FLEXTRONICS INTERNATIONAL
LTD.
A.
This 1993 Share Option Plan (the “Plan”) is intended to
promote the interests of Flextronics International Ltd., a
Singapore corporation (the “Corporation”), by providing
(i) key employees (including officers) of the Corporation (or
its parent or subsidiary corporations) who are responsible for the
management, growth and financial success of the Corporation (or its
parent or subsidiary corporations), (ii) certain non-employee
members of the Corporation’s Board of Directors (the
“Board”) and (iii) certain consultants and other
independent contractors who provide valuable services to the
Corporation (or its parent or subsidiary corporations) with the
opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation (or
its parent or subsidiary corporations).
B.
The Plan shall become effective on December 1, 1993 upon
adoption by the Board, and such date shall accordingly constitute
the Effective Date of the Plan.
A.
For purposes of the Plan, the following definitions shall be in
effect:
BOARD : the Corporation’s Board of
Directors.
CHANGE IN CONTROL : a change in ownership or control of the
Corporation effected through either of the following
transactions:
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(a)
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the
direct or indirect acquisition by any person or related group of
persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control
with, the Corporation) of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation’s outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation’s
stockholders which the Board does not recommend such stockholders
to accept; or
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(b)
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a
change in the composition of the Board over a period of thirty-six
(36) consecutive months or less such that a majority of the Board
members (rounded up to the next whole number) ceases, by reason of
one or more proxy contests for the election of Board members, to be
comprised of individuals who either (i) have been Board
members continuously since the beginning of such period or
(ii) have been elected or nominated for election as Board
members during such period by at least a majority of the Board
members described in clause (i) who were still in office at
the time such election or nomination was approved by the
Board.
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CODE : the U.S. Internal Revenue Code of 1986, as
amended.
CORPORATE TRANSACTION : any of the following
stockholder-approved transactions to which the Corporation is a
party:
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(a)
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a
merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Corporation is
incorporated,
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(b)
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the
sale, transfer or other disposition of all or substantially all of
the assets of the Corporation in complete liquidation or
dissolution of the Corporation, or
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(c)
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any
reverse merger in which the Corporation is the surviving entity but
in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation’s outstanding
securities are transferred to a person or persons different from
the persons holding those securities immediately prior to such
merger.
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EMPLOYEE : an individual who performs services while in the
employ of the Corporation or one or more parent or subsidiary
corporations, subject to the control and direction of the employer
entity not only as to the work to be performed but also as to the
manner and method of performance.
EXERCISE DATE : the date on which the Corporation shall have
received written notice of the option exercise.
FAIR MARKET VALUE : the Fair Market Value per Ordinary Share
determined in accordance with the following provisions:
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(a)
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If
the Ordinary Shares are not at the time listed or admitted to
trading on any U.S. national stock exchange but are traded on the
Nasdaq National Market, the Fair Market Value shall be the closing
selling price per Ordinary Share on the date in question, as such
price is reported by the National Association of Securities Dealers
through the Nasdaq National Market or any successor system. If
there is no reported closing selling price for the Ordinary Shares
on the date in question, then the closing selling price per
Ordinary Share on the last preceding date for which such quotation
exists shall be determinative of Fair Market Value.
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(b)
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If
the Ordinary Shares are at the time listed or admitted to trading
on any U.S. national stock exchange, then the Fair Market Value
shall be the closing selling price per Ordinary Share on the date
in question on the U.S. exchange determined by the Plan
Administrator to be the primary market for the Ordinary Shares, as
such price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale of the
Ordinary Shares on such exchange on the date in question, then the
Fair Market Value shall be the closing selling price per Ordinary
Share on the exchange on the last preceding date for which such
quotation exists.
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(c)
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If
the Ordinary Shares are on the date in question neither listed nor
admitted to trading on any U.S. national stock exchange nor traded
on the Nasdaq National Market, then the Fair Market Value per
Ordinary Share on such date shall be determined by the Plan
Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.
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HOSTILE TAKE-OVER : a change in ownership of the Corporation
effected through the following transaction:
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(a)
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the
direct or indirect acquisition by any person or related group of
persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control
with, the Corporation) of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation’s outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation’s
stockholders which the Board does not recommend such stockholders
to accept, and
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(b)
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the
acceptance of more than fifty percent (50%) of the securities so
acquired in such tender or exchange offer from holders other than
Section 16 Insiders.
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INCENTIVE OPTION : a stock option which satisfies the
requirements of Code Section 422.
INITIAL AUTOMATIC GRANT DATE : January 24,
1994.
1934 ACT : the U.S. Securities and Exchange Act of 1934, as
amended from time to time.
NON-STATUTORY OPTION : a stock option not intended to meet
the requirements of Code Section 422.
OPTIONEE : any person to whom an option is granted under the
Discretionary Option Grant or Automatic Option Grant Program in
effect under the Plan.
ORDINARY SHARES : ordinary shares of the Corporation with a
par value of S$0.01 per share.
PARENT : any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation,
provided each corporation in the unbroken chain (other than the
Corporation) owns, at the time of the determination, stock
possessing more than fifty percent (50%) of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
PERMANENT DISABILITY OR PERMANENTLY DISABLED : the inability
of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment expected to result in death or to be of
continuous duration of twelve (12) months or more.
PLAN ADMINISTRATOR : the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is
authorized to administer the Discretionary Option Grant Program
with respect to one or more classes of eligible persons, to the
extent such entity is carrying out its administrative functions
under that program with respect to the persons under its
jurisdiction.
PRIMARY COMMITTEE : the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Discretionary Option Grant Program with respect to Section 16
Insiders.
SECONDARY COMMITTEE : the committee of one (1) or more
Board members appointed by the Board to administer the
Discretionary Option Grant Program with respect to eligible persons
other than Section 16 Insiders.
SERVICE : the performance of services on a periodic basis to
the Corporation (or any parent or subsidiary corporation) in the
capacity of an Employee, a non-employee member of the Board or an
independent consultant or advisor, except to the extent otherwise
specifically provided in the applicable stock option
agreement.
SECTION 12(g) REGISTRATION DATE : the date on which the
initial registration of the Ordinary Shares under Section 12(g) of
the 1934 Act becomes effective.
SECTION 16 INSIDER : an officer or director of the
Corporation subject to the short-swing profit restrictions of
Section 16 of the 1934 Act.
SUBSIDIARY : any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation,
provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock
possessing more than fifty percent (50%) of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
TAKE-OVER PRICE : the greater of (a) the Fair Market
Value per Ordinary Share on the date the particular option to
purchase Ordinary Shares is surrendered to the Corporation in
connection with a Hostile Take-Over or (b) the highest
reported price per Ordinary Share paid by the tender offeror in
effecting such Hostile Take-Over. However, if the surrendered
option is an Incentive Option, the Take-Over Price shall not exceed
the clause (a) price per share.
UNDERWRITING EXECUTION DATE : the date on which the
Underwriting Agreement for the initial public offering of the
Ordinary Shares in the U.S. is executed and priced.
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B.
The following provisions shall be applicable in determining the
parent and subsidiary corporations of the Corporation:
Any
corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation shall be considered to be
a PARENT of the Corporation, provided each such corporation in the
unbroken chain (other than the Corporation) owns, at the time of
the determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of
the other corporations in such chain.
Each
corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation shall be considered to
be a SUBSIDIARY of the Corporation, provided each such corporation
in the unbroken chain (other than the last corporation) owns, at
the time of the determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
III.
STRUCTURE OF THE PLAN
A. Stock
Programs. The Plan shall be divided into two
(2) components: the Discretionary Option Grant Program
specified in Article Two and the Automatic Option Grant
Program specified in Article Three. Under the Discretionary
Option Grant Program, eligible individuals may, at the discretion
of the Plan Administrator, be granted options to purchase Ordinary
Shares in accordance with the provisions of Article Two. Under
the Automatic Option Grant Program, non-employee members of the
Board will receive special option grants at periodic intervals to
purchase Ordinary Shares in accordance with the provisions of
Article Three.
B. General Provisions. Unless the context clearly
indicates otherwise, the provisions of Articles One and Four shall
apply to the Discretionary Option Grant and the Automatic Option
Grant Programs and shall accordingly govern the interests of all
individuals under the Plan.
IV.
ADMINISTRATION OF THE PLAN
A.
The Primary Committee shall have sole and exclusive authority to
administer the Discretionary Option Grant Program with respect to
Section 16 Insiders. No non-employee Board member shall be
eligible to serve on the Primary Committee if such individual has,
during the twelve (12)-month period immediately preceding the date
of his or her appointment to the Committee or (if shorter) the
period commencing with the Section 12(g) Registration Date and
ending with the date of his or her appointment to the Primary
Committee, received an option grant under the Plan or any other
stock option, stock appreciation, stock bonus or other stock plan
of the Corporation (or any parent or subsidiary corporation), other
than pursuant to the Automatic Option Grant Program.
B.
Administration of the Discretionary Option Grant Program with
respect to all other persons eligible to participate in that
program may, at the Board’s discretion, be vested in the
Primary Committee or a Secondary Committee, or the Board may retain
the power to administer that program with respect to all such
persons. The members of the Secondary Committee may be Board
members who are Employees eligible to receive discretionary option
grants under the Plan or any other stock option, stock
appreciation, stock bonus or other stock plan of the Corporation
(or any Parent or Subsidiary).
C.
Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be
removed by the Board at any time. The Board may also at any time
terminate the functions of any Secondary Committee and reassume all
powers and authority previously delegated to such
committee.
D.
Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and
authority (subject to the provisions of the Plan) to establish such
rules and regulations as it may deem appropriate for proper
administration of the Discretionary Option Grant Program and to
make such determinations under, and issue such interpretations of
the provisions of such program and any outstanding options or stock
issuances thereunder as it may deem necessary or advisable.
Decisions of the Plan Administrator within the scope of its
administrative functions under the Plan shall be final and binding
on all parties who have an interest in the Discretionary Option
Grant Program under its jurisdiction or any option grant
thereunder.
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E.
Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such
committee shall accordingly be entitled to full indemnification and
reimbursement as Board members for their service on such committee.
No member of the Primary Committee or the Secondary Committee shall
be liable for any act or omission made in good faith with respect
to the Plan or any option grants under the Plan.
F.
Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the terms and conditions of that
program, and no Plan Administrator shall exercise any discretionary
functions with respect to any option grants made under that
program.
A.
The persons eligible to participate in the Discretionary Option
Grant Program under Article Two shall be limited to the
following:
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1.
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officers and other key employees of
the Corporation (or its parent or subsidiary corporations) who
render services which contribute to the management, growth and
financial success of the Corporation (or its parent or subsidiary
corporations); and
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2.
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those consultants or other
independent contractors who provide valuable services to the
Corporation (or its parent or subsidiary corporations) but who are
not residents of Singapore.
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B.
Non-employee Board members shall not be eligible to participate in
the Discretionary Option Grant Program. Such individuals shall,
however, be eligible to receive automatic option grants pursuant to
the provisions of Article Three, provided such individuals are
not residents of Singapore.
C.
The Plan Administrator shall have full authority to determine which
eligible individuals are to receive option grants under the
Discretionary Option Grant Program, the number of Ordinary Shares
to be covered by each such grant, the status of the granted option
as either an Incentive Option or a Non-Statutory Option, the time
or times at which each granted option is to become exercisable and
the maximum term for which the option may remain
outstanding.
D.
Options may be granted to eligible individuals or upon the request
of any such individual to a trust or other entity for the benefit
of such individual at the discretion of the Plan
Administrator.
VI. STOCK
SUBJECT TO THE PLAN
A.
The maximum number of Ordinary Shares which may be issued over the
term of the Plan shall not exceed 50,800,000* Ordinary Shares,
subject to adjustment from time to time in accordance with the
provisions of this Section VI. The Ordinary Shares reserved
for issuance under the Plan shall be drawn from the
Corporation’s authorized but unissued Ordinary
Shares.
B.
In no event may the aggregate number of Ordinary Shares for which
any one individual participating in the Plan may be granted stock
options exceed 4,000,000* Ordinary Shares annually.
C.
Should one or more outstanding options under this Plan expire or
terminate for any reason prior to exercise in full (including any
option cancelled in accordance with the cancellation-regrant
provisions of Section IV of Article Two of the Plan),
then the Ordinary Shares subject to the portion of each option not
so exercised shall be available for subsequent issuance under the
Plan. Ordinary Shares subject to any option or portion thereof
surrendered in accordance with Section V of Article Two
or Section III of Article Three and all Ordinary Shares
issued under the Plan shall reduce on a share-for-share basis the
number of Ordinary Shares available for subsequent issuance the
Plan.
D.
Should any change be made to the Ordinary Shares issuable under the
Plan by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Ordinary Shares as a class
without the Corporation’s receipt of consideration, then
appropriate adjustments shall be made to (i)
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the maximum
number and/or class of securities issuable under the Plan,
(ii) the maximum number and/or class of securities for which
any one individual participating in the Plan may be granted stock
options over the term of the Plan, (iii) the number and/or
class of securities and price per share in effect under each option
outstanding under the Discretionary Option Grant or Automatic
Option Grant Program, and (iv) the class of securities for
which automatic option grants are to be subsequently made to newly
elected or continuing non-employee Board members under Automatic
Option Grant Program. Such adjustments to the outstanding options
are to be effected in a manner which shall preclude the enlargement
or dilution of rights and benefits under such options. The
adjustments determined by the Plan Administrator shall be final,
binding and conclusive. In no event shall such adjustments be made
to the number of securities for which automatic option grants are
to be subsequently made to newly elected or continuing non-employee
Board members under the Automatic Option Grant Program.
E.
The repricing, replacement or regranting of any previously granted
share option, through cancellation or by lowering the exercise
price of such share option, shall be prohibited unless the
shareholders of the Company first approve such repricing,
replacement or regranting.
DISCRETIONARY OPTION GRANT
PROGRAM
I. TERMS AND
CONDITIONS OF OPTIONS
Options granted
pursuant to the Discretionary Option Grant Program shall be
authorized by action of the Plan Administrator and may, at the Plan
Administrator’s discretion, be either Incentive Options or
Non-Statutory Options. Individuals who are not Employees of the
Corporation or its parent or subsidiary corporations may only be
granted Non-Statutory Options. Each granted option shall be
evidenced by one or more instruments in the form approved by the
Plan Administrator; provided, however, that each such instrument
shall comply with the terms and conditions specified below. Each
instrument evidencing an Incentive Option shall, in addition, be
subject to the applicable provisions of Section II of this
Article Two.
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1.
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The
exercise price per Ordinary Share shall be fixed by the Plan
Administrator in accordance with the following
provisions:
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(a)
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The
exercise price per Ordinary Share subject to an Incentive Option
shall in no event be less than one hundred percent (100%) of the
Fair Market Value per Ordinary Share on the grant date.
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(b)
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The
exercise price per Ordinary Share subject to a Non-Statutory Option
shall in no event be less than eighty-five percent (85%) of the
Fair Market Value per Ordinary Share on the grant date.
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(c)
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In
no event may the exercise price per Ordinary Share subject to any
Incentive or Non-Statutory Option be less than the par value of
such Ordinary Share.
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2.
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The
exercise price shall become immediately due upon exercise of the
option and, subject to the provisions of Section I of
Article Four and the instrument evidencing the grant, shall be
payable in one of the following alternative forms specified
below:
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(a)
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full payment in cash or check made
payable to the Corporation’s order;
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(b)
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full payment through a broker-dealer
sale and remittance procedure pursuant to which the Optionee shall
provide concurrent irrevocable written instructions (i) to a
Corporation-designated brokerage firm to effect the immediate sale
of the purchased Ordinary Shares and remit to the Corporation, out
of the sale proceeds available on the settlement date, sufficient
funds to cover the aggregate exercise price payable for the
purchased Ordinary Shares plus all applicable
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Federal, state and local income and
employment taxes required to be withheld by the Corporation in
connection with such purchase and (ii) to the Corporation to
deliver the certificates for the purchased Ordinary Shares directly
to such brokerage firm in order to complete the sale transaction;
or
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(c)
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conversion of a convertible note
issued by the Corporation or a Subsidiary, the terms of which
provide that it is convertible into Ordinary Shares issuable
pursuant to the 1993 Plan (with the principal amount and any
accrued interest being converted and credited dollar for dollar to
the payment of the exercise price).
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B. Term
and Exercise of Options. Each option granted under this
Discretionary Option Grant Program shall be exercisable at such
time or times and during such period as is determined by the Plan
Administrator and set forth in the instrument evidencing the grant.
No such option, however, shall have a maximum term in excess of
five (5) years measured from the grant date. The option,
together with any stock appreciation rights pertaining to such
option, shall be exercisable only by the Optionee and shall not be
assignable by the Optionee, except for a transfer of the option
effected by will or the laws of descent or distribution following
the Optionee’s death. Notwithstanding the foregoing,
(i) Optionees may transfer or assign their options (other than
Incentive Options) to family members (as defined below) through a
gift or a domestic relations order (and not in a transfer for
value), and (ii) if the terms of the applicable instrument
evidencing the grant of an option so provide, Optionees who reside
outside of the United States and Singapore may assign their options
to a financial institution outside of the United States and
Singapore that has been approved by the Plan Administrator, in
accordance with the terms of the applicable instrument. The
Optionee shall be solely responsible for effecting any such
assignment, and for ensuring that such assignment is valid, legal
and binding under all applicable laws. The Plan Administrator shall
have the discretion to adopt such rules as it deems necessary to
ensure that any assignment is in compliance with all applicable
laws.
C. Termination of Service.
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1.
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The
following provisions shall govern the exercise period applicable to
any outstanding options held by the Optionee at the time of
cessation of Service or death.
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(a)
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Should an Optionee cease Service for
any reason (including death or Permanent Disability) while holding
one or more outstanding options under this Article Two, then
none of those options shall (except to the extent otherwise
provided pursuant to subparagraph 3 below) remain exercisable for
more than a twenty-four (24)-month period (or such shorter period
determined by the Plan Administrator and set forth in the
instrument evidencing the grant) measured from the date of such
cessation of Service.
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(b)
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Any
option held by the Optionee under this Article Two and
exercisable in whole or in part on the date of his or her death may
be subsequently exercised by th
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