FLEXTRONICS INTERNATIONAL USA,
INC. THIRD
AMENDED AND RESTATED 2005 SENIOR EXECUTIVE
DEFERRED COMPENSATION PLAN
Flextronics
International USA, Inc. (the “Company”) hereby amends
and restates in its entirety the Flextronics International USA,
Inc. Second Amended and Restated 2005 Senior Executive Deferred
Compensation Plan (as amended and restated herein, the
“Plan”). The Plan sets forth the terms of an unfunded
deferred compensation plan for a select group of management, highly
compensated employees, directors and persons who have been part of
a select group of management, highly compensated employees or
directors of the Company who may agree, pursuant to the Deferral
Agreements, to defer certain compensation. It is intended that the
Plan constitute an unfunded “top hat plan” for purposes
of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”). The Plan shall be administered and construed
in accordance with Section 409A of the Code and any
administrative guidance issued thereunder.
The
following terms used in the Plan shall have the meanings set forth
below:
(a) “
Affiliate ” means, with respect to the Company, any
entity directly or indirectly controlling, controlled by, or under
common control with the Company or any other entity designated by
the Board in which the Company or an Affiliate has an
interest.
(b) “
Award Agreement ” shall mean any agreement between the
Company and a Participant for the payment to the Participant of
compensation that is deferred under this Plan.
(c) “
Beneficiary ” shall mean any person, persons, trust or
other entity designated by a Participant to receive benefits, if
any, under the Plan upon such Participant’s death. No
designation or change in designation of a Beneficiary shall be
effective until received and acknowledged in writing by the
Committee or Plan Administrator.
(d) “
Board ” shall mean the Board of Directors of
FIL
(e) “
Change in Control ” shall mean a change in the
ownership or effective control of the Company, or in the ownership
of a substantial portion of its assets, within the meaning of Code
Section 409A(a)(2)(A)(v) and Treasury Regulations
thereunder.
(f) “
Claimant ” shall have the meaning set forth in
Section 9(a).
(g) “
Code ” shall mean the Internal Revenue Code of 1986,
as amended, and Treasury Regulations issued thereunder.
(h) “
Committee ” shall mean the Compensation Committee
appointed by the Board.
(i) “
Company ” shall mean Flextronics International USA,
Inc. and, for purposes of determining the benefits provided under
the Plan or as applicable under ERISA or the Code, any successor to
all or a major portion of the Company’s assets or business
that assumes the obligations of the Company, and any other
corporation or unincorporated trade or business that has adopted
the Plan with the approval of the Company, and is a member of the
same controlled group of corporations or the same group of trades
or businesses under common control (within the meaning of Code
Sections 414(b) and 414(c) as modified by Code Section 415(h))
as the Company, or an affiliated service group (as defined in Code
Section 414(m)) which includes the Company, or any other
entity required to be aggregated with the Company pursuant to
regulations under Code Sections 414(o) and 409A or any other
affiliated entity that is designated by the Company as eligible to
adopt the Plan.
(j) “
Deferral Account ” shall mean the recordkeeping
account, and any sub-accounts if determined by the Committee or the
Plan Administrator to be necessary or appropriate for the proper
administration of the Plan, established and maintained by the
Company in the name of a Participant as provided in Section 4(c)
for compensation payable to a Participant pursuant to a Deferral
Agreement.
(k) “
Deferral Agreement ” shall mean an agreement executed
by the Participant and the Company, in such form as approved by the
Committee or the Plan Administrator, and as may be revised from
time to time with respect to any one or more Participants by or at
the direction of the Committee or Plan Administrator, whereby
(A) the Participant (i) agrees to receive certain types
of compensation in the future pursuant to the provisions of this
Plan, (ii) elects to defer future compensation such
Participant would otherwise be entitled to receive in cash from the
Company, including an amount or percentage of compensation to be
deferred, and/or (iii) makes such other elections as are
permitted and provides such other information as is required under
the Plan, and (B) the Participant specifies a schedule
according to which the Participant will receive payout of his or
her compensation that is payable in the future under this Plan.
Each Deferral Agreement shall be consistent with this Plan and
shall incorporate by its terms the provisions of this
Plan.
(l) “
Deferral Day ” shall mean, for each Participant, the
day on which the Company is required, by the terms of the
applicable Deferral Agreement form or any other agreement between
the Participant and the Company, to credit an amount to the
Participant’s Deferral Account under this Plan.
(m) “
Disabled ” shall mean a Participant who (i) is
unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a
continuous period of not less than 12 months; or (ii) is, by
reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving
income replacement benefits for a period of not less than
3 months under an accident and health plan covering employees
of the Participant’s employer. This definition shall be
construed and administered in accordance with the requirements of
Code Section 409A(a)(2)(C) and Treasury Regulations
thereunder.
(n) “
ERISA ” shall have the meaning set forth in
Section 1.
(o) “
Fair Market Value ” shall mean, on a given date of
valuation, (i) with respect to any mutual fund, the closing
net asset value as reported in The Wall Street Journal with respect
to the date of valuation and (ii) with respect to a security
traded on a national securities exchange or the NASDAQ National
Market, the closing price on the date of valuation as reported in
The Wall Street Journal.
(p) “
FIL ” shall mean Flextronics International
Ltd.
(q) “
Hypothetical Investments ” shall have the meaning set
forth in Section 4(d).
(r) “
Manager ” shall have the meaning set forth in
Section 4(d).
(s) “
Officers ” shall have the meaning set forth in
Section 8(b)(ii).
(t) “
Participant ” shall mean a present or former employee
or director of the Company who participates in this Plan and any
other present or former employee or director designated from time
to time by the Committee.
(u) “
Plan ” shall mean this Flextronics International USA,
Inc. Third Amended and Restated 2005 Senior Executive Deferred
Compensation Plan.
(v) “
Plan Administrator ” shall mean the Plan
Administrator, if any, appointed pursuant to
Section 3(a).
(w) “
Released Party ” shall have the meaning set forth in
Section 8(b)(iii).
(x) “
Separation from Service ” shall mean a
Participant’s separation from service from the Company within
the meaning of Code Section 409A(a)(2)(A)(i) and Treasury
Regulations thereunder.
(y) “
Share Award Deferral ” shall have the meaning set
forth in Section 4(l).
(z) “
Specified Employee ” shall mean a key employee (as
defined in Code Section 416(i) without regard to paragraph 5
thereof) of FIL, for so long as any of its stock is publicly traded
on an established securities market or otherwise. This definition
shall be construed and administered in accordance with the
requirements of Code Section 409A(a)(2)(B)(i) and Treasury
Regulations thereunder.
(aa)
“ Stock Unit ” shall mean compensation in the
form of a vested or unvested right to receive shares of FIL in the
future.
(bb)
“ Trust ” shall mean any trust or trusts
established or designated by the Company pursuant to Section 5(a)
to hold assets in connection with the Plan.
(cc)
“ Trustee ” shall have the meaning set forth in
Section 5(a).
(dd)
“ Unforeseeable Emergency ” shall mean a severe
financial hardship to a Participant resulting from an illness or
accident of the Participant, the Participant’s Spouse, the
Participant’s beneficiary, or a dependent (as defined in
Section 152(a) of the Code) of the Participant, loss of the
Participant’s property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant. This definition
shall be construed and administered in accordance with the
requirements of Code Section 409A(a)(2)(B)(ii) and Treasury
Regulations thereunder.
3. Authority
and Administration of the Committee and Plan
Administrator.
(a)
Authorization of Committee or Plan Administrator . The
Committee shall administer the Plan and may select one or more
persons to serve as the Plan Administrator. The Plan Administrator
shall have authority to perform any act that the Committee is
entitled to perform under this Plan, except to the extent that the
Committee specifies limitations on the Plan Administrator’s
authority. The Plan Administrator shall be the Company’s
Executive Vice President Worldwide HR and Management Systems. Any
person selected to serve as the Plan Administrator may, but need
not, be a Committee member or an officer or employee of the
Company. However, if a person serving as Plan Administrator or a
member of the Committee is a Participant, such person may not
decide or vote on a matter affecting his interest as a
Participant.
(b)
Administration by Committee or Plan Administrator . The
Committee or Plan Administrator shall administer the Plan in
accordance with its terms, and shall have all powers necessary to
accomplish such purpose, including the power and authority to
reasonably construe and interpret the Plan, to reasonably define
the terms used herein, to reasonably prescribe, amend and rescind
rules and regulations, agreements, forms, and notices relating to
the administration of the Plan, and to make all other
determinations reasonably necessary or advisable for the
administration of the Plan. The Committee or Plan Administrator may
appoint additional agents and delegate thereto powers and duties
under the Plan.
4. Deferral
Agreements, Deferral Accounts and Share Award Deferrals
.
(a)
Deferral Agreement . The Company and any Participant may
agree to defer all or a portion of his or her compensation, under
the terms provided in any Deferral Agreement form provided to the
Participant in accordance with the Plan, by executing a completed
Deferral Agreement. An election to defer compensation for a taxable
year pursuant to a Deferral Agreement must be made not later than
the close of the preceding taxable year, or at such other time
provided in Treasury Regulations issued under Code
Section 409A (or earlier date specified in the applicable
Deferral Agreement form); provided that, in the case of the first
year in which a Participant becomes eligible to participate in the
Plan within the meaning of Code Section 409A and applicable
administrative guidance, such election may be made with respect to
compensation paid for services to be performed subsequent to the
election within 30 days after the date the Participant becomes
eligible to participate in the Plan (or earlier date specified in
the applicable Deferral Agreement form); and, in the case of any
performance-based compensation based on services performed over a
period of at least 12 months, such election may be made no
later than 6 months before the end of the period (or the
earliest of such date, the day immediately prior to the date such
compensation has become reasonably ascertainable, and
the date
specified in the applicable Deferral Agreement form) provided that
the Participant is continuously employed from the date that the
applicable performance criteria are established through the date of
the election. Different Deferral Agreements may be used for
different components of compensation payable for a single service
period. Each Deferral Agreement form shall establish for each
Participant the amount and type of compensation (including bonuses
and/or salary) that may or shall be deferred pursuant to the Plan
and such determination will be reflected on the relevant Deferral
Agreement form, and may establish maximum or minimum amounts of
aggregate deferrals that may be elected for a Participant. A
Participant shall not be entitled to vary any term that is set
forth in a Deferral Agreement form except to the extent that the
form of Deferral Agreement itself permits variations.
(b)
Code Section 409A Transition Rules . The Committee or
Plan Administrator, in its sole and absolute discretion, may offer
to any Participant the option to make new elections in 2007 and/or
2008 as to time and form (but not medium) of payment for deferrals
of compensation that would not otherwise be payable under the Plan
in 2007 or 2008 (as applicable), provided the elections are
consistent with the requirements of Code Section 409A. Any
elections made under this Section shall be administered by the
Committee or the Plan Administrator in accordance with applicable
administrative guidance under Code Section 409A.
(c)
Establishment of Deferral Accounts . The Committee or Plan
Administrator shall establish a Deferral Account for each
Participant. Each Deferral Account shall be maintained for the
Participant solely as a bookkeeping entry by the Company to
evidence unfunded obligations of the Company. The Participant shall
be 100% vested in the Participant’s Deferral Account at all
times, except to the extent otherwise specified in the applicable
Deferral Agreement or in any other agreement between the Company
and the Participant. The provisions with respect to vesting in any
such Deferral Agreement or other agreement shall be incorporated in
this Plan and given effect as if fully set forth herein. A
Participant’s Deferral Account shall be credited with the
amounts required to be credited to the Participant’s Deferral
Account pursuant to the Participant’s initial Deferral
Agreement or pursuant to any subsequent Deferral Agreement entered
into by that Participant and the Company, in each case, less the
amount of federal, state or local tax required by law to be
withheld with respect to such amounts, unless such withholding is
provided from another source, and shall be adjusted for
Hypothetical Investment results as described herein.
(d)
Hypothetical Investments and Managers . Subject to the
provisions of Section 4(g), amounts credited to a Deferral
Account shall be deemed to be invested in one or more hypothetical
investments (“Hypothetical Investments”). Each
Participant shall select an investment manager (a
“Manager”) from a list established by the Committee or
Plan Administrator, and the Manager will then select Hypothetical
Investments on the Participant’s behalf. A Participant may
select a successor Manager from such list of Managers from time to
time. For the unvested portion of a Participant’s Deferral
Account, a Manager may select Hypothetical Investments from a list
of investments selected from time to time by the Committee or Plan
Administrator (the “Unvested Account List”), and
subject to any limitation on permissible allocations among groups
of Hypothetical Investments that the Committee or Plan
Administrator may establish. For the vested portion of a
Participant’s Deferral Account (which shall be accounted for
in a separate vested subaccount pursuant to Section 4(k)), a
Manager may
select
Hypothetical Investments from a list of publicly available mutual
funds, publicly traded stock and bonds selected from time to time
by the Committee or Plan Administrator (the “Vested Account
List”). The Committee or Plan Administrator shall consider
requests from any Participant to add to the list of Managers and/or
to the Vested Account List, and shall satisfy such requests if they
are reasonably acceptable to the Committee or Plan Administrator.
The Committee or Plan Administrator may change or discontinue any
Hypothetical Investment or Manager if reasonably necessary to
satisfy business objectives of the Company or its Affiliates;
provided that, following a Change in Control, neither the Committee
nor the Plan Administrator may change or modify the investment
options existing immediately prior to such Change in Control in any
manner that is adverse to the Participants. Except in accordance
with Section 4(l), no Hypothetical Investments may be made in
any debt or equity issued by FIL or its Affiliates.
(e)
List of Hypothetical Investments and Managers . An initial
list of Managers, an initial Unvested Account List, and an initial
Vested Account List shall be established by the Board, the
Committee or the Plan Administrator and each such list shall be
provided to each Participant in connection with the initial
Deferral Agreement.
(f)
Investment of Deferral Accounts . As provided in
Section 4(d), each Deferral Account shall be deemed to be
invested in one or more Hypothetical Investments as of the date of
the deferral or credit, as the case may be. The amounts of
hypothetical income, appreciation and depreciation in value of the
Hypothetical Investments shall be credited and debited to, or
otherwise reflected in, such Deferral Account from time to time in
accordance with procedures established by the Committee or Plan
Administrator. Unless otherwise determined by the Committee or Plan
Administrator, amounts credited to a Deferral Account shall be
deemed invested in Hypothetical Investments as of the date so
credited.
(g)
Allocation and Reallocation of Hypothetical Investments . A
Manager may allocate and reallocate amounts credited to a
Participant’s Deferral Account to one or more of the
Hypothetical Investments authorized under the Plan with such
frequency as determined by the Committee or the Plan Administrator.
Subject to the rules established by the Committee or Plan
Administrator, a Manager may reallocate amounts credited to a
Participant’s Deferral Account to other Hypothetical
Investments by filing with the Committee or Plan Administrator a
notice, in such form as may be specified by the Committee or Plan
Administrator. No Participant shall have the right, at any time, to
direct a Manager to enter into specific transactions in connection
with his or her Deferral Account; provided that this
provision shall not prohibit the Participant from communicating
with the Manager regarding Hypothetical Investments, including
communication regarding preferred Hypothetical Investment
objectives. Each Manager shall have the power to acquire and
dispose of such Hypothetical Investments as the Manager determines
necessary in connection with its portfolio. The Committee or Plan
Administrator may restrict or prohibit reallocation of amounts
deemed invested in specified Hypothetical Investments or invested
by specified Managers to comply with applicable law or
regulation.
(h)
No Actual Investment . Notwithstanding any other provision
of this Plan that may be interpreted to the contrary, the
Hypothetical Investments are to be used for measurement purposes
only. A Participant’s election of any such Hypothetical
Investments, the allocation of such Hypothetical Investments to his
or her Deferral Account, the calculation of
additional
amounts and the crediting or debiting of such amounts to a
Participant’s Deferral Account shall not be considered or
construed in any manner as an actual investment of his or her
Deferral Account in any such Hypothetical Investments. In the event
that the Company or the Trustee, in its own discretion, decides to
invest funds in any or all of the Hypothetical Investments, no
Participant shall have any rights in or to such investments
themselves. Without limiting the foregoing, a Participant’s
Deferral Account shall at all times be a bookkeeping entry only and
shall not represent any investment made on his or her behalf by the
Company or the Trust. The Participant shall at all times remain an
unsecured creditor of the Company.
(i)
Forfeiture of Unvested Portions of Deferral Accounts Upon
Separation from Service . Upon a Participant’s Separation
from Service, any unvested portion of the Participant’s
Deferral Account (excluding the portion, if any, that vests as a
result of such termination) shall be forfeited and terminated in
accordance with the applicable Deferral Agreement, except as
otherwise determined by the Committee in its sole and absolute
discretion.
(j)
Change in Law . If a future change in law would, in the
judgment of the Committee or Plan Administrator, likely accelerate
taxation to a Participant of amounts that would be credited to the
Participant’s Deferral Account in the future under the
Participant’s Deferral Agreement, the Company and the
Participant will attempt to amend the Plan to satisfy the
requirements of the change in law and, unless and until such an
amendment is agreed to, Company shall cease deferrals under the
Participant’s Deferral Agreement on the effective date of
such change in law; provided however, the Company shall not cease
deferrals if such cessation would violate the provisions of Code
Section 409A.
(k)
Separate Maintenance of Vested Subaccounts . A separate
vested subaccount shall be established and maintained for each
Participant who either (a) elects to defer amounts of salary
and/or cash bonus payments pursuant to a Deferral Agreement, or
(b) becomes vested in a portion of the unvested balance of the
Participant’s Deferral Account (the “Unvested
Balance”). A Participant’s vested subaccount shall
constitute part of the Participant’s Deferral Account.
Whenever a portion of a Participant’s Unvested Balance
becomes vested, the portion that becomes vested shall be
transferred to the Participant’s separate vested subaccount
as specified in the Deferral Agreement or other agreement entered
into between the Participant and the Company. If a Participant
elects to defer amounts of salary and cash bonus pursuant to a
Deferral Agreement, the deferral salary and cash bonus shall be
accounted for in the Participant’s separate vested
subaccount. The amounts of hypothetical income, appreciation and
depreciation in value of the Hypothetical Investments of amounts in
a vested subaccount shall be credited and debited to, or otherwise
reflected in, such vested subaccount from time to time in
accordance with procedures established by the Committee or Plan
Administrator. Unless otherwise determined by the Committee or Plan
Administrator, amounts credited to a vested subaccount shall be
deemed invested in Hypothetical Investments as of the effective
date of the credit.
(l)
Share Award Deferrals . Pursuant to an applicable Award
Agreement, compensation in the form of a Stock Unit may be deferred
under this Plan (any such deferral, a “Share Award
Deferral”). If a Share Award Deferral is made for a
Participant, a separate subaccount of the Participant’s
Deferral Account shall be established and maintained in order to
account for the Participant’s rights under the Share Award
Deferral, and any hypothetical earnings and losses thereon shall be
recorded in such separate subaccount. Any such
subaccount
shall be
unvested to the extent attributable to an unvested Stock Unit, and
from the time that the Stock Unit vests shall be deemed to be
invested solely in shares of FIL stock. Notwithstanding any other
provision of the Plan to the contrary, a Participant shall not be
entitled to reallocate any portion of a subaccount that is deemed
invested in a Stock Unit or FIL shares to another Hypothetical
Investment.
5.
Establishment of Trust .
(a)
The Trust Agreement . The Company has entered into a Trust
Agreement for the Plan, providing for the establishment of a trust
to be held and administered by a trustee (the
“Trustee”) designated in the Trust Agreement (the
“Trust”). The Trustee shall be the agent for purposes
of such duties delegated to the Trustee by the Committee or Plan
Administrator as set forth in the Trust Agreement. The Trust shall
be irrevocable.
(b)
Funding the Trust . Except as otherwise provided in Section
5(d) with respect to Share Award Deferrals, on the relevant
Deferral Day, the Company shall deposit into the Trust cash or
other assets, as specified in the applicable Deferral Agreement,
equal to the aggregate amount required to be credited to
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