Exhibit 10.01
FLEXTRONICS INTERNATIONAL LTD.
2001 EQUITY INCENTIVE PLAN
As Adopted August 13, 2001 and amended through July 22, 2009
1. PURPOSE. The purpose of this Plan is to provide incentives to attract, retain
and motivate eligible persons whose present and potential contributions are
important to the success of the Company, its Parent and Subsidiaries, by
offering them an opportunity to participate in the Company’s future performance
through grants of Awards. Capitalized terms not defined in the text are defined
in Section 21.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and 15, the total number
of Shares reserved and available for grant and issuance pursuant to this Plan
will be 62,000,000 Shares, plus shares that are subject to issuance upon
exercise of an Award but cease to be subject to such Award for any reason other
than exercise of such Award. In addition, any authorized shares not issued or
subject to outstanding grants under the Company’s 1993 Share Option Plan, 1997
Interim Option Plan, 1998 Interim Option Plan, 1999 Interim Option Plan, ASIC
International, Inc. Non-Qualified Stock Option Plan, Wave Optics, Inc. 1997
Share Option Plan, Wave Optics, Inc. 2000 Share Option Plan, Chatham
Technologies, Inc. Stock Option Plan, Chatham Technologies, Inc. 1997 Stock
Option Plan, IEC Holdings Limited 1997 Share Option Scheme, Palo Alto Products
International Private Ltd 1996 Share Option Plan, The DII Group, Inc. 1994 Stock
Incentive Plan, The DII Group, Inc. 1993 Stock Option Plan, Orbit Semiconductor,
Inc. 1994 Stock Incentive Plan, Telcom Global Solutions Holdings, Inc. 2000
Equity Incentive Plan, Telcom Global Solutions, Inc. 2000 Stock Option Plan,
KMOS Semi-Customs, Inc. 1989 Stock Option Plan, and KMOS Semi-Customs, Inc. 1990
Non-Qualified Stock Option Plan, (each a “Prior Plan” and collectively, the
“Prior Plans”) and any shares subject to outstanding grants that are forfeited
and/or that are issuable upon exercise of options granted pursuant to the Prior
Plans that expire or become unexercisable for any reason without having been
exercised in full, will no longer be available for grant and issuance under the
Prior Plans, but will be available for grant and issuance under this Plan. At
all times the Company shall reserve and keep available a sufficient number of
Shares as shall be required to satisfy the requirements of all outstanding
Awards granted under this Plan. No more than 30,000,000 Shares shall be issued
as ISOs and no more than 20,000,000 Shares shall be issued as Stock Bonuses.
2.2 Adjustment of Shares. Should any change be made to the Shares issuable under
the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares, spin-off or other change affecting
the outstanding Shares as a class without the Company’s receipt of
consideration, then appropriate adjustments shall be made to (i) the maximum
number and/or class of securities issuable under the Plan, (ii) the maximum
number and/or class of securities for which any Participant may be granted
Awards under the terms of the Plan or that may be granted generally under the
terms of the Plan, and (iii) the number and/or class of securities and price per
Share in effect under each Award outstanding under Sections 5 and 20 and
outstanding Awards previously granted pursuant to Section 7 hereof. Such
adjustments to the outstanding Awards are to be effected in a manner which shall
preclude the enlargement or dilution of rights and benefits under such Awards,
provided, however, that (i) fractions of a Share will not be issued but will be
replaced by a cash payment equal to the Fair Market Value of such fraction of a
Share, as determined by the Committee. The adjustments determined by the
Committee shall be final, binding and conclusive. The repricing, replacement or
regranting of any previously granted Award, through cancellation or by lowering
the Exercise Price or Purchase Price of such Award, shall be prohibited unless
the shareholders of the Company first approve such repricing, replacement or
regranting.
3. ELIGIBILITY. All Awards may be granted to employees, officers and directors
of the Company or any Parent or Subsidiary of the Company. No person will be
eligible to receive more than 6,000,000 Shares in any calendar year under this
Plan pursuant to the grant of Awards hereunder; provided, however, that no
Outside Director will be eligible to receive more than 100,000 Shares, in the
aggregate, in any calendar year under this Plan pursuant to the grant of Awards
hereunder. A person may be granted more than one Award under this Plan.

 

 

--------------------------------------------------------------------------------

 

4. ADMINISTRATION.
4.1 Committee Authority. This Plan will be administered by the Committee or by
the Board acting as the Committee. Subject to the general purposes, terms and
conditions of this Plan, and to the direction of the Board, the Committee will
have full power to implement and carry out this Plan. The Committee will have
the authority to:
(a) construe and interpret this Plan, any Award Agreement and any other
agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to this Plan or
any Award;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject to Awards;
(f) determine whether Awards will be granted singly, in combination with, in
tandem with, in replacement of, or as alternatives to, other Awards under this
Plan or any other incentive or compensation plan of the Company or any Parent or
Subsidiary of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission or reconcile any inconsistency in
this Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for the administration
of this Plan.
4.2 Committee Discretion. Any determination made by the Committee with respect
to any Award will be made in its sole discretion at the time of grant of the
Award or, unless in contravention of any express term of this Plan or Award, at
any later time, and such determination will be final and binding on the Company
and on all persons having an interest in any Award under this Plan. The
Committee may delegate to one or more officers of the Company the authority to
grant an Award under this Plan to Participants who are not Insiders of the
Company.
5. OPTIONS. The Committee may grant Options to eligible persons and will
determine whether such Options will be Incentive Stock Options within the
meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NQSOs”), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this Plan will be evidenced
by an Award Agreement which will expressly identify the Option as an ISO or an
NQSO (“Stock Option Agreement”), and will be in such form and contain such
provisions (which need not be the same for each Participant) as the Committee
may from time to time approve, and which will comply with and be subject to the
terms and conditions of this Plan.

 

2

--------------------------------------------------------------------------------

 

5.2 Date of Grant. The date of grant of an Option will be the date on which the
Committee makes the determination to grant such Option, unless otherwise
specified by the Committee. The Stock Option Agreement and a copy of this Plan
will be delivered to the Participant within a reasonable time after the granting
of the Option.
5.3 Exercise Period. Options may be exercisable within the times or upon the
events determined by the Committee as set forth in the Stock Option Agreement
governing such Option; provided, however, that no Option will be exercisable
after the expiration of ten (10) years from the date the Option is granted; and
provided further that (i) no ISO granted to a person who directly or by
attribution owns more than ten percent (10%) of the total combined voting power
of all classes of shares or stock of the Company or of any Parent or Subsidiary
of the Company (“Ten Percent Shareholder”) will be exercisable after the
expiration of five (5) years from the date the ISO is granted and (ii) no Option
granted to a person who is not an employee of the Company or any Parent or
Subsidiary of the Company on the date of grant of that Option will be
exercisable after the expiration of five (5) years from the date the Option is
granted. The Committee also may provide for Options to become exercisable at one
time or from time to time, periodically or otherwise, in such number of Shares
or percentage of Shares as the Committee determines.
5.4 Exercise Price. The Exercise Price of an Option will be determined by the
Committee when the Option is granted; provided that: (i) the Exercise Price will
be not less than 100% of the Fair Market Value of the Shares on the date of
grant; and (ii) the Exercise Price of any ISO granted to a Ten Percent
Shareholder will not be less than 110% of the Fair Market Value of the Shares on
the date of grant. Payment for the Shares purchased may be made in accordance
with Section 6 of this Plan.
5.5 Method of Exercise.
(a) Options may be exercised only by delivery to the Company (or as the Company
may direct) of a written stock option exercise agreement (the “Exercise
Agreement”) (in the case of a written Exercise Agreement, in the form approved
by the Board or the Committee, which need not be the same for each Participant),
in each case stating the number of Shares being purchased, the restrictions
imposed on the Shares purchased under such Exercise Agreement, if any, and such
representations and agreements regarding Participant’s investment intent and
access to information and other matters, if any, as may be required or desirable
by the Company to comply with applicable securities laws, together with payment
in full of the Exercise Price for the number of Shares being purchased.
(b) A written Exercise Agreement may be communicated electronically through the
use of such security device (including, without limitation, any logon
identifier, password, personal identification number, smartcard, digital
certificate, digital signature, encryption device, electronic key, and/or other
code or any access procedure incorporating any one or more of the foregoing) as
may be designated by the Board or the Committee for use in conjunction with the
Plan from time to time (“Security Device”), or via an electronic page, site, or
environment designated by the Company which is accessible only through the use
of such Security Device, and such written Exercise Agreement shall thereby be
deemed to have been sent by the designated holder of such Security Device. The
Company (or its agent) may accept and act upon any written Exercise Agreement
issued and/or transmitted through the use of the Participant’s Security Device
(whether actually authorized by the Participant or not) as his authentic and
duly authorized Exercise Agreement and the Company (or its agent) may treat such
Exercise Agreement as valid and binding on the Participant notwithstanding any
error, fraud, forgery, lack of clarity or misunderstanding in the terms of such
Exercise Agreement. All written Exercise Agreements issued and/or transmitted
through the use of the Participant’s Security Device (whether actually
authorized by the Participant or not) are irrevocable and binding on the
Participant upon transmission to the Company (or as the Company may direct) and
the Company (or its agent) shall be entitled to effect, perform or process such
Exercise Agreement without the Participant’s further consent and without further
reference to the Participant.

 

3

--------------------------------------------------------------------------------

 

(c) The Company’s records of the Exercise Agreements (whether delivered or
communicated electronically or in printed form), and its record of any
transactions maintained by any relevant person authorized by the Company
relating to or connected with the Plan, whether stored in audio, electronic,
printed or other form, shall be binding and conclusive on the Participant and
shall be conclusive evidence of such Exercise Agreements and/or transactions.
All such records shall be admissible in evidence and, in the case of a written
Exercise Agreement which has been communicated electronically, the Participant
shall not challenge or dispute the admissibility, reliability, accuracy or the
authenticity of the contents of such records merely on the basis that such
records were incorporated and/or set out in electronic form or were produced by
or are the output of a computer system, and the Participant waives any of his
rights (if any) to so object.
5.6 Termination. Notwithstanding the exercise periods set forth in the Stock
Option Agreement, exercise of an Option will always be subject to the following:
(a) If the Participant is Terminated for any reason except death or Disability,
then the Participant may exercise such Participant’s Options only to the extent
that such Options would have been exercisable upon the Termination Date no later
than three (3) months after the Termination Date (or such shorter or longer time
period not exceeding five (5) years as may be determined by the Committee,
provided, that any Option which is exercised beyond three (3) months after the
Termination Date shall be deemed to be an NQSO), but in any event no later than
the expiration date of the Options.
(b) If the Participant is Terminated because of the Participant’s death or
Disability (or the Participant dies within three (3) months after a Termination
other than for Cause or because of the Participant’s Disability), then the
Participant’s Options may be exercised only to the extent that such Options
would have been exercisable by the Participant on the Termination Date and must
be exercised by the Participant (or the Participant’s legal representative or
authorized assignee) no later than twelve (12) months after the Termination Date
(or such shorter or longer time period not exceeding five (5) years as may be
determined by the Committee, provided, that any Option which is exercised beyond
twelve (12) months after the Termination Date when the Termination is for
Participant’s Disability, shall be deemed to be an NQSO), but in any event no
later than the expiration date of the Options.
(c) If the Participant is terminated for Cause, then the Participant’s Options
shall expire on such Participant’s Termination Date, or at such later time and
on such conditions as are determined by the Committee (but in any event, no
later than the expiration date of the Options).
5.7 Limitations on Exercise. The Committee may specify a reasonable minimum
number of Shares that may be purchased on any exercise of an Option, provided
that such minimum number will not prevent Participant from exercising the Option
for the full number of Shares for which it is then exercisable.
5.8 Limitations on ISO. The aggregate Fair Market Value (determined as of the
date of grant) of Shares with respect to which ISO are exercisable for the first
time by a Participant during any calendar year (under this Plan or under any
other incentive stock option plan of the Company, Parent or Subsidiary of the
Company) will not exceed US$100,000. If the Fair Market Value of Shares on the
date of grant with respect to which ISO are exercisable for the first time by a
Participant during any calendar year exceeds US$100,000, then the Options for
the first US$100,000 worth of Shares to become exercisable in such calendar year
will be ISO and the Options for the amount in excess of US$100,000 that become
exercisable in that calendar year will be NQSOs. In the event that the Code or
the regulations promulgated thereunder are amended after the Effective Date of
this Plan to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to ISO, such different limit will be automatically
incorporated herein and will apply to any Options granted after the effective
date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may modify, extend or
renew outstanding Options and authorize the grant of new Options in substitution
therefor, provided that any such action may not, without the written consent of
a Participant, impair any of such Participant’s rights under any Option
previously granted, and provided further that the exercise period of any Option
may not in any event be extended beyond the periods specified in Section 5.3.
Any outstanding ISO that is modified, extended, renewed or otherwise altered
will be treated in accordance with Section 424(h) of the Code.

 

4

--------------------------------------------------------------------------------

 

5.10 No Disqualification. Notwithstanding any other provision in this Plan, no
term of this Plan relating to ISO will be interpreted, amended or altered, nor
will any discretion or authority granted under this Plan be exercised, so as to
disqualify this Plan under Section 422 of the Code or, without the consent of
the Participant affected, to disqualify any ISO under Section 422 of the Code.
6. PAYMENT FOR SHARE PURCHASES.
6.1 Payment. Payment for Shares purchased pursuant to this Plan may be made in
cash (by check) or, where expressly approved for the Participant by the
Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the Participant;
(b) by waiver of compensation due or accrued to the Participant for services
rendered;
(c) with respect only to purchases upon exercise of an Option, and provided that
a public market for the Company’s Shares exists:
(i) through a “same day sale” commitment from the Participant and a
broker-dealer that is a member of the National Association of Securities Dealers
(an “NASD Dealer”) whereby the Participant irrevocably elects to exercise the
Option and to sell a portion of the Shares so purchased to pay for the Exercise
Price, and whereby the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the Company; or
(ii) through a “margin” commitment from the Participant and a NASD Dealer
whereby the Participant irrevocably elects to exercise the Option and to pledge
the Shares so purchased to the NASD Dealer in a margin account as security for a
loan from the NASD Dealer in the amount of the Exercise Price, and whereby the
NASD Dealer irrevocably commits upon receipt of such Shares to forward the
Exercise Price directly to the Company;
(d) conversion of a convertible note issued by the Company, the terms of which
provide that it is convertible into Shares issuable pursuant to the Plan (with
the principal amount and any accrued interest being converted and credited
dollar for dollar to the payment of the Exercise Price); or
(e) by any combination of the foregoing.
7. GRANTS TO OUTSIDE DIRECTORS.
7.1 Option Grants. No Options granted to an Outside Director will be exercisable
after the expiration of five (5) years from the date the Option is granted to
such Outside Director. If the Outside Director is Terminated, the Outside
Director may exercise such Outside Director’s Options only to the extent that
such Options would have been exercisable upon the Termination Date for such
period as set forth in Section 5.6. Notwithstanding any provision to the
contrary, in the event of a Corporate Transaction described in Section 15.1, the
vesting of all Options previously granted to Outside Directors pursuant to
Section 7 of this Plan will accelerate and such Options will become exercisable
in full prior to the consummation of such event at such times and on such
conditions as the Committee determines, and must be exercised, if at all, within
three (3) months of the consummation of said event. Any Options not exercised
within such three-month period shall expire. Notwithstanding any provision to
the contrary, in the event of a Hostile Take-Over, the Outside Director shall
have a thirty-day period in which to surrender to the Company each option held
by him or her under this Plan for a period of at least six (6) months. The
Outside Director shall in return be entitled to a cash distribution from the
Company in an amount equal to the excess of (i) the Take-Over Price of the
Shares at the time subject to the surrendered Option (whether or not the Option
is otherwise at the time exercisable for those Shares) over (ii) the aggregate
Exercise Price payable for such Shares. Such cash distribution shall be paid
within five (5) days following the surrender of the Option to the Company.
Neither the approval of the Committee nor the consent of the Board shall be
required in connection with such option surrender and cash distribution. The
Shares subject to each Option surrendered in connection with the Hostile
Take-Over shall NOT be available for subsequent issuance under the Plan.

 

5

--------------------------------------------------------------------------------

 

7.2 Elimination of Automatic Grants to Outside Directors. As of July 22, 2009,
no further automatic option grants shall be made to Outside Directors pursuant
to this Section 7. Any automatic option grants previously granted pursuant to
Section 7 of this Plan shall remain subject to the terms, conditions and
restrictions of the Plan in effect at the time the Award was granted.
8. WITHHOLDING TAXES.
8.1 Withholding Generally. Whenever Shares are to be issued in satisfaction of
Awards granted under this Plan, the Company may require the Participant to remit
to the Company an amount sufficient to satisfy federal, state and local
withholding tax requirements prior to the delivery of any certificate or
certificates for such Shares. Whenever, under this Plan, payments in
satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
8.2 Stock Withholding. When, under applicable tax laws, a Participant incurs tax
liability in connection with the exercise or vesting of any Award that is
subject to tax withholding and the Participant is obligated to pay the Company
the amount required to be withheld, the Committee may in its sole discretion,
and subject to compliance with all applicable laws and regulations, allow the
Participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of Shares
having a Fair Market Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to be withheld is to be
determined. All elections by a Participant to have Shares withheld for this
purpose will be made in accordance with the requirements established by the
Committee and be in writing in a form acceptable to the Committee.
9. TRANSFERABILITY.
9.1 Except as otherwise provided in this Section 9, Awards granted under this
Plan, and any interest therein, will not be transferable or assignable by a
Participant, and may not be made subject to execution, attachment or similar
process, otherwise than by will or by the laws of descent and distribution or as
determined by the Committee and set forth in the Award Agreement with respect to
Awards. Notwithstanding the foregoing, (i) Participants may transfer or assign
their Options to Family Members through a gift or a domestic relations order
(and not in a transfer for value), and (ii) if the terms of the applicable
instrument evidencing the grant of an Option so provide, Participants who reside
outside of the United States and Singapore may assign their Options to a
financial institution outside of the United States and Singapore that has been
approved by the Committee, in accordance with the terms of the applicable
instrument, subject to Code regulations providing that any transfer of an ISO
may cause such ISO to become a NQSO. The Participant shall be solely responsible
for effecting any such assignment, and for ensuring that such assignment is
valid, legal and binding under all applicable laws. The Committee shall have the
discretion to adopt such rules as it deems necessary to ensure that any
assignment is in compliance with all applicable laws.
9.2 All Awards other than NQSO’s. All Awards other than NQSO’s shall be
exercisable: (i) during the Participant’s lifetime, only by (A) the Participant,
or (B) the Participant’s guardian or legal representative; and (ii) after
Participant’s death, by the legal representative of the Participant’s heirs or
legatees. 9.3 NQSOs. Unless otherwise restricted by the Committee, an NQSO shall
be exercisable: (i) during the Participant’s lifetime only by (A) the
Participant, (B) the Participant’s guardian or legal representative, (C) a
Family Member of the Participant who has acquired the NQSO by “permitted
transfer;” as defined below, (ii) by a transferee that is permitted pursuant to
clause (ii) of Section 9.2, for such period as may be authorized by the terms of
the applicable instrument evidencing the grant of the applicable Option, or by
the Committee, and (iii) after Participant’s death, by the legal representative
of the Participant’s heirs or legatees. “Permitted transfer” means any transfer
of an interest in such NQSO by gift or domestic relations order effected by the
Participant during the Participant’s lifetime. A permitted transfer shall not
include any transfer for value; provided that the following shall be permitted
transfers and shall not be considered to be transfers for value: (a) a transfer
under a domestic relations order in settlement of marital property rights or
(b) a transfer to an entity in which more than fifty percent of the voting
interests are owned by Family Members or the Participant in exchange for an
interest in that entity.

 

6

--------------------------------------------------------------------------------

 

10. PRIVILEGES OF STOCK OWNERSHIP. No Participant will have any of the rights of
a shareholder with respect to any Shares until the Shares are issued to the
Participant. After Shares are issued to the Participant, the Participant will be
a shareholder and have all the rights of a shareholder with respect to such
Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares.
11. CERTIFICATES. All certificates for Shares or other securities delivered
under this Plan will be subject to such stock transfer orders, legends and other
restrictions as the Committee may deem necessary or advisable, including
restrictions under any applicable federal, state or foreign securities law, or
any rules, regulations and other requirements of the SEC or any stock exchange
or automated quotation system upon which the Shares may be listed or quoted.
12. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or from time
to time and subject to compliance with all applicable laws and regulations,
authorize the Company, with the consent of the respective Participants, to issue
new Awards in exchange for the surrender and cancellation of any or all
outstanding Awards. The Committee may at any time and subject to compliance with
all applicable laws and regulations buy from a Participant an Award previously
granted with payment in cash, Shares or other consideration, based on such terms
and conditions as the Committee and the Participant may agree.
13. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be
effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to: (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable; and/or (b) completion of any registration or other qualification
of such Shares under any state or federal law or ruling of any governmental body
that the Company determines to be necessary or advisable. The Company will be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
will have no liability for any inability or failure to do so.
14. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted under
this Plan will confer or be deemed to confer on any Participant any right to
continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant’s employment or other relationship at any time, with or without
cause.
15. CORPORATE TRANSACTIONS.
15.1 Assumption or Replacement of Awards by Successor. Except for automatic
grants to Outside Directors previously granted pursuant to Section 7 hereof, in
the event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the shareholders of the Company or their relative share
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the shareholders of the Company immediately prior to such merger
(other than any shareholder that merges, or which owns or controls another
corporation that merges, with the Company in such

 

7

--------------------------------------------------------------------------------

 

merger) cease to own their shares or other equity interest in the Company,
(d) the sale of substantially all of the assets of the Company, or (e) the
acquisition, sale, or transfer of more than 50% of the outstanding shares of the
Company by tender offer or similar transaction (each, a “Corporate Transaction
”), each Option which is at the time outstanding under this Plan shall
automatically accelerate so that each such Option shall, immediately prior to
the specified effective date for the Corporate Transaction, become fully
exercisable with respect to the total number of Shares at the time subject to
such Option and may be exercised for all or any portion of such Shares. However,
subject to the specific terms of a Participant’s Award Agreement, an outstanding
Option under this Plan shall not so accelerate if and to the extent: (i) such
Option is, in connection with the Corporate Transaction, either to be assumed by
the successor corporation or parent thereof or to be replaced with a comparable
Option to purchase shares of the capital stock of the successor corporation or
parent thereof, (ii) such Option is to be replaced with a cash incentive program
of the successor corporation which preserves the Option spread existing at the
time of the Corporate Transaction and provides for subsequent payout in
accordance with the same vesting schedule applicable to such Option or (iii) the
acceleration of such Option is subject to other limitations imposed by the
Committee at the time of the Option grant. The determination of Option
comparability under clause (i) above shall be made by the Committee, and its
determination shall be final, binding and conclusive.
15.2 Other Treatment of Awards. Subject to any greater rights granted to
Participants under the foregoing provisions of this Section 15 or other specific
terms of a Participant’s Award Agreement, in the event of the occurrence of any
Corporate Transaction described in Section 15.1, any outstanding Awards will be
treated as provided in the applicable agreement or plan of merger,
consolidation, dissolution, liquidation, or sale of assets.
15.3 Assumption of Awards by the Company. The Company, from time to time, also
may substitute or assume outstanding awards granted by another company, whether
in connection with an acquisition of such other company or otherwise, by either;
(a) granting an Award under this Plan in substitution of such other company’s
award; or (b) assuming such award as if it had been granted under this Plan if
the terms of such assumed award could be applied to an Award granted under this
Plan. Such substitution or assumption will be permissible if the holder of the
substituted or assumed award would have been eligible to be granted an Award
under this Plan if the other company had applied the rules of this Plan to such
grant. In the event the Company assumes an award granted by another company, the
terms and conditions of such award will remain unchanged (except that the
Exercise Price and the number and nature of Shares issuable upon exercise of any
such Option will be adjusted appropriately pursuant to Section 424(a) of the
Code). In the event the Company elects to grant a new Option rather than
assuming an existing Option, such new Option may be granted with a similarly
adjusted Exercise Price.
16. ADOPTION AND SHAREHOLDER APPROVAL. This Plan will become effective on the
date on which the Board adopts the Plan (the “Effective Date”). This Plan shall
be approved by the shareholders of the Company (excluding Shares issued pursuant
to this Plan), consistent with applicable laws, within twelve (12) months before
or after the date this Plan is adopted by the Board. Upon the Effective Date,
the Committee may grant Awards pursuant to this Plan; provided, however, that:
(a) no Option may be exercised prior to initial shareholder approval of this
Plan; (b) no Option granted pursuant to an increase in the number of Shares
subject to this Plan approved by the Board will be exercised prior to the time
such increase has been approved by the shareholders of the Company; (c) in the
event that initial shareholder approval is not obtained within the time period
provided herein, all Awards granted hereunder shall be cancelled; and (d) in the
event that shareholder approval of such increase is not obtained within the time
period provided herein, all Awards granted pursuant to such increase will be
cancelled.
17. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided herein,
this Plan will terminate ten (10) years from the date this Plan is adopted by
the Board or, if earlier, the date of shareholder approval. This Plan and all
agreements thereunder shall be governed by and construed in accordance with the
laws of the State of California.

 

8

--------------------------------------------------------------------------------

 

18. AMENDMENT OR TERMINATION OF PLAN. The Board has complete and exclusive power
and authority to amend or modify the Plan (or any component thereof) in any or
all respects whatsoever. However, no such amendment or modification shall
adversely affect rights and obligations with respect to Options at the time
outstanding under the Plan, unless the Participant consents to such amendment.
In addition, the Board may not, without the approval of the Company’s
shareholders, amend the Plan to (i) materially increase the maximum number of
Shares issuable under the Plan or the number of Shares for which Options may be
granted per newly- elected or continuing Outside Director or the maximum number
of Shares for which any one individual participating in the Plan may be granted
Options, (ii) materially modify the eligibility requirements for plan
participation or (iii) materially increase the benefits accruing to
Participants. The Board may at any time terminate or amend this Plan in any
respect, including without limitation amendment of any form of Award Agreement
or instrument to be executed pursuant to this Plan; provided, however, that the
Board will not, without the approval of the shareholders of the Company, amend
this Plan in any manner that requires such shareholder approval.
19. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the Board,
the submission of this Plan to the shareholders of the Company for approval, nor
any provision of this Plan will be construed as creating any limitations on the
power of the Board to adopt such additional compensation arrangements as it may
deem desirable, including, without limitation, the granting of stock options and
bonuses otherwise than under this Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.
20. STOCK BONUSES.
20.1 Stock Bonuses Generally. A Stock Bonus is a grant of Shares by the Company
to an individual who has satisfied the terms and conditions set by the Committee
on the making of such grant. The Committee will determine to whom a grant may be
made, the number of Shares that may be granted, the restrictions to the making
of such grant, and all other terms and conditions of the Stock Bonus, subject to
the restrictions set forth in Section 20.2 hereof. The conditions to grant may
be based upon completion of a specified number of years of service with the
Company or upon completion of the performance goals as set out by the Committee.
Grants of Stock Bonuses may vary from Participant to Participant and between
groups of Participants. Prior to the grant of a Stock Bonus, the Commitee shall:
(a) determine the nature, length and starting date of any Performance Period
that may be a condition precedent to grant of a Stock Bonus; (b) select from
among the Performance Factors to be used to measure performance goals, if any;
and (c) determine the number of Shares that may be awarded to the Participant.
Prior to the grant of any Stock Bonus, the Committee shall determine the extent
to which such Stock Bonus has been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Stock Bonuses that
are subject to different Performance Periods and having different performance
goals and other criteria.
20.2 Restrictions on Stock Bonus Awards.
(a) Any Stock Bonuses with vesting based on Performance Factors shall have a
minimum Performance Period of one year, and any Stock Bonuses with vesting based
solely on the passage of time and continued service to the Company shall have a
minimum Performance Period of three years (collectively, the “Stock Bonus
Restriction Periods”).
(b) The Stock Bonus Restriction Periods may not be waived except in the case of
death, Disability, Termination or a Corporate Transaction.
(c) Stock Bonuses granted not in accordance with the Stock Bonus Restriction
Periods may not exceed five percent (5%) of the total Shares reserved and
available for grant and issuance pursuant to this Plan, including (i) shares
that are subject to issuance upon exercise of an Award but cease to be subject
to such Award for any reason other than exercise of such Award; (ii) any
authorized shares not issued or subject to outstanding grants under the Prior
Plans; and (iii) any shares subject to outstanding grants that are forfeited
and/or that are issuable upon exercise of options granted pursuant to the Prior
Plans that expire or become unexercisable for any reason without having been
exercised in full.
21. DEFINITIONS. As used in this Plan, the following terms will have the
following meanings:
“Award” means any Options or shares from Stock Bonuses granted under this Plan.
“Award Agreement” means, with respect to each Award, the signed written
agreement between the Company and the Participant setting forth the terms and
conditions of the Award.

 

9

--------------------------------------------------------------------------------

 

“Board” means the Board of Directors of the Company.
“Cause” means (a) the commission of an act of theft, embezzlement, fraud,
dishonesty, (b) a breach of fiduciary duty to the Company or a Parent or
Subsidiary of the Company or (c) a failure to materially perform the customary
duties of the employee’s employment.
“Code” means the Internal Revenue Code of 1986, as amended.
“Committee” means the Compensation Committee of the Board.
“Company” means Flextronics International Ltd. or any successor corporation.
“Disability” means total and permanent disability as defined in Section 22(e)(3)
of the Code.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Exercise Price” means the price at which a holder of an Option may purchase the
Shares issuable upon exercise of the Option.
“Fair Market Value” means, as of any date, the value of the Shares determined as
follows:
(a) if such Shares are then quoted on the Nasdaq National Market, the closing
price of such Shares on the Nasdaq National Market on the date of determination
as reported in The Wall Street Journal;
(b) if such Shares are publicly traded and are then listed on a national
securities exchange, the closing price of such Shares on the date of
determination on the principal national securities exchange on which the Shares
are listed or admitted to trading as reported in The Wall Street Journal;
(c) if such Shares are publicly traded but are not quoted on the Nasdaq National
Market nor listed or admitted to trading on a national securities exchange, the
average of the closing bid and asked prices on the date of determination as
reported in The Wall Street Journal; or
(d) if none of the foregoing is applicable, by the Committee in good faith.
“Family Member” includes any of the following:
(a) child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law of the Participant, including
any such person with such relationship to the Participant by adoption;
(b) any person (other than a tenant or employee) sharing the Participant’s
household;
(c) a trust in which the persons in (a) and (b) have more than fifty percent of
the beneficial interest;
(d) a foundation in which the persons in (a) and (b) or the Participant control
the management of assets; or
(e) any other entity in which the persons in (a) and (b) or the Participant own
more than fifty percent of the voting interest.

 

10

--------------------------------------------------------------------------------

 

“Hostile Take-Over” means a change in ownership of the Company effected through
the following transaction:
(a) the direct or indirect acquisition by any person or related group of persons
(other than the Company or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Company) of beneficial
ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company’s outstanding securities pursuant to a tender or exchange offer made
directly to the Company’s shareholders which the Board does not recommend such
shareholders to accept, and
(b) the acceptance of more than fifty percent (50%) of the securities so
acquired in such tender or exchange offer from holders other than Insiders.
“Insider” means an officer or director of the Company or any other person whose
transactions in the Company’s Shares are subject to Section 16 of the Exchange
Act.
“Option” means an award of an option to purchase Shares pursuant to Section 5 or
previously granted pursuant to Section 7.
“Outside Director” means a member of the Board who is not an employee of the
Company or any Parent or Subsidiary.
“Parent” means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if each of such corporations other than the
Company owns stock possessing more than 50% of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
“Participant” means a person who receives an Award under this Plan.
“Performance Factors” means the factors selected by the Committee from among the
following measures to determine whether the performance goals established by the
Committee and applicable to Awards have been satisfied:
(a) Net revenue and/or net revenue growth;
(b) Earnings before income taxes and amortization and/or earnings before income
taxes and amortization growth;
(c) Operating income and/or operating income growth;
(d) Net income and/or net income growth;
(e) Earnings per share and/or earnings per share growth;
(f) Total stockholder return and/or total stockholder return growth;
(g) Return on equity;
(h) Operating cash flow return on income;
(i) Adjusted operating cash flow return on income;
(j) Economic value added; and
(k) Individual confidential business objectives.
“Performance Period” means the period of service determined by the Committee,
not to exceed five years, during which years of service or performance is to be
measured for Awards.

 

11

--------------------------------------------------------------------------------

 

“Plan” means this Flextronics International Ltd. 2001 Equity Incentive Plan, as
amended from time to time.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Shares” means ordinary shares of no par value each in the capital of the
Company reserved for issuance under this Plan, as adjusted pursuant to
Sections 2 and 15, and any successor security.
“Stock Bonus” means an award of Shares pursuant to Section 20.
“Subsidiary” means any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company if each of the corporations other
than the last corporation in the unbroken chain owns stock possessing more than
50% of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
“Take-Over Price” means the greater of (a) the Fair Market Value per Share on
the date the particular Option to purchase Shares is surrendered to the Company
in connection with a Hostile Take-Over or (b) the highest reported price per
Share paid by the tender offeror in effecting such Hostile Take-Over. However,
if the surrendered Option is an ISO, the Take-Over Price shall not exceed the
clause (a) price per Share.
“Termination” or “Terminated” means, for purposes of this Plan with respect to a
Participant, that the Participant has for any reason ceased to provide services
as an employee, officer or director to the Company or a Parent or Subsidiary of
the Company. An employee will not be deemed to have ceased to provide services
in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of
absence approved by the Committee, provided, that such leave is for a period of
not more than 90 days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute or unless provided otherwise pursuant to
formal policy adopted from time to time by the Company and issued and
promulgated to employees in writing. In the case of any employee on an approved
leave of absence, the Committee may make such provisions respecting suspension
of vesting of the Award while on leave from the employ of the Company or a
Subsidiary as it may deem appropriate, except that in no event may an Option be
exercised after the expiration of the term set forth in the Stock Option
Agreement. The Committee will have sole discretion to determine whether a
Participant has ceased to provide services and the effective date on which the
Participant ceased to provide services (the “Termination Date”).
22. OPTION EXCHANGE PROGRAM.
Notwithstanding any other provision of this Plan to the contrary, upon approval
of this amendment by the Company’s shareholders, the Board, the Committee or any
designee of the Board or the Committee may provide for, and the Company may
implement, a one-time Option exchange offer, pursuant to which certain
outstanding Options would, at the election of the holder of such Option, be
surrendered to the Company for cancellation, whereupon the surrendered Options
shall terminate and have no legal effect whatsoever, in exchange for the grant
of a lesser number of new Options, which new Options may have reduced Exercise
Prices and different vesting and expiration periods from the surrendered
Options; provided, however, that such offer shall be commenced within twelve
months of the date of such shareholder approval. For the avoidance of doubt, the
surrendering and cancellation of the Options shall not at any time, result in
the Company acquiring, directly or indirectly, a right or interest in the
surrendered Options.

 

12