Exhibit 10.1

 

PEMSTAR INC.

INCENTIVE STOCK OPTION AGREEMENT

 

This Incentive Stock Option Agreement is made and entered into this      day of
            ,          between PEMSTAR INC., a Minnesota corporation (the
“Company”) and                         , an individual resident of the state of
                 (“Employee”).

 

WHEREAS, the Company has adopted the PEMSTAR INC.              Stock Option Plan
(the “Plan”) which permits issuance of stock options for the purchase of shares
of common stock of the Company.

 

NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Company and Employee hereby agree as follows:

 

1. Grant of Option. The Company hereby grants Employee the right and option
(hereinafter called the “Option”) to purchase all or any part of an aggregate of
             (            )     shares of the Company’s common stock at the
option price of              ( $             )     per share on the terms and
conditions set forth in this agreement and in the Plan. It is understood and
agreed that the option price is the per share fair market value of such shares
on the date of this agreement. The Company intends that the Option shall be an
Incentive Stock Option governed by the provisions of Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”), subject to satisfaction of all
requirements for such treatment at the time of exercise, including approval of
the Plan by the shareholders of the Company. The terms of the Plan and the
Option shall be interpreted and administered so as to satisfy the requirements
of the Code. A copy of the Plan will be furnished, upon approval of
shareholders, upon request of Employee.

 

2. Vesting of Option Rights. The Option shall not be exercisable the first time
by Employee except in accordance with subsection 422(d) of the Code. Except as
provided in the preceding sentence or as otherwise provided in section 3 of this
agreement, the Option may be exercised by Employee in accordance with the
following schedule:

 

On or after each of

the following dates

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Percentage of shares with respect to

which the Option is exercisable

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____________  

______

____________  

______

____________  

______

 

Notwithstanding the foregoing, the Option may be exercised as to 100% of the
shares of common stock of the Company for which the Option was granted on the
date of a “change of control”, as hereinafter defined. A “change of control”
shall mean any of the following: (i) A public announcement that any person has
acquired or has the right to acquire beneficial ownership of 51% or more of the
then outstanding shares of common stock of the Company and, for this purpose,
the terms “person” and “beneficial ownership” shall have the meanings provided
in Section 13(d) of the Securities Exchange Act of 1934 or related rules
promulgated by the Securities and Exchange Commission; (ii) The commencement of
or public announcement of an intention to make a tender or exchange offer for
51% or more of the then outstanding shares of the common stock of the Company;
(iii) a sale of all or substantially all of the assets of the Company, or (iv)
the Board of Directors of the Company, in its sole and absolute discretion,
determines that there has been a sufficient change in the stock ownership of the
Company to constitute a change in control of the Company. The Option shall
terminate at the close of business on                      or such shorter
period as is prescribed herein. Employee shall not have any of the rights of a
shareholder with respect to the shares subject to the Option until such shares
shall be issued to Employee upon the proper exercise of the Option.

 

3. Exercise of Option after Death or Termination of Employment. The Option shall
terminate and may no longer be exercised if Employee ceases to be employed by
the Company or its subsidiaries, except that:

 

(a) If Employee’s employment shall be terminated for any reason, voluntary or
involuntary, except for death, disability (as set forth in section 3(c)) or as a
result of Employee’s gross and willful misconduct, Employee may at any time
within a period of three (3) months after such termination exercise the Option
to the extent the Option was exercisable by Employee on the date of the
termination of Employee’s employment; and

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(b) If Employee’s employment is terminated as a result of Employee’s gross and
willful misconduct, including but not limited to wrongful appropriation of funds
or the commission of a gross misdemeanor or felony, the Option shall be
terminated as of the date of the employment termination; and

 

(c) If Employee dies in the employ of the Company or a subsidiary or within
three (3) months after the termination of such employment for any reason other
than Employee’s gross and willful misconduct, or Employee’s employment is
terminated because Employee has become disabled (within the meaning of Code
section 22(e)(3)) while in the employ of the Company or a subsidiary, the Option
may, within twelve (12) months after Employee’s death or the date of termination
for such disability, be exercised to the extent that Employee was entitled to
exercise the Option on the date of Employee’s death or termination of
employment, if earlier, by Employee or Employee’s personal representatives, if
applicable, or by the person or persons to whom Employee’s rights under the
Option pass by will or by the applicable laws of descent and distribution;
provided, however, that the Option may not be exercised to any extent by anyone
after the termination date of the Option.

 

4. Method of Exercise of Option. Subject to the foregoing, the Option may be
exercised in whole or in part from time to time by serving written notice of
exercise on the Company at its principal office in Rochester, Minnesota. The
notice shall set forth the number of shares as to which the Option is being
exercised and shall be accompanied by payment of the purchase price. Payment of
the purchase price shall be made by check payable to the Company; or, at the
discretion of the Company, (i) by delivering to the Company for cancellation
shares of the Company’s common stock already owned by Employee having a fair
market value equal to the full purchase price of the shares being acquired, or
(ii) a combination of cash and such shares. The fair market value of such shares
shall be determined as provided in section 5 of the Plan. However, if Employee
is still in the employment of the Company at the time of the exercise of the
Option, Employee may, at the discretion of the Company, make payment of the
purchase price of the option shares by delivery to the Company of Employee’s
full recourse promissory note bearing interest at the applicable federal rate in
effect at the time of exercise of the Option in the amount of such purchase
price, which promissory note shall be secured by a pledge of the option shares
and shall be payable by Employee in one lump sum at the earlier of (a) two (2)
years from the date of the promissory note, or (b) the date that Employee leaves
the employment of the Company.

 

5. Miscellaneous.

 

(a) The Option is issued pursuant to the PEMSTAR INC. 1999 Stock Option Plan and
is subject to its terms. The terms of the Plan are available for inspection
during business hours at the principal offices of the Company.

 

(b) This agreement shall not confer on Employee any right with respect to
continuance of employment with the Company or any subsidiary of the Company, nor
will it interfere in any way with the right of the Company to terminate such
employment at any time. Neither Employee nor his legal representative, legatees
or distributees, as the case may be, will be or will be deemed to be the holder
of any shares subject to the Option unless and until the Option has been
exercised and the purchase price of the shares purchased has been paid.

 

(c) The Option may not be transferred, except by will or the laws of descent and
distribution to the extent provided in subsection 3(c), and during Employee’s
lifetime the Option is exercisable only by Employee.

 

(d) The exercise of all or any parts of the Option shall only be effective at
such time that the sale of common shares pursuant to such exercise will not
violate any state or federal securities or other laws.

 

(e) If there shall be any change in the stock subject to the Option through
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split or other change in the corporate structure of the Company, appropriate
adjustments shall be made by the Company in the number of shares and the price
per share of the shares subject to the Option in order to prevent dilution or
enlargement of the option rights granted hereunder.

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(f) If Employee shall dispose of any of the shares of stock acquired upon
exercise of the Option within two (2) years from the date the Option was granted
or within one (1) year after the date of exercise of the Option, then, in order
to provide the Company with the opportunity to claim the benefit of any income
tax deduction, Employee shall promptly notify the Company of the dates of
acquisition and disposition of such shares, the number of shares so disposed of,
and the consideration, if any, received for such shares.

 

IN WITNESS WHEREOF, the Company and Employee have executed this agreement on the
date set forth in the first paragraph.

 

    PEMSTAR INC.

 

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  By  

 

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[“Employee”]

                  [the “Company”]