Exhibit 10.79

 

 

 

MULTI-FINELINE ELECTRONIX, INC.

2004 STOCK INCENTIVE PLAN

(Adopted by the Board on June 15, 2004 and amended and restated

by the Board on March 11, 2009, December 4, 2009, December 10, 2010 and
January 18, 2012)

 

 

 

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Table of Contents

 

          Page  

Section 1. ESTABLISHMENT AND PURPOSE

     1   

Section 2. DEFINITIONS

     1   

(a)

   “Affiliate”      1   

(b)

   “Award”      1   

(c)

   “Board of Directors”      1   

(d)

   “Cause”      1   

(e)

   “Change in Control”      2   

(f)

   “Code”      3   

(g)

   “Committee”      3   

(h)

   “Company”      3   

(i)

   “Consultant”      3   

(j)

   “Employee”      3   

(k)

   “Exchange Act”      3   

(l)

   “Exercise Price”      3   

(m)

   “Fair Market Value”      3   

(n)

   “Good Reason”      4   

(o)

   “Incumbent Director”      4   

(p)

   “ISO”      4   

(q)

   “Nonstatutory Option” or “NSO”      4   

(r)

   “Offeree”      5   

(s)

   “Option”      5   

(t)

   “Optionee”      5   

(u)

   “Outside Director”      5   

(v)

   “Parent”      5   

(w)

   “Participant”      5   

(x)

   “Performance Vesting Award      5   

(y)

   “Plan”      5   

(z)

   “Purchase Price”      5   

 

MULTI-FINELINE ELECTRONIX, INC.

2004 STOCK INCENTIVE PLAN

 

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(aa)

   “Qualifying Termination”      5   

(bb)

   “Restricted Share”      6   

(cc)

   “Restricted Share Agreement”      6   

(dd)

   “SAR”      6   

(ee)

   “SAR Agreement”      6   

(ff)

   “Section 409A Deferred Compensation”      6   

(gg)

   “Service”      6   

(hh)

   “Share”      6   

(ii)

   “Stock”      6   

(jj)

   “Stock Option Agreement”      6   

(kk)

   “Stock Unit”      6   

(ll)

   “Stock Unit Agreement”      6   

(mm)

   “Subsidiary”      6   

(nn)

   “Time Vesting Award”      7   

(oo)

   “Total and Permanent Disability”      7    Section 3. ADMINISTRATION      7
  

(a)

   Committee Composition      7   

(b)

   Committee for Non-Officer Grants      7   

(c)

   Committee Procedures      7   

(d)

   Committee Responsibilities      7    Section 4. ELIGIBILITY      9   

(a)

   General Rule      9   

(b)

   Automatic Grants to Outside Directors      9   

(c)

   Ten-Percent Stockholders      10   

(d)

   Attribution Rules      10   

(e)

   Outstanding Stock      10    Section 5. STOCK SUBJECT TO PLAN      11   

(a)

   Basic Limitation      11   

(b)

   Option/SAR Limitation      11   

(c)

   Additional Shares      11    Section 6. RESTRICTED SHARES      11   

 

MULTI-FINELINE ELECTRONIX, INC.

2004 STOCK INCENTIVE PLAN

 

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(a)

   Restricted Stock Agreement      11   

(b)

   Payment for Awards      11   

(c)

   Vesting      11   

(d)

   Effect of Change in Control      12   

(e)

   Voting and Dividend Rights      12   

(f)

   Restrictions on Transfer of Shares      12   

Section 7. TERMS AND CONDITIONS OF OPTIONS

     12   

(a)

   Stock Option Agreement      12   

(b)

   Number of Shares      12   

(c)

   Exercise Price      13   

(d)

   Withholding Taxes      13   

(e)

   Exercisability and Term      13   

(f)

   Exercise of Options Upon Termination of Service      13   

(g)

   Effect of Change in Control      13   

(h)

   Leaves of Absence      14   

(i)

   No Rights as a Stockholder      14   

(j)

   Modification, Extension and Renewal of Options      14   

(k)

   Restrictions on Transfer of Shares      14   

Section 8. PAYMENT FOR SHARES

     15   

(a)

   General Rule      15   

(b)

   Surrender of Stock      15   

(c)

   Services Rendered      15   

(d)

   Cashless Exercise      15   

(e)

   Exercise/Pledge      15   

(f)

   Promissory Note      15   

(g)

   Other Forms of Payment      15   

(h)

   Limitations under Applicable Law      15   

Section 9. STOCK APPRECIATION RIGHTS

     16   

(a)

   SAR Agreement      16   

(b)

   Number of Shares      16   

(c)

   Exercise Price      16   

 

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2004 STOCK INCENTIVE PLAN

 

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(d)

   Exercisability and Term      16   

(e)

   Effect of Change in Control      16   

(f)

   Exercise of SARs      17   

(g)

   Modification or Assumption of SARs      17   

Section 10. STOCK UNITS

     17   

(a)

   Stock Unit Agreement      17   

(b)

   Payment for Awards      17   

(c)

   Vesting Conditions      17   

(d)

   Effect of Change in Control      17   

(e)

   Voting and Dividend Rights      18   

(f)

   Form and Time of Settlement of Stock Units      18   

(g)

   Death of Recipient      18   

(h)

   Creditors’ Rights      18   

Section 11. ADJUSTMENT OF SHARES

     18   

(a)

   Adjustments      18   

(b)

   Dissolution or Liquidation      19   

(c)

   Reorganizations      19   

(d)

   Reservation of Rights      20   

Section 12. DEFERRAL OF AWARDS

     20   

Section 13. AWARDS UNDER OTHER PLANS

     20   

Section 14. PAYMENT OF DIRECTOR’S FEES IN SECURITIES

     21   

(a)

   Effective Date      21   

(b)

   Elections to Receive NSOs, Restricted Shares or Stock Units      21   

(c)

   Number and Terms of NSOs, Restricted Shares or Stock Units      21   

Section 15. LEGAL AND REGULATORY REQUIREMENTS

     21   

Section 16. WITHHOLDING TAXES

     21   

(a)

   General      21   

(b)

   Share Withholding      21   

Section 17. TRANSFERABILITY

     22   

Section 18. NO EMPLOYMENT RIGHTS

     22   

Section 19. DURATION AND AMENDMENTS

     22   

 

MULTI-FINELINE ELECTRONIX, INC.

2004 STOCK INCENTIVE PLAN

 

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(a)

   Term of the Plan      22   

(b)

   Right to Amend or Terminate the Plan      22   

(c)

   Effect of Termination      22   

Section 20. EXECUTION

     23   

APPENDIX A Amendment to Multi-Fineline Electronix, Inc.’s 2004 Stock Incentive
Plan

     A-1   

 

MULTI-FINELINE ELECTRONIX, INC.

2004 STOCK INCENTIVE PLAN

 

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MULTI-FINELINE ELECTRONIX, INC.

2004 STOCK INCENTIVE PLAN

SECTION 1. ESTABLISHMENT AND PURPOSE.

The Plan was adopted by the Board of Directors on June 15, 2004, effective as of
the date of the initial offering of Stock to the public pursuant to a
registration statement filed by the Company with the Securities and Exchange
Commission (the “Effective Date”), and amended and restated by the Board of
Directors on January 11, 2006, December 4, 2007, March 11, 2009, December 4,
2009, December 10, 2010 and January 18, 2012, and as amended by Appendix A on
January 13, 2009. The purpose of the Plan is to promote the long-term success of
the Company and the creation of stockholder value by (a) encouraging Employees,
Outside Directors and Consultants to focus on critical long-range objectives,
(b) encouraging the attraction and retention of Employees, Outside Directors and
Consultants with exceptional qualifications and (c) linking Employees, Outside
Directors and Consultants directly to stockholder interests through increased
stock ownership. The Plan seeks to achieve this purpose by providing for Awards
in the form of restricted shares, stock units, options (which may constitute
incentive stock options or nonstatutory stock options) or stock appreciation
rights.

SECTION 2. DEFINITIONS.

(a) “Affiliate” shall mean any entity other than a Subsidiary, if the Company
and/or one or more Subsidiaries own not less than 50% of such entity.

(b) “Award” shall mean any award of an Option, a SAR, a Restricted Share or a
Stock Unit under the Plan.

(c) “Board of Directors” shall mean the Board of Directors of the Company, as
constituted from time to time.

(d) “Cause” shall mean any of the following with respect to a particular
Participant:

(i) Such Participant’s (a) willful or reckless and (b) repeated failure to
satisfactorily perform his job duties after written notice to such Participant
and no less than a one month period within which prospectively to cure such
failure to perform;

(ii) Failure by such Participant to comply with either (a) all material
applicable laws or (b) all lawful and material directives from executive
management of the Company in performing his job duties or in directing the
conduct of the Company’s business;

(iii) Commission by such Participant of any felony or intentionally fraudulent
act against the Company, or its employees, agents or customers, that
demonstrates his untrustworthiness or lack of integrity;

 

MULTI-FINELINE ELECTRONIX, INC.

2004 STOCK INCENTIVE PLAN

 

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(iv) Commission by such Participant of any material fraud against the Company or
use or intentional appropriation for his personal use or benefit of any material
funds or properties of the Company not authorized by the Company to be so used
or appropriated; or

(v) Any material noncompliance with Company policy or procedure.

(e) “Change in Control” shall mean the occurrence of any of the following:

(i) the acquisition of beneficial ownership, directly or indirectly, of
securities having fifty percent (50%) or more of the combined voting power of
the Company’s then outstanding securities by any “Unrelated Person” or
“Unrelated Persons” acting in concert with one another either at one time or
over a series of acquisitions. For purposes of this definition, the term
“Person” shall mean and include any individual, partnership, joint venture,
association, trust, corporation, or other entity (including a “group” as
referred to in Section 13(d)(3) of the Exchange Act). For purposes of this
Section, the term “Unrelated Person” shall mean and include any Person other
than the Company, an employee benefit plan of the Company, or any beneficial
owner of fifty percent (50%) or more of the combined voting power of the
Company’s then outstanding securities as of January 18, 2012 (which, for the
avoidance of doubt, shall include WBL Corporation Limited);

(ii) the Company is party to a merger, consolidation or similar corporate
transaction, or series of related transactions, which results in the holders of
the voting securities of the Company outstanding immediately prior to such
transaction(s) failing to retain immediately after such transaction(s) direct or
indirect beneficial ownership of more than fifty percent (50%) of the total
combined voting power of the securities entitled to vote generally in the
election of directors of the Company or the surviving entity outstanding
immediately after such transaction(s);

(iii) the consummation of any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company and its subsidiaries (taken as a whole), other than
pursuant to a sale-leaseback, structured finance or other form of financing
transaction;

(iv) the stockholders of the Company approve any plan or proposal for
liquidation or dissolution of the Company;

(v) as a result of a “going private” transaction, the common stock of the
Company ceases to be traded on any established United States securities
exchange; or

(vi) a change in the composition of the Board within any consecutive period of
thirty-six (36) months as a result of which fewer than a majority of the
directors are Incumbent Directors;

provided, however, that to the extent that any amount constituting Section 409A
Deferred Compensation would become payable under this Plan by reason of a Change
in Control, such amount shall become payable only if the event constituting a
Change in Control would also

 

MULTI-FINELINE ELECTRONIX, INC.

2004 STOCK INCENTIVE PLAN

 

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constitute a change in ownership or effective control of the Company or a change
in the ownership of a substantial portion of the assets of the Company within
the meaning of Section 409A of the Code. Any other provision of this
Section 2(e) notwithstanding, a transaction shall not constitute a Change in
Control if its sole purpose is to change the state of the Company’s
incorporation or to create a holding company that will be owned in substantially
the same proportions by the persons who held the Company’s securities
immediately before such transaction.

(f) “Code” shall mean the Internal Revenue Code of 1986, as amended, or any
successor thereto and any applicable regulations or administrative guidelines
promulgated thereunder.

(g) “Committee” shall mean the Compensation Committee as designated by the Board
of Directors, which is authorized to administer the Plan, as described in
Section 3 hereof.

(h) “Company” shall mean Multi-Fineline Electronix, Inc., a Delaware
corporation.

(i) “Consultant” shall mean a consultant or advisor who provides bona fide
services to the Company, a Parent, a Subsidiary or an Affiliate as an
independent contractor or a member of the board of directors of a Parent or a
Subsidiary who is not an Employee. Service as a Consultant shall be considered
Service for all purposes of the Plan.

(j) “Employee” shall mean any individual who is a common-law employee of the
Company, a Parent or a Subsidiary.

(k) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(l) “Exercise Price” shall mean, in the case of an Option, the amount for which
one Common Share may be purchased upon exercise of such Option, as specified in
the applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR,
shall mean an amount, as specified in the applicable SAR Agreement, which is
subtracted from the Fair Market Value of one Common Share in determining the
amount payable upon exercise of such SAR.

(m) “Fair Market Value” with respect to a Share, shall mean the market price of
one Share of Stock, determined by the Committee as follows:

(i) If the Stock was traded over-the-counter on the date in question but was not
traded on The Nasdaq Stock Market, then the Fair Market Value shall be equal to
the last transaction price quoted for such date by the OTC Bulletin Board or, if
not so quoted, shall be equal to the mean between the last reported
representative bid and asked prices quoted for such date by the principal
automated inter-dealer quotation system on which the Stock is quoted or, if the
Stock is not quoted on any such system, by the Pink Sheets LLC;

(ii) If the Stock was traded on The Nasdaq Stock Market, then the Fair Market
Value shall be equal to the last reported sale price quoted for such date by The
Nasdaq Stock Market;

 

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2004 STOCK INCENTIVE PLAN

 

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(iii) If the Stock was traded on a United States stock exchange on the date in
question, then the Fair Market Value shall be equal to the closing price
reported for such date by the applicable composite-transactions report; and

(iv) If none of the foregoing provisions is applicable, then the Fair Market
Value shall be determined by the Committee in good faith on such basis as it
deems appropriate.

Notwithstanding the foregoing, the Fair Market Value of the Stock on the
Effective Date shall be the price at which one share of Stock is offered to the
public on such date pursuant to a registration statement filed by the Company
with the Securities and Exchange Commission.

In all cases, the determination of Fair Market Value by the Committee shall be
conclusive and binding on all persons.

(n) “Good Reason” shall mean any of the following with respect to a particular
Participant without the Participant’s informed written consent:

(i) A material reduction in duties or responsibilities;

(ii) A reduction in any component of pay opportunity or benefits, unless such
change is similarly applied to all employees of the same level (i.e., engineer,
director, etc.) of the Company; or

(iii) relocation of the Participant to a work location more than fifty
(50) miles from the Participant’s then present work location.

The existence of Good Reason shall not be affected by the Participant’s
temporary incapacity due to physical or mental illness not constituting a Total
and Permanent Disability. The Participant’s continued employment for a period
not exceeding ninety (90) days following the initial occurrence of any condition
constituting Good Reason shall not constitute consent to, or a waiver of rights
with respect to, such condition.

(o) “Incumbent Director” shall mean a director who either (i) is a member of the
Board of Directors as of January 18, 2012, or (2) is elected, or nominated for
election, to the Board of Directors with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination,
but (3) was not elected or nominated in connection with an actual or threatened
proxy contest relating to the election of directors of the Company.

(p) “ISO” shall mean an employee incentive stock option described in Section 422
of the Code.

(q) “Nonstatutory Option” or “NSO” shall mean an employee stock option that is
not an ISO.

 

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2004 STOCK INCENTIVE PLAN

 

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(r) “Offeree” shall mean an individual to whom the Committee has offered the
right to acquire Shares under the Plan (other than upon exercise of an Option).

(s) “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and
entitling the holder to purchase Shares.

(t) “Optionee” shall mean an individual or estate who holds an Option or SAR.

(u) “Outside Director” shall mean a member of the Board of Directors who is not
a common-law employee of, or paid consultant to, the Company or a Subsidiary.
Service as an Outside Director shall be considered Service for all purposes of
the Plan, except as provided in Section 4(a).

(v) “Parent” shall mean any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, if each of the corporations other
than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Parent on a date after the adoption of
the Plan shall be a Parent commencing as of such date.

(w) “Participant” shall mean an individual or estate who holds an Award.

(x) “Performance Vesting Award” shall mean an Award granted to a Participant,
the vesting or earning of which is conditioned in whole or in part upon the
achievement of one or more performance goals (including, without limitation,
performance goals established on the basis of Performance Measures described in
Appendix A to this Plan), notwithstanding that the vesting or earning of such
award may also be conditioned upon the continued Service of the Participant.

(y) “Plan” shall mean this 2004 Stock Incentive Plan of Multi-Fineline
Electronix, Inc., as amended from time to time.

(z) “Purchase Price” shall mean the consideration for which one Share may be
acquired under the Plan (other than upon exercise of an Option), as specified by
the Committee.

(aa) “Qualifying Termination” shall mean, as to a particular Participant under
the Plan, the occurrence of any of the following upon or within twelve
(12) months following a Change in Control:

(i) an individual’s Service with the Company (including any Parent or Subsidiary
thereof) is terminated without “Cause”; or

(ii) an individual terminates his Service with the Company (including any Parent
or Subsidiary thereof) for Good Reason; provided the Participant has given the
Company written notice of the existence of a condition constituting Good Reason
within thirty (30) days following the initial occurrence of such condition, the
Company fails to remedy such condition within thirty (30) days following such
written notice, and the Participant’s resignation from

 

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Service is effective no later than ninety (90) days following the initial
occurrence of such condition.

Qualifying Termination shall not include any termination of the Participant’s
Service which is (i) for Cause, (ii) a result of the Participant’s death or
Total and Permanent Disability, or (iii) a result of the Participant’s voluntary
termination of Service other than for Good Reason.

(bb) “Restricted Share” shall mean a Share awarded under the Plan.

(cc) “Restricted Share Agreement” shall mean the agreement between the Company
and the recipient of a Restricted Share which contains the terms, conditions and
restrictions pertaining to such Restricted Shares.

(dd) “SAR” shall mean a stock appreciation right granted under the Plan.

(ee) “SAR Agreement” shall mean the agreement between the Company and an
Optionee which contains the terms, conditions and restrictions pertaining to his
or her SAR.

(ff) “Section 409A Deferred Compensation” shall mean compensation and benefits
provided by the Plan that constitute or would give rise to deferred compensation
subject to and not exempted from the requirements of Section 409A of the Code.

(gg) “Service” shall mean service as an Employee, Consultant or Outside
Director.

(hh) “Share” shall mean one share of Stock, as adjusted in accordance with
Section 8 (if applicable).

(ii) “Stock” shall mean the Common Stock of the Company.

(jj) “Stock Option Agreement” shall mean the agreement between the Company and
an Optionee that contains the terms, conditions and restrictions pertaining to
such Option.

(kk) “Stock Unit” shall mean a bookkeeping entry representing the equivalent of
one Share, as awarded under the Plan.

(ll) “Stock Unit Agreement” shall mean the agreement between the Company and the
recipient of a Stock Unit which contains the terms, conditions and restrictions
pertaining to such Stock Unit.

(mm) “Subsidiary” shall mean any corporation, if the Company and/or one or more
other Subsidiaries own not less than 50% of the total combined voting power of
all classes of outstanding stock of such corporation. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.

 

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2004 STOCK INCENTIVE PLAN

 

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(nn) “Time Vesting Award” shall mean any Award granted to a Participant, the
vesting or earning of which is based solely upon the continued Service of the
Participant over a specified period of time.

(oo) “Total and Permanent Disability” shall mean that the Optionee is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or that has lasted, or can be expected to last, for a continuous period of
not less than 12 months.

SECTION 3. ADMINISTRATION.

(a) Committee Composition. The Plan shall be administered by the Committee. The
Committee shall consist of two or more directors of the Company, who shall be
appointed by the Board. In addition, the composition of the Committee shall
satisfy (i) such requirements as the Securities and Exchange Commission may
establish for administrators acting under plans intended to qualify for
exemption under Rule 16b-3 (or its successor) under the Exchange Act; and
(ii) such requirements as the Internal Revenue Service may establish for outside
directors acting under plans intended to qualify for exemption under
Section 162(m)(4)(C) of the Code.

(b) Committee for Non-Officer Grants. The Board may also appoint one or more
separate committees of the Board, each composed of one or more directors of the
Company who need not satisfy the requirements of Section 3(a), who may
administer the Plan with respect to Employees who are not considered officers or
directors of the Company under Section 16 of the Exchange Act, may grant Awards
under the Plan to such Employees and may determine all terms of such grants.
Within the limitations of the preceding sentence, any reference in the Plan to
the Committee shall include such committee or committees appointed pursuant to
the preceding sentence. The Board of Directors may also authorize one or more
officers of the Company to designate Employees, other than officers under
Section 16 of the Exchange Act, to receive Awards and/or to determine the number
of such Awards to be received by such persons; provided, however, that the Board
of Directors shall specify the total number of Awards that such officers may so
award.

(c) Committee Procedures. The Board of Directors shall designate one of the
members of the Committee as chairman. The Committee may hold meetings at such
times and places as it shall determine. The acts of a majority of the Committee
members present at meetings at which a quorum exists, or acts reduced to or
approved in writing by all Committee members, shall be valid acts of the
Committee.

(d) Committee Responsibilities. Subject to the provisions of the Plan, the
Committee shall have full authority and discretion to take the following
actions:

(i) To interpret the Plan and to apply its provisions;

(ii) To adopt, amend or rescind rules, procedures and forms relating to the
Plan;

 

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(iii) To authorize any person to execute, on behalf of the Company, any
instrument required to carry out the purposes of the Plan;

(iv) To determine when Shares are to be awarded or offered for sale and when
Options are to be granted under the Plan;

(v) To select the Offerees and Optionees;

(vi) To determine the number of Shares to be offered to each Offeree or to be
made subject to each Option;

(vii) To prescribe the terms and conditions of each award or sale of Shares,
including (without limitation) the Purchase Price, the vesting of the award
(including accelerating the vesting of awards, either at the time of the award
or sale or thereafter, without the consent of the Offeree or Optionee) and to
specify the provisions of the Restricted Stock Agreement relating to such award
or sale;

(viii) To prescribe the terms and conditions of each Option, including (without
limitation) the Exercise Price, the vesting or duration of the Option (including
accelerating the vesting of the Option), to determine whether such Option is to
be classified as an ISO or as a Nonstatutory Option, and to specify the
provisions of the Stock Option Agreement relating to such Option;

(ix) To amend any outstanding Restricted Stock Agreement or Stock Option
Agreement, subject to applicable legal restrictions and to the consent of the
Offeree or Optionee who entered into such agreement if the Offeree’s or
Optionee’s rights or obligations would be adversely affected;

(x) To prescribe the consideration for the grant of each Option or other right
under the Plan and to determine the sufficiency of such consideration;

(xi) To determine the disposition of each Option or other right under the Plan
in the event of an Optionee’s or Offeree’s divorce or dissolution of marriage;

(xii) To determine whether Options or other rights under the Plan will be
granted in replacement of other grants under an incentive or other compensation
plan of an acquired business;

(xiii) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, any Stock Option Agreement or any Restricted Stock
Agreement; and

(xiv) To take any other actions deemed necessary or advisable for the
administration of the Plan.

Subject to the requirements of applicable law, the Committee may designate
persons other than members of the Committee to carry out its responsibilities
and may prescribe such conditions

 

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and limitations as it may deem appropriate, except that the Committee may not
delegate its authority with regard to the selection for participation of or the
granting of Options or other rights under the Plan to persons subject to
Section 16 of the Exchange Act. All decisions, interpretations and other actions
of the Committee shall be final and binding on all Offerees, all Optionees, and
all persons deriving their rights from an Offeree or Optionee. No member of the
Committee shall be liable for any action that he has taken or has failed to take
in good faith with respect to the Plan, any Option, or any right to acquire
Shares under the Plan.

Notwithstanding any provision of the Plan to the contrary, neither the Board,
nor the Committee shall have the authority to take any of the following actions,
unless the stockholders of the Company have approved such an action prior to
such an event: (a) the reduction of the exercise price of any outstanding Option
or SAR under the Plan; (b) the cancellation of any outstanding Option or SAR
under the Plan and the grant in substitution therefore of any other Award, cash
and/or other valuable consideration; or (c) any other action that is treated as
a repricing under generally accepted accounting principles. Nothing in this
paragraph shall be construed to apply to the issuance or assumption of an Option
or SAR in connection with an acquisition in a manner which complies with the
requirements of Section 424(a) or Section 409A of the Code or to an adjustment
pursuant to Section 11(a).

SECTION 4. ELIGIBILITY.

(a) General Rule. Only Employees shall be eligible for the grant of ISOs. Only
Employees, Consultants and Outside Directors shall be eligible for the grant of
Restricted Shares, Stock Units, Nonstatutory Options or SARs.

(b) Automatic Grants to Outside Directors.

(i) On the date of his or her election to the Board of Directors, each Outside
Director who first joins the Board of Directors on or after March 9, 2010, and
who was not previously an Employee, shall receive an Award of Stock Units equal
to: $70,000 divided by the Fair Market Value of the Stock on the trading day
immediately preceding the date of grant, rounded to the nearest whole share.
Each Stock Unit subject to the Award granted under this Section 4(b)(i) shall
fully vest on the first anniversary of the date of grant. Notwithstanding the
foregoing, each Stock Unit subject to the Award granted under this
Section 4(b)(i) shall become vested in full immediately prior to the
consummation of a Change in Control.

(ii) On the first business day following the conclusion of each regular annual
meeting of the Company’s stockholders, commencing with the annual meeting
occurring on March 11, 2008, each Outside Director who was not elected to the
Board for the first time at such meeting and who will continue serving as a
member of the Board of Directors thereafter shall receive an Award of Stock
Units equal to: $70,000 divided by the Fair Market Value of the Stock on the
trading day immediately preceding the date of grant, rounded to the nearest
whole share; provided that such Outside Director has served on the Board of
Directors for at least six months. Each Stock Unit subject to the Award granted
under this Section 4(b)(ii) shall fully vest on the first anniversary of the
date of grant; provided, however, that each such Stock Unit shall

 

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vest in full immediately prior to the next regular annual meeting of the
Company’s stockholders following such date of grant in the event such meeting
occurs prior to such first anniversary date. Notwithstanding the foregoing, each
Stock Unit subject to the Award granted under this Section 4(b)(ii) shall become
vested in full immediately prior to the consummation of a Change in Control.

(iii) Any Stock Unit granted under this Section 4(b) shall be forfeited, and all
rights of the Outside Director to or with respect to such Stock Unit shall
terminate without any obligation on the part of the Company, upon the
termination of an Outside Director’s Service as a member of the Board of
Directors prior to the date on which such Stock Unit vests.

(iv) The Stock Units subject to Awards under this Section 4(b) shall be
evidenced by a Stock Unit Agreement having such terms and conditions, consistent
with the provisions of the Plan, as are determined by the Board in its sole
discretion, to be executed by the Outside Director and the Company. Settlement
of a Stock Unit subject to an Award granted under this Section 4(b) shall be
made by the issuance of a number of Shares equal to the number of Stock Units
that have vested or the Company, in its sole discretion, may substitute an
equivalent amount of cash, and such settlement shall be made as soon as
administratively practicable after the Stock Unit vests, subject to the terms
and conditions of the applicable Stock Unit Agreement. Notwithstanding the
preceding sentence, a Stock Unit Agreement evidencing an Award under this
Section 4(b) may provide for settlement of any or all of the vested Stock Units
upon the Outside Director’s termination of Service as a member of the Board of
Directors, or may provide that an Outside Director may elect to defer settlement
of any or all of the vested Stock Units, in each case in accordance with the
terms and conditions of the applicable Stock Unit Agreement and Section 409A of
the Code.

(c) Ten-Percent Stockholders. An Employee who owns more than 10% of the total
combined voting power of all classes of outstanding stock of the Company, a
Parent or Subsidiary shall not be eligible for the grant of an ISO unless such
grant satisfies the requirements of Section 422(c)(5) of the Code.

(d) Attribution Rules. For purposes of Section 4(c) above, in determining stock
ownership, an Employee shall be deemed to own the stock owned, directly or
indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its stockholders, partners or beneficiaries.

(e) Outstanding Stock. For purposes of Section 4(c) above, “outstanding stock”
shall include all stock actually issued and outstanding immediately after the
grant. “Outstanding stock” shall not include shares authorized for issuance
under outstanding options held by the Employee or by any other person.

 

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SECTION 5. STOCK SUBJECT TO PLAN.

(a) Basic Limitation. Shares offered under the Plan shall be authorized but
unissued Shares or treasury Shares. The maximum aggregate number of Options,
SARs, Stock Units and Restricted Shares awarded under the Plan shall not exceed
3,976,400 Shares and all of such shares may be issued as ISOs. The limitations
of this Section 5(a) shall be subject to adjustment pursuant to Section 11. The
number of Shares that are subject to Options or other rights outstanding at any
time under the Plan shall not exceed the number of Shares which then remain
available for issuance under the Plan. The Company, during the term of the Plan,
shall at all times reserve and keep available sufficient Shares to satisfy the
requirements of the Plan.

(b) Option/SAR Limitation. Subject to the provisions of Section 11, no
Participant may receive Options or SARs under the Plan in any calendar year that
relate to more than 1,000,000 Shares.

(c) Additional Shares. If Restricted Shares or Shares issued upon the exercise
of Options are forfeited, then such Shares shall again become available for
Awards under the Plan. If Stock Units, Options or SARs are forfeited or
terminate for any other reason before being exercised, then the corresponding
Shares shall again become available for Awards under the Plan. If Stock Units
are settled, then only the number of Shares (if any) actually issued in
settlement of such Stock Units shall reduce the number available under
Section 5(a) and the balance shall again become available for Awards under the
Plan. If SARs are exercised, then only the number of Shares (if any) actually
issued in settlement of such SARs shall reduce the number available in
Section 5(a) and the balance shall again become available for Awards under the
Plan.

SECTION 6. RESTRICTED SHARES.

(a) Restricted Stock Agreement. Each grant of Restricted Shares under the Plan
shall be evidenced by a Restricted Stock Agreement between the recipient and the
Company. Such Restricted Shares shall be subject to all applicable terms of the
Plan and may be subject to any other terms that are not inconsistent with the
Plan. The provisions of the various Restricted Stock Agreements entered into
under the Plan need not be identical.

(b) Payment for Awards. Subject to the following sentence, Restricted Shares may
be sold or awarded under the Plan for such consideration as the Committee may
determine, including (without limitation) cash, cash equivalents, full-recourse
promissory notes, past services and future services. To the extent that an Award
consists of newly issued Restricted Shares, the Award recipient shall furnish
consideration with a value not less than the par value of such Restricted Shares
in the form of cash, cash equivalents, or past services rendered to the Company
(or a Parent or Subsidiary), as the Committee may determine.

(c) Vesting. Each Award of Restricted Shares may or may not be subject to
vesting. Vesting shall occur, in full or in installments, upon satisfaction of
the conditions specified in the

 

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Restricted Stock Agreement. A Restricted Stock Agreement may provide for
accelerated vesting in the event of the Participant’s death, disability or
retirement or other events.

(d) Effect of Change in Control. Outstanding Restricted Shares held by a
Participant immediately prior to the consummation of a Change in Control shall
be treated as follows:

(i) Restricted Shares which are Time Vesting Awards shall vest in full
immediately prior to the consummation of the Change in Control.

(ii) Restricted Shares which are Performance Vesting Awards shall vest at the
same vesting level that they would vest upon achievement of 100% of the
applicable performance goals (without regard to the actual achievement of any
such performance goal) upon the first to occur of (A) the date of completion of
the performance period applicable to the Restricted Shares, provided that the
Participant’s Service has not terminated prior to such date, (B) the Qualifying
Termination of the Participant, or (C) the time immediately prior to the
consummation of the Change in Control in the event that the surviving
corporation or its parent will not, pursuant to the Change in Control, convert
the Restricted Shares into equity securities of such corporation which are
registered under the Securities Act of 1933 and traded on a United States
securities exchange.

(e) Voting and Dividend Rights. The holders of Restricted Shares awarded under
the Plan shall have the same voting, dividend and other rights as the Company’s
other stockholders. A Restricted Stock Agreement, however, may require that the
holders of Restricted Shares invest any cash dividends received in additional
Restricted Shares. Such additional Restricted Shares shall be subject to the
same conditions and restrictions as the Award with respect to which the
dividends were paid.

(f) Restrictions on Transfer of Shares. Restricted Shares shall be subject to
such rights of repurchase, rights of first refusal or other restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Restricted Stock Agreement and shall apply in addition to any general
restrictions that may apply to all holders of Shares.

SECTION 7. TERMS AND CONDITIONS OF OPTIONS.

(a) Stock Option Agreement. Each grant of an Option under the Plan shall be
evidenced by a Stock Option Agreement between the Optionee and the Company. Such
Option shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions which are not inconsistent with
the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The Stock Option Agreement shall specify whether the Option is
an ISO or an NSO. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical. Options may be granted in
consideration of a reduction in the Optionee’s other compensation.

(b) Number of Shares. Each Stock Option Agreement shall specify the number of
Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 11.

 

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(c) Exercise Price. Each Stock Option Agreement shall specify the Exercise
Price. The Exercise Price of an ISO shall not be less than 100% of the Fair
Market Value of a Share on the date of grant, except as otherwise provided in
Section 4(c), and the Exercise Price of an NSO shall not be less 85% of the Fair
Market Value of a Share on the date of grant. Notwithstanding the foregoing, a
Stock Option Agreement may specify that the exercise price of an NSO may vary in
accordance with a predetermined formula. Subject to the foregoing in this
Section 7(c), the Exercise Price under any Option shall be determined by the
Committee at its sole discretion. The Exercise Price shall be payable in one of
the forms described in Section 8.

(d) Withholding Taxes. As a condition to the exercise of an Option, the Optionee
shall make such arrangements as the Committee may require for the satisfaction
of any federal, state, local or foreign withholding tax obligations that may
arise in connection with such exercise. The Optionee shall also make such
arrangements as the Committee may require for the satisfaction of any federal,
state, local or foreign withholding tax obligations that may arise in connection
with the disposition of Shares acquired by exercising an Option.

(e) Exercisability and Term. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. The Stock
Option Agreement shall also specify the term of the Option; provided that the
term of an ISO shall in no event exceed 10 years from the date of grant (five
years for Employees described in Section 4(c)). A Stock Option Agreement may
provide for accelerated exercisability in the event of the Optionee’s death,
disability, or retirement or other events and may provide for expiration prior
to the end of its term in the event of the termination of the Optionee’s
Service. Options may be awarded in combination with SARs, and such an Award may
provide that the Options will not be exercisable unless the related SARs are
forfeited. Subject to the foregoing in this Section 7(e), the Committee at its
sole discretion shall determine when all or any installment of an Option is to
become exercisable and when an Option is to expire.

(f) Exercise of Options Upon Termination of Service. Each Stock Option Agreement
shall set forth the extent to which the Optionee shall have the right to
exercise the Option following termination of the Optionee’s Service with the
Company and its Subsidiaries, and the right to exercise the Option of any
executors or administrators of the Optionee’s estate or any person who has
acquired such Option(s) directly from the Optionee by bequest or inheritance.
Such provisions shall be determined in the sole discretion of the Committee,
need not be uniform among all Options issued pursuant to the Plan, and may
reflect distinctions based on the reasons for termination of Service.

(g) Effect of Change in Control. Outstanding Options held by a Participant
immediately prior to the consummation of a Change in Control shall be treated as
follows:

(i) Options which are Time Vesting Awards shall vest in full immediately prior
to the consummation of the Change in Control.

(ii) Options which are Performance Vesting Awards shall vest at the same vesting
level that they would vest upon achievement of 100% of the applicable
performance

 

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goals (without regard to the actual achievement of any such performance goal)
upon the first to occur of (A) the date of completion of the performance period
applicable to the Options, provided that the Participant’s Service has not
terminated prior to such date, (B) the Qualifying Termination of the
Participant, or (C) the time immediately prior to the consummation of the Change
in Control in the event that the surviving corporation or its parent will not,
pursuant to the Change in Control, assume or continue the Company’s rights and
obligations under the Options or substitute for the Options substantially
equivalent options for equity securities of such corporation, in each such case
exercisable for equity securities of such corporation which are registered under
the Securities Act of 1933 and traded on a United States securities exchange.

(h) Leaves of Absence. An Employee’s Service shall cease when such Employee
ceases to be actively employed by, or a Consultant to, the Company (or any
subsidiary) as determined in the sole discretion of the Board of Directors. For
purposes of Options, Service does not terminate when an Employee goes on a bona
fide leave of absence, that was approved by the Company in writing, if the terms
of the leave provide for continued service crediting, or when continued service
crediting is required by applicable law. However, for purposes of determining
whether an Option is entitled to ISO status, an Employee’s Service will be
treated as terminating 90 days after such Employee went on leave, unless such
Employee’s right to return to active work is guaranteed by law or by a contract.
Service terminates in any event when the approved leave ends, unless such
Employee immediately returns to active work. The Company determines which leaves
count toward Service, and when Service terminates for all purposes under the
Plan.

(i) No Rights as a Stockholder. An Optionee, or a transferee of an Optionee,
shall have no rights as a stockholder with respect to any Shares covered by his
Option until the date of the issuance of a stock certificate for such Shares. No
adjustments shall be made, except as provided in Section 11.

(j) Modification, Extension and Renewal of Options. Subject to the limitations
set forth in Section 3, the Committee may modify, extend or renew outstanding
options or may accept the cancellation of outstanding options (to the extent not
previously exercised), whether or not granted hereunder, in return for the grant
of new Options for the same or a different number of Shares and at the same or a
different exercise price, or in return for the grant of the same or a different
number of Shares. The foregoing notwithstanding, no modification of an Option
shall, without the consent of the Optionee, adversely affect his or her rights
or obligations under such Option.

(k) Restrictions on Transfer of Shares. Any Shares issued upon exercise of an
Option shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first refusal and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Option Agreement and shall apply in addition to any general restrictions
that may apply to all holders of Shares.

 

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SECTION 8. PAYMENT FOR SHARES.

(a) General Rule. The entire Exercise Price or Purchase Price of Shares issued
under the Plan shall be payable in lawful money of the United States of America
at the time when such Shares are purchased, except as provided in Section 8(b)
through Section 8(g) below.

(b) Surrender of Stock. To the extent that a Stock Option Agreement so provides,
payment may be made all or in part by surrendering, or attesting to the
ownership of, Shares which have already been owned by the Optionee or his
representative. Such Shares shall be valued at their Fair Market Value on the
date when the new Shares are purchased under the Plan. The Optionee shall not
surrender, or attest to the ownership of, Shares in payment of the Exercise
Price if such action would cause the Company to recognize compensation expense
(or additional compensation expense) with respect to the Option for financial
reporting purposes.

(c) Services Rendered. At the discretion of the Committee, Shares may be awarded
under the Plan in consideration of services rendered to the Company or a
Subsidiary prior to the award. If Shares are awarded without the payment of a
Purchase Price in cash, the Committee shall make a determination (at the time of
the award) of the value of the services rendered by the Offeree and the
sufficiency of the consideration to meet the requirements of Section 6(b).

(d) Cashless Exercise. To the extent that a Stock Option Agreement so provides,
payment may be made all or in part by delivery (on a form prescribed by the
Committee) of an irrevocable direction to a securities broker to sell Shares and
to deliver all or part of the sale proceeds to the Company in payment of the
aggregate Exercise Price.

(e) Exercise/Pledge. To the extent that a Stock Option Agreement so provides,
payment may be made all or in part by delivery (on a form prescribed by the
Committee) of an irrevocable direction to a securities broker or lender to
pledge Shares, as security for a loan, and to deliver all or part of the loan
proceeds to the Company in payment of the aggregate Exercise Price.

(f) Promissory Note. To the extent that a Stock Option Agreement or Restricted
Stock Agreement so provides, payment may be made all or in part by delivering
(on a form prescribed by the Company) a full-recourse promissory note. However,
the par value of the Common Shares being purchased under the Plan, if newly
issued, shall be paid in cash or cash equivalents.

(g) Other Forms of Payment. To the extent that a Stock Option Agreement or
Restricted Stock Agreement so provides, payment may be made in any other form
that is consistent with applicable laws, regulations and rules.

(h) Limitations under Applicable Law. Notwithstanding anything herein or in a
Stock Option Agreement or Restricted Stock Agreement to the contrary, payment
may not be made in any form that is unlawful, as determined by the Committee in
its sole discretion.

 

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SECTION 9. STOCK APPRECIATION RIGHTS.

(a) SAR Agreement. Each grant of a SAR under the Plan shall be evidenced by a
SAR Agreement between the Optionee and the Company. Such SAR shall be subject to
all applicable terms of the Plan and may be subject to any other terms that are
not inconsistent with the Plan. The provisions of the various SAR Agreements
entered into under the Plan need not be identical. SARs may be granted in
consideration of a reduction in the Optionee’s other compensation.

(b) Number of Shares. Each SAR Agreement shall specify the number of Shares to
which the SAR pertains and shall provide for the adjustment of such number in
accordance with Section 11.

(c) Exercise Price. Each SAR Agreement shall specify the Exercise Price. A SAR
Agreement may specify an Exercise Price that varies in accordance with a
predetermined formula while the SAR is outstanding.

(d) Exercisability and Term. Each SAR Agreement shall specify the date when all
or any installment of the SAR is to become exercisable. The SAR Agreement shall
also specify the term of the SAR. A SAR Agreement may provide for accelerated
exercisability in the event of the Optionee’s death, disability or retirement or
other events and may provide for expiration prior to the end of its term in the
event of the termination of the Optionee’s service. SARs may be awarded in
combination with Options, and such an Award may provide that the SARs will not
be exercisable unless the related Options are forfeited. A SAR may be included
in an ISO only at the time of grant but may be included in an NSO at the time of
grant or thereafter. A SAR granted under the Plan may provide that it will be
exercisable only in the event of a Change in Control.

(e) Effect of Change in Control. Outstanding SARs held by a Participant
immediately prior to the consummation of a Change in Control shall be treated as
follows:

(i) SARs which are Time Vesting Awards shall vest in full immediately prior to
the consummation of the Change in Control.

(ii) SARs which are Performance Vesting Awards shall vest at the same vesting
level that they would vest upon achievement of 100% of the applicable
performance goals (without regard to the actual achievement of any such
performance goal) upon the first to occur of (A) the date of completion of the
performance period applicable to the SARs, provided that the Participant’s
Service has not terminated prior to such date, (B) the Qualifying Termination of
the Participant, or (C) the time immediately prior to the consummation of the
Change in Control in the event that the surviving corporation or its parent will
not, pursuant to the Change in Control, assume or continue the Company’s rights
and obligations under the SARs or substitute for the SARs substantially
equivalent stock appreciation rights for equity securities of such corporation,
in each such case exercisable for equity securities of such corporation which
are registered under the Securities Act of 1933 and traded on a United States
securities exchange.

 

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(f) Exercise of SARs. Upon exercise of a SAR, the Optionee (or any person having
the right to exercise the SAR after his or her death) shall receive from the
Company (a) Shares, (b) cash or (c) a combination of Shares and cash, as the
Committee shall determine. The amount of cash and/or the Fair Market Value of
Shares received upon exercise of SARs shall, in the aggregate, be equal to the
amount by which the Fair Market Value (on the date of surrender) of the Shares
subject to the SARs exceeds the Exercise Price.

(g) Modification or Assumption of SARs. Subject to the limitations set forth in
Section 3, the Committee may modify, extend or assume outstanding SARs or may
accept the cancellation of outstanding SARs (whether granted by the Company or
by another issuer) in return for the grant of new SARs for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of a SAR shall, without the consent
of the holder, may alter or impair his or her rights or obligations under such
SAR.

SECTION 10. STOCK UNITS.

(a) Stock Unit Agreement. Each grant of Stock Units under the Plan shall be
evidenced by a Stock Unit Agreement between the recipient and the Company. Such
Stock Units shall be subject to all applicable terms of the Plan and may be
subject to any other terms that are not inconsistent with the Plan. The
provisions of the various Stock Unit Agreements entered into under the Plan need
not be identical. Stock Units may be granted in consideration of a reduction in
the recipient’s other compensation.

(b) Payment for Awards. To the extent that an Award is granted in the form of
Stock Units, no cash consideration shall be required of the Award recipients.

(c) Vesting Conditions. Each Award of Stock Units may or may not be subject to
vesting. Vesting shall occur, in full or in installments, upon satisfaction of
the conditions specified in the Stock Unit Agreement. A Stock Unit Agreement may
provide for accelerated vesting in the event of the Participant’s death,
disability or retirement or other events.

(d) Effect of Change in Control. Outstanding Stock Units held by a Participant
immediately prior to the consummation of a Change in Control shall be treated as
follows:

(i) Stock Units which are Time Vesting Awards shall vest in full immediately
prior to the consummation of the Change in Control.

(ii) Stock Units which are Performance Vesting Awards shall vest at the same
vesting level that they would vest upon achievement of 100% of the applicable
performance goals (without regard to the actual achievement of any such
performance goal) upon the first to occur of (A) the date of completion of the
performance period applicable to the Stock Units, provided that the
Participant’s Service has not terminated prior to such date, (B) the Qualifying
Termination of the Participant, or (C) the time immediately prior to the
consummation of the Change in Control in the event that the surviving
corporation or its parent will not, pursuant to the Change in Control, assume or
continue the Company’s rights and obligations under the Stock

 

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Units or substitute for the Stock Units substantially equivalent rights to
acquire equity securities of such corporation, in each such case for equity
securities of such corporation which are registered under the Securities Act of
1933 and traded on a United States securities exchange.

(e) Voting and Dividend Rights. The holders of Stock Units shall have no voting
rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan
may, at the Committee’s discretion, carry with it a right to dividend
equivalents. Such right entitles the holder to be credited with an amount equal
to all cash dividends paid on one Share while the Stock Unit is outstanding.
Dividend equivalents may be converted into additional Stock Units. Settlement of
dividend equivalents may be made in the form of cash, in the form of Shares, or
in a combination of both. Prior to distribution, any dividend equivalents which
are not paid shall be subject to the same conditions and restrictions (including
without limitation, any forfeiture conditions) as the Stock Units to which they
attach.

(f) Form and Time of Settlement of Stock Units. Settlement of vested Stock Units
may be made in the form of (a) cash, (b) Shares or (c) any combination of both,
as determined by the Committee. The actual number of Stock Units eligible for
settlement may be larger or smaller than the number included in the original
Award, based on predetermined performance factors. Methods of converting Stock
Units into cash may include (without limitation) a method based on the average
Fair Market Value of Shares over a series of trading days. Vested Stock Units
may be settled in a lump sum or in installments. The distribution may occur or
commence when all vesting conditions applicable to the Stock Units have been
satisfied or have lapsed, or it may be deferred to any later date. The amount of
a deferred distribution may be increased by an interest factor or by dividend
equivalents. Until an Award of Stock Units is settled, the number of such Stock
Units shall be subject to adjustment pursuant to Section 11.

(g) Death of Recipient. Any Stock Units Award that becomes payable after the
recipient’s death shall be distributed to the recipient’s beneficiary or
beneficiaries. Each recipient of a Stock Units Award under the Plan shall
designate one or more beneficiaries for this purpose by filing the prescribed
form with the Company. A beneficiary designation may be changed by filing the
prescribed form with the Company at any time before the Award recipient’s death.
If no beneficiary was designated or if no designated beneficiary survives the
Award recipient, then any Stock Units Award that becomes payable after the
recipient’s death shall be distributed to the recipient’s estate.

(h) Creditors’ Rights. A holder of Stock Units shall have no rights other than
those of a general creditor of the Company. Stock Units represent an unfunded
and unsecured obligation of the Company, subject to the terms and conditions of
the applicable Stock Unit Agreement.

SECTION 11. ADJUSTMENT OF SHARES.

(a) Adjustments. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the price
of Shares, a combination or consolidation of

 

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the outstanding Stock (by reclassification or otherwise) into a lesser number of
Shares, a recapitalization, a spin-off or a similar occurrence, the Committee
shall make such adjustments as it, in its sole discretion, deems appropriate in
one or more of:

(i) The number of Options, SARs, Restricted Shares and Stock Units available for
future Awards under Section 5;

(ii) The limitations set forth in Section 5(a) and (b);

(iii) The number of Stock Units to be granted to Outside Directors under
Section 4(b);

(iv) The number of Shares covered by each outstanding Option and SAR;

(v) The Exercise Price under each outstanding Option and SAR; or

(vi) The number of Stock Units included in any prior Award which has not yet
been settled.

Except as provided in this Section 11, a Participant shall have no rights by
reason of any issue by the Company of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.

(b) Dissolution or Liquidation. To the extent not previously exercised or
settled, Options, SARs and Stock Units shall terminate immediately prior to the
dissolution or liquidation of the Company.

(c) Reorganizations. In the event that the Company is a party to a merger or
other reorganization, outstanding Awards shall be subject to the agreement of
merger or reorganization. Such agreement shall provide for:

(i) The continuation of the outstanding Awards by the Company, if the Company is
a surviving corporation;

(ii) The assumption of the outstanding Awards by the surviving corporation or
its parent or subsidiary;

(iii) The substitution by the surviving corporation or its parent or subsidiary
of its own awards for the outstanding Awards;

(iv) Full exercisability or vesting and accelerated expiration of the
outstanding Awards; or

(v) Settlement of the full value of the outstanding Awards in cash or cash
equivalents followed by cancellation of such Awards.

 

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(d) Reservation of Rights. Except as provided in this Section 11, an Optionee or
Offeree shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class, the payment of any dividend or any other increase
or decrease in the number of shares of stock of any class. Any issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or Exercise Price of Shares subject to
an Option. The grant of an Option pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.

SECTION 12. DEFERRAL OF AWARDS.

The Committee (in its sole discretion) may permit or require a Participant to:

(a) Have cash that otherwise would be paid to such Participant as a result of
the exercise of a SAR or the settlement of Stock Units credited to a deferred
compensation account established for such Participant by the Committee as an
entry on the Company’s books;

(b) Have Shares that otherwise would be delivered to such Participant as a
result of the exercise of an Option or SAR converted into an equal number of
Stock Units; or

(c) Have Shares that otherwise would be delivered to such Participant as a
result of the exercise of an Option or SAR or the settlement of Stock Units
converted into amounts credited to a deferred compensation account established
for such Participant by the Committee as an entry on the Company’s books. Such
amounts shall be determined by reference to the Fair Market Value of such Shares
as of the date when they otherwise would have been delivered to such
Participant.

A deferred compensation account established under this Section 12 may be
credited with interest or other forms of investment return, as determined by the
Committee. A Participant for whom such an account is established shall have no
rights other than those of a general creditor of the Company. Such an account
shall represent an unfunded and unsecured obligation of the Company and shall be
subject to the terms and conditions of the applicable agreement between such
Participant and the Company. If the deferral or conversion of Awards is
permitted or required, the Committee (in its sole discretion) may establish
rules, procedures and forms pertaining to such Awards, including (without
limitation) the settlement of deferred compensation accounts established under
this Section 12.

SECTION 13. AWARDS UNDER OTHER PLANS.

The Company may grant awards under other plans or programs. Such awards may be
settled in the form of Shares issued under this Plan. Such Shares shall be
treated for all purposes under the Plan like Shares issued in settlement of
Stock Units and shall, when issued, reduce the number of Shares available under
Section 5.

 

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SECTION 14. PAYMENT OF DIRECTOR’S FEES IN SECURITIES.

(a) Effective Date. No provision of this Section 14 shall be effective unless
and until the Board has determined to implement such provision.

(b) Elections to Receive NSOs, Restricted Shares or Stock Units. An Outside
Director may elect to receive his or her annual retainer payments and/or meeting
fees from the Company in the form of cash, NSOs, Restricted Shares or Stock
Units, or a combination thereof, as determined by the Board. Such NSOs,
Restricted Shares and Stock Units shall be issued under the Plan. An election
under this Section 14 shall be filed with the Company on the prescribed form.

(c) Number and Terms of NSOs, Restricted Shares or Stock Units. The number of
NSOs, Restricted Shares or Stock Units to be granted to Outside Directors in
lieu of annual retainers and meeting fees that would otherwise be paid in cash
shall be calculated in a manner determined by the Board. The terms of such NSOs,
Restricted Shares or Stock Units shall also be determined by the Board.

SECTION 15. LEGAL AND REGULATORY REQUIREMENTS.

Shares shall not be issued under the Plan unless the issuance and delivery of
such Shares complies with (or is exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, state securities laws and
regulations and the regulations of any stock exchange on which the Company’s
securities may then be listed, and the Company has obtained the approval or
favorable ruling from any governmental agency which the Company determines is
necessary or advisable.

SECTION 16. WITHHOLDING TAXES.

(a) General. To the extent required by applicable federal, state, local or
foreign law, a Participant or his or her successor shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. The Company shall not be
required to issue any Shares or make any cash payment under the Plan until such
obligations are satisfied.

(b) Share Withholding. The Committee may permit a Participant to satisfy all or
part of his or her withholding or income tax obligations by having the Company
withhold all or a portion of any Shares that otherwise would be issued to him or
her or by surrendering all or a portion of any Shares that he or she previously
acquired. Such Shares shall be valued at their Fair Market Value on the date
when taxes otherwise would be withheld in cash. In no event may a Participant
have Shares withheld that would otherwise be issued to him or her in excess of
the number necessary to satisfy the legally required minimum tax withholding.

 

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SECTION 17. TRANSFERABILITY.

Unless the agreement evidencing an Award (or an amendment thereto authorized by
the Committee) expressly provides otherwise, no Award granted under this Plan,
nor any interest in such Award, may be sold, assigned, conveyed, gifted,
pledged, hypothecated or otherwise transferred in any manner (prior to the
vesting and lapse of any and all restrictions applicable to Shares issued under
such Award), other than by will or the laws of descent and distribution;
provided, however, that an ISO may be transferred or assigned only to the extent
consistent with Section 422 of the Code. Any purported assignment, transfer or
encumbrance in violation of this Section 17 shall be void and unenforceable
against the Company.

SECTION 18. NO EMPLOYMENT RIGHTS.

No provision of the Plan, nor any right or Option granted under the Plan, shall
be construed to give any person any right to become, to be treated as, or to
remain an Employee. The Company and its Subsidiaries reserve the right to
terminate any person’s Service at any time and for any reason, with or without
notice.

SECTION 19. DURATION AND AMENDMENTS.

(a) Term of the Plan. The Plan, as set forth herein, shall terminate
automatically ten (10) years after its adoption by the Board. The Plan may be
terminated on any earlier date pursuant to Subsection (b) below.

(b) Right to Amend or Terminate the Plan. The Board of Directors may amend the
Plan at any time and from time to time. Rights and obligations under any Award
granted before amendment of the Plan shall not be materially impaired by such
amendment, except with consent of the Participant. An amendment of the Plan
shall be subject to the approval of the Company’s stockholders only to the
extent required by applicable laws, regulations or rules.

(c) Effect of Termination. No Awards shall be granted under the Plan after the
termination thereof. The termination of the Plan shall not affect any Award
previously granted under the Plan.

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SECTION 20. EXECUTION.

To record the amendment and restatement of the Plan by the Board of Directors,
the Company has caused its authorized officer to execute the same.

 

MULTI-FINELINE ELECTRONIX, INC. By  

/s/ Christine Besnard

Name   Christine Besnard Title   Secretary

 

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Amendment to Multi-Fineline Electronix, Inc.’s

2004 Stock Incentive Plan

WHEREAS, Multi-Fineline Electronix, Inc. (the “Company”) maintains the
Multi-Fineline Electronix Inc. 2004 Stock Incentive Plan (the “Plan”);

WHEREAS, the Compensation Committee (“Committee”) of the Company’s Board of
Directors (the “Board”) may amend the Plan pursuant to Section 19(b) of the
Plan;

WHEREAS, the Committee considers it desirable to amend the Plan (i) to permit
the grant of performance shares, performance units, and cash-based awards to
Plan participants; (ii) to permit the grant of Awards that shall be considered
“performance-based” awards under Section of 162(m) of the Internal Revenue Code;
and (iii) to make other desirable changes to the Plan.

NOW, THEREFORE, the Plan is hereby amended, effective January 13, 2009 by adding
to the end thereof the following Appendix A:

APPENDIX A

Article A-1: General Provisions

Section A-1.1—Eligibility. Only Employees shall be eligible for the grant of
Performance Shares, Performance Units, and Cash-Based Awards as described
herein.

Section A-1.2—Conflicts Between Appendix A and Plan. The Plan provides a
complete description of the terms and conditions governing this Appendix A. If
there is any inconsistency between the terms of this Appendix and the terms of
the Plan, the Plan’s terms shall completely supersede and replace the
conflicting terms of this Appendix A. All capitalized terms shall have the
meanings ascribed to them in the Plan, unless specifically set forth otherwise
herein.

Section A-1.3—Terms Incorporated by Reference. The terms of the Plan are hereby
incorporated by reference into this Appendix A.

Section A-1.4—Definition of Award. The definition of “Award” shall include
Performance Shares, Performance Units, and Cash-Based Awards.

Section A-1.5—Share Authorization Pool. For purposes of Section 5(a), the
aggregate number of Performance Units (which are stock settled) awarded under
the plan and Performance Shares plus the aggregate number of Options, SARs,
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under the Plan shall not exceed the maximum number of Shares available under the
Plan as computed under Section 5(a).

Section A-1.6—Additional Shares. If Performance Shares are forfeited prior to
being earned, then such Shares shall again become available for Awards under the
Plan. If Performance Shares and Performance Units are settled, then only the
number of Shares (if any) actually issued in settlement of such Performance
Shares and Performance Units shall reduce the number available in Section 5(a)
and the balance shall again become available for Awards under the Plan.

Article A-2: Performance Shares

Section A-2.1—Performance Share. A “Performance Share” shall mean a Share
awarded under this Article A-2.

Section A-2.2—Grant of Performance Shares. The Committee, at any time and from
time to time, may grant Performance Shares to a Participant in such amounts and
upon such terms as the Committee shall determine; provided that the grant of
Performance Shares shall be subject to the terms and conditions of the Plan and
this Appendix A.

Section A-2.3—Performance Share Award Agreement. Each grant of Performance
Shares shall be evidenced by a Performance Share Award Agreement that shall
specify the number of Performance Shares granted, the performance period over
which such Performance Shares may be earned, the applicable performance goals,
and such other provisions as the Committee shall determine.

Section A-2.4—Value of Performance Shares. Each Performance Share shall have an
initial value equal to the Fair Market Value of a Share on the Grant Date. The
Committee shall set performance goals in its discretion which, depending on the
extent to which such performance goals are met, shall determine the value and/or
number of Performance Shares that will be paid to the Participant.

Section A-2.5—Earning of Performance Shares. After the applicable performance
period has ended, the holder of Performance Shares shall be entitled to receive
a settlement based on the number of Performance Shares earned over the
performance period, to be determined as a function of the extent to which
the corresponding performance goals have been achieved. The determination of the
extent to which Performance Shares are earned at the conclusion of the
applicable performance period shall be made by the Committee in its sole
discretion.

Section A-2.6—Form and Timing of Payment of Performance Shares. The Committee,
in its sole discretion, shall pay at the close of the applicable performance
period or as soon as practicable thereafter, but no later than the fifteenth day
of the third month of the calendar year following the calendar year in which the
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earned Performance Shares in the form of cash or in Shares (or in a combination
thereof), as specified in a Participant’s Performance Share Award Agreement. Any
Shares paid to a Participant under this Section A-2.6 may be subject to any
restrictions deemed appropriate by the Committee.

Section A-2.7—Termination of Service. Each Performance Share Award Agreement
shall set forth the extent to which the Participant shall vest in or forfeit
Performance Shares following termination of the Participant’s Service with or
provision of services to the Company or any Parent or Subsidiary, as the case
may be. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Performance Share Award Agreement entered
into with each Participant, need not be uniform among all Performance Shares
awarded pursuant to this Plan, and may reflect distinctions based on the reasons
for termination.

Section A-2.8—Voting and Dividend Rights. The holders of Performance Shares
shall have no voting rights. Prior to settlement or forfeiture, a Performance
Share awarded under the Plan may, at the Committee’s sole discretion, carry with
it a right to dividend equivalents. Such right entitles the holder to be
credited with an amount equal to all cash dividends paid on one Share while the
Performance Share is outstanding. Settlement of dividend equivalents may be made
in the form of cash, in the form of Shares, or in a combination of both. Prior
to distribution, any dividend equivalents which are not paid shall be subject to
the same conditions and restrictions (including without limitation, any
forfeiture conditions) as the Performance Shares to which they attach.

Section A-2.9—Amendments. Within the limitations of the Plan, the Committee may
modify an Award of outstanding Performance Shares. However, neither such
modification nor any amendment or termination of the Plan approved by the Board
of Directors pursuant to Section 19(b) at the time such Performance Shares are
outstanding shall adversely affect the rights of the holder of such Performance
Shares without the consent of the holder.

Article A-3: Performance Units

Section A-3.1—Performance Unit. A “Performance Unit” shall mean an award granted
under this Article A-3.

Section A-3.2—Grant of Performance Units. The Committee, at any time and from
time to time, may grant Performance Units to a Participant in such amounts and
upon such terms as the Committee shall determine; provided that the grant of
Performance Units shall be subject to the terms and conditions of the Plan and
this Appendix A.

Section A-3.3—Performance Unit Award Agreement. Each grant of Performance Units
shall be evidenced by a Performance Unit Award Agreement that shall specify the
number of Performance Units granted, the initial notional value of each
Performance Unit, the

 

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performance period over which such Performance Units may be earned, the
applicable performance goals, and such other provisions as the Committee shall
determine.

Section A-3.4—Value of Performance Unit. Each Performance Unit shall have an
initial notional value equal to a dollar amount determined by the Committee in
its sole discretion. The Committee shall set performance goals in its discretion
which, depending on the extent to which such performance goals are met, shall
determine the value of the Performance Units that will be paid to the
Participant.

Section A-3.5—Earning of Performance Units. After the applicable performance
period has ended, the holder of Performance Units shall be entitled to receive a
settlement based on the number of Performance Units earned over the performance
period, to be determined as a function of the extent to which the corresponding
performance goals have been achieved. The determination of the extent to which
Performance Units are earned at the conclusion of the applicable performance
period shall be made by the Committee in its sole discretion.

Section A-3.6—Form and Timing of Payment of Performance Units. The Committee, in
its sole discretion, shall pay at the close of the applicable performance period
or as soon as practicable thereafter, but no later than the fifteenth day of the
third month of the calendar year following the calendar year in which the
applicable performance period ends, any earned Performance Units in the form of
cash or in Shares (or in a combination thereof), as specified in a Participant’s
Performance Unit Award Agreement. Any Shares paid to a Participant under this
Section A-3.6 may be subject to any restrictions deemed appropriate by the
Committee.

Section A-3.7—Termination of Service. Each Performance Unit Award Agreement
shall set forth the extent to which the Participant shall vest in or forfeit
Performance Units following termination of the Participant’s Service with or
provision of services to the Company or any Parent or Subsidiary, as the case
may be. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Performance Unit Award Agreement entered
into with each Participant, need not be uniform among all Performance Units
awarded pursuant to this Plan, and may reflect distinctions based on the reasons
for termination.

Section A-3.8—Amendments. Within the limitations of the Plan, the Committee may
modify an Award of outstanding Performance Units. However, neither such
modification nor any amendment or termination of the Plan approved by the Board
of Directors pursuant to Section 19(b) at the time such Performance Units are
outstanding shall adversely affect the rights of the holder of such Performance
Units without the consent of the holder.

 

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Article A-4: Cash-Based Awards

Section A-4.1—Cash-Based Awards. A “Cash-Based Award” shall mean awards granted
under this Article A-4.

Section A-4.2—Grant of Cash-Based Awards. The Committee, at any time and from
time to time, may grant Cash-Based Awards to a Participant in such amounts and
upon such terms as the Committee shall determine; provided that the grant of
Cash-Based Awards shall be subject to the terms and conditions of the Plan and
this Appendix A.

Section A-4.3—Value of Cash-Based Awards. Each Cash-Based Award shall specify a
payment amount or payment range as determined by the Committee. If the Committee
exercises its discretion to establish performance goals, the value of Cash-Based
Awards that shall be paid to the Participant will depend on the extent to which
such performance goals are met.

Section A-4.4—Form and Timing of Payment of Cash-Based Awards. The Committee
shall determine the amount of Cash-Based Awards to be paid and the timing of
such payment in accordance with its terms but payment shall be no later than the
fifteenth day of the third month of the calendar year following the calendar
year in which the Cash-Based Award is earned.

Section A-4.5—Termination of Service. The Committee shall determine the extent
to which the Participant shall have the right to receive Cash-Based Awards
following termination of the Participant’s Service with or provision of services
to the Company or any Affiliate or Subsidiary, as the case may be. Such
provisions shall be determined in the sole discretion of the Committee, such
provisions may be included in an agreement entered into with each Participant,
but need not be uniform among all Cash-Based Awards issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination.

Section A-4.6—Amendments. Within the limitations of the Plan, the Committee may
modify a Cash-Based Award to the extent such Award is evidenced by an award
agreement. However, neither such modification nor any amendment or termination
of the Plan approved by the Board of Directors pursuant to Section 19(b) at the
time such Cash-Based Awards are outstanding shall adversely affect the rights of
the holder of such Cash-Based Awards without the consent of the holder.

Article A-5: Performance-Based Compensation

Section A-5.1—Special Definitions for Performance-Based Compensation.

 

  (a) “Actual Award” means as to any Performance Period, the actual award (if
any) payable to a Participant for the Performance Period. The Actual Award is
determined by the Payout Formula for the Performance Period, subject to the
Committee’s authority under Section A-5.5 to reduce the Award otherwise
determined by the Payout Formula.

 

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  (b) “Award Pool” means the total dollars or percentage of any one or more of
the Performance Measures (if any) designated to fund Actual Awards payable for
any Performance Period.

 

  (c) “Base Salary” means as to any Performance Period, 100% of the
Participant’s annualized salary rate on the last day of each fiscal year or on
the last day of the last applicable fiscal year for any Performance Period, as
determined by the Committee. Such Base Salary shall be before both
(a) deductions for taxes or benefits, and (b) deferrals of compensation pursuant
to Company-sponsored plans.

 

  (d) “Covered Employee” means any Employee who is or may become a “Covered
Employee,” as defined in Section 162(m) of the Internal Revenue Code, and who is
designated, either as an individual Employee or class of Employees, by the
Committee within the shorter of (i) ninety (90) days after the beginning of the
Performance Period, or (ii) twenty-five percent (25%) of the Performance Period
has elapsed, as a “Covered Employee” under this Plan for such applicable
Performance Period.

 

  (e) “Determination Date” means as to any Performance Period of the Company,
(x) the first day of such Performance Period, or (y) if later, the latest date
possible which will not jeopardize the Plan’s qualification as performance-based
compensation under Code Section 162(m).

 

  (f) “Disability” means a permanent and total disability determined in
accordance with uniform and nondiscriminatory standards adopted by the Committee
from time to time.

 

  (g) “Payout Formula” means as to any Performance Period, the formula or payout
matrix established by the Committee pursuant to Section A-5.5, above, in order
to determine the Actual Awards (if any) to be paid to Participants. The formula
or matrix may differ from Participant to Participant.

 

  (h) “Performance-Based Compensation” means compensation under an Award that is
intended to satisfy the requirements of Code Section 162(m) for certain
performance-based compensation paid to Covered Employees. Notwithstanding the
foregoing, nothing in this Plan shall be construed to mean that an Award which
does not satisfy the requirements for performance-based compensation under Code
Section 162(m) does not constitute performance-based compensation for other
purposes, including Code Section 409A.

 

  (i) “Performance Period” means any period as determined by the Committee in
its sole discretion.

 

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  (j) “Target Award” means the target award payable under the Plan to a
Participant for the Performance Period as determined by the Committee in
accordance with Section A-5.4 and may be (a) expressed as a percentage of a
Participant’s Base Salary, (b) expressed as a percentage of the Award Pool, or
(c) a specified amount determined by the Committee in accordance with Section
A-5.4.

Section A-5.2—Performance-Based Compensation. The Committee may designate
whether an Award being granted to any Participant is intended to be
“performance-based compensation” as that term is used in Section 162(m) of the
Code. Any such Awards designated by the Committee to be “performance-based
compensation” shall be conditioned on the achievement of one or more Performance
Measures (as set forth in Section A-5.12), to the extent required by Code
Section 162(m). On or prior to the Determination Date, the Committee shall
select the Employees who shall receive Performance-Based Compensation. Grants of
Performance-Based Compensation are in the sole discretion of the Committee, and
on a Performance Period by Performance Period basis.

Section A-5.3—Determination of Performance Measures. On or prior to the
Determination Date, the Committee shall establish the Performance Measures for
each Participant for the Performance Period. Such Performance Measures shall be
set forth in writing.

Section A-5.4—Determination of Award Pool. On or prior to the Determination
Date, the Committee may establish an Award Pool, if any, for any Performance
Period.

Section A-5.5—Determination of Target Awards. On or prior to the Determination
Date, the Committee shall establish a Target Award for each Participant. Each
Participant’s Target Award shall be determined by the Committee in its sole
discretion, and each Target Award shall be set forth in writing.

Section A-5.6—Determination of Payout Formula or Formulae. On or prior to the
Determination Date, the Committee shall establish a Payout Formula or Formulae
for purposes of determining the Actual Award (if any) payable to each
Participant. Each Payout Formula shall (a) be in writing, (b) be based on a
comparison of actual performance to the Performance Measures, (c) provide for
the payment of a Participant’s Target Award if the Performance Measures for the
Performance Period are achieved, and (d) provide for an Actual Award greater
than or less than the Participant’s Target Award, depending upon the extent to
which actual performance exceeds or falls below the Performance Measures.
Notwithstanding the preceding, no participant’s Actual Award under the Plan may
exceed the Maximum Award (as set forth in Section A-5.14).

Section A-5.7—Determination of Actual Awards. After the end of each Performance
Period, the Committee shall certify in writing the extent to which the
Performance Measures applicable to each Participant for the Performance Period
were achieved or exceeded. The

 

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Actual Award for each Participant shall be determined by applying the Payout
Formula to the level of actual performance which has been certified by the
Committee. Notwithstanding any contrary provision of the Plan, the Committee, in
its sole discretion, may eliminate or reduce the Actual Award payable to any
Participant below that which otherwise would be payable under the Payout
Formula. Awards that are intended to qualify as Performance-Based Compensation
may not be adjusted upward.

Section A-5.8—Right to Receive Payment. Each Actual Award that may become
payable under the Plan shall be paid solely from the general assets of the
Company. Nothing in this Plan shall be construed to create a trust or to
establish or evidence any Participant’s claim of any right other than as an
unsecured general creditor with respect to any payment to which he or she may be
entitled.

Section A-5.9—Timing of Payment. Payment of each Actual Award shall be made as
soon as practicable after the Committee determines the amount of the Actual
Award (if any) under Section A-5.6 but in no event later than the fifteenth day
of the third month of the calendar year following the calendar year in which the
applicable Performance Period ends.

Section A-5.10—Termination Prior to the Date the Actual Award for the
Performance Period is Paid. If a Participant terminates Service with the Company
for any reason after the end of the applicable Performance Period but prior to
the date the Actual Award for such Performance Period is paid, the Participant
shall be entitled to the payment of the Actual Award for the Performance Period
subject to reduction or elimination under Section A-5.7 based on the
circumstances surrounding such termination of Service.

Section A-5.11—Termination Prior to End of the Performance Period for Reasons
other than Death or Disability. If a Participant terminates Service with the
Company prior to the end of the applicable Performance Period for any reason
other than death or Disability, the Committee shall reduce the Participant’s
Actual Award proportionately based on the date of termination (and subject to
further reduction or elimination under Section A-5.7 based on the circumstances
surrounding such termination of Service).

Section A-5.12—Termination Prior to the End of the Performance Period Due to
Death or Disability. If a Participant terminates Service with the Company prior
to the end of the applicable Performance Period due to death or Disability, the
Participant (or in the case of the Participant’s death, the Participant’s
beneficiary) shall be entitled to the payment of the Actual Award for the
Performance Period subject to reduction or elimination under Section A-5.7.

Section A-5.13—Payment in the Event of a Change in Control. In the event of a
Change in Control, the Performance Measures for the Performance Period in which
such Change in Control takes place shall be deemed achieved as of the date
immediately prior to the effective date of such Change in Control and a
Participant’s Target Bonus shall be paid on the effective date of such Change in
Control; provided, however, the Committee, in its sole discretion, may

 

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eliminate or reduce the Target Award payable to any Participant below that which
otherwise would be payable.

Section A-5.14—Payment in the Event of Death. If a Participant dies prior to the
payment of an Actual Award earned by him or her for a prior Performance Period,
the Actual Award shall be paid to the Participant’s beneficiary. If a
Participant fails to designate a beneficiary or if each person designated as a
beneficiary predeceases the Participant or dies prior to payment of an Actual
Award, then the Committee shall direct the payment of such Actual Award to the
Participant’s estate.

Section A-5.15—Code Section 162(m) Annual Limits. Unless and until the Committee
determines that an Award to a Covered Employee shall not be designed to qualify
as Performance-Based Compensation, the following limits (each an “Annual Award
Limit” and, collectively, “Annual Award Limits”), as adjusted pursuant to
Section 11, shall apply to grants of such Awards under this Plan:

 

  (a) Equity-Based Awards: The maximum aggregate number of Shares subject to
Performance Shares, Restricted Stock, and Stock Units granted with respect to
any one fiscal year of the Company to any one Participant shall be 1,500,000
shares.

 

  (b) Performance Units: The maximum aggregate value of Performance Units that a
Participant may be paid with respect to any one fiscal year of the Company may
not exceed $10,000,000.

 

  (c) Cash-Based Awards: The maximum aggregate amount paid or credited with
respect to Cash-Based Awards to any one Participant for any Performance Period
may not exceed $10,000,000 for each twelve (12) months in a Performance Period
(proportionately adjusted for periods less than twelve (12) months) (the
“Maximum Award”). The Maximum Award is the maximum amount which may be paid to a
Participant for any Performance Period.

Section A-5.16—Performance Measures. The performance goals upon which the
payment or vesting of an Award to a Covered Employee that is intended to qualify
as Performance-Based Compensation shall be limited to the following Performance
Measures:

 

  (a) Net earnings or net income (before or after taxes);

  (b) Earnings per share;

  (c) Operating earnings;

  (d) Net sales;

  (e) Sales growth;

  (f) Net revenues;

  (g)

Revenue growth;

 

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  (h) Net operating profit;

  (i) Net operating profit growth;

  (j) Return measures (including, but not limited to, return on assets, capital,
invested capital, equity, sales, or revenue);

  (k) Cash flow (including, but not limited to, operating cash flow, free cash
flow, cash flow return on equity, and cash flow return on investment);

  (l) Earnings before or after taxes, interest, depreciation, and/or
amortization;

  (m) Gross or operating margins;

  (n) Productivity ratios;

  (o) Share price (including, but not limited to, growth measures and total
shareholder return);

  (p) Expense targets;

  (q) Margins;

  (r) Operating efficiency;

  (s) Market share;

  (t) Customer satisfaction;

  (u) Working capital targets;

  (v) Operating margin;

  (w) Pre-tax profit; and

  (x)

Economic value added or EVA® (net operating profit after tax minus the sum of
capital multiplied by the cost of capital);

Any Performance Measure(s) may be used to measure the performance of the Company
or any Parent or Subsidiary as a whole or any business unit of the Company or
any Parent or Subsidiary or any combination thereof, as the Committee may deem
appropriate, or any of the above Performance Measures as compared to the
performance of a group of comparator companies, or published or special index
that the Committee, in its sole discretion, deems appropriate, or the Committee
may select Performance Measure (o) above as compared to various stock market
indices. The Committee also has the authority to provide for accelerated vesting
of any Award based on the achievement of performance goals pursuant to the
Performance Measures specified in this Section A-5.12.

Section A-5.17—Evaluation of Performance. The Committee may provide in any Award
that is intended to qualify as Performance-Based Compensation that any
evaluation of performance may include or exclude any of the following events
that occurs during a Performance Period: (a) asset write-downs, (b) litigation
or claim judgments or settlements, (c) the effect of changes in tax laws,
accounting principles, or other laws or provisions affecting reported results,
(d) any reorganization and restructuring programs, (e) extraordinary
nonrecurring items, (f) acquisitions or divestitures, (g) foreign exchange gains
and losses, and (h) any other adjustment item permissible under Code
Section 162(m). To the extent such inclusions or exclusions affect Awards to
Covered Employees, they shall be prescribed in a form that meets the
requirements of Code Section 162(m) for deductibility.

 

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Section A-5.18—Committee Discretion. In the event that applicable tax and/or
securities laws change to permit Committee discretion to alter the governing
Performance Measures without obtaining shareholder approval of such changes, the
Committee shall have sole discretion to make such changes without obtaining
shareholder approval. In addition, in the event that the Committee determines
that it is advisable to grant Awards that shall not qualify as Performance-Based
Compensation, the Committee may make such grants without satisfying the
requirements of Code Section 162(m) and base vesting on Performance Measures
other than those set forth in Section A-5.12.

Article A-6: Additional Committee Responsibilities

Section A-6.1—Additional Committee Responsibilities. In addition to
responsibilities in Section 3(d) of the Plan, the Committee shall have the full
authority and discretion to take the following actions:

 

  (a) To determine when and to whom Performance Shares, Performance Units, and
Cash-Based Awards are to be awarded under the Plan;

 

  (b) To prescribe the terms and conditions of each Performance Share and
Performance Unit, including (without limitation) the applicable performance
measures, performance period and, in the case of Performance Shares, to set the
number of shares or range of shares that may be earned or, in the case of
Performance Units, to set the value or range of values that may be earned;

 

  (c) To prescribe the terms and conditions of each Cash-Based Award, including
(without limitation) to determine performance measures, if applicable, and to
specify payment amount or amounts that may be earned;

 

  (d) To amend any outstanding Performance Share Award Agreement, Performance
Unit Award Agreement, or any award agreement applicable to a Cash-Based Award,
subject to applicable legal restrictions and to the consent of the Participant
who entered into such agreement if the Participant’s rights or obligations would
be adversely affected; and

 

  (e) To correct any defect, supply any omission, or reconcile any inconsistency
in the Plan, any Performance Share Award Agreement, any Performance Unit Award
Agreement or any award agreement, applicable to a Cash-Based Award.

 

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