THE DII GROUP, INC.
1994 STOCK INCENTIVE PLAN
I.
PURPOSES AND SCOPE OF PLAN
The DII Group,
Inc. (the “Company”) desires to afford certain salaried
officers and other salaried key employees of the Company and its
subsidiaries who are in a position to affect materially the
profitability and growth of the Company and its subsidiaries an
opportunity to acquire a proprietary interest in the Company, and
thus to create in such persons interest in and a greater concern
for the welfare of the Company. Directors who are salaried key
employees within the meaning of the foregoing are eligible to
participate in the 1994 Stock Incentive Plan (the
“Plan”). These objectives will be promoted through the
granting to such key employees of equity instruments including
(i) incentive stock options (“Incentive Options”)
which are intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”);
(ii) options which are not intended to so qualify
(“NQSOs”); and (iii) performance shares
(“Performance Shares”).
The awards offered
pursuant to this Plan are a matter of separate inducement and are
not in lieu of any salary or other compensation for
services.
The Company, by
means of the Plan, seeks to retain the services of persons now
holding key positions and to secure the services of persons capable
of filling such positions.
II.
AMOUNT OF STOCK SUBJECT TO THE PLAN
The total number
of shares of the Company reserved and available for distribution
pursuant to options and awards granted hereunder shall not exceed,
in the aggregate, 5,500,000 shares, S$0.01 par value, per share, of
the Company (the “Shares”), subject to adjustment
described below.
Shares which may
be acquired under the Plan shall be authorized but unissued Shares.
Whenever any outstanding option or award or portion thereof
expires, is canceled, is forfeited or is otherwise terminated for
any reason without having been exercised or payment having been
made in respect of the entire option or award, the Shares allocable
to the expired, canceled, forfeited or otherwise terminated portion
of the option or award may again be the subject of options or
awards granted hereunder.
In the event of
any stock dividend, stock split, combination or exchange of Shares,
recapitalization or other change in the capital structure of the
Company, corporate separation or division (including, but not
limited to, split-up, spin-off or distribution to Company
shareholders other than a normal cash dividend), sale by the
Company of all or a substantial portion of its assets, rights
offering, merger, consolidation, reorganization or partial or
complete liquidation, or any other corporate transaction or event
having an effect similar to any of the foregoing, the aggregate
number of Shares reserved for issuance under the Plan, the number
and option price of Shares subject to outstanding options, the
financial performance goals of the Shares contained in a
Performance Share award, the number of Shares subject to a
Performance Share award agreement and any other characteristics or
terms of the options and awards as the Committee (as hereinafter
defined) shall deem necessary or appropriate to reflect equitably
the effects of such changes to the holders of options and awards,
shall be appropriately substituted for new shares or adjusted, as
determined by the Committee in its discretion. Notwithstanding the
foregoing, (i) each such adjustment with respect to an
Incentive Option shall comply with the rules of Section 424(a) of
the Code, and (ii) in no event shall any adjustment be made
which would render any Incentive Option granted hereunder other
than an incentive stock option for purposes of Section 422 of
the Code without the consent of the grantee.
The Compensation
Committee (the “Committee”), or the Board of Directors
of the Company (the “Board of Directors”) if there is
no Committee, will have sole and exclusive authority to administer
the Plan. The
Committee shall
consist of no fewer than two (2) members of the Board of
Directors, each of whom shall be a “non-employee
Director” within the meaning of Rule 16b-3 or any
successor rule or regulation (“Rule 16b-3”)
promulgated under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). The Committee shall administer
the Plan so as to comply at all times with Rule 16b-3. A majority
of the members of the Committee shall constitute a quorum, and a
resolution passed by a majority of the members of the Committee
shall be a resolution of the Committee. Any member of the Committee
may be removed at any time, either with or without cause, by
resolution adopted by a majority of the Board of Directors, and any
vacancy on the Committee may at any time be filled by resolution
adopted by a majority of the Board of Directors.
Subject to the
express provisions of the Plan, the Board of Directors or the
Committee, as the case may be, shall have authority, in its
discretion, to (i) select employees of the Company as
recipients of options or awards; (ii) determine the number and
type of options or awards to be granted; (iii) determine the
terms and conditions, not inconsistent with the terms hereof, of
any options or awards granted; (iv) adopt, alter and repeal
such administrative rules, guidelines and practices governing the
Plan as it shall, from time to time, deem advisable;
(v) interpret the terms and provisions of the Plan and any
option or award granted and any agreements relating thereto; and
(vi) otherwise supervise the administration of the
Plan.
The determination
of the Board of Directors or the Committee, as the case may be, on
matters referred to in this Article III shall be
conclusive.
The Board of
Directors or the Committee, as the case may be, may employ such
legal counsel, consultants and agents as it may deem desirable for
the administration of the Plan and may rely upon any opinion
received from any such counsel or consultant and any computation
received from any such consultant or agent. Expenses incurred by
the Board of Directors or the Committee in the engagement of such
counsel, consultant or agent shall be paid by the Company. No
member or former member of the Committee or of the Board of
Directors shall be liable for any action or determination made in
good faith with respect to the Plan or any option or award granted
hereunder.
The Company shall
indemnify each member of the Committee for all costs and expenses
and, to the extent permitted by applicable law, any liability
incurred in connection with defending any proceedings arising in
connection with any actions in administering the Plan or in
authorizing or denying authorization to any transaction hereunder
in which judgment is given in his favor or in which he is acquitted
or in connection with any application, in relation to such
liability, in which relief is granted to him by the
court.
Options and
Performance Share awards may be granted only to certain salaried
officers and other salaried key employees of the Company and its
subsidiaries who are not members of the Committee; provided, that
no person shall be eligible for any award if the granting of such
award to such person would prevent the satisfaction by the Plan of
the general exemptive conditions of Rule 16b-3. No employee
shall be granted or awarded stock option and Performance Shares
covering, in aggregate, more than 300,000 Shares in any fiscal year
of the Company (subject to adjustment as provided in II.
above).
1.
General . Options may be granted alone or in addition to
other awards granted under the Plan. Any options granted under the
Plan shall be on such terms as the Committee may from time to time
approve and the provisions of the option grants need not be the
same with respect to each optionee. Options granted under the Plan
may be either Incentive Options or NQSOs. The Committee may grant
to any optionee Incentive Options, NQSOs or both types of
options.
Options granted
under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions
not inconsistent with the terms of the Plan, as the Committee deems
appropriate. Each option grant shall be evidenced by an agreement
executed on behalf of the Company by an officer designated by the
Committee and accepted by the optionee. Such agreement shall
describe the options and state that such 2
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options are
subject to all the terms and provisions of the Plan and shall
contain such other terms and provisions, consistent with the Plan,
as the Committee may approve.
2.
Exercise Price and Payment . The price per Share under any
option granted hereunder shall be such amount as the Board of
Directors or the Committee, as the case may be, shall determine,
provided, however, that such price shall not be less than one
hundred percent (100%) of the fair market value of the Shares
subject to such option, as determined below, at the date the option
is granted (110% in the case of an Incentive Option granted to any
person who, at the time the option is granted, owns shares of the
Company or any subsidiary or parent of the Company possessing more
than ten percent (10%) of the total combined voting power of all
classes of shares of the Company or of any subsidiary or parent of
the Company (a “10% Shareholder”)), and provided
further that in no event may the price be less than the par value
of a Share.
If the Shares are
listed on a national securities exchange in the United States on
the date any option is granted, the fair market value per Share
shall be deemed to be the highest sales price at which such Shares
are sold on such national securities exchange in the United States
on the date upon which the option is granted, but if the Shares are
not traded on such date, or such national securities exchange is
not open for business on such date, the fair market value per Share
shall be the closing price per share determined as of the closest
preceding date on which such exchange shall have been open for
business and the Shares were traded. If the Shares are listed on
more than one national securities exchange in the United States on
the date any such option is granted, the Board of Directors or the
Committee, as the case may be, shall determine which national
securities exchange shall be used for the purpose of determining
the fair market value per Share. If the Shares are not listed on a
national securities exchange but are reported on the National
Association of Securities Dealers, Inc. Automated Quotation System
(“Nasdaq”), the fair market value per share shall be
deemed to be the average of the high bid and low asked prices on
the date upon which the option is granted as reported by
Nasdaq.
For purposes of
this Plan, the determination by the Board of Directors or the
Committee, as the case may be, of the fair market value of a Share
shall be conclusive.
3. Term
of Options and Limitations on the Right of Exercise . The term
of each option will be for such period as the Board of Directors or
the Committee, as the case may be, shall determine, provided that,
except as otherwise provided herein, in no event may any option
granted hereunder be exercisable more than ten (10) years from
the date of grant of such option (five years in the case of an
Incentive Option granted to a 10% Shareholder). Each option shall
become exercisable in such installments and at such times as may be
designated by the Board of Directors or the Committee, as the case
may be, and set forth in the agreement related to the grant of
options. To the extent not exercised, installments shall accumulate
and be exercisable, in whole or in part, at any time after becoming
exercisable, but not later than the date the option
expires.
The Board of
Directors or the Committee, as the case may be, shall have the
right to limit, restrict or prohibit, in whole or in part, from
time to time, conditionally or unconditionally, rights to exercise
any option granted hereunder.
To the extent that
an option is not exercised within the period of exercisability
specified therein, it shall expire as to the then unexercised
part.
4.
Exercise of Options . Options granted under the Plan shall
be exercised by the optionee as to all or part of the Shares
covered thereby by the giving of written notice of the exercise
thereof to the Company at the principal business office of the
Company, specifying the number of Shares to be purchased,
accompanied by payment therefor made to the Company for the full
purchase price of such Shares. The date of actual receipt by the
Company of such notice shall be deemed the date of exercise of the
option with respect to the Shares being purchased.
Upon the exercise
of an option granted hereunder, the Company shall cause the
purchased Shares to be issued only when it shall have received the
full purchase price for the Shares in cash.
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Notwithstanding
the foregoing, the Company, in its sole discretion, may establish
cashless exercise procedures whereby an option holder, subject to
the requirements of Rule 16b-3, Regulation T, federal
income tax laws, and other federal, state and local tax and
securities laws, can exercise an option or a portion thereof
without making a direct payment of the option price to the Company,
including a program whereby option shares would be sold on behalf
of and at the request of an option holder by a designated broker
and the exercise price would be satisfied out of the sale proceeds
and delivered to the Company. If the Company so elects to establish
a cashless exercise program, the Company shall determine, in its
sole discretion, and from time to time, such administrative
procedures and policies as it deems appropriate and such procedures
and policies shall be binding on any option holder wishing to
utilize the cashless exercise program.
5.
Nontransferability of Options . An option granted hereunder
shall not be transferable, whether by operation of law or
otherwise, other than by will or the laws of descent and
distribution, and any option granted hereunder shall be
exercisable, during the lifetime of the holder, only by such
holder.
The option of any
person to acquire Shares and all his rights thereunder shall
terminate immediately if the holder: (a) attempts to or does
sell, assign, transfer, pledge, hypothecate or otherwise dispose of
the option or any rights thereunder to any other person except as
permitted above; or (b) becomes insolvent or bankrupt or
becomes involved in any manner so that the option or any rights
thereunder becomes subject to being taken from him to satisfy his
debts or liabilities.
6.
Termination of Employment . Upon termination of employment
of any option holder, any option previously granted to such option
holder, u
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