
with the qualifications set forth by the Corporation's board of directors in its
business judgment. In addition, at least one member of the Audit Committee has
accounting or related financial management expertise, as the board of directors
interprets this qualification in its business judgment.
The board of directors has adopted a written Charter for the Audit Committee
which is attached as an appendix to this proxy statement/prospectus. The Charter
sets forth the authority and responsibilities of the Audit Committee. In
connection with those responsibilities, the Audit Committee has taken the
following actions:
(1) reviewed and discussed the consolidated audited financial statements
with management and the independent auditors;
(2) discussed with the independent auditors, PricewaterhouseCoopers
("PwC"), the matters required to be discussed by Statement on Auditing
Standards No. 61 (Communication with Audit Committees);
(3) received the written disclosures and the letter from PwC required by
the Independence Standards Board Standard No. 1, (Independence Discussions
with Audit Committees) and has discussed with PwC its independence from the
Corporation and its management;
(4) discussed with the Corporation's internal and independent auditors,
PwC, the overall scope and plans of their respective audits. The Committee
meets with the internal and independent auditors, with and without
management present, to discuss the results of their examinations, the
evaluations of the Corporation's internal controls and the overall quality
of the Corporation's financial reporting;
(5) recommended, based on the reviews and discussions referred to above,
to the board of directors, and the board has approved, that the audited
financial statements be included in the Corporation's Annual Report on
Form 10-K for the year ended December 29, 2000, for filing with the
Securities and Exchange Commission. The Committee and the board also have
recommended, subject to shareholder approval, the selection of the
Corporation's independent auditors.
THE AUDIT COMMITTEE:
John E. Stuart, Chairman
John P. Clancey
David J. Farris
Joseph J. Melone
COMMITTEES OF THE BOARD
The board of directors of the Company has established standing committees to
consider various matters and to make recommendations to the full board as to
proposed courses of action for the board.
41
<PAGE>
Among the standing committees that have been established are the Audit
Committee, the Committee on Nominees for Directors and Officers, the
Compensation Committee and the Finance Committee.
The members of the Audit Committee are Mr. John E. Stuart, Chairman;
Mr. John P. Clancey, Mr. David J. Farris, and Mr. Joseph J. Melone. During
fiscal 2000, this Committee held meetings. The functions of this Committee are
to review management's recommendations for the engagement or discharge of
independent accountants; to review and monitor the progress of the audit plans
prepared by the independent accountants and internal auditors; to review
compliance with Company policies; to annually review the status of any
significant litigation; to review with the independent accountants the results
of the audit, the Company's financial statements and the Company's system of
internal accounting control; to review fees of the independent accountants; to
review with management and the outside auditors the Company's annual and
quarterly financial statements and any material changes in accounting principles
or practices used in preparing the statements prior to the filing of a report on
Forms 10-K or 10-Q with the Securities and Exchange Commission. This review
includes the items required by SAS 61 as in effect at that time in the case of
the quarterly statements; to receive from the outside auditors the report
required by Independence Standards Board No. I as in effect at that time and
discuss it with the outside auditors; and to prepare a report each year
concerning compliance with its charter for inclusion in the Company's annual
proxy statement.
The Compensation Committee consists of Mr. Joseph J. Melone, Chairman;
Mr. Eugene D. Atkinson, Mr. David J. Farris, Ms. Martha Clark Goss and Mr. John
E. Stuart. During fiscal 2000, this Committee held meetings. The functions of
this Committee are to recommend to the board compensation arrangements for
directors and executive officers, including approving specific benefits under
such arrangements, to administer certain benefit plans for directors and
officers and to review employee pension and welfare programs.
Following are the members of the Finance Committee: Mr. E. James Ferland,
Chairman; Mr. Eugene D. Atkinson, Mr. Louis E. Azzato, Ms. Martha Clark Goss and
Ms. Constance J. Horner. meetings of this Committee were held during
fiscal 2000. This Committee reviews a range of financial policies and plans
including the consolidated financial results of the Corporation, the dividend
policy, proposed securities issuances, and financial risk management policies
and practices. The Committee also oversees pension plan investments and
periodically reviews investor relations activities.
The members of the Committee on Nominees for Directors and Officers are
Mr. David J. Farris, Chairman; Mr. Eugene D. Atkinson, Mr. E. James Ferland,
Ms. Constance J. Horner and Mr. Joseph J. Melone. During fiscal 2000, this
Committee held meetings. The functions of this Committee are to recommend
to the board the nominees for election as directors and officers, and to
consider performance of incumbent directors and officers to determine whether to
nominate them for re-election. The Committee will consider director nominees
recommended by shareholders in accordance with the procedure set forth in this
proxy statement/prospectus under the caption "Proposals of Shareholders."
42
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth information showing compensation paid or
accrued by the Company and its subsidiaries during each of the Company's last
three fiscal years for the Chief Executive Officer ("CEO") and the four other
most highly compensated executive officers of the Company.
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG-TERM COMPENSATION
------------------- ------------------------------------
AWARDS PAYOUTS
----------------------- ----------
SECURITIES LONG-
RESTRICTED UNDERLYING TERM ALL OTHER
NAME AND PRINCIPAL SALARY BONUS STOCK OPTIONS/ INCENTIVE COMPENSATION
POSITION YEAR ($) ($) AWARDS(1) SARS(#) PAYOUTS($) ($)(6)
------------------ -------- -------- -------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard J. Swift....................... 2000
Chairman, President & 1999 $775,000 $ 0 $ 0 50,000 $ 0 $ 4,800
CEO 1998 $725,000 $ 0 421,283 50,000 $ 0 $ 4,800
Gilles A. Renaud Senior Vice President 2000 (2) 111,486
& CFO
Henry E. Bartoli....................... 2000
Senior Vice 1999 $350,000 $ 0 $ 0 25,000 $ 0 $ 4,800
President 1998 $330,000 $ 0 $85,000 25,000 $133,807 $ 4,800
John C. Blythe......................... 2000
Senior Vice 1999 $340,000 $150,000(3) $50,000(3) 25,000 $ 0 $ 0
President 1998 $287,500 $192,000(4) $48,000 17,000 $ 0 $46,000(5)
Thomas R. O'Brien...................... 2000
General Counsel & 1999 $312,000 $ 0 $ 0 15,000 $ 0 $ 4,800
Senior Vice President 1998 $300,000 $ 0 $10,000 15,000 $181,400 $ 4,800
</TABLE>
------------------------------
(1) The amounts reported in the table represent the market value at the dates of
grant, without giving effect to the diminution in value attributable to the
restrictions on said stock. As of December 31, 2000, the aggregate number
and market values (based on the closing stock price on December 31, 2000) of
restricted stock held by the above individuals are as follows:
(i) Mr. Swift: shares with a value of $ ; (ii) Mr. Renaud:
shares with a value of $ ; (iii) Mr. Bartoli: shares with a value
of $ ; (iv) Mr. Blythe: shares with a value of $ ; and
(v) Mr. O'Brien: shares with a value of $ . Dividends are paid on
restricted stock.
(2) Mr. Renaud became an executive officer of the Company on March 27, 2000.
(3) Mr. Blythe was formerly the President and Chief Executive Officer of Foster
Wheeler Limited (U.K.) and became an executive officer of the Company
effective as of July 1, 1998. The bonus paid to Mr. Blythe was a transition
bonus in connection with his former position in the United Kingdom.
(4) The bonus paid to Mr. Blythe in 1998 included a bonus earned in his position
as President and Chief Executive Officer of Foster Wheeler Limited (U.K.).
(5) In October, 1998, the Company made a four-year interest-free loan to
Mr. Blythe in the amount of $144,600 to assist him with unreimbursed
relocation expenses. The interest for the term of the loan using the current
market interest rate would be approximately $46,000.
(6) Company match on employee 401(k) contribution.
OPTIONS GRANTED
Following is a table dealing with stock option grants which were made to the
named individuals during the last completed fiscal year. The options were
granted pursuant to the terms of the Company's Executive Compensation Plan and
the 1995 Stock Option Plan, as amended, (the "1995 Stock Option Plan"), which
provides that ten-year term options are to be awarded at market value on the
date of the award. One-third of the options become exercisable after one year,
two-thirds after two years and all of
43
<PAGE>
the options are exercisable after three years. Mr. Renaud's options however, are
all exercisable after one year.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANT DATE
UNDERLYING GRANTED TO EXERCISE OR PRESENT
OPTIONS EMPLOYEES BASE PRICE EXPIRATION VALUE(1)
NAME GRANTED(#) IN FISCAL YEAR ($/SHARE) DATE ($)
---- ---------- -------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
R.J. Swift.......................... 50,000 % $8.15625 7/25/10 $
G.A. Renaud......................... 111,486 % $ 6.375 3/27/10 $
H.E. Bartoli........................ 25,000 % $ 9.00 1/3/10 $
J.C. Blythe......................... 25,000 % $ 9.00 1/3/10 $
T.R. O'Brien........................ 15,000 % $ 9.00 1/3/10 $
</TABLE>
------------------------
(1) [Present Value calculation to be added]
PERFORMANCE STOCK OPTIONS
The following table sets forth Performance Stock Option grants which were
made to the named individuals during the last completed fiscal year. The options
were recommended and approved by the Compensation Committee and the board of
directors. The options become exercisable after one year if the market price of
Foster Wheeler Corporation common stock reaches $20.00 per share for three
consecutive trading days from the date of the award to December 31, 2001 and the
earnings per share reaches $1.23 for the 2001 fiscal year. If the forgoing
criteria is not met, the options become exercisable nine years and six months
after the date of the award.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANT DATE
UNDERLYING GRANTED TO EXERCISE OR PRESENT
OPTIONS EMPLOYEES BASE PRICE EXPIRATION VALUE(1)
NAME GRANTED(#) IN FISCAL YEAR ($/SHARE) DATE ($)
---- ---------- -------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
R.J. Swift.......................... 60,000 % $ 10.00 7/25/10 $
H.E. Bartoli........................ 35,000 % $ 10.00 2/29/10 $
J.C. Blythe......................... 50,000 % $ 10.00 2/29/10 $
T.R. O'Brien........................ 15,000 % $ 10.00 2/29/10 $
</TABLE>
------------------------
(1) [Present Value calculation to be added]
AGGREGATE OPTIONS EXERCISES
The following table sets forth, for the named individuals, the number of
shares of Foster Wheeler Corporation common stock acquired upon option exercise
during 2000, the value realized (spread between the market price on the date of
exercise and the option price) as a result of such option
44
<PAGE>
exercises, and the number and value of unexercised options (both exercisable and
unexercisable) as of December 31, 2000.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-
UNEXERCISED OPTIONS MONEY OPTIONS AT
SHARES AT FY-END (#) FY-END ($)
ACQUIRED ON -------------------- --------------------
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ----------- -------------------- --------------------
<S> <C> <C> <C> <C>
R.J. Swift.......................... 0 0 $0/$0
G.A. Renaud......................... 0 0 $0/$0
H.E. Bartoli........................ 0 0 $0/$0
J.C. Blythe......................... 0 0 $0/$0
T.R. O'Brien........................ 0 0 $0/$0
</TABLE>
DEFINED BENEFIT PLANS
The following table illustrates annual retirement benefits under the
Company's regular and supplementary pension plans but not including the 401(k)
Plan for executive officers based on the average annual compensation and service
shown.
[Table to be inserted]
YEARS OF PENSION CREDITED SERVICE AFTER APRIL 1, 1976
For service after April 1, 1976, the retirement benefit is based on average
annual compensation (which would include amounts in the "Salary," "Bonus" and
"Long-Term Incentive Payouts" columns in the Summary Compensation Table which
appears earlier in this proxy statement/prospectus) during the five highest
years in the last ten years of employment. The Company's pension is solely
noncontributory. The benefits in the foregoing table are computed as a straight
life annuity payable at normal retirement age and are subject to deduction for
(a) the annuity equivalent of the Company provided accumulated contributions
under the Company's 401(k) Plan, and (b) one-half of the Supplemental Employee
Retirement Plan ("SERP") participant's age 65. The credited years of service
after April 1, 1976, (limited to a maximum of 30 years) assuming retirement at
the normal retirement age of 65 for those individuals named in the Summary
Compensation Table are as follows: R.J. Swift--30 years; G.A. Renaud-- years;
H.E. Bartoli--18 1/2 years and T.R. O'Brien--10 years. J.C. Blythe is not a
participant in the current pension plan.
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The following line graph compares the five-year cumulative total stockholder
return of (i) Foster Wheeler Corporation common stock, (ii) the S&P 500 Index,
and (iii) an industry peer group index that consists of several companies (the
"Peer Group") (1).
In the preparation of the line graph, the following assumptions have been
used: (i) $100 was invested on December 29, 1995 in Foster Wheeler Corporation
common stock, the S&P 500 Index, and the Peer Group, (ii) dividends were
reinvested, and (iii) the investment is weighted on the basis of market
capitalization.
45
<PAGE>
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
YEARS ENDING
------------
DEC. 95 DEC. 96 DEC. 97 DEC. 98 DEC. 99 DEC. 2000
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Foster Wheeler Corporation.............. 100.00
S&P 500 Index........................... 100.00
Peer Group (1).......................... 100.00
</TABLE>
------------------------
(1) The following companies comprise the Peer Group: Fluor Corporation, Foster
Wheeler Corporation, Jacobs Engineering Group Inc., Washington Group
International Inc. (formerly Morrison Knudsen) and McDermott
International, Inc. This group consists of companies that were compiled by
Foster Wheeler Corporation in 1996 and have been used in the line graph
since that time.
CHANGE OF CONTROL ARRANGEMENTS
On September 26, 1995, the board of directors authorized Foster Wheeler
Corporation to enter into change of control employment agreements (the
"Agreements") with its top executive officers, which includes the officers
listed in the preceding tables and three other individuals (the "Executives").
The Agreements provide that if, within three years of a "change of control", as
defined in the Agreements, Foster Wheeler Corporation terminates an Executive's
employment other than for "cause" (defined as failure to perform the Executive's
duties or engaging in illegal or gross misconduct) or disability or if the
Executive terminates employment for "good reason," (defined as diminution of
duties or responsibilities, Foster Wheeler Corporation's failure to compensate
the Executive, a change in workplace, Foster Wheeler Corporation's purported
termination of the Agreements or failure to comply with the Agreements), the
Executive will be entitled to receive a lump sum cash payment of the following
amounts: (a) the Executive's base salary through the date of termination, plus
(b) a proportionate annual bonus, plus (c) three times the sum of the
Executive's base salary, the highest annual bonus and the highest long-term
bonus for any of the most recent three cycles completed before the change of
control, plus (d) unpaid deferred compensation and vacation pay. The Agreements
also provide for a five-year continuation of certain employee welfare benefits
and a lump sum payment equal to the actuarial value of the service credit under
Foster Wheeler Corporation's qualified and supplemental retirement plans the
Executive would have received if the Executive had remained employed for three
years after the date of the Executive's termination. Foster Wheeler Corporation
will also provide the Executive with outplacement services. Finally, the
Executive may tender restricted stock (whether vested or not) in exchange for
cash. However, if any payments to the Executive, whether under the Agreements or
otherwise, would be subject to the "golden parachute" excise tax under
Section 4999 of the Internal Revenue Code of 1986, as amended, Foster Wheeler
Corporation will make an additional payment to put the Executive in the same
after-tax position as if no excise tax had been imposed. Any legal fees and
expenses arising in connection with any dispute under the Agreements will be
paid by Foster Wheeler Corporation.
In addition to the Agreements, there are other contracts and arrangements
whereunder the Executives listed in the foregoing tables will receive payments
from Foster Wheeler Corporation in the event of a change of control. Under the
Executive Compensation Plan, which is discussed in detail in the Compensation
Committee Report on Executive Compensation set forth in this proxy statement/
prospectus, individual participant accruals are paid to the participants within
ten days after a change of control. This Plan also provides that transfer
restrictions on Foster Wheeler Corporation common stock received by an
Executive, at the Executive's option in lieu of a cash incentive payment, lift
upon a change of control. "Units" (limited stock appreciation rights) which may
have been granted under the 1984 Stock Option Plan of Foster Wheeler Corporation
become exercisable upon a change in control.
46
<PAGE>
Under the 1995 Stock Option Plan of Foster Wheeler Corporation, the Executive
has the right to surrender his or her option to Foster Wheeler Corporation and
receive, in cash, the difference between the fair market value of the shares
covered by the option and the exercise price of the option. The Management
Incentive Life Insurance Program ("Incentive Program") and the Supplemental
Employee Retirement Plan ("SERP") are annuity contracts between the Company and
employees that contain change of control provisions. If a participant in the
Incentive Program is terminated within three years after a change of control,
the participant may continue in the program until the latter of (i) three years
from such termination date; or (ii) attainment of age 56. A participant in the
SERP receives the equivalent actuarial value of his or her benefit immediately
upon a change of control.
The 1984 Stock Option Plan and the Incentive Program have been amended so
that the Reorganization will not be a "change of control" as defined in that
plan or program. The Agreements, Incentive Program, SERP, Executive Compensation
Plan and outstanding options and awards under the 1995 Stock Option Plan, 1984
Stock Option Plan and Foster Wheeler Corporation Executive Stock Ownership Plan
have been amended to provide that they will continue to apply on the same terms
for the Executive's employment with Foster Wheeler Ltd. and/or its subsidiaries.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors served on the Compensation Committee during the last
fiscal year: Messrs. Joseph J. Melone, Chairman; Eugene D. Atkinson, David J.
Farris, John E. Stuart and Ms. Martha Clark Goss. None of the members of the
Compensation Committee are former or current officers or employees of Foster
Wheeler Corporation.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The board of directors, in accordance with the recommendation of its Audit
Committee, has appointed PricewaterhouseCoopers LLP to audit the consolidated
financial statements of Foster Wheeler Corporation for the fiscal year ending
December 28, 2001, subject to ratification by the stockholders.
PricewaterhouseCoopers LLP has been acting as independent accountants for Foster
Wheeler Corporation and its subsidiaries since 1977. A representative of
PricewaterhouseCoopers LLP will attend the Annual Meeting and will be available
to respond to appropriate questions and to make a statement if he/she so
desires.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF INDEPENDENT ACCOUNTANTS.
EXPERTS
The financial statements incorporated by reference in this registration
statement and by reference to the Annual Report on Form 10-K for the year ended
December 29, 1999 have been so incorporated in reliance of the report by
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with the Foster Wheeler Ltd. common
shares have been passed upon for the Company by its Bermuda counsel, Conyers
Dill & Pearman. Conyers Dill & Pearman has also rendered an opinion regarding
Bermuda tax consequences of the Reorganization referred to in "Income Tax
Considerations". White & Case LLP, New York, New York, has rendered an opinion
regarding the United States federal income tax consequences of the
Reorganization to shareholders referred to in "Income Tax Considerations".
47
<PAGE>
PROPOSALS OF SHAREHOLDERS
Under the by-laws of Foster Wheeler Corporation, shareholders who wish to
nominate persons for election to the board of directors must submit their
nominations to Foster Wheeler Corporation no later than November 21, 2001 to be
considered at the 2002 Annual Meeting of Stockholders. Nominations must include
certain information concerning the nominee and the proponent's ownership of
common stock of Foster Wheeler Corporation. Nominations not meeting these
requirements will not be entertained at the Annual Meeting. The Secretary of
Foster Wheeler Corporation should be contacted in writing at Perryville
Corporate Park, Clinton, New Jersey 08809-4000 to submit a nomination or to
obtain additional information as to the proper form of a nomination.
In addition, any other proposal by a shareholder intended to be presented or
for consideration at the 2002 Annual Meeting of Shareholders must be received by
the Secretary of Foster Wheeler Corporation no later than November 21, 2001, to
be included in the proxy materials relating to that meeting. If timely notice is
not given of a shareholder proposal, then the proxies named on the proxy cards
distributed by Foster Wheeler Corporation for the Annual Meeting may use the
discretionary voting authority granted them by the proxy cards if the proposal
is raised at the meeting, whether or not there is any discussion of the matter
in the proxy statement/prospectus.
The board of directors of Foster Wheeler Corporation is not aware of any
matters that are expected to come before the Annual Meeting other than those
referred to in this proxy statement/ prospectus. If other matters should
properly come before the meeting, the persons named in the proxy intend to vote
the proxies in accordance with their best judgment.
If the Reorganization is approved by the shareholders, Foster
Wheeler Ltd.'s bye-laws will require that shareholders who wish to nominate
persons for election to the board of directors must submit their nominations to
Foster Wheeler Ltd. no later than [November 21, 2001] to be considered at the
2002 Annual Meeting of Shareholders. Nominations must include certain
information concerning the nominee and the proponent's ownership of common
shares of Foster Wheeler Ltd. Nominations not meeting these requirements will
not be entertained at the Annual Meeting. The Secretary of Foster Wheeler Ltd.
can be contacted at the same address listed above for the Secretary of Foster
Wheeler Corporation. Any other shareholder proposals intended to be presented or
for consideration at the 2002 Annual Meeting of Shareholders must also be
received by the Secretary of Foster Wheeler Ltd. no later than [November 21,
2001], to be included in the proxy materials relating to that meeting.
WHERE YOU CAN FIND MORE INFORMATION
Foster Wheeler Ltd. has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-4 (herein, together with
all amendments and exhibits, referred to as the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"). This proxy
statement/prospectus, which constitutes a part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted as permitted by the rules and regulations of
the Commission. For further information, reference is hereby made to the
Registration Statement. Statements made in this proxy statement/ prospectus as
to the contents of any contract, agreement or other document are not necessarily
complete. With respect to each such contract, agreement or other document filed
as an exhibit to the Registration Statement or otherwise filed with the
Commission, reference is made to the copy so filed, and each such statement
shall be deemed qualified in its entirety by such reference.
Foster Wheeler Corporation is, and after the Reorganization, Foster
Wheeler Ltd. will be, subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files and will file reports, proxy and information
statements, and other information with the Commission. Such reports, proxy and
information statements, and other information filed with the Commission, can be
inspected and copied at the public reference facilities
48
<PAGE>
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the Securities and Exchange Commission at 7 World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material also can be
obtained at prescribed rates from the Public Reference Section of the Securities
and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of reports, proxy and information statements and other information
regarding registrants that file electronically (including Foster Wheeler
Corporation) are available on the Commission's Web Site at http://www.sec.gov.
Upon completion of the Reorganization, Foster Wheeler Ltd. common shares
will be traded on the New York Stock Exchange. At the time of commencement of
such trading, Foster Wheeler Corporation common stock will be delisted and will
no longer be registered pursuant to Section 12 of the Exchange Act. At such
time, your shares will have converted into shares of Foster Wheeler Ltd. and
Foster Wheeler Ltd. will be registered pursuant to Section 12 of the Exchange
Act.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Foster Wheeler Corporation with the
Commission pursuant to the Exchange Act are hereby incorporated by reference in
this proxy statement/prospectus:
(1) Annual Report on Form 10-K for the fiscal year ended December 31,
2000 (File No. 1-286-2);
(2) Quarterly Reports on Form 10-Q for the quarterly period ended
March 31, 2001, (File No. );
(3) Current Report on Form 8-K dated and filed on November 29, 2000
(File No. 1-286-2);
(4) The description of the Foster Wheeler Corporation common stock in
the Registration Statement on Form 8-A dated filed on
under Section 12 of the Exchange Act, including any amendment or
report for the purpose of updating such description (Registration No. ).
(5) The description of the Foster Wheeler Corporation Rights to
Purchase Series A Junior Participatory Preferred Stock in the Registration
Statement on Form 8-A dated filed on and the
amendment to such Form 8-A dated filed on under
Section 12 of the Exchange Act (Registration No. ).
Each document filed by Foster Wheeler Corporation pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this proxy statement/prospectus and prior to the date of the annual meeting
shall be deemed to be incorporated by reference in this proxy
statement/prospectus and to be a part of this proxy statement/prospectus from
the date of filing of such document. Any statement contained in this proxy
statement/prospectus or in a document incorporated or deemed to be incorporated
by reference in this proxy statement/prospectus shall be deemed to be modified
or superseded for purposes of the Registration Statement and this proxy
statement/prospectus to the extent that a statement contained in this proxy
statement/prospectus or in any subsequently filed document that also is or is
deemed to be incorporated by reference in this proxy statement/prospectus
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this proxy
statement/prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF THE INCORPORATED
DOCUMENTS (OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY
49
<PAGE>
REFERENCE THEREIN) WILL BE FURNISHED UPON REQUEST WITHOUT CHARGE TO EACH PERSON
TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED. WRITTEN OR TELEPHONE
REQUESTS SHOULD BE DIRECTED TO FOSTER WHEELER CORPORATION, PERRYVILLE CORPORATE
PARK, CLINTON, NEW JERSEY 08809, ATTENTION (TELEPHONE
(908) 730-4000).
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
FOSTER WHEELER LTD. IS PROHIBITED FROM MAKING ANY INVITATION TO THE PUBLIC IN
BERMUDA TO SUBSCRIBE FOR ANY OF ITS SHARES.
Neither delivery of this proxy statement/prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of Foster Wheeler Corporation and Foster
Wheeler Ltd. since the date of this proxy statement/prospectus.
50
<PAGE>
<TABLE>
<S> <C>
ANNEX I AGREEMENT AND PLAN OF MERGER
ANNEX II MEMORANDUM OF ASSOCIATION OF FOSTER WHEELER LTD.
ANNEX BYE-LAWS OF FOSTER WHEELER LTD.
III
ANNEX IV AUDIT COMMITTEE CHARTER
</TABLE>
51
<PAGE>
ANNEX I
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of April , 2001 among Foster Wheeler
Corporation, a New York corporation ("FWC"), Foster Wheeler Ltd., a Bermuda
company ("FW Ltd.") and wholly-owned by FWC, and Foster Wheeler LLC, a Delaware
limited liability company ("Foster Wheeler LLC") and a newly formed, indirect
wholly-owned subsidiary of FW Ltd.
WHEREAS, the respective Boards of Directors of FWC and FW Ltd. and the
Manager of Foster Wheeler LLC deem it advisable and in the best interests of
their respective stockholders and member to reorganize so that FWC will
effectively change its domicile from New York to Bermuda by merging with and
into Foster Wheeler LLC, and having all current shareholders of FWC becoming
shareholders of FW Ltd. by operation of this Agreement and by operation of law
(the "Reorganization");
WHEREAS, the respective Boards of Directors of FWC and FW Ltd. and the
Manager of Foster Wheeler LLC have approved the merger of FWC with and into
Foster Wheeler LLC (the "Merger"), upon the terms and subject to the conditions
set forth in this Agreement, whereby each outstanding share of common stock, par
value $1.00 per share ("FWC Common Stock"), of FWC (other than those shares held
by FWC or any direct or indirect wholly-owned subsidiary of FWC), will be
automatically converted into one common share, par value $1.00 per share ("FW
Ltd. Common Share"), of FW Ltd.;
WHEREAS, Foreign Holdings Ltd., a Bermuda company and wholly-owned
subsidiary of FW Ltd. has, as sole member and Manager of Foster Wheeler LLC,
approved the Merger and FW Ltd. has, as sole stockholder of Foreign Holdings
Ltd., approved the Merger;
WHEREAS, the Merger requires the approval of the holders of two-thirds of
the outstanding shares of FWC Common Stock entitled to vote thereon at the
annual meeting of holders of FWC Common Stock (the "FWC Stockholder Approval");
and
WHEREAS, [40,705,552] FWC Common Stock are outstanding and entitled to vote
at the date of this Agreement and Plan of Merger;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
MERGER
1.1. MERGER
Upon the terms and subject to the conditions set forth in this Agreement,
and in accordance with the Delaware Limited Liability Company Act (the "DLLCA")
and the New York Business Corporation Law (the "NYBCL"), FWC shall be merged
with and into Foster Wheeler LLC at the Effective Time of the Merger (as defined
in Section 1.2). Following the Effective Time of the Merger, the separate
corporate existence of FWC shall cease and Foster Wheeler LLC shall continue as
the surviving entity (the "Surviving Entity") and shall succeed to and assume
all the rights and obligations of FWC in accordance with the DLLCA and the
NYBCL.
1.2. EFFECTIVE TIME
Subject to the provisions of this Agreement, as soon as practicable
following the satisfaction or waiver of the conditions set forth in Section 5.1,
the parties shall duly prepare, execute and file (i) a certificate of merger
(the "NEW YORK CERTIFICATE OF MERGER") in accordance with Section 907 of the
NYBCL with the Department of State of New York, and (ii) a certificate of merger
(the "DELAWARE CERTIFICATE OF MERGER") in accordance with Section 18-209(c) of
the DLLCA and with the Secretary of
I-1
<PAGE>
State of Delaware. The Merger shall become effective upon the filing of both the
New York Certificate of Merger and the Delaware Certificate of Merger (or at
such later time reflected in such Certificate of Merger as shall be agreed to by
Foster Wheeler LLC and FWC). The date and time when the Merger shall become
effective is hereinafter referred to as the "EFFECTIVE TIME."
1.3. EFFECTS OF THE MERGER
(a) GENERAL EFFECTS. The Merger shall have the effects set forth in
Section 906 of the NYBCL and Section 18-209(g) of the DLLCA.
(b) ASSUMPTIONS OF OBLIGATIONS. The Surviving Entity specifically assumes
any obligation of FWC which require that such obligation is specifically assumed
by the Surviving Entity.
ARTICLE II
NAME, CERTIFICATE OF INCORPORATION, BY-LAWS,
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
2.1. NAME OF SURVIVING CORPORATION
The name of the Surviving Entity shall be "Foster Wheeler LLC".
2.2. CERTIFICATE OF FORMATION
The Certificate of Formation of Foster Wheeler LLC, as in effect immediately
prior to the Effective Time, shall, from and after the Effective Time, be the
certificate of formation of the Surviving Entity until thereafter changed or
amended as provided therein or by applicable law.
2.3. OPERATING AGREEMENT
The Operating Agreement of Foster Wheeler LLC as in effect immediately prior
to the Effective Time, shall, from and after the Effective Time, be the
Operating Agreement of the Surviving Entity until thereafter changed or amended
as provided therein or by applicable law.
2.4. MANAGER
The Manager of Foster Wheeler LLC immediately prior to the Effective Time
shall be the Manager of the Surviving Entity, until the earlier of such
Manager's death, resignation or removal in accordance with the Foster Wheeler
LLC Operating Agreement, or as otherwise provided by applicable law.
2.5. OFFICERS
The officers of Foster Wheeler LLC immediately prior to the Effective Time
shall be the officers of the surviving Entity, until the earlier of their death,
resignation or removal in accordance with the Foster Wheeler LLC Operating
Agreement, or as otherwise provided by applicable law.
ARTICLE III
CONVERSION AND EXCHANGE OF STOCK
3.1. CONVERSION
At the Effective Time, by virtue of the Merger and without any action on the
part of the holder of any shares:
(a) FWC COMMON STOCK. Each issued and outstanding share of FWC Common
Stock shall be converted into and become one fully paid and nonassessable FW
Ltd. Common Share.
I-2
<PAGE>
(b) CANCELLATION OF FWC-OWNED STOCK. Each outstanding share of FWC Common
Stock that is owned by FWC or by any direct or indirect wholly-owned subsidiary
of FWC prior to the Effective Time shall automatically be canceled and retired
and shall cease to exist, and no FW Ltd. Common Shares or other consideration
shall be delivered or deliverable in exchange for such shares of FWC Common
Stock.
(c) STOCK OPTION AND AWARD PLANS. FWC Ltd. shall cause its subsidiary
Foster Wheeler US Holdings Inc., a Delaware corporation ("FW US Holdings"), to
assume all the rights and obligations of FWC under the 1984 Stock Option Plan of
FWC, the 1995 Stock Option Plan of FWC, the Director's Stock Option Plan of FWC,
the Executive Compensation Plan, the Directors Deferred Compensation and Stock
Award Plan, the Executive Stock Ownership Plan and any other plan or agreement
providing for the grant or award to employees or directors of options or other
rights to purchase or receive FWC Common Stock or any payment in respect thereof
as each such plan or agreement has been or may be amended to the Effective Time
of the Merger (collectively, the "Plans"). The outstanding options and other
awards assumed by FW US Holdings shall be exercisable or issuable upon the same
terms and conditions as under the Plans and the agreements relating thereto
immediately prior to the Effective Time of the Merger, except that upon the
exercise or issuance of such options or awards, FW Ltd. Common Shares shall be
issuable in lieu of shares of FWC Common Stock. The number of FW Ltd. Common
Shares issuable upon the exercise or issuance of an option or award immediately
after the Effective Time and the option price of each such option or award shall
be the number of shares and option price in effect immediately prior to the
Effective Time. All options or awards issued pursuant to the Plans after the
Effective Time shall entitle the holder thereof to purchase FW Ltd. Common
Shares in accordance with the terms of the Plans.
3.2. EXCHANGE OF STOCK
(d) EXCHANGE PROCEDURES. Following the Effective Time, each holder of an
outstanding certificate or certificates theretofore representing shares of FWC
Common Stock may, but shall not be required to, surrender the same to FW Ltd.
for cancellation or transfer, and each such holder or transferee will be
entitled to receive certificates representing the same number of FW Ltd. Common
Shares as the shares of FWC Common Stock previously represented by the stock
certificates surrendered. If any certificate representing FW Ltd. Common Shares
is to be issued in a name other than that in which the certificate theretofore
representing FWC Common Stock surrendered is registered, it shall be a condition
to such issuance that the certificate surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
issuance shall either: (i) pay FW Ltd. or its agents any taxes or other
governmental charges required by reason of the issuance of certificates
representing FW Ltd. Common Shares in a name other than that of the registered
holder of the certificate so surrendered; or (ii) establish to the satisfaction
of FW Ltd. or its agents that such taxes or governmental charges have been paid.
Until so surrendered or presented for transfer each outstanding certificate
which, prior to the Effective Time, represented FWC Common Stock shall be deemed
and treated for all corporate purposes to represent the ownership of the same
number of FW Ltd. Common Shares as though such surrender or transfer and
exchange had taken place.
(e) NO FURTHER OWNERSHIP RIGHTS IN FWC COMMON STOCK. All FW Ltd. Common
Shares issued upon the surrender for exchange of certificates in accordance with
the terms of this Article III shall be deemed to have been issued (and paid) in
full satisfaction of all rights pertaining to the shares of FWC Common Stock
theretofore represented by such certificates, subject, however, to the Surviving
Entity's obligation (if any) to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have been
declared or made by FWC on such shares of FWC Common Stock in accordance with
the terms of this Agreement or prior to the date of this Agreement and which
remain unpaid at the Effective Time, and there shall be no further registration
of transfers on the stock transfer books of the Surviving Entity of the shares
of FWC Common Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, certificates are presented to the
I-3
<PAGE>
Surviving Entity they shall be canceled and exchanged as provided in this
Article III, except as otherwise provided by law.
ARTICLE IV
EMPLOYEE BENEFIT AND COMPENSATION PLANS
4.1. PLANS.
At the Effective Time, each employee benefit plan and incentive compensation
plan to which FWC is then a party shall be assumed by, and continue to be the
plan of, FW US Holdings. To the extent any employee benefit or incentive
compensation plan of FWC provides for the issuance or purchase of, or otherwise
relates to, FWC Common Stock, after the Effective Time, such plan shall be
deemed to provide for the issuance or purchase of, or otherwise relate to, FW
Ltd. Common Shares.
ARTICLE V
CONDITIONS PRECEDENT
5.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger is subject to
the satisfaction or waiver of the following conditions:
(a) STOCKHOLDER APPROVAL. The FWC Stockholder Approval shall have been
obtained.
(b) FORM S-4. The registration statement on Form S-4 filed with the
Securities and Exchange commission by FW Ltd. in connection with the issuance of
the FW Ltd. Common Shares in the Merger shall have become effective under the
Securities Act of 1933, as amended, and shall not be the subject of any stock
order or proceedings seeking a stop order.
(c) NYSE APPROVAL. The New York Stock Exchange shall have confirmed that
the shares of FW Ltd. may trade on the NYSE and succeed to the ticker symbol
"FWC".
(d) US TAX OPINION. FW Ltd. shall have received an opinion from White &
Case LLP confirming, as of the Effective Time, certain matters discussed under
the heading "Income Tax Considerations--United States Federal Income
Taxation--Receipt of Foster Wheeler Ltd. Common Shares" in the Form S-4 filed by
FW Ltd.
(e) BERMUDA TAX OPINION. FW Ltd. shall have received an opinion from
Conyers Dill & Pearman confirming, as of the Effective Time, the matters
discussed under the heading "Material Tax Considerations--Bermuda Tax
Consequences" in the Form S-4 filed by FW Ltd.
(f) GOVERNMENTAL, REGULATORY AND OTHER CONSENTS. All filings required to
be made prior to the Effective Time of the Merger with, and all consents,
approvals, permits and authorizations required to be obtained prior to the
Effective Time from, any court or governmental or regulatory authority or
agency, domestic or foreign, or other person in connection with the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby will have been made or obtained (as the case may be).
(g) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger or any of the other transactions contemplated hereby
shall be in effect.
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<PAGE>
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.1. TERMINATION
This Agreement may be terminated at any time prior to the Effective Time,
whether before or after approval by the stockholders of FWC of matters presented
in connection with the Merger, by action of the Board of Directors of FWC or of
FW Ltd.
6.2. EFFECT OF TERMINATION
In the event of termination of this Agreement as provided in Section 6.1,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of FWC, Foster Wheeler LLC or FW Ltd., other
than the provisions of this Article VI and Article VII.
6.3. AMENDMENT
This Agreement may be amended by the parties at any time before or after any
required approval of matters presented in connection with the Merger by the
stockholders of FWC PROVIDED, HOWEVER, that after any such approval, there shall
be made no amendment that by law requires further approval by such stockholders
without the further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties.
6.4. WAIVER
At any time prior to the Effective Time, the parties may waive compliance by
the other parties with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.
6.5. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER.
A termination of this Agreement pursuant to Section 6.1, an amendment of
this Agreement pursuant to Section 6.3 or a waiver pursuant to Section 6.4
shall, in order to be effective, require in the case of FWC or FW Ltd., action
by its Board of Directors or in the case of Foster Wheeler LLC, action by its
Manager.
ARTICLE VII
GENERAL PROVISIONS
7.1. NOTICES
All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to FWC
Foster Wheeler Corporation
Perryville Corporate Park
Clinton, New Jersey 08809
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<PAGE>
(b) if to FW Ltd.
Foster Wheeler Ltd.
c/o Conyers Dill & Pearman
Clarendon House
Church Street
P.O. Box HM666
Hamilton HM CX, Bermuda
(c) if to Foster Wheeler LLC:Foster Wheeler LLC
c/o Foster Wheeler Corporation
Perryville Corporate Park
Clinton, New Jersey 08809
7.2. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES
This Agreement (including the documents and instruments referred to herein)
(a) constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and (b) except for the provisions of Article
III, are not intended to confer upon any person other than the parties any
rights or remedies.
7.3. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
IN WITNESS WHEREOF, FWC and Foster Wheeler LLC have caused this Agreement to
be signed in New York, New York, and FW Ltd. has caused this Agreement to be
signed in Hamilton, Bermuda, by their respective officers thereunto duly
authorized, all as of the date first written above.
<TABLE>
<S> <C> <C>
FOSTER WHEELER CORPORATION
By:
-----------------------------------------
Name:
TITLE: CHAIRMAN, CEO & PRESIDENT
FOSTER WHEELER LLC
By:
-----------------------------------------
Name:
TITLE: PRESIDENT
FOSTER WHEELER LTD.
By:
-----------------------------------------
Name:
TITLE: SECRETARY
</TABLE>
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<PAGE>
ANNEX II
[SEAL]
BERMUDA
THE COMPANIES ACT 1981
MEMORANDUM OF ASSOCIATION OF
COMPANY LIMITED BY SHARES
(SECTION 7(1) AND (2))
MEMORANDUM OF ASSOCIATION
OF
FOSTER WHEELER LTD.
(hereinafter referred to as "the Company")
1. The liability of the members of the Company is limited to the amount (if
any) for the time being unpaid on the shares respectively held by them.
2. We, the undersigned, namely,
<TABLE>
<CAPTION>
BERMUDIAN NUMBER OF
NAME ADDRESS (YES/NO) NATIONALITY SUBSCRIBED STATUS
---- ----------------- --------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
2 CHURCH STREET
HAMILTON HM 11
BERMUDA
YES BRITISH ONE
YES BRITISH ONE
</TABLE>
do hereby respectively agree to take such number of shares of the Company as
may be allotted to us respectively by the provisional directors of the
Company, not exceeding the number of shares for which we have respectively
subscribed, and to satisfy such calls as may be made by the directors,
provisional directors or promoters of the Company in respect of the shares
allotted to us respectively.
3. The Company is to be an EXEMPTED Company as defined by the Companies Act
1981.
4. The Company, with the consent of the Minister of Finance, has power to hold
land situated in Bermuda not exceeding in all, including the following
parcels:--
N/A
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<PAGE>
5. The authorised share capital of the Company is US$161,500,000 divided into
shares of US$1.00 each. The minimum subscribed share capital of the Company
is US$12,000.
6. The objects for which the Company is formed and incorporated are--
1. TO ACT AND OR TO PERFORM ALL THE FUNCTIONS OF A HOLDING COMPANY IN ALL
ITS BRANCHES AND TO CO-ORDINATE THE POLICY AND ADMINISTRATION OF ANY
SUBSIDIARY COMPANY OR COMPANIES WHEREVER INCORPORATED OR CARRYING ON
BUSINESS OR OF ANY GROUP OF COMPANIES OF WHICH THE COMPANY OR ANY
SUBSIDIARY COMPANY IS A MEMBER OR WHICH ARE IN ANY MANNER CONTROLLED
DIRECTLY OR INDIRECTLY BY THE COMPANY OR WHICH ARE IN ANY MANNER
CONTROLLED DIRECTLY OR INDIRECTLY BY THE SAME ENTITY IN ANY MANNER
CONTROLLING DIRECTLY OR INDIRECTLY THE COMPANY;
2. TO RAISE OR SECURE THE PAYMENT OF MONEY IN SUCH MANNER AS THE COMPANY
MAY THINK FIT AND FOR THAT PURPOSE TO AUTHORISE, ISSUE, OFFER, SELL AND
DELIVER, COMMON SHARES, PREFERRED SHARES AND OTHER SECURITIES OF THE
COMPANY, NOTES, OR OTHER EVIDENCES AND TO TRANSFER, REDEEM, AND PURCHASE
ANY SUCH SECURITIES, NOTES OR EVIDENCES OF INDEBTEDNESS AS AFORESAID;
3. TO PROVIDE AND OR PROCURE FINANCING AND FINANCIAL INVESTMENT, MANAGEMENT
AND ADVISORY SERVICES AND ADMINISTRATIVE SERVICES TO ANY ENTITY IN WHICH
THE COMPANY OWNS, DIRECTLY OR INDIRECTLY AN EQUITY INTEREST (REGARDLESS
OF WHETHER THE SAME CARRIES ANY VOTING RIGHTS OR PREFERRED RIGHTS OR
RESTRICTIONS); AND, IN CONNECTION WITH ANY OF THE FOREGOING, TO PROVIDE
AND OR PROCURE CREDIT, FINANCIAL ACCOMMODATION, LOANS AND OR ADVANCES
WITH OR WITHOUT INTEREST OR BENEFIT TO THE COMPANY TO ANY SUCH ENTITY AND
TO LEND TO AND OR DEPOSIT WITH ANY FINANCIAL INSTITUTION, FUND AND OR
TRUST, ALL OR ANY PROPERTY OF THE COMPANY AND OR ANY INTEREST THEREIN TO
PROVIDE COLLATERAL FOR LOANS OR OTHER FORMS OF FINANCING PROVIDED TO ANY
SUCH ENTITY;
4. TO ACT AS AN INVESTMENT COMPANY AND FOR THAT PURPOSE TO ACQUIRE AND HOLD
UPON ANY TERMS AND, EITHER IN THE NAME OF THE COMPANY OR THAT OF ANY
NOMINEE, SHARES, STOCK, DEBENTURES, DEBENTURE STOCK, OWNERSHIP INTERESTS,
ANNUITIES, NOTES, MORTGAGES, BONDS, OBLIGATIONS AND SECURITIES, FOREIGN
EXCHANGE, FOREIGN CURRENCY DEPOSITS AND COMMODITIES, ISSUED OR GUARANTEES
BY ANY COMPANY OR PARTNERSHIP WHEREVER INCORPORATED, ESTABLISHED OR
CARRYING ON BUSINESS, OR BY ANY GOVERNMENT, SOVEREIGN, RULER,
COMMISSIONERS, PUBLIC BODY OR AUTHORITY, SUPREME, MUNICIPAL, LOCAL OR
OTHERWISE, BY ORIGINAL SUBSCRIPTION, TENDER, PURCHASE, EXCHANGE,
UNDERWRITING, PARTICIPATION IN SYNDICATES OR IN ANY OTHER MANNER AND
WHETHER OR NOT FULLY PAID UP, AND TO MAKE PAYMENTS THEREON AS CALLED UP
OR IN ADVANCE OF CALLS OR OTHERWISE AND TO SUBSCRIBE FOR THE SAME,
WHETHER CONDITIONALLY OR ABSOLUTELY, AND TO HOLD THE SAME WITH A VIEW TO
INVESTMENT, BUT WITH THE POWER TO VARY ANY INVESTMENTS, AND TO EXERCISE
AND ENFORCE ALL RIGHTS AND POWERS CONFERRED BY OR INCIDENT TO THE
OWNERSHIP THEREOF, AND TO INVEST AND DEAL WITH THE MONEYS OF THE COMPANY
NOT IMMEDIATELY REQUIRED UPON SUCH SECURITIES AND IN SUCH MANNER AS MAY
BE FROM TIME TO TIME DETERMINED;
5. BUYING, SELLING AND DEALING IN GOODS OF ALL KINDS;
6. ACQUIRING BY PURCHASE OR OTHERWISE AND HOLDING AS AN INVESTMENT
INVENTIONS, PATENTS, TRADE MARKS, TRADE NAMES, TRADE SECRETS, DESIGNS AND
THE LIKE;
7. BUYING, SELLING, HIRING, LETTING AND DEALING IN CONVEYANCES OF ANY SORT;
8. TO ACQUIRE BY PURCHASE OR OTHERWISE HOLD, SELL, DISPOSE OF AND DEAL IN
REAL PROPERTY SITUATED OUTSIDE BERMUDA AND IN PERSONAL PROPERTY OF ALL
KINDS WHERESOEVER SITUATED; AND
9. TO ENTER INTO ANY GUARANTEE, CONTRACT OF INDEMNITY OR SURETYSHIP AND TO
ASSURE, SUPPORT OR SECURE WITH OR WITHOUT CONSIDERATION OR BENEFIT THE
PERFORMANCE OF ANY OBLIGATIONS OF ANY PERSON OR PERSONS AND TO GUARANTEE
THE FIDELITY OF INDIVIDUALS FILLING OR ABOUT TO FILL SITUATIONS OF TRUST
OR CONFIDENCE.
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<PAGE>
7. Powers of the Company
1. THE COMPANY SHALL, PURSUANT TO THE SECTION 42 OF THE COMPANIES ACT 1981,
HAVE THE POWER TO ISSUE PREFERENCE SHARES WHICH ARE, AT THE OPTION OF THE
HOLDER, LIABLE TO BE REDEEMED.
2. THE COMPANY SHALL, PURSUANT TO SECTION 42A OF THE COMPANIES ACT 1981,
HAVE THE POWER TO PURCHASE ITS OWN SHARES.
Signed by each subscriber in the presence of at least one witness attesting
the signature thereof
<TABLE>
<S> <C>
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
(SUBSCRIBERS) (WITNESSES)
</TABLE>
SUBSCRIBED this day of , 2000
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<PAGE>
ANNEX III
BYE-L A W S
OF
FOSTER WHEELER LTD.
<PAGE>
<TABLE>
<C> <S> <C>
1. Interpretation.............................................. 14
2. Board of Directors.......................................... 14
3. Management of the Company................................... 14
4. Power to authorise specific actions......................... 14
5. Power to appoint attorney................................... 14
6. Committees; Executive Committee............................. 14
7. Power to appoint and dismiss employees...................... 14
8. Power to borrow and charge property......................... 14
9. Exercise of power to purchase shares of or discontinue the
Company..................................................... 14
10. Nomination of Directors..................................... 14
11. Defects in appointment of Directors......................... 14
12. Alternate Directors......................................... 14
13. Removal of Directors........................................ 14
14. Vacancies on the Board...................................... 14
15. Meetings of the Board....................................... 14
16. Quorum at meetings of the Board............................. 14
17. Meetings of the Board....................................... 14
18. Unanimous written resolutions............................... 14
19. Contracts and disclosure of Directors' interests............ 14
20. Remuneration of Directors................................... 14
21. Officers of the Company..................................... 14
22. Appointment and Authority of Officers....................... 14
23. Duties of Officers.......................................... 14
24. Chairman of meetings........................................ 14
25. Register of Directors and Officers.......................... 14
26. Obligations of Board to keep minutes........................ 14
27. Indemnification of Directors and Officers of the Company.... 14
28. Annual General Meeting...................................... 14
29. Special general meetings.................................... 14
30. Accidental omission of notice of general meeting............ 14
31. Meeting called on requisition of Members.................... 14
32. Short notice................................................ 14
33. Postponement of meetings.................................... 14
34. Quorum for general meeting.................................. 14
35. Adjournment of meetings..................................... 14
36. Attendance at meetings...................................... 14
37. Written resolutions......................................... 14
38. Attendance of Directors..................................... 14
39. Presiding Officer at Meetings............................... 14
40. Voting at meetings.......................................... 14
41. Seniority of joint holders voting........................... 14
42. Instrument of proxy......................................... 14
43. Representation of companies at meetings..................... 14
</TABLE>
III-i
<PAGE>
<TABLE>
<C> <S> <C>
44. Authorized share capital.................................... 14
45. Power to issue shares....................................... 14
46. Variation of rights, alteration of Capital and purchase of
Shares...................................................... 14
47. Registered holder of Shares................................. 14
48. Death of a joint holder..................................... 14
49. Share certificates.......................................... 14
50. Calls on Shares............................................. 14
51. Forfeiture of Shares........................................ 14
52. Contents of Register of Members............................. 14
53. Right of inspection of register............................. 14
54. Transactions with Interested Members........................ 14
55. Record dates................................................ 14
56. Scrutineers................................................. 14
57. Instrument of transfer...................................... 14
58. Restriction on transfer..................................... 14
59. Transfers by joint holders.................................. 14
60. Representative of deceased Member........................... 14
61. Registration on death or bankruptcy......................... 14
62. Dividend Entitlement of Transferee.......................... 14
63. Declaration of dividends by the Board....................... 14
64. Issue of bonus shares....................................... 14
65. Records of account.......................................... 14
66. Fiscal year................................................. 14
67. Financial statements........................................ 14
68. Appointment of Auditor...................................... 14
69. Remuneration of Auditor..................................... 14
70. Vacation of office of Auditor............................... 14
71. Access to books of the Company.............................. 14
72. Report of the Auditor....................................... 14
73. Notices to Members of the Company........................... 14
74. The corporate seal.......................................... 14
75. Manner in which seal is to be affixed....................... 14
76. Winding-up/distribution by liquidator....................... 14
77. Alteration of Bye-laws...................................... 14
</TABLE>
III-ii
<PAGE>
INTERPRETATION
1. INTERPRETATION
(1) In these Bye-laws the following words and expressions shall, where not
inconsistent with the context, have the following meanings respectively:
(a) "Act" means the Companies Act 1981 as amended from time to time;
(b) "Alternate Director" means an alternate director of the Company
appointed in accordance with these Bye-laws;
(c) "Affiliate" means a Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, a specified Person;
(d) "Announcement date", when used in reference to any Business
Combination, means the date of the first public announcement of the final,
definitive proposal for such Business Combination;
(e) "Annual General Meeting" means the Annual General Meeting of the
Members held in accordance with Section 71 of the Act and Bye-law 28;
(f) "Associate", when used to indicate a relationship with any Person,
means (A) any corporation or organization of which such Person is an officer
or partner or is, directly or indirectly, the Beneficial Owner of ten
percent or more of any class of voting shares, (B) any trust or other estate
in which such Person has a substantial beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity, and (C)
any relative or spouse of such Person, or any relative of such spouse, who
has the same home as such Person;
(g) "Auditor" means the auditor of the Company for the time being
appointed under Bye-law 69 and includes any individual or partnership;
(h) "Beneficial owner" means a Person:
(i) that, individually or with or through any of its Affiliates or
Associates, beneficially owns such shares, directly or indirectly; or
(ii) that, individually or with or through any of its Affiliates or
Associates, has (i) the right to acquire such shares (whether such right
is exercisable immediately or only after the passage of time), pursuant
to any agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise; provided, however, that a Person shall
not be deemed the Beneficial Owner of shares tendered pursuant to a
tender or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered shares are accepted for
purchase or exchange; or (ii) the right to vote such shares pursuant to
any agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the Beneficial Owner
of any shares if the agreement, arrangement or understanding to vote such
shares (X) arises solely from a revocable proxy or consent given in
response to a proxy or consent solicitation made in accordance with the
applicable rules and regulations under the Exchange Act and (Y) is not
then reportable on a Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) that has any agreement, arrangement or understanding (whether
or not in writing), for the purpose of acquiring, holding, voting (except
voting pursuant to a revocable proxy or consent as described in item (ii)
of clause (B) of this subparagraph), or disposing of such shares with any
other Person that beneficially owns, or whose Affiliates or Associates
beneficially own, directly or indirectly, such shares;
III-1
<PAGE>
(i) "Board" means the Board of Directors appointed or elected pursuant
to these Bye-laws and acting by resolution in accordance with the Act and
these Bye-laws or the Directors present at a meeting of Directors at which
there is a quorum;
(j) "Business Combination", when used in reference to the Company and
any Interested Member of the Company, means:
(i) any amalgamation or consolidation of the Company or any
Subsidiary of the Company with (i) such Interested Member or (ii) any
other corporation with (i) such Interested Member or (ii) any other
corporation (whether or not itself an Interested Member of the Company)
which is, or after such amalgamation or consolidation would be, an
Affiliate or Associate of such Interested Member;
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with
such Interested Member or any Affiliate or Associate of such Interested
Member of assets of the Company or any Subsidiary of the Company (i)
having an aggregate Market Value equal to ten percent or more of the
aggregate Market Value of all the assets, determined on a consolidated
basis, of the Company, (ii) having an aggregate Market Value equal to ten
percent or more of the aggregate Market Value of all the outstanding
Shares of the Company, or (iii) representing ten percent or more of the
earning power or net income, determined on a consolidated basis, of the
Company;
(iii) the issuance or transfer by the Company or any Subsidiary of
the Company (in one transaction or a series of transactions) of any
Shares of the Company or any shares of a Subsidiary of the Company which
has an aggregate Market Value equal to five percent or more of the
aggregate Market Value of all the outstanding Shares of the Company to
such Interested Member or any Affiliate or Associate of such Interested
Member except pursuant to the exercise of warrants or rights to purchase
Shares offered, or a dividend or distribution paid or made, pro rata to
all Members of the Company;
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Company proposed by, or pursuant to any agreement,
arrangement or understanding (whether or not in writing) with, such
Interested Member or any Affiliate or Associate of such Interested
Member;
(v) any reclassification of securities (including, without
limitation, any shares split, shares dividend, or other distribution of
Shares or capital, or any reverse split of the Shares), or
recapitalization of the Company, or any amalgamation or consolidation of
the Company with any Subsidiary of the Company, or any other transaction
(whether or not with or into or otherwise involving such Interested
Member), proposed by, or pursuant to any agreement, arrangement or
understanding (whether or not in writing) with, such Interested Member or
any Affiliate or Associate of such Interested Member, which has the
effect, directly or indirectly, of increasing the proportionate share of
the outstanding Shares of any class or series of voting Shares or
securities convertible into voting Shares of the Company or any
Subsidiary of the Company which is directly or indirectly owned by such
Interested Member or any Affiliate or Associate of such Interested
Member, except as a result of immaterial changes due to fractional share
adjustments; or
(vi) any receipt by such Interested Member or any Affiliate or
Associate of such Interested Member of the benefit, directly or
indirectly (except proportionately as a Member of the Company) of any
loans, advances, guarantees, pledges or other financial assistance or any
tax credits or other tax advantages provided by or through the Company.
(k) "Bye-laws" means these Bye-laws in their present form or as
supplemented or amended from time to time;
III-2
<PAGE>
(l) "Capital" means the share capital of the Company authorized for
issuance in accordance with the Act from time to time;
(m) "Common Shares" means common shares of Capital;
(n) "Company" means Foster Wheeler Ltd.;
(o) "Consummation date", with respect to any Business Combination, means
the date of consummation of such Business Combination, or, in the case of a
Business Combination as to which a Member vote is taken, the later of the
business day prior to the vote or twenty days prior to the date of
consummation of such Business Combination;
(p) "Control", including the terms "controlling", "controlled by" and
under common control with", means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting shares, by contract, or
otherwise. A Person's beneficial ownership of ten percent or more of a
corporation's outstanding voting shares shall create a presumption that such
Person has control of such corporation. Notwithstanding the foregoing, a
Person shall not be deemed to have control of a corporation if such Person
holds voting shares, in good faith and not for the purpose of circumventing
Section 59 of the Bye-laws, as an agent, bank, broker, nominee, custodian or
trustee for one or more beneficial owners who do not individually or as a
group have control of the Company;
(q) "Designated Stock Exchange" means a stock exchange upon which Shares
are listed or quoted;
(r) "Director" means a director of the Company and shall include an
Alternate Director;
(s) "Exchange Age" means the Act of United States Congress known as the
Securities Exchange Act of 1934, as the same has been or hereafter may be
amended from time to time;
(t) "Executive Committee" means an executive committee of the Board
established pursuant to Bye-law 6;
(u) "Interested Member" means any Person (other than the Company or any
Subsidiary of the Company) that:
(i) A. is the Beneficial Owner, directly or indirectly, of twenty
percent or more of the outstanding voting Shares of the Company; or
B. is an Affiliate or Associate of the Company and at any time
within the five-year period immediately prior to the date in question was
the Beneficial Owner, directly or indirectly, of twenty percent or more
of the then outstanding voting Shares of the Company;
provided that:
(ii) for the purpose of determining whether a Person is an Interested
Member, the number of Shares of voting Shares of the Company deemed to be
outstanding shall include shares deemed to be beneficially owned by the
Person through application of the provisions contained in definition of
"Beneficial Owner" above but shall not include any unissued voting Shares
of the Company which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights,
warrants or options, or otherwise;
(v) "Market Value", when used in reference to shares or property of the
Company, means:
(i) in the case of Shares, the highest closing sale price during the
thirty-day period immediately preceding the date in question of a Share
on the composite tape for New York Stock Exchange-Listed Shares; and
III-3
<PAGE>
(ii) in the case of property other than cash or Shares, the fair
market value of such property on the date in question as determined by
the Board in good faith;
(w) "Member" means the Person registered in the Register of Members as
the holder of Shares and, when two or more Persons are so registered as
joint holders of Shares, means the Person whose name stands first in the
Register of Members as one of such joint holders or all of such Persons as
the context so requires;
(x) "notice" means written notice as further defined in these Bye-laws
unless otherwise specifically stated;
(y) "Officer" means any Person appointed by the Board to hold an office
in the Company pursuant to Bye-law 22;
(z) "Person" means any individual, general or limited partnership,
corporation, association, trust, estate, company (including a limited
liability company) or any other entity or organization including a
government, a political subdivision or agency or instrumentality thereof;
(aa) "Preferred Share" means any class or series of Shares of the
Company which under the Bye-laws are entitled to receive payment of
dividends prior to any payment of dividends on some other class or series of
Share, or is entitled in the event of any voluntary liquidation, dissolution
or winding up of the company to receive payment or distribution of a
preferential amount before any payments or distributions are received by
some other class or series of Shares;
(bb) "Register of Directors and Officers" means the Register of
Directors and Officers referred to in these Bye-laws;
(cc) "Register of Members" means the Register of Members referred to in
these Bye-laws;
(dd) "Registration Office" means, in respect of any class or series of
Shares, such place as the Board may from time to time determine to keep a
branch register of Members in respect of that class or series of Shares and
where (except in cases where the Board otherwise directs) the transfers or
other documents of title for such class or series of Shares are to be
delivered for registration;
(ee) "Resident Representative" means any Person appointed to act as
resident representative of the Company under the Act and includes any deputy
or assistant resident representative;
(ff) "Secretary" means the Person appointed to perform any or all the
duties of secretary of the Company and includes any deputy or assistant
secretary;
(gg) "Shares" means shares in the Capital and includes the Common Shares
or the Preferred Shares of the Company as the case may be;
(hh) "Share Acquisition Date" means the date that a Person first becomes
an Interested Member of the Company;
(ii) "Subsidiary" means any other corporation of which a majority of the
voting shares are owned, directly or indirectly, by the Company;
(2) In these Bye-laws, where not inconsistent with the context:
(a) words denoting the plural number include the singular number and
vice versa;
(b) words denoting a gender include every gender;
(c) the word:
(i) "may" shall be construed as permissive; and
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(ii) "shall" shall be construed as imperative;
(d) expressions referring to writing shall, unless the contrary
intention appears, be construed as including printing, lithography,
photography, facsimile, computer generated and other modes of representing
words or figures in a visible form;
(e) references to any act, ordinance, statute or statutory provision
shall be interpreted as relating to any statutory modification or
re-enactment thereof for the time being in force;
(f) unless otherwise provided herein words or expressions defined in the
Act shall bear the same meaning in these Bye-laws; and
(g) headings used in these Bye-laws are for convenience only and are not
to be used or relied upon in the construction of these Bye-laws.
(3) Any rights or power of the Company under the Act or the Company's
Memorandum of Association or these Bye-laws which is not expressly subject to
approval by the Members in a general meeting shall be exercisable by the Board.
2. BOARD OF DIRECTORS
The business of the Company shall be managed and conducted by the Board.
3. MANAGEMENT OF THE COMPANY
(1) In managing the business of the Company, the Board may exercise all such
powers of the Company as are not, by statute, or by these Bye-laws, required to
be exercised by the Company in general meeting subject, nevertheless, to these
Bye-laws, the provisions of any statute and to such directions as may be
prescribed by the Company in general meeting.
(2) No regulation or alteration to these Bye-laws made by the Company in
general meeting shall invalidate any prior act of the Board which would have
been valid if that regulation or alteration had not been made.
4. POWER TO AUTHORISE SPECIFIC ACTIONS
The Board may from time to time and at any time authorise any company, firm,
Person or body of Persons to act on behalf of the Company for any specific
purpose and in connection therewith to execute any agreement, document or
instrument on behalf of the Company.
5. POWER TO APPOINT ATTORNEY
The Board may from time to time and at any time by power of attorney appoint
any company, firm, Person or body of Persons, whether nominated directly or
indirectly by the Board, to be an attorney of the Company for such purposes and
with such powers, authorities and discretions (not exceeding those vested in or
exercisable by the Board) and for such period and subject to such conditions as
it may think fit and any such power of attorney may contain such provisions for
the protection and convenience of Persons dealing with any such attorney as the
Board may think fit and may also authorise any such attorney to sub-delegate all
or any of the powers, authorities and discretions so vested in the attorney.
Such attorney may, if so authorised under the seal of the Company, execute any
deed or instrument under such attorney's Personal seal with the same effect as
the affixation of the seal of the Company.
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6. COMMITTEES; EXECUTIVE COMMITTEE
(1) The Board, by resolution adopted by a majority of the Board, may
establish an Executive Committee to serve at the pleasure of the Board. Such
Committee shall be comprised of not less than three nor more than seven
Directors as shall be determined by the Board and shall include the Chairman of
the Board and President.
(2) Any vacancy occurring in the Executive Committee, from whatever cause,
may be filled by resolution of a majority of the Board.
(3) Each member of the Executive Committee shall hold office, so long as
such member remains a Director, until a successor for such Director is duly
appointed, or a majority of the Board establishes a new Executive Committee.
(4) During the intervals between meetings of the Board, the Executive
Committee shall have and may exercise all of the powers of the Board, except as
restricted by law, in all cases in which specific directions have not been given
by the Board.
(5) The Executive Committee shall fix its own rules of procedure and meet at
such times and places as the Chairman of the Board may direct. At all meetings
of the Executive Committee, the presence of a majority of its members shall be
necessary to constitute a quorum, and the concurrence or consent of a majority
of the members present shall be necessary for action on any matter.
(6) The Board may from time to time, by resolution passed by a majority of
the entire Board, designate one or more committees of the Board in addition to
the Executive Committee and delegate to any of them such powers and duties, not
inconsistent with law or these Bye-laws, as the Board may determine.
(7) Each committee of the Board shall keep complete, accurate minutes and
records of all actions taken by such committee, prepare such minutes and records
in a timely fashion and promptly distribute all such minutes and records to each
member of the Board at the meeting of the Board next ensuing.
(8) The notice provisions applicable to meetings of the Board described in
Bye-law 15 shall apply to meetings of any committee described in this Bye-law 6.
(9) Each member of the Executive Committee and other committees of the Board
shall be entitled to receive such compensation and expense allowance for
attendance at meetings of their respective committees as the Board from time to
time may fix and determine.
7. POWER TO APPOINT AND DISMISS EMPLOYEES
The Board may appoint, suspend or remove any manager, secretary, clerk,
agent or employee of the Company and may fix their remuneration and determine
their duties.
8. POWER TO BORROW AND CHARGE PROPERTY
The Board may exercise all the powers of the Company to borrow money and to
mortgage or charge its undertaking, property and uncalled Capital, or any part
thereof, and may issue debentures, debenture stock and other securities whether
outright or as security for any debt, liability or obligation of the Company or
any third party.
9. EXERCISE OF POWER TO PURCHASE SHARES OF OR DISCONTINUE THE COMPANY
(1) The Board may exercise all the powers of the Company to purchase all or
any part of the Shares pursuant to Section 42A of the Act and the applicable
rules of any Designated Stock Exchange, provided that, the Board may not
purchase or agree to purchase more than ten percent of the Shares from a Member
for more than the Market Value of such Shares unless such purchase or agreement
to
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<PAGE>
purchase is approved by the affirmative vote of the Board and a majority of the
votes of all outstanding Shares entitled to vote thereon at a meeting of
Members.
(2) The Board may exercise all the powers of the Company to discontinue the
Company to a named country or jurisdiction outside Bermuda pursuant to Section
132G of the Act.
10. NOMINATION OF DIRECTORS
(1) The Board shall consist of not less than nine and not more than twenty
Directors. The number of Directors to be elected at any one time within the
minimum and maximum limitations specified in the preceding sentence shall be
fixed from time to time by the Board pursuant to a resolution adopted by a
majority of the Board then elected. No decrease of the number of Directors to be
elected within such minimum and maximum shall change the term of any office of
any Director in office at the time thereof. If the number of Directors is
increased within such maximum allowed, the additional Director or Directors
shall be elected and shall serve a term of office to expire on the date of the
third successive Annual General Meeting of Members following the date such
additional Director or Directors were elected.
(2) The Directors elected at the , 2001 special meeting of the Members
shall be divided into three classes by the Board following their election at
such meeting, as nearly equal in number as possible, with the term of office of
the first class to expire at the 2002 Annual General Meeting, the term of office
of the second class to expire at the 2003 Annual General Meeting and the term of
office of the third class to expire at the 2004 Annual General Meeting or, in
the case of each class, upon their office being otherwise vacated.
(3) At each Annual General Meeting following the initial election and
classification of the Board in 2001, directors elected to succeed those
directors whose terms expire shall be elected for a term of office to expire at
the third succeeding Annual General Meeting after their election.
(4) Directors elected to the Board of Directors after July 1, 1995 must
retire from the Board before reaching the age of 70. Directors elected before
such date shall not serve as a Director once attaining the age of 72.
(5) Each Director shall be the owner of at least 100 Common Shares at the
time of the Director's election to the Board and at least 1000 Common Shares by
the third anniversary of such election.
(6) Only individuals who are nominated in accordance with the following
procedures shall be eligible for election as Directors and no individual shall
be elected as a Director unless nominated in accordance with these procedures:
(a) The Committee on Nominees for Directors and Officers(1) shall
recommend to the Board, in writing, individuals to be nominated for election
as Directors.
(b) The Board shall thereafter by resolution adopted at least 20 days
before the Annual General Meeting select nominees for election as Directors.
Such resolution shall be reflected in the minutes of the Board as of the
date of its adoption.
(c) Nominations of individuals for election to the Board at the Annual
General Meeting may be made by any Member entitled to vote for the election
of Directors at the Annual General Meeting who complies with the following
notice procedures. A Member's notice to nominate an individual for election
as a Director shall be received by the Secretary at the Company's principal
executive offices not less than 120 calendar days in advance of the
Company's proxy statement released to Members in connection with the
previous year's annual meeting of Members. Such Member's notice shall set
forth (a) as to each individual whom the Member proposes to nominate for
election or re-election as a Director, (i) the name, age, business address
and residence address of such individual, (ii) the principal occupation or
employment of such individual, (iii) the class
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<PAGE>
and number of shares of the Company which are beneficially owned by such
individual and (iv) any other information relating to such individual that
is required to be disclosed in solicitations of proxies with respect to
nominees for election as Directors, pursuant to Regulation 14A under the
Exchange Act (including without limitation such individual's written consent
to being named as a nominee in the Company's proxy statement delivered to
Members in connection with the Annual General Meeting at which the
individual is to be nominated and to serving as Director, if elected); and
(b) as to the Member giving the notice (i) the name and address, as they
appear on the books of the Company, of such Member, (ii) the class and
number of Shares which are beneficially owned by such Member, and (iii) the
period of time such Shares have been owned.
(d) At the request of the Board, any individual nominated by the Board
for election as a Director shall furnish to the Secretary of the Company the
information required to be set forth in a Member's notice of nomination
which pertains to the nominee, together with the required written consents.
(7) The Chairman of an Annual General Meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by these Bye-laws, and if such
determination is made, the Chairman shall so declare to the meeting and the
defective nomination shall be disregarded.
(8) Ballots bearing the names of all the individuals nominated by the Board
and by Members shall be provided for use at the Annual General Meeting. If the
Board shall fail or refuse to act at least 20 days prior to the Annual General
Meeting, nominations for Directors may be made at the Annual General Meeting by
any Member entitled to vote and shall be voted upon.
11. DEFECTS IN APPOINTMENT OF DIRECTORS
All acts done bona fide by any meeting of the Board or by a committee of the
Board or by any individual acting as a Director shall, notwithstanding that it
be afterwards discovered that there was some defect in the appointment of any
Director or individual acting as aforesaid, or that they or any of them were
disqualified, be as valid as if every such individual had been duly appointed
and was qualified to be a Director.
12. ALTERNATE DIRECTORS
(1) Any general meeting of the Company may elect a Person or Persons to act
as a Director in the alternative to any one or more of the Directors of the
Company or may authorize the Board to appoint such Alternate Directors. Any
Director may appoint a Person or Persons to act as a Director in the alternative
to himself or herself as a member of the Board or as a member of a Committee
duly constituted by the Board by notice in writing deposited with the Secretary.
Any Person so elected or appointed shall have all the rights and powers of the
Director or Directors for whom such Person is appointed in the alternative
provided that such Person shall not be counted more than once in determining
whether or not a quorum is present.
(2) An Alternate Director shall be entitled to receive notice of all
meetings of the Board or any relevant Committee Meeting and to attend and vote
at any such meeting at which a Director for whom such Alternate Director was
appointed in the alternative is not Personally present and generally to perform
at such meeting all the functions of such Director for whom such Alternate
Director was appointed.
(3) An Alternate Director shall cease to be such if the Director for whom
such Alternate Director was appointed ceases for any reason to be a Director but
may be re-appointed by the Board as alternate to the Person appointed to fill
the vacancy in accordance with these Bye-laws.
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<PAGE>
13. REMOVAL OF DIRECTORS
(1) Subject to the rights of the holders of any series of Preferred Shares
then outstanding, any Director, or the entire Board, may be removed from office
at any time, but only for cause and only by the affirmative vote of the holders
of at least two-thirds of the holders of shares entitled to vote for the
election of Directors, provided that the notice of any such meeting convened for
the purpose of removing a Director shall contain a statement of the intent to do
so and be served on the Director fourteen (14) days before the meeting [and at
such meeting such Director shall be entitled to be heard on the removal motion].
(2) A vacancy on the Board created by the removal of a Director under the
provisions of subparagraph (1) of this Bye-law may be filled only pursuant to
Bye-law 14.
14. VACANCIES ON THE BOARD
(1) Subject to the rights of any series of Preferred Shares then
outstanding, newly created directorships resulting from any increase in the
authorized number of Directors or any vacancies in the Board resulting from
death, resignation, retirement, disqualification, removal from office or other
cause shall be filled by a majority vote of the Directors then in office.
(2) A vote of the Board pursuant to Bye-law 14(1) to replace a Director
shall include an assignment of the Director so elected to the class of Directors
established under Bye-law 10(2) of which the former Director was a member and
any Director so chosen shall hold office for a term expiring when that class of
Director's term of office expires.
(3) The Board may act notwithstanding any vacancy in its number but, if and
so long as its number is reduced below the number fixed by these Bye-laws as the
quorum necessary for the transaction of business at meetings of the Board, the
continuing Directors or Director may act for the purpose of (i) summoning a
general meeting of the Company or (ii) preserving the assets of the Company.
(4) The office of Director shall be vacated if the Director:
(a) is removed from office pursuant to these Bye-laws or is prohibited
from being a Director by law;
(b) is or becomes bankrupt or makes any arrangement or composition with
his creditors generally;
(c) is or becomes of unsound mind or dies;
(d) resigns by notice in writing to the Company; or
(e) retires, changes employer or occupation, or materially changes
employment or occupational responsibilities, unless the Board requests the
Director to reconsider and continue to serve on the Board.
15. MEETINGS OF THE BOARD
(1) The Board may hold meetings at such place or places within or without
Bermuda as the Board may determine or as specified or fixed in the respective
notices or waiver of notices thereof.
(2) Regular meetings of the Board shall be held without notice on the last
Tuesday of each month, except May, August and December, if not a legal holiday,
or, if a legal holiday then on the next succeeding day not a legal holiday, at
ten thirty o'clock a.m., or on such other date or at such other time as may be
determined by the Board, except that one meeting shall be held immediately
following adjournment of each annual meeting of members and such meeting shall
be in lieu of the meeting to be held in the month of such annual meeting. Any
business may be conducted at any regular meeting,
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<PAGE>
except as may be otherwise specifically provided by law or by Bye-law 83 or any
other provisions of these Bye-laws.
(3) Special meetings of the Board shall be called by the Secretary when
directed in writing to call such meetings by the Chairman of the Board or, if
the Chairman is incapacitated, by the written request of a majority of
Directors.
(4) Notice of the time, date, place and purpose of each special meeting of
the Board shall be mailed or sent electronically to each Director, addressed to
the Director's residence or usual place of business, at least two days before
the day on which the meeting is to be held, or shall be given to each Director
verbally in Person or by telephone or otherwise electronically communicated or
sent to such Director by facsimile or other mode of representing words in a
legible and non-transitory form, including by electronic means, not later than
the day before the day on which the meeting is to be held, at such Director's
last known address or any other address given by such Director to the Company
for this purpose. Notice of any meeting need not be given to any Director if
waived by the Director in writing either before or after such meeting. At any
meeting at which every member of the Board shall be present, though held without
notice, any business may be transacted which might have been transacted if the
meeting had been duly called.
(5) At all meetings of the Board, the Chairman of the Board or, in the
absence of the Chairman, the Vice Chairman, if one is elected, and if not the
President shall preside and the Secretary shall act as secretary. In the absence
of such officers, a chairman or secretary of the meeting, or both, as the case
may be, shall be elected from those present.
16. QUORUM AT MEETINGS OF THE BOARD
The quorum necessary for the transaction of business at a meeting of the
Board shall be a majority of the Directors provided, however, in the event that
a quorum of Directors is not present at any two (2) consecutive duly re-convened
and held meetings of the Board, the number of Directors necessary to constitute
a quorum for the transaction of business at the second of such meetings shall be
reduced to three (3). If a quorum is not present at a meeting, such meeting
shall automatically be adjourned to the same time and place one week later
unless otherwise specified in the notice of the original meeting.
17. MEETINGS OF THE BOARD
(1) Directors may participate in any meeting of the Board by means of such
telephone, electronic, video or other communication facilities as permit all
Persons participating in the meeting to communicate with each other
simultaneously and instantaneously, and participation in such a meeting shall
constitute presence in Person at such meeting.
(2) A resolution put to the vote at a meeting of the Board shall be carried
by the affirmative votes of a majority of the votes cast.
18. UNANIMOUS WRITTEN RESOLUTIONS
A resolution in writing signed by all the Directors or all the members of a
committee of the Board, which may be in counterparts, shall be as valid as if it
had been passed at a meeting of the Board or committee of the Board duly called
and constituted, such resolution to be effective on the date on which the last
Director signs the resolution and to be filed with the minutes of the
proceedings of the Board or committee of the Board.
19. CONTRACTS AND DISCLOSURE OF DIRECTORS' INTERESTS
(1) Any Director, or any Director's firm, partner or any company with whom
any Director is associated, may act in a professional capacity for the Company
and such Director or such Director's
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firm, partner or such company shall be entitled to remuneration for professional
services as if such Director were not a Director, provided that nothing herein
contained shall authorize a Director or Director's firm, partner or such company
to act as Auditor of the Company.
(2) A Director who is directly or indirectly interested in a contract or
proposed contract or arrangement with the Company shall declare the nature of
such interest as required by the Act.
(3) Following a declaration being made pursuant to this Bye-law, and unless
disqualified by the chairman of the relevant Board meeting, a Director may vote
in respect of any contract or proposed contract or arrangement in which such
Director is interested and may be counted in the quorum at such meeting.
20. REMUNERATION OF DIRECTORS
The remuneration (if any) of the Directors shall be determined, as the Board
of Directors from time to time determine, by the Company in general meeting and
shall be deemed to accrue from day to day. The Directors may also be paid all
travel, hotel and other expenses properly incurred by them in attending and
returning from meetings of the Board, any committee appointed by the Board,
general meetings of the Company, or in connection with the business of the
Company or their duties as Directors generally. Nothing herein shall be
construed to preclude any Director from serving the Company in any other
capacity and receiving compensation therefor.
21. OFFICERS OF THE COMPANY
The Officers of the Company shall consist of a Chairman of the Board, a Vice
Chairman, a President, one or more Vice Presidents (the numbers thereof and
variations in title to be determined by the Board of Directors), a Secretary, a
Treasurer, a Director of Tax, a Controller, and such additional Officers as the
Board may from time to time determine all of whom shall be deemed to be Officers
for the purposes of these Bye-laws. Any two offices except those of Chairman of
the Board and Vice Chairman or President and Secretary may be held by the same
individual.
22. APPOINTMENT AND AUTHORITY OF OFFICERS
(1) ELECTION OF OFFICERS. The Board shall elect, at its first meeting after
its election by the members, a Chairman of the Board and a President from among
its number and one or more Vice Presidents, a Secretary, a Treasurer, a Director
of Tax and a Controller. The Board may elect a Vice Chairman from among its
number and such other officers including one or more Assistant Secretaries,
Assistant Controllers and Assistant Treasurers, as it shall deem necessary, who
shall have such authority and perform such duties as may be prescribed by the
Board. Each officer so elected shall hold office until the first meeting of the
Board following the next Annual General Meeting for the election of directors
and until a successor for such officer is elected, except in the event of the
earlier termination of an officer's term of office as a consequence of death,
resignation or removal by the Board, in which events the Board may appoint a
replacement for such officer.
(2) CHAIRMAN OF THE BOARD. Except as otherwise provided in these Bye-laws,
the Chairman of the Board shall preside at all meetings of the Members and of
the Board; shall be the chief executive officer of the Company and shall perform
all functions and duties incidental to that position, and shall have such
additional powers and duties as may from time to time be assigned by the Board.
(3) VICE CHAIRMAN. In the event of the absence or incapacity of the Chairman
of the Board, the Vice Chairman shall preside at meetings of the Members and the
Board, and shall have such other duties as the Chairman of the Board or the
Board may assign from time to time.
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<PAGE>
(4) PRESIDENT. The President shall be the chief operating officer of the
Company and shall supervise and administer all of the general business and
affairs of the Company and shall perform all other functions and duties
incidental to that position and such other duties as may from time to time be
assigned by the Chairman of the Board or the Board.
(5) VICE PRESIDENT. Vice Presidents shall have such powers and perform such
duties as may be assigned by the President or the Chairman of the Board. The
Board in its discretion may assign to the titles of individual vice presidents
terms such as "executive", "senior", "special", or others indicative of levels
or areas of responsibility.
(6) SECRETARY. The Secretary shall record or cause to be recorded in books
provided for that purpose the minutes of the meetings of the Members, the Board,
and all committees of the Board of which a secretary shall have been appointed.
The Secretary shall be responsible for keeping the Register of Members, and
shall give or cause to be given notice of all meetings of members, directors and
committees. The Secretary shall have custody of the seal of the Company and
shall perform such other duties as may from time to time be assigned by the
Chairman of the Board or the President. The Secretary shall perform in general
all duties incident to the office of Secretary.
(7) ASSISTANT SECRETARIES. The Board may from time to time appoint
additional Assistant Secretaries. In the event of the absence or disability of
the Secretary, the duties and powers of the Secretary shall be performed and
exercised by an Assistant Secretary.
(8) CONTROLLER. The Controller shall maintain adequate records of all
assets, liabilities and transaction of the Company. The Controller shall see
that adequate audits thereof are regularly made. The Controller shall render
financial and accounting reports as required by the Chairman of the Board, the
President or the Board or as necessary to the proper conduct of business.
(9) ASSISTANT CONTROLLERS. The Board may from time to time appoint one or
more Assistant Controllers, who shall perform the duties and exercise the powers
of the Controller in the absence or disability of the Controller.
(10) DIRECTOR OF TAX. The Director of tax shall be responsible for the
preparation, signature and filing of tax returns and the supervision of all
matters relating to taxes.
(11) TREASURER. The Treasurer shall have charge and custody of and be
responsible for all funds and securities of the Company and shall deposit all
such funds to the credit of the Company in such depositories as may be
designated from time to time by the Board. The Treasurer shall disburse the
funds of the Company as may from time to time be ordered by the Chairman of the
Board or the President. The Treasurer shall render to the Chairman of the Board,
the President, the Board and the Members (the latter in response to a request
made by a resolution of the Members), upon request, an account of all the
Treasurer's transactions as Treasurer.
(12) ASSISTANT TREASURERS. The Board may from time to time appoint one or
more Assistant Treasurers, who shall perform the duties and exercise the powers
of the Treasurer in the absence or disability of the Treasurer.
(13) GENERAL COUNSEL. The General Counsel shall be the chief legal officer
of the Company and shall perform all functions and duties incidental to that
position and such other duties as may from time to time be assigned by the
Chairman of the Board or by the Board.
(14) SALARIES. The salaries of the officers of the Company elected by the
Board, except for those officers who are designated as assistant officers, shall
be fixed from time to time by the Board.
(15) RETIREMENT; VACANCIES. Each officer shall retire on the first day of
the month following attainment of age 65; however at the request of the Board,
an officer may continue in that capacity
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after age 65 for a defined period. If the office of any officer becomes vacant
for any reason, the vacancy may be filled by the Board at any regular or special
meeting thereof.
23. DUTIES OF OFFICERS
The Officers shall have such powers and perform such duties in the
management, business and affairs of the Company as may be delegated to them by
the Board from time to time.
24. CHAIRMAN OF MEETINGS
Unless otherwise agreed by a majority of those attending and entitled to
attend and vote thereat, the Chairman, if there be one, and if not the
President, shall act as chairman at all meetings of the Members at which such
Person is present. In their absence the Vice Chairman or Vice President, if
present, shall act as chairman and in the absence of all of them a chairman
shall be appointed or elected by those Members present at the meeting and
entitled to vote.
25. REGISTER OF DIRECTORS AND OFFICERS
The Board shall cause to be kept in one or more books at the registered
office of the Company a Register of Directors and Officers and shall enter
therein the particulars required by the Act.
MINUTES
26. OBLIGATIONS OF BOARD TO KEEP MINUTES
(1) The Board shall cause minutes to be duly entered in books provided for
the purpose:
(a) of all elections and appointments of Officers;
(b) of the names of the Directors present at each meeting of the Board
and of any committee appointed by the Board; and
(c) of all resolutions and proceedings of general meetings of the
Members, meetings of the Board, meetings of managers and meetings of
committees appointed by the Board.
(2) Minutes prepared in accordance with the Act and these Bye-laws shall be
kept by the Secretary at the registered office of the Company.
INDEMNITY
27. INDEMNIFICATION OF DIRECTORS AND OFFICERS OF THE COMPANY
(1) The Directors, Secretary and other Officers (such term to include, for
the purposes of Bye-laws 27 and 28, any Person appointed to any committee of the
Board) for the time being acting in relation to any of the affairs of the
Company and the liquidator or trustees (if any) for the time being acting in
relation to any of the affairs of the Company and every one of them, and their
heirs, executors and administrators, shall be indemnified and secured harmless
out of the assets of the Company from and against all liabilities, losses,
actions damages or expenses (including, but not limited to, liabilities under
contract, tort and statute or any applicable foreign law or regulation and all
reasonable legal and other costs and expenses properly payable) which they or
any of them, their heirs, executors or administrators, shall or may incur or
sustain by or by reason of any act done, concurred in or omitted in or about the
execution of their duty, or supposed duty, or in their respective offices or
trusts, and none of them shall be answerable for the acts, receipts, neglects or
defaults of the others of them or for joining in any receipts for the sake of
conformity, or for any bankers or other Persons with whom any moneys or effects
belonging to the Company shall or may be lodged or deposited for safe custody,
or for insufficiency or deficiency of any security upon which any moneys of or
belonging to the
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Company shall be placed out on or invested, or for any other loss, misfortune or
damage which may happen in the execution of their respective offices or trusts,
or in relation thereto, provided that this indemnity shall not extend to any
matter that would render it void by the operation of any applicable law in
respect of any fraud, dishonesty or wilful misconduct which may attach to any of
said Persons. The indemnity in this Bye-law 27 shall extend to any Person acting
as a Director, Secretary or other Officer in the reasonable belief that they
have been appointed or elected, notwithstanding any defect in such appointment
or election.
(2) Each Member and the Company agree to waive any claim or right of action
such Member or it might have, whether individually or by or in the right of the
Company, against any Director or Officer on account of any action taken by such
Director or Officer, or the failure of such Director or Officer to take any
action, in the performance of such Director's duties, or supposed duties, with
or for the Company; provided that such waiver shall not extend to any matter in
respect of any fraud or dishonesty which may attach to such Director or Officer.
Any repeal or modification of this Bye-law 27 shall not adversely affect any
right or protection of a Director or Officer of the Company existing immediately
prior to such repeal or modification.
(3) Expenses incurred in defending a civil or criminal action, suit or
proceeding shall be paid by the Company in advance of the final disposition of
such action, suit or proceeding as authorized by the Board in the specific case
upon receipt of an undertaking by or on behalf of the Director, Officer,
liquidator or trustee to repay such amount unless it shall ultimately be
determined that the individual is entitled to be indemnified by the Company as
authorized in these Bye-laws or otherwise pursuant to the laws of Bermuda.
MEETINGS
28. ANNUAL GENERAL MEETING
(1) The Annual General Meeting for the election of Directors and for the
transaction of such other business as may properly come before the Annual
General Meeting shall be held in each year at such time and place either within
or outside Bermuda as the Board shall specify by resolution and specify in the
notice of meeting. Notice of each Annual General Meeting shall be given to each
Member entitled to vote at an Annual General Meeting as of the record date for
the Annual General Meeting established by the Board. Such notice shall be given
no more than sixty (60) days nor less than ten (10) days prior to the Annual
General Meeting and each such notice shall state the date, place and time at
which the Annual General Meeting is to be held, that the election of Directors
will take place thereat, and as far as practicable, the other business to be
conducted at the Annual General Meeting.
(2) At any Annual General Meeting, only such business shall be conducted as
shall have been brought before the meeting (i) by or at the direction of the
Board or (ii) by any Member of the Company who complies with the procedures set
forth in this Bye-law 28(2). For business to be properly brought before an
Annual General Meeting by a Member, the Member must have given timely notice
thereof in proper written form to the Secretary of the Company. To be timely, a
Member's notice must be received by the Secretary at the Company's principal
executive offices not less than 120 calendar days in advance of the date of the
Company's proxy statement released to Members in connection with the previous
year's Annual General Meeting. To be in proper written form, a Member's notice
to the Secretary shall set forth in writing as to each matter the Member
proposes to bring before the Annual General Meeting (i) a brief description of
the business desired to be brought before the Annual General Meeting and the
reasons for conducting such business at the Annual General Meeting, (ii) the
name and address, as they appear in the Register of Members, of the Member
proposing such business, (iii) the class and number of Shares which are
beneficially owned by the Member and (iv) any material interest of the Member in
such business. Notwithstanding anything in these Bye-laws to the contrary, no
business shall be conducted at an Annual General Meeting except in accordance
with the
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procedures set forth in this Section 28(2). The chairman of an Annual General
Meeting shall, if the facts warrant, determine and declare to the meeting that
business was not properly brought before the meeting in accordance with the
provisions of this Bye-law 28(2) and, if such determination is made, the
Chairman shall so declare to the meeting and any such business not properly
brought before the Annual General Meeting shall not be transacted.
29. SPECIAL GENERAL MEETINGS
The Board may convene a special general meeting of the Company, by a
resolution approved by a majority of the Board upon not less than thirty (30)
nor more than sixty (60) days' written notice which shall state the date, time,
place and the general nature of the business to be considered at the meeting.
30. ACCIDENTAL OMISSION OF NOTICE OF GENERAL MEETING
The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a general meeting by, any Person entitled to receive
notice shall not invalidate the proceedings at that meeting.
31. MEETING CALLED ON REQUISITION OF MEMBERS
Notwithstanding anything herein, the Board shall, on the requisition of
Members holding at the date of the deposit of the requisition not less than
one-tenth of such of the paid-up Capital as at the date of the deposit carries
the right to vote at general meetings of the Company, forthwith proceed to
convene a special general meeting of the Company and the provisions of Section
74 of the Act shall apply.
32. SHORT NOTICE
A general meeting of the Company shall, notwithstanding that it is called by
shorter notice than that specified in these Bye-laws, be deemed to have been
properly called if it is so agreed by all the Members entitled to attend and
vote thereat.
33. POSTPONEMENT OF MEETINGS
The Secretary may postpone any general meeting called in accordance with the
provisions of these Bye-laws (other than a meeting requisitioned under these
Bye-laws) provided that notice of postponement is given to each Member before
the time for such meeting. Fresh notice of the date, time and place for the
postponed meeting shall be given to each Member in accordance with the
provisions of these Bye-laws.
34. QUORUM FOR GENERAL MEETING
At any general meeting of the Company except as otherwise expressly required
by the Act or by these Bye-laws one or more Persons present in Person and
representing in Person or by proxy in excess of 50% of the total issued voting
Shares throughout the meeting shall form a quorum for the transaction of any
business. If within half an hour from the time appointed for the meeting a
quorum is not present, the meeting shall stand adjourned to the same day one
week later, at the same time and place or to such other day, time or place as
the Secretary may determine. At such adjourned meeting at which a quorum shall
be present, any business may be transacted which might have been transacted at
the meeting as originally called.
35. ADJOURNMENT OF MEETINGS
The chairman of a general meeting may, with the consent of the Members at
any general meeting at which a quorum is present (and shall if so directed by a
majority of the Members participating in the meeting), adjourn the meeting.
Unless the meeting is adjourned to a specific date and time, fresh notice of the
date, time and place for the resumption of the adjourned meeting shall be given
to each Member in accordance with the provisions of these Bye-laws.
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36. ATTENDANCE AT MEETINGS
If provided in a Notice of General Meeting, Members may participate in such
general meeting by means of such telephone, electronic or other communication
facilities as will permit all Persons participating in the meeting to
communicate with each other simultaneously and instantaneously, and
participation in such a meeting shall constitute presence in Person at such
meeting.
37. WRITTEN RESOLUTIONS
(1) Subject to subparagraph (6), anything which may be done by resolution of
the Company in general meeting or by resolution of a meeting of any class of the
Members of the Company, may, without a meeting and without any previous notice
being required, be done by resolution in writing signed by, or, in the case of a
Member that is a corporation whether or not a company within the meaning of the
Act, on behalf of, all the Members who at the date of the resolution would be
entitled to attend the meeting and vote on the resolution.
(2) A resolution in writing may be signed by, or, in the case of a Member
that is a corporation whether or not a company within the meaning of the Act, on
behalf of, all the Members, or any class thereof, in as many counterparts as may
be necessary.
(3) For the purposes of this Bye-law, the date of the resolution is the date
when the resolution is signed by, or, in the case of a Member that is a
corporation whether or not a company within the meaning of the Act, on behalf
of, the last Member to sign and any reference in any Bye-law to the date of
passing of a resolution is, in relation to a resolution made in accordance with
this Bye-law, a reference to such date.
(4) A resolution in writing made in accordance with this Bye-law is as valid
as if it had been passed by the Company in general meeting or by a meeting of
the relevant class of Members, as the case may be, and any reference in any
Bye-law to a meeting at which a resolution is passed or to Members voting in
favour of a resolution shall be construed accordingly.
(5) A resolution in writing made in accordance with this Bye-law shall
constitute minutes for the purposes of Sections 81 and 82 of the Act.
(6) This Bye-law shall not apply to:
(a) a resolution passed pursuant to Section 89(5) of the Act; or
(b) a resolution passed for the purpose of removing a Director before
the expiration of such Director's term of office under these Bye-laws.
38. ATTENDANCE OF DIRECTORS
The Directors of the Company shall be entitled to receive notice of and to
attend and be heard at any general meeting.
39. PRESIDING OFFICER AT MEETINGS
At all meetings of Members, unless otherwise determined by the Board, the
Chairman of the Board or, in the absence of the Chairman of the Board, the Vice
Chairman, if one is elected and if not the President shall preside and the
Secretary or an Assistant Secretary shall act as Secretary.
40. VOTING AT MEETINGS
(1) Subject to these Bye-laws and to any special rights or other
restrictions as to voting for the time being attached to any Shares by or in
accordance with these Bye-laws or the act, at every general meeting of Members,
each holder of Common Shares shall be entitled to one vote in Person or by
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proxy, for each Common Share registered in the name of such Member as of the
record date fixed by the Board for the meeting.
(2) Subject to these Bye-laws and to the Act, any matter submitted to the
Members at any general meeting for consideration shall be decided by the
affirmative votes of a majority of the votes cast in accordance with the
provisions of these Bye-laws and in the case of an equality of votes the
resolution shall fail and without limiting the generality of the foregoing, any
matter submitted to the Members at a general meeting for approval which relates
to the amalgamation, merger or consolidation of the Company with another company
or the sale, lease or exchange of all or substantially all of the assets of the
Company shall be approved by 66 2/3% of the votes cast in accordance with the
provisions of these Bye-laws.
(3) No Member shall be entitled to vote at any general meeting unless such
Member has paid all the calls, if any, on all Shares held by such Member.
(4) The receipt and tabulations of all proxies and ballots shall be done by
the scrutineers appointed in accordance with By-law 56.
41. SENIORITY OF JOINT HOLDERS VOTING
In the case of joint holders of Shares, the vote of the senior who tenders a
vote, whether in Person or by proxy, shall be accepted to the exclusion of the
votes of the other joint holders, and for this purpose seniority shall be
determined by the order in which the names stand in the Register of Members.
42. INSTRUMENT OF PROXY
The instrument appointing a proxy shall be in writing or by electronic means
in the form, or as near thereto as circumstances admit or as otherwise
determined by the Board, of Form "A" in the Schedule hereto, under the hand of
the appointor or of the appointor's attorney duly authorised in writing, or if
the appointor is a corporation, either under its seal, or under the hand of a
duly authorised officer or attorney. The decision of the chairman of any general
meeting as to the validity of any instrument of proxy shall be final.
43. REPRESENTATION OF COMPANIES AT MEETINGS
A corporation which is a Member may, by written instrument, authorize such
Person as it thinks fit to act as its representative at any meeting of the
Members and the Person so authorised shall be entitled to exercise the same
powers on behalf of the corporation which such Person represents as that
corporation could exercise if it were an individual Member. Notwithstanding the
foregoing, the chairman of the meeting may accept such assurances as he or she
thinks fit as to the right of any Person to attend and vote at general meetings
on behalf of a corporation which is a Member.
SHARE CAPITAL AND SHARES
44. AUTHORIZED SHARE CAPITAL
(1) The authorized share capital of the Company is US$161,500,000 consisting
of 160,000,000 common shares of the par value of $1.00 per share ("Common
Shares") and 1,500,000 preferred shares of the par value of $1.00 per share
("Preferred Shares").
(2) Subject to these Bye-laws, holders of the Common Shares shall:
(a) at a general meeting of the Company, be entitled to one vote for
each Common Share held by such holder on all matters submitted to a vote of
the Members;
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(b) be entitled to such dividends as the Board may from time to time
declare;
(c) in the event of a winding-up or dissolution of the Company, whether
voluntary or involuntary or for the purpose of a reorganisation or otherwise
or upon any distribution of capital, be entitled to the surplus assets of
the Company; and
(d) generally be entitled to enjoy all of the rights attaching to the
Common Shares.
(3) The Preferred Shares shall be issuable in one or more classes or series,
with such designations, rights, preferences, limitations and voting rights, if
any, as the Board may determine upon issuance; provided that the Board shall fix
such provisions as will, at a minimum, entitle the holders of such Preferred
Shares, voting as a class, to elect at least two Directors upon default of the
equivalent of six quarterly dividends on the Preferred Shares, such right to
continue until cumulative dividends have been paid in full, or until
non-cumulative dividends have been paid regularly for at least a year; and
require the affirmative approval of at least two-thirds of the outstanding
Preferred Shares as a prerequisite to any amendments to the Memorandum of
Association or Bye-laws altering materially any existing provision of such
Preferred Shares.
(4) The Preferred Shares shall include 400,000 shares designated as "Series
A Junior Participating Preferred Shares" having the following rights and
privileges;
(a) Subject to the rights of the holders of any shares of any series of
Preferred Shares (or any similar shares) ranking prior and superior to the
Series A Preferred Shares with respect to dividends, the holders of shares
of Series A Preferred Shares, in preference to the holders of Common Shares
and of any other junior shares, shall be entitled to receive, when, as and
if declared by the Board out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June,
September and December in each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Series A Preferred Shares, in an amount per share (rounded to the
nearest cent) equal to the greater of (i) $1 or (ii) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate
amount of all cash dividends or other distributions, other than a dividend
payable in shares of Common Shares or a subdivision of the outstanding
shares of Common Shares (by reclassification or otherwise), declared on the
Common Shares since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment Date, since
the first issuance of any share or fraction of a share or Series A Preferred
Share. In the event the Company shall at any time declare or pay any
dividend on the Common Share payable in shares of Common Shares, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Shares (by reclassification or otherwise than by payment of a
dividend in shares of Common Shares) into a greater or lesser number of
shares of Common Shares, then in each such case the amount to which holders
of shares or Series A Preferred Shares were entitled immediately prior to
such event under clause (ii) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Shares outstanding immediately after such event and the
denominator of which is the number of shares of Common Shares that were
outstanding immediately prior to such event.
(b) The Company shall declare a dividend or distribution on the Series A
Preferred Shares as provided in paragraph (a) immediately before it declares
a dividend or distribution on the Common Shares (other than a dividend
payable in shares of Common Shares); provided that, in the event no dividend
or distribution shall have been declared on the Common Shares during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1 per share on the Series A
Preferred Shares shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
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(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Shares from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Shares entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment
Date. In either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Preferred Shares in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares at the time outstanding. The
Board may fix a record date for the determination of holders of shares of
Series A Preferred Shares entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60
days prior to the date fixed or the payment thereof.
(d) Except as set forth herein, or as otherwise provided by law, holders
of Series A Preferred Shares shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to
vote with holders of Common Shares as set forth herein) for taking any
corporate action. Holders of Series A Preferred Shares shall have the
following voting rights:
(i) Subject to the provisions for adjustment hereinafter set forth,
each Series A Preferred Share shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the members of the Company.
In the event the Company shall at any time declare or pay any dividend on
the Common Shares payable in shares of Common Shares, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Shares (by reclassification or otherwise than by payment of a
dividend in shares of Common Shares) into greater or lesser number of
shares of Common Shares, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Shares were
entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction, the numerator of which is the number of shares
of Common Shares outstanding immediately after such event and the
denominator of which is the number of shares of Common Shares that were
outstanding immediately prior to such event.
(ii) Except as otherwise provided herein, in any other amendment to
these Bye-laws creating a series of Preferred Shares or any similar
shares, the holders of shares of Series A Preferred Shares and the
holders of shares of Common Shares and any other capital stock of the
Company having general voting rights shall vote together as one class on
all matters submitted to a vote of members of the Company.
(iii) If, on the date used to determine members of record for any
meeting of members of the Company at which directors are to be elected,
dividends on the Series A Preferred Shares shall be in arrears in an
amount equal to at least six quarterly dividends (whether or not
consecutive), the number of the Board of the Company shall be increased
by two as of the date of such meeting and the holders of Series A
Preferred Shares (voting separately as a class with all other series of
Preferred Shares of the Company upon which like voting rights have been
conferred and are exercisable) will be entitled to vote for and elect
such two additional directors of the Company. The right of the holders of
Series A Preferred Shares to vote for such two additional Directors shall
terminate when all accrued and unpaid dividends on the Series A Preferred
Shares have been declared and paid or set apart for payment. The term of
office of the Directors so elected shall terminate immediately upon the
termination of the right of the holders of Series A Preferred Shares (and
all other series of Preferred Shares of the Company) to vote for such two
additional Directors. In connection with the right to
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vote for such additional Directors, each holder of Series A Preferred
Shares will have one vote for each share held.
(e) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Shares as provided herein are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Preferred Shares outstanding
shall have been paid in full, the Company shall not: (i) declare or pay
dividends, or make any other distributions, on any shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Shares; (ii) declare or pay dividends, or make
any other distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Shares, except dividends paid rateably on the Series A
Preferred Shares and all such parity stock on which dividends are payable or
to arrears in proportion to the total amounts to which the holders of all
such shares are then entitled; (iii) redeem or purchase or otherwise acquire
for consideration shares of any stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred
Shares, provided that the Company may at any time redeem, purchase or
otherwise acquire any junior shares in exchange for shares of the Company
ranking junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Preferred Shares; or (iv) redeem or purchase or
otherwise acquire for consideration any shares of Series A Preferred Shares,
or any shares ranking on a parity with the Series A Preferred Shares, except
in accordance with a purchase offer made in writing or by publication (as
determined by the Board) to all holders of such shares upon such terms as
the Board, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes.
(f) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of the Company
unless the Company could, under the preceding paragraph purchase or
otherwise acquire such shares at such time in such manner.
(g) Any shares of Series A Preferred Shares purchased or otherwise
acquired by the Company in any manner whatsoever shall be retired promptly
after the acquisition thereof. All such shares shall upon their retirement
or cancellation become authorized but unissued shares of Preferred Shares
and may be reissued as part of a new series of Preferred Shares subject to
the conditions and restrictions on issuance set forth herein, or in any
amendment to these Bye-laws creating a series of Preferred Shares or any
similar stock or as otherwise required by law.
(h) Upon any liquidation, dissolution or winding up of the Company, no
distribution shall be made (i) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Shares unless, prior thereto, the holders of
shares of Series A Preferred Shares shall have received $100 per share, plus
an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, provided that the
holders of shares of Series A Preferred Shares, shall be entitled to receive
an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Shares, or (ii) to the
holders of shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred
Shares, except distributions made rateably on the Series A Preferred Shares
and all such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution
or winding up. In the event the Company shall at any time declare or pay any
dividend on the Common Shares payable in shares of Common Shares, or effect
a subdivision or combination or consolidation of the outstanding shares of
Common Shares (by reclassification or otherwise than by payment of a
dividend in shares of Common Shares) into a
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greater or lesser number of shares of Common Shares then in each such case
the aggregate amount to which holders of shares of Series A Preferred Shares
were entitled immediately prior to such event under the provision in clause
(i) of the preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of Common
Shares outstanding immediately after such event and the denominator of which
is the number of shares of Common Shares that were outstanding immediately
prior to such event.
(i) In case the Company shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Shares are
exchanged for or changed into other stock or securities, cash and/or any
other property, then in any such case, each share of Series A Preferred
Shares shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter set
forth, equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which
or for which each share of Common Shares is changed or exchanged. In the
event the Company shall at any time declare or pay any dividend on the
Common Share payable in shares of Common Shares, or effect a subdivision or
combination of the outstanding shares of Common Shares (by reclassification
or otherwise than by payment of a dividend in shares of Common Shares) into
a greater or lesser number of shares of Common Shares, then in each such
case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Shares shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Shares outstanding immediately after such event
and the denominator of which is the number of shares of Common Shares that
were outstanding immediately prior to such event.
(j) The shares of Series A Preferred Shares shall not be redeemable.
(k) The Series A Preferred Shares shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all series of
any other class of the Company's Preferred Shares.
(l) Neither the Memorandum of Association nor the Bye-laws of the
Company shall be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred
Shares so as to affect them adversely without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Series A
Preferred Shares, voting together as a single class.
45. POWER TO ISSUE SHARES
(1) Subject to these Bye-laws and to any resolution of the Members to the
contrary and without prejudice to any special rights previously conferred on the
holders of any existing Shares, the Board shall have power to issue any unissued
Shares of the Company on such terms and conditions as it may determine and any
Shares or class of Shares may be issued with such preferred, deferred or other
special rights or such restrictions, whether in regard to dividend, voting,
return of capital or otherwise as the Company may from time to time by
resolution of the Members prescribe.
(2) The Board shall, in connection with the issue of any Share, have the
power to pay such commission and brokerage as may be permitted by law.
(3) The Company shall not give, whether directly or indirectly, whether by
means of loan, guarantee, provision of security or otherwise, any financial
assistance for the purpose of a purchase or subscription made or to be made by
any Person of or for any shares in the Company, but nothing in this Bye-law
shall prohibit transactions mentioned in Sections 39A, 39B and 39C of the Act.
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(4) The Company may from time to time do any one or more of the following
things:
(a) make arrangements on the issue of Shares for a difference between
the Members in the amounts and times of payments of calls on their Shares;
(b) accept from any Member the whole or a part of the amount remaining
unpaid on any Shares held by such Member, although no part of that amount
has been called up;
(c) pay dividends in proportion to the amount paid up on each Share
where a larger amount is paid up on some Shares than on others; and
(d) issue its Shares in fractional denominations and deal with such
fractions to the same extent as its whole Shares and Shares in fractional
denominations shall have in proportion to the respective fractions
represented thereby all of the rights of whole Shares including (but without
limiting the generality of the foregoing) the right to vote, to receive
dividends and distributions and to participate in a winding up.
46. VARIATION OF RIGHTS, ALTERATION OF CAPITAL AND PURCHASE OF SHARES
(1) Subject to the provisions of Sections 42 and 43 of the Act any Preferred
Shares may be issued or converted into Shares that, at a determinable date or at
the option of the Company, are liable to be redeemed on such terms and in such
manner as the Company before the issue or conversion may by resolution of the
Members determine.
(2) If at any time the Capital is divided into different classes of Shares,
the rights attached to any class (unless otherwise provided by the terms of
issue of the shares of that class) may, whether or not the Company is being
wound-up, be varied with the consent in writing of the holders of three-fourths
of the issued Shares of that class or with the sanction of a resolution passed
by a majority of the votes cast at a separate general meeting of the holders of
the Shares of the class in accordance with Section 47 (7) of the Act. The rights
conferred upon the holders of the Shares of any class issued with preferred or
other rights shall not, unless otherwise expressly provided by the terms of
issue of the Shares of that class, be deemed to be varied by the creation or
issue of further Shares ranking PARI PASSU therewith.
(3) The Company may from time to time by resolution of the Members change
the currency denomination of, increase, alter or reduce its Capital in
accordance with the provisions of Sections 45 and 46 of the Act. Where, on any
alteration of Capital, fractions of Shares or some other difficulty would arise,
the Board may deal with or resolve the same in such manner as it thinks fit
including, without limiting the generality of the foregoing, the issue to
Members, as appropriate, of fractions of Shares and/or arranging for the sale or
transfer of the fractions of Shares of Members.
47. REGISTERED HOLDER OF SHARES
(1) The Company shall be entitled to treat the registered holder of any
Share as the absolute owner thereof and accordingly shall not be bound to
recognise any equitable or other claim to, or interest in, such Share on the
part of any other Person.
(2) Any dividend, interest or other moneys payable in cash in respect of
Shares may be paid by cheque or draft sent through the post directed to the
Member at such Member's address in the Register of Members or, in the case of
joint holders, to such address of the holder first named in the Register of
Members, or to such Person and to such address as the holder or joint holders
may in writing direct. If two or more Persons are registered as joint holders of
any Shares any one can give an effectual receipt for any dividend paid in
respect of such Shares.
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48. DEATH OF A JOINT HOLDER
Where two or more Persons are registered as joint holders of a Share or
Shares then in the event of the death of any joint holder or holders the
remaining joint holder or holders shall be absolutely entitled to the said share
or Shares and the Company shall recognise no claim in respect of the estate of
any joint holder except in the case of the last survivor of such joint holders.
49. SHARE CERTIFICATES
(1) The Shares of the Company may be represented by certificates or be
uncertificated. Each Member, upon request to the Company, shall be provided with
a certificate representing the number of Shares owned by such Member. Absent a
specific request for such a certificate by the Member or transferee thereof, all
Shares shall be uncertificated upon the original issuance thereof by the Company
or upon the surrender of the certificate representing such Shares to the
Company. The Board shall have power and authority to make such rules and
regulations as it may deem expedient concerning the issue, transfer and
registration of uncertificated Shares or certificates for Shares of stock of the
Company.
(2) The certificates for Shares of the Company shall be in such form, not
inconsistent with the Memorandum of Association or Bye-laws, as shall be
approved by the Board and under the seal of the Company (or a facsimile
thereof). The Board may by resolution determine, either generally or in a
particular case, that any or all signatures on certificates may be printed
thereon or affixed by mechanical means. Any or all of the signatures may be
facsimiles unless the regulations of the Designated Stock Exchange then in
effect shall require to the contrary. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall cease to be such officer, transfer agent or registrar before
such certificate is issued, it may nevertheless be issued and delivered by the
Company with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
(3) Within two business days after uncertificated Shares have been
registered, the Company or its transfer agent shall send to the registered owner
thereof a written statement containing a description of the issue of which such
Shares are a part, the number of Shares registered, the date of registration and
such other information as may be required or appropriate.
50. CALLS ON SHARES
(1) The Board may from time to time make such calls as it thinks fit upon
the Members in respect of any monies unpaid on the Shares allotted to or held by
such Members and, if a call is not paid on or before the day appointed for
payment thereof, the Member may at the discretion of the Board be liable to pay
the Company interest on the amount of such call at such rate as the Board may
determine, from the date when such call was payable up to the actual date of
payment. The joint holders of a Share shall be jointly and severally liable to
pay all calls in respect thereof.
(2) The Board may, on the issue of Shares, differentiate between the holders
as to the amount of calls to be paid and the times of payment of such calls.
51. FORFEITURE OF SHARES
(1) If any Member fails to pay, on the day appointed for payment thereof,
any call in respect of any Share allotted to or held by such Member, the Board
may, at any time thereafter during such time as the call remains unpaid, direct
the Secretary to forward to such Member a notice in the form, or as near thereto
as circumstances admit, of Form "B" in the Schedule hereto.
(2) If the requirements of such notice are not complied with, any such Share
may at any time thereafter before the payment of such call and the interest due
in respect thereof be forfeited by a
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resolution of the Board to that effect, and such share shall thereupon become
the property of the Company and may be disposed of as the Board shall determine.
(3) A Member whose Share or Shares have been forfeited as aforesaid shall,
notwithstanding such forfeiture, be liable to pay to the Company all calls owing
on such Share or Shares at the time of the forfeiture and all interest due
thereon.
REGISTER OF MEMBERS
52. CONTENTS OF REGISTER OF MEMBERS
(1) The Company shall keep in one or more books a Register of its Members
and shall enter therein the following particulars:
(a) The name and address of each Member, the number and, where
appropriate, the class or series of Shares held by such Member and the
amount paid or agreed to be considered as paid on such Shares;
(b) The date on which each Person was entered in the Register; and
(c) The date on which any Person ceased to be a Member for one year
after such Person so ceased.
(2) Subject to the Act, the Company may keep an overseas or local or other
branch register of Members resident in any place, and the Board may make and
vary such regulations as it determines in respect of the keeping of any such
register and maintaining a Registration Office in connection therewith.
53. RIGHT OF INSPECTION OF REGISTER
The Register of Members and any branch register of Members, as the case may
be, shall be open to inspection on every business day by Members without charge
or by any other Person, upon the maximum payment permitted under the Act,
subject to such reasonable restrictions as the Board may impose, so that not
less than two (2) hours in each business day be allowed for inspections, at the
Office or such other place in Bermuda at which the Register of Members is kept
in accordance with the Act or, if appropriate, upon the maximum payment
permitted under the Act at the Registration Office. The Register, including any
overseas or local or other branch register of Members, may, after Notice has
been given by advertisement in an appointed newspaper and, where applicable, any
other newspapers in accordance with the requirements of any Designated Stock
Exchange to that effect, be closed at such times or for such periods not
exceeding in the aggregate thirty (30) days in each year as the Board may
determine and either generally or in respect of any class or series of shares.
54. TRANSACTIONS WITH INTERESTED MEMBERS
(1) Notwithstanding anything to the contrary contained in these Bye-laws,
the Company shall not engage in any Business Combination with any Interested
Member of the Company for a period of five years following such Interested
Member's Share Acquisition Date unless such Business Combination or the purchase
of Shares made by such Interested Member on such Interested Member's Share
Acquisition Date is approved by the Board prior to such Interested Member's
Share Acquisition Date. If a good faith proposal is made in writing to the Board
regarding a Business Combination, the Board shall respond, in writing, within
thirty days or such shorter period, if any, as may be required by the Exchange
Act, setting forth its reasons for its decision regarding such proposal. If a
good faith proposal to purchase Shares is made in writing to the Board, the
Board, unless it responds affirmatively in writing within thirty days or such
shorter period, if any, as may be required by the Exchange Act, shall be deemed
to have disapproved such purchase of Shares.
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(2) Notwithstanding anything to the contrary contained in these Bye-laws
(except the provisions of paragraphs (1) and (3) of this Section 54, the Company
shall not engage at any time in any Business Combination with any Interested
Member of the Company other than a Business Combination specified in any one of
the following subparagraphs (a), (b) or (c):
(a) A Business Combination approved by the Board prior to such
Interested Member's Share Acquisition Date, or where the purchase of Shares
made by such Interested Member on such Interested Member's Share Acquisition
Date had been approved by the Board prior to such Interested Member's Share
Acquisition Date;
(b) a Business Combination approved by the affirmative vote of the
holders of a majority of the outstanding voting shares not beneficially
owned by such Interested Member or any Affiliate or Associate of such
Interested Member at a meeting called for such purpose no earlier than five
years after such Interested Member's Share Acquisition Date; or
(c) a Business Combination that meets all of the following conditions:
(i) The aggregate amount of the cash and the Market Value as of the
Consummation Date of consideration other than cash to be received per
share by holders of outstanding Common Shares of the Company in such
Business Combination is at least equal to the higher of the following:
(x) the highest per share price paid by such Interested Member at
a time when such Interested Member was the Beneficial Owner, directly
or indirectly, of five percent or more of the outstanding voting
Shares, for any common shares of the same class or series acquired by
it (1) within the five-year period immediately prior to the
Announcement Date with respect to such Business Combination, or (2)
within the five-year period immediately prior to, or in, the
transaction in which such Interested Member became an Interested
Member, whichever is higher; plus, in either case, interest
compounded annually from the earliest date on which such highest per
share acquisition price was paid through the Consummation Date at the
rate for one-year United States treasury obligations from time to
time in effect; less the aggregate amount of any cash dividends paid,
and the Market Value of any dividends paid other than in cash, per
common share since such earliest date, up to the amount of such
interest; and
(y) the Market Value per common share on the Announcement Date
with respect to such Business Combination or on such Interested
Member's Share Acquisition Date, whichever is higher; plus interest
compounded annually from such date through the Consummation Date at
the rate for one-year United States treasury obligations from time to
time in effect; less the aggregate amount of any cash dividends paid,
and the Market Value of any dividends paid other than in cash, per
common share since such date, up to the amount of such interest.
(ii) The aggregate amount of the cash and the Market Value as of the
Consummation Date of consideration other than cash to be received per
share by holders of outstanding Shares, other than Common Shares, of the
Company is at least equal to the highest of the following (whether or not
such Interested Member has previously acquired any shares of such class
or series of stock):
(x) the highest per share price paid by such Interested Member at
a time when such Interested Member was the Beneficial Owner, directly
or indirectly, of five percent or more of the outstanding voting
Shares of the Company, for any Shares of such class or series
acquired by it (1) within the five-year period immediately prior to
the Announcement Date with respect to such Business Combination, or
(2) within the five-year period immediately prior to, or in, the
transaction in which such Interested Member
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became an Interested Member, whichever is higher; plus, in either
case, interest compounded annually from the earliest date on which
such highest per share acquisition price was paid through the
Consummation Date at the rate for one-year United States treasury
obligations from time to time in effect; less the aggregate amount of
any cash dividends paid, and the Market Value of any dividends paid
other than in cash, per share of such class or series of shares since
such earliest date, up to the amount of such interest;
(y) the highest preferential amount per share to which the
holders of shares of such class or series are entitled in the event
of any voluntary liquidation, dissolution or winding up of the
Company, plus the aggregate amount of any dividends declared or due
as to which such holders are entitled prior to payment of dividends
on some other class or series of shares (unless the aggregate amount
of such dividends is included in such preferential amount); and
(z) the Market Value per share of such class or series of stock
on the Announcement Date with respect to such Business Combination or
on such Interested Member's Share Acquisition Date, whichever is
higher; plus interest compounded annually from such date through the
Consummation Date at the rate for one-year United States treasury
obligations from time to time in effect; less the aggregate amount of
any cash dividends paid, and the Market Value of any dividends paid
other than in cash, per share of such class or series of shares since
such date, up to the amount of such interest.
(iii) The consideration to be received by holders of a particular
class or series of outstanding shares (including Common Shares) of the
Company in such Business Combination is in cash or in the same form as
the Interested Member has used to acquire the largest number of shares of
such class or series of Shares previously acquired by it, and such
consideration shall be distributed promptly.
(iv) The holders of all outstanding Shares not Beneficially Owned by
such Interested Member immediately prior to the consummation of such
Business Combination are entitled to receive in such Business Combination
cash or other consideration for such Shares in compliance with clauses
(i), (ii) and (iii) of this subparagraph.
(v) After such Interested Member's Share Acquisition Date and prior
to the Consummation Date with respect to such Business Combination, such
Interested Member has not become the Beneficial Owner of any additional
Shares except:
A. as part of the transaction which resulted in such Interested
Member becoming an Interested Member;
B. by virtue of proportionate share splits, share dividends or
other distributions of shares in respect of shares not constituting a
Business Combination under clause (E) under the definition of
"Business Combination" contained in Section 1 of these Bye-laws;
C. through a Business Combination meeting all of the conditions
of paragraph (1) of this Section 54; or
D. through purchase by such Interested Member at any price which,
if such price had been paid in an otherwise permissible Business
Combination the Announcement Date and Consummation Date of which were
the date of such purchase, would have satisfied the requirements of
clauses (i), (ii) and (iii) of paragraph (c) of this subsection (2).
(3) Notwithstanding anything to the contrary contained in this Bye-law,
paragraphs (1) and (2) above shall not apply to any Business Combination with an
Interested Member of the Company which became an Interested Member
inadvertently, if such Interested Member (i) as soon as practicable,
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divests itself of a sufficient amount of the voting Shares so that it no longer
is the Beneficial Owner, directly or indirectly, of twenty percent or more of
the outstanding voting Shares, and (ii) would not at any time within the
five-year period preceding the Announcement Date with respect to such Business
Combination have been an Interested Member but for such inadvertent acquisition.
55. RECORD DATES
(1) The Board of Directors may fix a record date not more than 60 days prior
to the day of holding any meetings of the Members.
(2) A list of Members as of the record date, certified by the company
officer responsible for its preparation or by the transfer agent of the Company,
shall be produced at any meeting of Members upon the request thereat or prior
thereto of any Member.
56. SCRUTINEERS
(1) One or more scrutineers may be appointed by the Board to act at any
meeting of Members, or, if the Board fails to act, the chairman of the meeting
may appoint a scrutineer or scrutineers. A scrutineer may or may not be a
Member, but shall not be a candidate for the office of Director.
(2) The scrutineer(s) shall determine the number of Shares outstanding and
the voting power of each, the Shares represented at the meeting, the existence
of a quorum, the validity and effect of proxies, and shall receive votes,
ballots or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all Members.
(3) Each scrutineer, before entering upon the discharge of the duties
described in By-law 56(2), shall be sworn faithfully to execute the duties of a
scrutineer at such meeting with strict impartiality, and according to the best
of such Person's ability.
TRANSFER OF SHARES
57. INSTRUMENT OF TRANSFER
(1) Subject to these Bye-laws, any Member may transfer all or any Shares
held by such Member by an instrument of transfer in a form consistent with these
Bye-laws, however the transferor Member shall be deemed to be the holder of the
Shares until the name of the transferee is entered in the Register of Members.
(2) An instrument of transfer shall be in the form or as near thereto as
circumstances admit of Form "C" in the Schedule hereto or in such other common
form as the Board may accept. Such instrument of transfer shall be signed by or
on behalf of the transferor and transferee provided that, in the case of a fully
paid Share, the Board may accept the instrument signed by or on behalf of the
transferor alone.
(3) Upon surrender to the Company or the transfer agent of the Company of a
certificate for Shares accompanied by an instrument of transfer, the Company may
issue or cause to be issued uncertificated shares or, if requested by the
appropriate Person or if otherwise appropriate, a new certificate to the Person
entitled thereto, cancel the old certificate and record the transaction in the
Register of Members. Upon receipt of a proper instrument of transfer from the
registered Member of uncertificated Shares, such uncertificated Shares shall be
cancelled and issuance of new equivalent uncertificated Shares shall be made to
the Person entitled thereto and the transaction shall be recorded in the
Register of Members.
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58. RESTRICTION ON TRANSFER
(1) The Board shall refuse to register the transfer of a share unless:
(a)Such transfer is in accordance with the Bye-laws;
(b) the transfer is accompanied by the certificate in respect of the
Shares to which it related, if such certificate was issued; and
(c) all applicable consents, authorisations and permissions of any
governmental body or agency in Bermuda have been obtained.
(2) If the Board refuses to register a transfer of any Share the Secretary
shall, within 120 days after the date on which the transfer was lodged with the
Company, send to the transferor and transferee notice of the refusal.
59. TRANSFERS BY JOINT HOLDERS
The joint holders of any Share or Shares may transfer such Share or Shares
to one or more of such joint holders, and the surviving holder or holders of any
Share or Shares previously held by them jointly with a deceased Member may
transfer any such Share to the executors or administrators of such deceased
Member.
TRANSMISSION OF SHARES
60. REPRESENTATIVE OF DECEASED MEMBER
If a Member dies, the survivor or survivors where the deceased Member was a
joint holder, and the legal Personal representatives of the deceased Member
where the deceased Member was a sole holder of Shares, shall be the only Persons
recognised by the Company as having any title to the deceased Member's interest
in such Shares. Nothing herein contained shall release the estate of a deceased
joint holder from any liability in respect of any Share which had been jointly
held by such deceased Member with other Persons. Subject to the provisions of
Section 52 of the Act, for the purpose of this Bye-law, legal Personal
representative means the executor or administrator of a deceased Member or such
other Person as the Board may in its absolute discretion decide as being
properly authorised to deal with the shares of a deceased Member.
61. REGISTRATION ON DEATH OR BANKRUPTCY
Any Person becoming entitled to a share in consequence of the death or
bankruptcy of any Member may be registered as a Member upon such evidence as the
Board may deem sufficient or may elect to nominate some Person to be registered
as a transferee of such Share, and in such case the Person becoming entitled
shall execute in favour of such nominee an instrument of transfer in the form,
or as near thereto as circumstances admit, of Form "D" in the Schedule hereto.
On the presentation thereof to the Board, accompanied by such evidence as the
Board or transfer agent may require to prove the title of the transferor, the
transferee shall be registered as a Member but the Board shall, in either case,
have the same right to decline or suspend registration as it would have had in
the case of a transfer of the share by that Member before such Member's death or
bankruptcy, as the case may be.
62. DIVIDEND ENTITLEMENT OF TRANSFEREE
A Person becoming entitled to a share by reason of the death or bankruptcy
or winding-up of a Member shall be entitled to the same dividends and other
advantages to which he would be entitled if he were the registered holder of the
share. However, the Board may determine to withhold the payment of any dividend
payable or other advantages in respect of such share until such Person shall
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become the registered holder of the share or shall have effectually transferred
such share, but, subject to the requirements of these Bye-laws being met, such a
Person may vote at meetings.
DIVIDENDS AND OTHER DISTRIBUTIONS
63. DECLARATION OF DIVIDENDS BY THE BOARD
(1) Subject to these Bye-laws and subject to Section 54 of the Act, the
Board may declare dividends to be paid to the Members, in proportion to the
number of Shares held by them.
(2) The Board may declare and make such other distributions (in any currency
or property including, without limitation, in Shares) to the Members as may be
lawfully made out of the assets of the Company including, without limitation,
out of contributed surplus (as ascertained in accordance with the Act).
(3) Except in so far as the rights attaching to, or the terms of issue of,
any Share otherwise provide:
(a) all dividends shall be declared and paid according to the amounts
paid; and
(b) all dividends shall be apportioned and paid pro rata according to
the amounts paid up on the shares during any portion or portions of the
period in respect of which the dividend is paid.
(4) The Board may from time to time pay to the Members such interim
dividends as appear to the Board to be justified by the profits of the Company
and in particular (but without prejudice to the generality of the foregoing) if
at any time the Capital is divided into different classes, the Board may pay
such interim dividends in respect of those Shares which confer on the holders
thereof deferred or non-preferential rights as well as in respect of those
Shares which confer on the holders thereof preferential rights with regard to
dividend and provided that the Board acts bona fide the Board shall not incur
any responsibility to the holders of Shares conferring any preference for any
damage that they may suffer by reason of the payment of an interim dividend on
any Shares having deferred or non-preferential rights and may also pay any fixed
dividend which is payable on any shares of the Company half-yearly or on any
other dates, whenever such profits, in the opinion of the Board, justifies such
payment.
(5) The Board may deduct from any dividend or other monies payable to a
Member by the Company on or in respect of any shares all sums of money (if any)
presently payable by him to the Company on account of calls or otherwise.
(6) No dividend or other monies payable by the Company on or in respect of
any share shall bear interest against the Company.
(7) Any dividend, interest or other sum payable in cash to a Member may be
paid by check or warrant sent through the mail addressed to the Member at the
registered address or, in the case of joint holders, addressed to the Member
whose name stands first in the Register of Members in respect of the Shares at
the Member's address as appearing in the Register of Members or addressed to
such Person and at such address as the Member or joint holders may in writing
direct. Every such check or warrant shall, unless the holder or joint holders
otherwise direct, be made payable to the order of the holder or, in the case of
joint holders, to the order of the holder whose name stands first on the
Register in respect of such Shares, and shall be sent at his or their risk and
payment of the check or warrant by the bank on which it is drawn shall
constitute a good discharge to the Company notwithstanding that it may
subsequently appear that the same has been stolen or that any endorsement
thereon has been forged. Any one of two or more joint holders may give effectual
receipts for any dividends or other monies payable or property distributable in
respect of the shares held by such joint holders.
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(8) All dividends or bonuses unclaimed for one (1) year after having been
declared may be invested or otherwise made use of by the Board for the benefit
of the Company until claimed. Any dividend or bonuses unclaimed after a period
of six (6) years from the date of declaration shall be forfeited and shall
revert to the Company. The payment by the Board of any unclaimed dividend or
other sums payable on or in respect of a share into a separate account shall not
constitute the Company a trustee in respect thereof.
(9) Whenever the Board has resolved that a dividend be declared or paid, the
Board may further resolve that such dividend be satisfied wholly or in part by
the distribution of specific assets of any kind and in particular of paid up
shares, debentures or warrants to subscribe securities of the Company or any
other company, or in any one or more of such ways, and where any difficulty
arises in regard to the distribution the Board may settle the same as it thinks
expedient, and in particular may issue certificates in respect of fractions of
shares, disregard fractional entitlements or round the same up or down, and may
fix the value for distribution of such specific assets, or any part thereof, and
may determine that cash payments shall be made to any Members upon the footing
of the value so fixed in order to adjust the rights of all parties, and may vest
any such specific assets in trustees as may seem expedient to the Board and may
appoint any Person to sign any requisite instruments of transfer and other
documents on behalf of the Persons entitled to the dividend, and such
appointment shall be effective and binding on the Members. The Board may resolve
that no such assets shall be made available to Members with registered addresses
in any particular territory or territories where, in the absence of a
registration statement or other special formalities, such distribution of assets
would or might, in the opinion of the Board, be unlawful or impracticable and in
such event the only entitlement of the Members aforesaid shall be to receive
cash payments as aforesaid. Members affected as a result of the foregoing
sentence shall not be or be deemed to be a separate class of Members for any
purpose whatsoever.
(10) Whenever the Board has resolved that a dividend be declared or paid on
any class of the Capital of the Company, the Board may further resolve either:
(a) that such dividend be satisfied wholly or in part in the form of an
allotment of Shares credited as fully paid up, provided that the Members
entitled thereto will be entitled to elect to receive such dividend (or part
thereof if the Board so determines) in cash in lieu of such allotment. In
such case, the following provisions shall apply:
(i) the basis of any such allotment shall be determined by the Board;
(ii) the Board, after determining the basis of allotment, shall give
not less than two (2) weeks' Notice to the holders of the relevant Shares
of the right of election accorded to them, and shall send with such
Notice, forms of election and specify the procedure to be followed and
the place at which and the latest date and time by which duly completed
forms of election must be delivered in order to be effective;
(iii) the right of election may be exercised in respect of the whole
or part of that portion of the dividend in respect of which the right of
election has been accorded; and
(iv) the dividend (or that part of the dividend to be satisfied by
the allotment of shares as aforesaid) shall not be payable in cash on
Shares in respect whereof the cash election has not been duly exercised
("the non-elected Shares") and in satisfaction thereof shares of the
relevant class shall be allotted credited as fully paid up to the holders
of the non-elected Shares on the basis of allotment determined as
aforesaid and for such purpose the Board shall capitalize and apply out
of any part of the undivided profits of the Company (including profits
carried and standing to the credit of any reserves or other special
account) as the Board may determine, such sum as may be required to pay
up in full the appropriate number of shares of
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the relevant class for allotment and distribution to and amongst the
holders of the non-elected Shares on such basis; or
(b) that the Members entitled to such dividend shall be entitled to
elect to receive an allotment of Shares credited as fully paid up in lieu of
the whole or such part of the dividend as the Board may determine. In such
case, the following provisions shall apply:
(i) the basis of any such allotment shall be determined by the Board;
(ii) the Board, after determining the basis of allotment, shall give
not less than fourteen (14) days' Notice to the holders of the relevant
shares of the right of election accorded to them and shall send with such
Notice forms of election and specify the procedure to be followed and the
place at which and the latest date and time by which duly completed forms
of election must be delivered in order to be effective;
(iii) the right of election may be exercised in respect of the whole
or part of that portion of the dividend in respect of which the right of
election has been accorded; and
(iv) the dividend (or that part of the dividend in respect of which a
right of election has been accorded) shall not be payable in cash on
Shares in respect whereof the share election has been duly exercised
("the elected Shares") and in lieu thereof Shares of the relevant class
shall be allotted credited as fully paid up to the holders of the elected
Shares on the basis of allotment determined as aforesaid and for such
purpose the Board shall capitalize and apply out of any part of the
undivided profits of the Company (including profits carried and standing
to the credit of any reserves or other special account) as the Board may
determine, such sum as may be required to pay up in full the appropriate
number of Shares of the relevant class for allotment and distribution to
and amongst the holders of the elected Shares on such basis.
(11) The Shares allotted under paragraph (10) of this Bye-Law shall rank
pari passu in all respects with Shares of the same class (if any) then in issue
save only as regards participation in the relevant dividend or in any other
distributions, bonuses or rights paid, made, declared or announced prior to or
contemporaneously with the payment or declaration of the relevant dividend
unless, contemporaneously with the announcement by the Board of their proposal
under paragraph (10) of this Bye-Law in relation to the relevant dividend or
contemporaneously with their announcement of the distribution, bonus or rights
in question, the Board shall specify that the Shares to be allotted under
paragraph (10) of this Bye-Law shall rank for participation in such
distribution, bonus or rights.
(12) The Board may do all acts and things considered necessary or expedient
to give effect to any capitalization under paragraph (10) of this Bye-Law, with
full power to the Board to make such provisions as it determines in the case of
shares becoming distributable in fractions (including provisions whereby, in
whole or in part, fractional entitlements are aggregated and sold and the net
proceeds distributed to those entitled, or are disregarded or rounded up or down
or whereby the benefit of fractional entitlements accrues to the Company rather
than to the Members concerned). The Board may authorize any Person to enter into
on behalf of all Members interested, an agreement with the Company providing for
such capitalization and matters incidental thereto and any agreement made
pursuant to such authority shall be effective and binding on all concerned.
(13) The Board may resolve in respect of any particular dividend of the
Company that notwithstanding the provisions of paragraph (10) of this Bye-Law
such dividend may be satisfied wholly in the form of an allotment of Shares
credited as fully paid up without offering any right to Members to elect to
receive such dividend in cash in lieu of such allotment.
(14) The Board may on any occasion determine that rights of election and the
allotment of Shares under paragraph (10) of this Bye-Law shall not be made
available or made to any Members with
III-31
<PAGE>
registered addresses in any territory where, in the absence of a registration
statement or other special formalities, the circulation of an offer of such
rights of election or the allotment of shares would or might, in the opinion of
the Board, be unlawful or impracticable, and in such event the provisions
aforesaid shall be read and construed subject to such determination. Members
affected as a result of the foregoing sentence shall not be or be deemed to be a
separate class of Members for any purpose whatsoever.
(15) Any resolution declaring a dividend on Shares of any class may specify
that the same shall be payable or distributable to the Persons registered as the
holders of such Shares at the close of business on a particular date,
notwithstanding that it may be a date prior to that on which the resolution is
passed, and thereupon the dividend shall be payable or distributable to them in
accordance with their respective holdings so registered, but without prejudice
to the rights inter se in respect of such dividend of transferors and
transferees of any such Shares. The provisions of this Bye-Law shall, as the
case may be, apply to bonuses, capitalization issues, distributions of realized
capital profits or offers or grants made by the Company to the Members.
(16) Before declaring any dividend, the Board may set aside out of the
profits of the Company such sums as it determines as reserves which shall, at
the discretion of the Board, be applicable for any purpose to which the profits
of the Company may be properly applied and pending such application may, also at
such discretion, either be employed in the business of the Company or be
invested in such investments as the Board may from time to time determine and so
that it shall not be necessary to keep any investments constituting the reserve
or reserves separate or distinct from any other investments of the Company. The
Board may also, without placing the same to reserve, carry forward any profits
which it may think prudent not to distribute.
CAPITALISATION
64. ISSUE OF BONUS SHARES
(1) The Board may resolve to capitalise any part of the amount for the time
being standing to the credit of any of the Company's share premium or other
reserve accounts or to the credit of the profit and loss account or otherwise
available for distribution by applying such sum in paying up (i) unissued
Shares, debentures or other obligations to be allotted or distributed as fully
paid pro rata to the Members or any class of Members or (ii) in full or partly
paid Shares of those Members who would have been entitled to such sums if they
were distributed by way of dividend or other distribution. In addition, the
Board may, subject to the Act, resolve to capitalize any part of the amount for
the time being standing to the credit of the Company's share premium account by
applying such sum in paying up unissued shares to be issued to the Members, or
class of Members, as fully paid bonus Shares.
(2) The Board may settle, as it considers appropriate, any difficulty
arising in regard to any distribution under the preceding paragraph and in
particular may issue certificates in respect of fractions of Shares or authorize
any Person to sell and transfer any fractions or may resolve that the
distribution should be as nearly as may be practicable in the correct proportion
but not exactly so or may ignore fractions altogether, and may determine that
cash payments shall be made to any Members in order to adjust the rights of all
parties, as may seem expedient to the Board. The Board may appoint any Person to
sign on behalf of the Persons entitled to participate in the distribution any
contract necessary or desirable for giving effect thereto and such appointment
shall be effective and binding upon the Members.
(3) Subject to the Act, a printed copy of the balance sheet and profit and
loss account, including every document required by law to be annexed thereto,
made up to the end of the applicable financial year and containing a summary of
the assets and liabilities of the Company under convenient headings and a
statement of income and expenditures, together with a copy of the Auditors'
report, shall be sent to each Person entitled thereto at least twenty-one (21)
days before the date of the Annual General
III-32
<PAGE>
Meeting and laid before the Company at such meeting in accordance with the
requirements of the Act provided that this Bye-law shall not require a copy of
those documents to be sent to any Person of whose address the Company is not
aware or to more than one of the joint holders of any Shares or debentures.
ACCOUNTS AND FINANCIAL STATEMENTS
65. RECORDS OF ACCOUNT
(1) The Board shall cause to be kept true records of account with respect to
all transactions of the Company and in particular with respect to:
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt and expenditure relates;
(b) all sales and purchases of goods by the Company; and
(c) the assets and liabilities of the Company.
(2) Such records of account shall be kept at the registered office of the
Company or, subject to Section 83 (2) of the Act, at such other place as the
Board thinks fit and shall be available for inspection by the Directors during
normal business hours. No Member (other than a Director of the Company) shall
have any right of inspecting any accounting record or book or document of the
Company except as conferred by law or authorized by the Board or the Company in
a General Meeting.
66. FISCAL YEAR
The fiscal year of the Company may be determined by resolution of the Board
and failing such resolution the fiscal year shall be the 52 or 53-week annual
accounting period ending the last Friday in December for domestic and US
operations and December 31 for foreign operations.
67. FINANCIAL STATEMENTS
Subject to any rights to waive laying of accounts pursuant to Section 88 of
the Act, financial statements as required by the Act shall be laid before the
Members in general meeting.
68. APPOINTMENT OF AUDITOR
(1) Subject to the Act, at the Annual General Meeting or at a subsequent
special general meeting in each year, the Members shall appoint an Auditor to
audit the accounts of the Company and such Auditor shall hold office until the
Members appoint another Auditor. Such Auditor may be a Member but no Director or
Officer or employee of the Company shall, during his or her continuance in
office, be eligible to act as an Auditor of the Company.
(2) Subject to the Act, a Person, other than a retiring Auditor, shall not
be capable of being appointed Auditor unless the notice of meeting at which such
appointment is proposed states such proposal and such notice has been given to
the Members in accordance with the Bye-laws not less than twenty-one (21) days
before the meeting date and a copy of such notice has been delivered to the
nominee and the retiring Auditor.
(3) The Members, by a resolution passed by at least two thirds of the vote
cast at a General Meeting at which notice specifying the intention to pass such
resolution was given, may remove the Auditor at any time before the expiration
of the Auditor's term of office and shall by ordinary resolution at that meeting
appoint another Auditor in the Auditor's stead for the remainder of the retiring
Auditor's term, provided that, not less than twenty-one (21) days before the
date of the meeting, notice in writing of the proposed resolution is given to
the incumbent auditor and to the auditor proposed to be appointed.
III-33
<PAGE>
AUDIT
69. REMUNERATION OF AUDITOR
The remuneration of the Auditor shall be fixed by the Board of Directors or
in such manner as the Board may determine.
70. VACATION OF OFFICE OF AUDITOR
If the office of Auditor becomes vacant by the resignation or death of the
Auditor, or by the Auditor becoming incapable of acting by reason of illness or
other disability at a time when the Auditor's services are required, the Board
or its designated agents shall appoint an interim auditor and the Board shall,
as soon as practicable, convene a special general meeting to fill the vacancy
thereby created.
71. ACCESS TO BOOKS OF THE COMPANY
The Auditor shall at all reasonable times have access to all books kept by
the Company and to all accounts and vouchers relating thereto, and the Auditor
may call on the Directors or Officers of the Company for any information in
their possession relating to the books or affairs of the Company.
72. REPORT OF THE AUDITOR
(1) Subject to the Act, the accounts of the Company shall be audited at
least once in every year.
(2) The financial statements provided for by these Bye-laws shall be audited
by the Auditor in accordance with generally accepted auditing standards. The
Auditor shall make a written report thereon in accordance with generally
accepted auditing standards and the report of the Auditor shall be submitted to
the Members in general meeting.
(3) The generally accepted auditing standards referred to in subparagraph
(2) of this Bye-law may be those of a country or jurisdiction other than
Bermuda. If so, the financial statements and the report of the Auditor must
disclose this fact and name such country or jurisdiction.
NOTICES
73. NOTICES TO MEMBERS OF THE COMPANY
(1) Any Notice from the Company to a Member shall be given in writing or by
cable, telex, facsimile transmission message or electronic transmission and any
such Notice and (where appropriate) any other document may be served or
delivered by the Company on or to any Member either personally or by sending it
through the mail or other courier service in a prepaid envelope addressed to
such Member at the Member's registered address as appearing in the Register or
at any other address supplied by the Member to the Company for the purpose or,
as the case may be, by transmitting it to any such address or transmitting it to
any cable, telex, facsimile transmission number or electronic mail address
supplied by him to the Company for the giving of Notice to such Member or which
the Person transmitting the Notice reasonably and bona fide believes at the
relevant time will result in the Notice being duly received by the Member or may
also be served by advertisement in appointed newspapers (as defined in the Act)
or in accordance with the requirements of any Designated Stock Exchange. In the
case of joint holders of a Share all Notices shall be given to that one of the
joint holders whose name stands first in the Register and Notice so given shall
be deemed a sufficient service on or delivery to all the joint holders.
III-34
<PAGE>
(2) Any Notice or other document:
(a) if served or delivered by mail, shall be deemed to have been served
or delivered on the day following that on which the envelope containing the
same, properly prepaid and addressed, is put into the mail; in proving such
service or delivery it shall be sufficient to prove that the envelope or
wrapper containing the Notice or document was properly addressed and put
into the mail and a certificate in writing signed by the Secretary or other
Officer of the Company or other Person appointed by the Board that the
envelope or wrapper containing the Notice or other document was so addressed
and put into the mail shall be conclusive evidence thereof; and
(b) if served or delivered in any other manner contemplated by these
Bye-Laws, shall be deemed to have been served or delivered at the time of
personal service or delivery or, as the case may be, at the time of the
relevant dispatch or transmission; and in proving such service or delivery a
certificate in writing signed by the Secretary or other Officer of the
Company or other Person appointed by the Board as to the fact and time of
such service, delivery, dispatch or transmission shall be conclusive
evidence thereof.
(c) Any Notice or other document delivered or sent by mail to or left at
the registered address of any Member in pursuance of these Bye-Laws shall,
notwithstanding that such Member is then dead or bankrupt or that any other
event has occurred, and whether or not the Company has Notice of the death
or bankruptcy or other event, be deemed to have been duly served or
delivered in respect of any Share registered in the name of such Member as
sole or joint holder unless such Member's name shall, at the time of the
service or delivery of the Notice or document, have been removed from the
Register as the holder of the Share, and such service or delivery shall for
all purposes be deemed a sufficient service or delivery of such Notice or
document on all Persons interested (whether jointly with or as claiming
through or under the Member) in the Share.
(d) A Notice may be given by the Company to the Person entitled to a
Share in consequence of the death, mental disorder or bankruptcy of a Member
by sending it through the mail in a prepaid letter, envelope or wrapper
addressed to such Person by name, or by the title of representative of the
deceased, or trustee of the bankrupt, or by any like description, at the
address, if any, supplied for the purpose by the Person claiming to be so
entitled, or (until such an address has been so supplied) by giving the
Notice in any manner in which the same might have been given if the death,
mental disorder or bankruptcy had not occurred.
(e) Any Person who by operation of law, transfer or other means
whatsoever shall become entitled to any Share shall be bound by every Notice
in respect of such Share which prior to such Person's name and address being
entered on the Register shall have been duly given to the Person from whom
title to such Share is derived.
(f) For the purposes of these Bye-Laws, a cable or telex or facsimile
transmission or electronic transmission message purporting to come from a
holder of Shares or, as the case may be, a Director or Alternate Director,
or, in the case of a corporation which is a holder of Shares from a director
or the secretary thereof or a duly appointed attorney or duly authorized
representative thereof for it and on its behalf, shall in the absence of
express evidence to the contrary available to the Person relying thereon at
the relevant time be deemed to be a document or instrument in writing signed
by such holder or Director or Alternate Director.
III-35
<PAGE>
SEAL OF THE COMPANY
74. THE CORPORATE SEAL
The corporate seal of the Company shall be in circular form as the Board may
from time to time approve, with the name of the Company in the circumference and
"Bermuda" in the centre. The Board may adopt one or more duplicate seals for use
outside Bermuda.
75. MANNER IN WHICH SEAL IS TO BE AFFIXED
The seal of the Company shall not be affixed to any instrument except
attested by the signature of a Director and the Secretary or any two Directors
or the Secretary and the Assistant Secretary, or any Person appointed by the
Board for the purpose, provided that any Director, Officer or Resident
Representative, may affix the seal of the Company attested by such Director,
Officer or Resident Representative's signature to any authenticated copies of
these Bye-laws, the incorporating documents of the Company, the minutes of any
meetings or any other documents required to be authenticated by such Director,
Officer or Resident Representative.
WINDING-UP
76. WINDING-UP/DISTRIBUTION BY LIQUIDATOR
(1) A resolution that the Company be wound up by the court or be wound up
voluntarily shall be adopted by the holders of Shares representing seventy-five
percent of the voting Shares of the Company.
(2) The Board may, in the name of and on behalf of the Company, present a
petition to the court for the Company to be wound up.
(3) If the Company shall be wound up (whether the liquidation is voluntary
or by the court) the liquidator may, with the sanction of a resolution of the
Members, and any other sanction required by the Act, divide amongst the Members
in specie or in kind the whole or any part of the assets of the Company (whether
they shall consist of property of the same kind or not) and may, for such
purpose, set such value as the liquidator deems fair upon any property to be
divided as aforesaid and may determine how such division shall be carried out as
between the Members or different classes of Members. The liquidator may, with
the like sanction, vest the whole or any part of such assets in trustees upon
such trusts for the benefit of the Members as the liquidator shall think fit,
but so that no Member shall be compelled to accept any Shares or other
securities or assets whereon there is any liability.
ALTERATION OF BYE-LAWS
77. ALTERATION OF BYE-LAWS
No Bye-law shall be rescinded, altered or amended and no new Bye-law shall
be made until the same has been approved by a resolution of the Board and by a
resolution of the Members passed by a simple majority of the votes cast in
accordance with the provisions of these Bye-laws, or by unanimous vote of the
Members without prior approval of the Board, provided that any proposed
amendment to Bye-law 13 shall be approved by the Board and by the affirmative
vote of the holders of 75% of the Shares entitled to vote at a general meeting
of the Company. If the rescission, alteration or amendment varies the rights
attached to a class of Shares, Bye-law 46 must also be complied with.
III-36
<PAGE>
SCHEDULE--FORM A (BYE-LAW *)
P R O X Y
I/We
of
the holder(s) of share(s) in the above-named company
hereby appoint ________________________ or failing him/her
________________________ or failing
him/her ________________________ as my/our proxy to vote on my/our behalf at the
general meeting
of the Company to be held on the day of , , and at any
adjournment thereof.
Dated this day of ,
*GIVEN under the seal of the Company
*Signed by the above-named
_________________________________
_________________________________
Witness
*Delete as applicable.
III-37
<PAGE>
SCHEDULE--FORM B (BYE-LAW *)
NOTICE OF LIABILITY TO FORFEITURE FOR NON PAYMENT OF CALL
You have failed to pay the call of [amount of call] made on the day of
, last, in respect of the [number] share(s) [numbers in figures]
standing in your name in the Register of Members of the Company, on the day of
, last, the day appointed for payment of such call. You are hereby
notified that unless you pay such call together with interest thereon at the
rate of per annum computed from the said day of , last, on or
before the day of , next at the place of business of the Company
the share(s) will be liable to be forfeited.
Dated this day of ,
[Signature of Secretary]
By order of the Board
III-38
<PAGE>
SCHEDULE--FORM C (BYE-LAW *)
TRANSFER OF A SHARE OR SHARES
FOR VALUE RECEIVED .................................................... [amount]
.................................................................. [transferor]
hereby sell assign and transfer unto .............................. [transferee]
of ................................................................... [address]
............................................................ [number of shares]
shares of .................................................... [name of Company]
<TABLE>
<S> <C>
Dated........................................
.............................................
(Transferor)
In the presence of:
............................................
(Witness)
.............................................
(Transferee)
In the presence of:
............................................
(Witness)
</TABLE>
III-39
<PAGE>
SCHEDULE--FORM D (BYE-LAW *)
TRANSFER BY A PERSON BECOMING ENTITLED ON DEATH/BANKRUPTCY
OF A MEMBER
I/We having become entitled in consequence of the [death/bankruptcy] of
[name of the deceased Member] to [number] share(s) standing in the register of
Members of [Company] in the name of the said [name of deceased Member] instead
of being registered myself/ourselves elect to have [name of transferee] (the
"Transferee") registered as a transferee of such share(s) and I/we do hereby
accordingly transfer the said share(s) to the Transferee to hold the same unto
the Transferee his or her executors administrators and assigns subject to the
conditions on which the same were held at the time of the execution thereof; and
the Transferee does hereby agree to take the said share(s) subject to the same
conditions.
WITNESS our hands this day of ,
<TABLE>
<S> <C>
Signed by the above-named
[Person or Persons entitled]
in the presence of:
Signed by the above-named
[transferee]
in the presence of:
</TABLE>
III-40
<PAGE>
ANNEX IV
FOSTER WHEELER CORPORATION
AUDIT COMMITTEE
CHARTER
The Audit Committee is appointed by the Board of Directors of Foster Wheeler
Corporation (the "Company") to assist the Board in fulfilling its
responsibilities by overseeing (1) that management has maintained the
reliability and integrity of the accounting policies and financial reporting and
disclosure practices of the Company, (2) that management has established and
maintained an adequate system of internal controls within the Company, (3) that
management has established and maintained processes to assure compliance by the
Company with all applicable legal and regulatory requirements and Company
policies, and (4) the independence and performance of the Company's independent
auditors.
MEMBERSHIP
The Board shall (1) establish the size of the Audit Committee, which shall
consist of at least three directors, and (2) appoint the members of the Audit
Committee on the recommendation of the Committee on Nominees for Directors and
Officers. The members of the Audit Committee shall meet the independence and
financial experience requirements of the New York Stock Exchange, as interpreted
by the Board of Directors.
AUTHORITY
The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Committee. The Audit Committee may
request any officer or employee of the Company or the Company's outside counsel
or independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
2. Review the annual audited financial statements with management and the
independent auditor, including a discussion of significant accounting
issues regarding the accounting and auditing principles and practices as
well as the adequacy of the internal controls.
3. Review with management and the independent auditor significant financial
reporting and accounting issues made in connection with the preparation
of the Company's financial statements.
4. Review with the independent auditor the matters required to be discussed
by Statement on Auditing Standards No. 61 relating to the conduct of the
audit or the review of the quarterly financial statements as included in
the 10-Q.
5. Review any major changes to the Company's auditing and accounting
principles and practices as suggested by the independent auditor,
internal auditors or management.
6. Recommend to the Board the appointment of the independent auditor,
subject to ratification by stockholders, which firm is ultimately
accountable to the Audit Committee and the Board.
7. Approve the fees to be paid to the independent auditor.
8. Ensure that the Committee obtains an annual independence statement from
the independent auditor and discusses any item that may impact the
auditor's independence. The Committee
IV-1
<PAGE>
shall take appropriate action or recommend that the Board take
appropriate action, to satisfy itself of the independence of the
auditor.
9. Review the performance of the independent auditor and, if circumstances
warrant, recommend that the Board replace the independent auditor,
subject to ratification by stockholders.
10. Maintain oversight of the appointment and the functions of senior
internal auditing personnel.
11. Review with the independent auditor and financial management of the
Company the scope and staffing of the proposed audit for the current
year and, at the conclusion thereof, review such audit including any
comments or recommendations of the independent auditor or problems or
difficulties which the auditor may have encountered.
12. Review the audit scope of work planned for the current year by the
Director of Corporate Audit Services and, thereafter, periodically
review progress that has been made.
13. Review the scope of work planned for the current year by the Director of
Contract Performance Appraisal and, thereafter, periodically review
progress that has been made.
14. Review status reports prepared by Corporate Audit Services and Contract
Performance Appraisal.
15. Cause to be issued the report of the Audit Committee required by the
rules of the Securities and Exchange Commission to be included in the
Company's annual proxy statement.
16. Obtain periodic reports from the Chief Compliance Officer regarding the
status of the Corporation's Compliance Program and ensure that the Chief
Compliance Officer obtains annual compliance program certificates from
Chief Executive Officers.
17. Review with the Company's General Counsel any legal matters, including
significant litigation and regulatory matters, which may have a material
impact on the financial statements.
18. Meet in a separate executive session at least annually with the chief
financial officer, the Director of Corporate Audit Services, the
Director of Contract Performance Appraisal, the Chief Compliance Officer
and the independent auditor.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
The foregoing is the responsibility of management and the independent auditor.
The Audit Committee has no duty to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations and the Company's Code of Ethics.
MINUTES AND REPORTING
The Audit Committee shall make regular reports to the Board. Minutes of each
Audit Committee meeting are to be prepared by the Secretary of the Corporation
and copies sent to Committee Members with the original filed in the Corporate
archives.
SCHEDULE
The Committee shall meet a minimum of four times per year although
additional meetings may be called at any time the Chairman desires.
Approved by the Board of Directors
March 28, 2000
IV-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Seventh of the Foster Wheeler Corporation Restated Certificate of
Incorporation provides that a director shall not be personally liable to the
Company or its shareholders for damages for any breach of duty in such
director's capacity as a director except if a judgment or other final
adjudication establishes that the director's acts or omissions were in bad
faith, involved intentional misconduct, a knowing violation of law or that the
director personally gained in fact a financial profit or other advantage to
which such director was not legally entitled or that such director's acts
violated section 719 of the New York Business Corporation Law.
Section 6.6 of the Foster Wheeler Corporation By-laws, as amended, provides
that an officer or director will be indemnified against any costs or
liabilities, including attorney fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement in connection with any
action, suit or proceeding, or appeal thereof, except for proceedings initiated
by an officer or director without the authorization of the Board of Directors,
to the fullest extent permitted under the New York Business Corporation Law.
Foster Wheeler Corporation maintains liability insurance covering its
directors and officers and those of its subsidiaries.
Section 722(a) of the New York Business Corporation Law provides that a
corporation may indemnify any officer or director, made or threatened to be
made, a party to an action or proceeding other than one by or in the right of
any other corporation served in any capacity at the request of the corporation,
because he or she was a director or officer of the corporation, or served such
other corporation or other enterprise in any capacity, against judgments, fines,
amounts paid in settlement and reasonable expenses, including attorneys' fees
actually and necessarily incurred as a result of such action or proceeding, or
any appeal therein, if such director or officer acted, in good faith, for a
purpose which he or she reasonably believed to be in, or in the case of service
for any other corporation or other enterprise, not opposed to, the best
interests of the corporation and, in criminal actions or proceedings, in
addition, had no reasonable cause to believe that his or her conduct was
unlawful.
Section 722(c) of the New York Business Corporation Law provides that a
corporation may indemnify any officer or director made, or threatened to be
made, a party to an action by or in the right of the corporation by reason of
the fact that he or she is or was a director or officer of the corporation, or
is or was serving at the request of the corporation as a director or officer of
any other corporation of any type or kind, or other enterprise, against amounts
paid in settlement and reasonable expenses, including attorney's fees actually
and necessarily incurred by him or her in connection with the defense or
settlement of such action, or in connection with an appeal therein, if such
director or officer acted, in good faith, for a purpose which he or she
reasonably believed to be in, or, to, the best interests of the corporation. The
corporation may not, however, indemnify any officer or director pursuant to
Section 722(c) in respect of (1) a threatened action, or a pending action which
is settled or otherwise disposed of, or (2) any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation,
unless and only to the extent that the court in which the action was brought or,
if no action was brought, any court of competent jurisdiction, determines upon
application, that the person is fairly and reasonably entitled to indemnity for
such portion of the settlement and expenses as the court deems proper.
Section 723 of the New York Business Corporation Law provides that an
officer or director who has been successful on the merits or otherwise in the
defense of a civil or criminal action of the
II-1
<PAGE>
character set forth in Section 722 is entitled to indemnification as permitted
in such section. Section 724 of the New York Business Corporation Law permits a
court to award the indemnification required by Section 722.
Foster Wheeler Ltd. is a Bermuda company. Section 98 of the Companies Act of
1981 of Bermuda (the "Act") provides generally that a Bermuda company may
indemnify its directors, officers and auditors against any liability which by
virtue of Bermuda law otherwise would be imposed on them, except in cases where
such liability arises from fraud or dishonesty of which such director, officer
or auditor may be guilty in relation to the company. Section 98 further provides
that a Bermudian company may indemnify its directors, officers and auditors
against any liability incurred by them in defending any proceedings, whether
civil or criminal, in which judgment is awarded in their favor or they are
acquitted or in which they are acquitted or granted relief by the Supreme Court
of Bermuda in certain proceedings arising under Section 281 of the Act.
Foster Wheeler Ltd. has adopted provisions in its bye-laws that provide that
the Company shall indemnify its officers and directors to the maximum extent
permitted under the Act.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2 Agreement and Plan of Merger, dated as of , 2001,
among Foster Wheeler Corporation, Foster Wheeler LLC and
Foster Wheeler Ltd. (included as Annex I to the proxy
statement/ prospectus).
3.1 Memorandum of Association of Foster Wheeler Ltd. (included
as Annex II to the proxy statement/prospectus).
3.2 Bye-Laws of Foster Wheeler Ltd. (included as Annex III to
the proxy statement/prospectus).
4 Foster Wheeler Ltd. hereby agrees to furnish copies of
instruments defining the rights of holders of long-term debt
of Foster Wheeler Corporation and its consolidated
subsidiaries to the Commission upon its request.
4.1 Amended and Restated Rights Agreement dated as of September
30, 1997, between Foster Wheeler Corporation and Chase
Mellon Shareholder Services, L.L.C., as Rights Agent (filed
as Exhibit 1.2 to Foster Wheeler Corporation's Form 8-A
dated October 1, 1997 and incorporated herein by reference.)
*4.2 Form of Specimen Common Share certificate, par value $1.00
per share, of Foster Wheeler Ltd.
*5.1 Opinion of Conyers Dill & Pearman as to the legality of the
securities being issued.
*8.1 Opinion of White & Case LLP as to certain tax matters.
*8.2 Opinion of Conyers Dill & Pearman as to certain tax matters.
*23.1 Consent of PricewaterhouseCoopers LLP.
*23.2 Consent of White & Case LLP.
*23.3 Consent of Conyers Dill & Pearman.
*24 Powers of Attorney.
[99 Additional schedules.]
</TABLE>
------------------------
* To be filed by amendment.
II-2
<PAGE>
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The registrant undertakes that every prospectus: (i) that is filed pursuant
to paragraph (1) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
II-3
<PAGE>
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
SIGNATURES AND POWERS OF ATTORNEY
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the city of Clinton, state of New
Jersey, on December 21, 2000.
<TABLE>
<S> <C> <C>
FOSTER WHEELER LTD.
(Registrant)
By: /s/ LISA FRIES GARDNER
-----------------------------------------
Lisa Fries Gardner
VICE PRESIDENT AND SECRETARY
</TABLE>
Each of the directors and officers of Foster Wheeler Ltd., whose signature
appears below hereby authorizes each of Gilles A. Renaud and Lisa Fries Gardner,
as attorney-in-fact and agent, with full powers of substitution, to sign on his
or her behalf, individually and in the capacities stated below, and to file any
and all amendments (including post-effective amendments) to this Registration
Statement with the Securities and Exchange Commission, granting to said
attorney-in-fact and agents full power and authority to perform any other act on
behalf of the undersigned required to be done in the premises.
Pursuant to the requirements of the Securities Act of 1933, this report has
been signed by the following persons in the capacity and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ THOMAS R. O'BRIEN
---------------------------------- Director and Chief Executive
Thomas R. O'Brien Officer December 21, 2000
(PRINCIPAL EXECUTIVE OFFICER)
/s/ ROBERT D. ISEMAN
---------------------------------- Director and Chief Financial
Robert D. Iseman Officer December 21, 2000
(PRINCIPAL FINANCIAL OFFICER)
</TABLE>
II-4
