Document:

1994 Stock Option Plan

 EXHIBIT 10.2 
  
 MULTI-FINELINE ELECTRONIX, INC. 
  
 1994 Stock Plan 
 (Amended December 14, 1996)

 (Amended June 30, 1997) 
  

	1.	 	Purpose. The purpose of this 1994 Stock Plan (the “Plan”) is to advance the interests of Multi-Fineline Electronix, Inc., a California corporation
(“M-Flex”), and its shareholders by offering to those employees and directors of M-Flex and its subsidiaries who will be responsible for the long-term growth of M-Flex’s earnings the opportunity to acquire or increase their equity
interests in M-Flex, thereby achieving a greater commonality of interest between shareholders, employees and directors, enhancing M-Flex’s ability to retain and attract both highly qualified employees and directors and providing an additional
incentive to such employees to achieve M-Flex’s long-term business plans and objectives. 

  

	2.	 	Award Opportunities. Awards (individually, an “Award”; collectively, the “Awards”) under the Plan may be granted in the form of (a) incentive stock
options to acquire shares of common stock, no par value per share of M-Flex (the “Common Stock”), as provided in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), (b) nonqualified stock options to acquire
Common Stock, (c) Common Stock that is restricted and must be purchased by the employee or director (the “Restricted Common Stock”) and (d) stock appreciation rights (“SARs”). 

  
 Incentive and nonqualified stock options shall hereinafter be referred to
individually as an “Option” and collectively as “Options” in the Plan. 
  

	3.	 	Administration. 

  

	 	(A)	 	Committee. The Plan shall be administered by M-Flex’s Board of Directors (the “Board”) or by a committee (the “Committee”) of the Board authorized by
the Board. The Committee shall consist of no more than three directors of M-Flex who shall be appointed, from time to time, by the Board. Whether or not M-Flex has a class of equity securities registered under Section 12 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), (i) only directors who, at the time of service, qualify as “disinterested persons” within the meaning of Rule 16b-3 under the Exchange Act shall be members of the Committee and (ii)
all references in the Plan to the Board shall refer only to the Committee. 

  

	 	(B)	 	 Authority. The Board, or the Committee, to the extent the Board has delegated such authority to the Committee, shall have full and final authority with
respect to the Plan (i) to interpret all provisions of the Plan consistent with law; (ii) to determine the individuals who will receive Awards; (iii) to determine the frequency of grant of Awards; (iv) to determine the type of, the number of shares
of Common Stock subject to, and the exercise period and price of each Option to be granted to each eligible individual; (v) to determine the number and the 

  

	 	 
purchase price of shares of Restricted Common Stock to be granted to each individual; (vi) to prescribe the form and terms of instruments evidencing any
Award granted under the Plan; (vii) to determine when SARs may be exercised or; (viii) to determine the term of the restricted period and other conditions applicable to Restricted Common Stock; (ix) to adopt, amend and rescind general and special
rules and regulations for the Plan’s administration; and (x) to make all other determinations necessary or advisable for the administration of the Plan. The Board may, with the consent of the person who has been granted an Award under the Plan,
amend the instrument regarding such Award consistent with the provisions of the Plan. 

  

	 	(C)	 	Indemnification. No member of the Board or the Committee shall be liable for any action taken or determination made in good faith. The members of the Board and the Committee
shall be indemnified by M-Flex for any acts or omissions in connection with the Plan to the full extent permitted by California and Federal laws. 

  

	4.	 	Eligibility. Participation in the Plan shall be determined by the Board and shall be limited to employees or non-employee advisors, consultants, and directors of M-Flex and
its subsidiaries (individually, a “Participant”; collectively, the “Participants”). An individual who owns five percent or more of the shares of Common Stock issued and outstanding on the date of grant of an Award may not be a
Participant. The Company’s executive officers, as a group, are not eligible to receive Awards, which, in the aggregate, constitute Options to purchase more than 58,325 shares of Common Stock (or such other number that is greater than 50% of the
number of shares of Common Stock subject to the Plan, as set forth in Section 5, below). 

  

	5.	 	Stock Subject to Plan. Subject to adjustments as provided in Section 9(A) hereof, the aggregate amount of Common Stock as to which Awards may be granted under the Plan shall
not exceed 136,650 shares and may be authorized but unissued shares or treasury shares. 

  
 The Board shall maintain records showing the cumulative number of shares of Common Stock underlying outstanding Options, the number of shares of
Restricted Common Stock and the applicable restricted periods under the Plan, and the number of shares of Common Stock delivered in settlement of any other Award under the Plan. 
  
 If an Option granted hereunder shall expire or terminate for any reason without having been fully exercised, if any shares
of Common Stock to be issued pursuant to an Award are not issued for any reason, of if any shares of Restricted Common Stock granted under the Plan are forfeited to M-Flex, then the shares of Common Stock underlying the unexercised portion of such
expired or terminated Option and by the unissued portion of such Award and the shares of forfeited Restricted Common Stock shall again become available for the purposes of the Plan. In addition, any shares of Common Stock that are used as full or
partial payment by a Participant of the exercise price of an Option shall be available for Awards under the Plan as shall any shares of Common Stock that are 

 
withheld in payment of tax withholding obligations of a Participant (as provided in Section 9(E)). 
  

	6.	 	Options. 

  

	 	(A)	 	Allotment of Shares. The Board may, in its sole discretion and subject to the provisions of the Plan, grant to Participants at such times as it deems appropriate following
adoption of the Plan by the Board, Options to purchase Common Stock, subject to approval of the Plan by M-Flex shareholders, but in no event may any Participant be granted an Option to purchase more than 34,163 shares of Common Stock (or such other
number that is greater than 25% of the number of shares of Common Stock subject to the Plan, as set forth in Section 5, above). 

  
 Options may be allotted to Participants in such amounts, subject to the limitations specified in this Section, as the Board, in its sole discretion, may
from time to time determine. Notwithstanding the foregoing, a non-employee advisor, consultant, or director shall not be eligible to be granted an incentive stock option pursuant to the Plan, but shall be eligible to be granted any other form of
Award available under the Plan. 
  

	 	(B)	 	Exercise Price. The price per share at which each non-qualified option granted under the Plan may be exercised shall not, as to any particular nonqualified option, be less
than eighty–five percent (85%) nor more than one hundred percent (100%) of the fair market value of one share of Common Stock at the time such non-qualified option is granted; provided, however, that the exercise price for any share of Common
Stock underlying any Option that is intended to qualify as an incentive stock option within the meaning of Section 422 of the Code shall be not less than one hundred percent (100%) of the fair market value of one share of Common Stock at the time
such Option is granted. 

  
 If the Common Stock
listed on a national securities exchange or the high and low selling prices thereof are reported on NASDAQ at the time an Option is granted, then the fair market value of one share of Common Stock shall be the average of the highest and lowest
selling prices of the Common stock as reported by such exchange or as reported on NASDAQ on the date such Option is granted or, if there were no sales of Common Stock on said date, then on the next prior business day on which there were sales of
Common Stock. If the Common Stock is traded other than on a national securities exchange or the high and low selling prices thereof are not reported on NASDAQ at the time an Option is granted, then the fair market value of one share of Common Stock
shall be the average between the bid and asked price of a share of Common Stock on the date the Option is granted as reported on NASDAQ or, if there is no bid and asked price on said date, then on the next prior business day on which there was a bid
and asked price. If no such bid and asked price is available, then the Board shall make a good faith determination of the fair market value of one share of Common Stock using any reasonable method of valuation. Notwithstanding the above, the
exercise price of any Option shall not be less than the net book value of the Common Stock on the 

 
date of grant of an Award. Unless another date is specified by the Board, the date on which the Board approves the granting of an Option shall be deemed the
date on which the Option is granted. 
  

	 	(C)	 	Option Period. An Option granted under the Plan shall terminate, and the right of the Participant (or the Participant’s estate, personal representative, or beneficiary)
to exercise the Option shall expire, on the date determined by the Board at the time the Option is granted (the “Termination Date”). No incentive stock option shall be exercisable more than ten (10) years after the date on which it was
granted, and no nonqualified stock option shall be exercisable more than ten (10) years and one (1) day after the date on which it was granted. 

  

	 	(D)	 	Vesting; Exercise of Options. Except as set forth in Subsection (1), below, no Option may be exercised before the first anniversary of its grant (or the second anniversary of
its grant if such Option had been granted to a Participant who had served in an eligible capacity (as referenced in Section 4, above) for a continuous period of less than one year prior to such grant date). 

  

	 	(1)	 	By a Participant During Continuous Employment or Service. 

  
 Notwithstanding the above, an Option will become exercisable in full at the earlier to occur of (a) the closing of a business combination
transaction, wherein M-Flex is not the survivor or (b) the closing of a business combination transaction, wherein M-Flex is the survivor, provided that a class of equity securities of such acquired party is then publicly traded and, accordingly,
such party is then subject to the reporting obligations of Section 13 or 15(d) of the Exchange Act or then provides current public information through its market makers pursuant to Rule 15c2-11 promulgated under the Exchange Act. 
  
 A Participant who has been continuously employed by M-Flex
or a subsidiary or in continuous service as a non-employee advisor, consultant, or director since the date of Option grant is eligible to exercise all Options that become exercisable, as provided in the immediately preceding paragraph, up to the
Termination Date of such Options and within the guidelines established by Section 6(F). The Board will decide in each case, subject to the limitations set forth in Section 422 of the Code applicable to incentive stock options, to what extent leaves
of absence for government or military service, illness, temporary disability, or other reasons shall not, for this purpose, be deemed interruptions of continuous employment or service as a non-employee advisor, consultant, or director. 

 

	 	(2)	 	By a Former Employee or Advisor, Consultant, or Director. 

  
 Participants who terminate employment with M-Flex or cease their services as a non-employee advisor or consultant of M-Flex or its
subsidiaries for reasons other than retirement, permanent, and total 

 
disability or death, must exercise all Options previously awarded, provided that such Options are fully exercisable as provided in Section (D)(1) above,
within three (3) months after such termination and within the guidelines established by Section 6(F) (but no later than the Termination Date of the Options); provided, however, that for participants who cease their services as a non-employee
director of M-Flex or its subsidiaries for any reason (other than removal as a director pursuant to California Corporations Code Section 304, in which event the Options may be exercised only until such removal has become effective), the period in
which their Options may be exercised shall be extended until three (3) months after their Options become exercisable in accordance with the provisions of Section (D)(1) above (but no later than the Termination Date of the Options). An Option may be
exercised only for the number of Shares for which it could have been exercised at the time the Participant terminated employment or ceased service as a non-employee advisor, consultant, or director with M-Flex or a subsidiary. Failure to exercise
all Options within the designated time period will result in their termination. 
  

	 	(3)	 	In Case of Retirement. 

  
 Upon retirement (as hereafter defined), the non-qualified stock options of a Participant must be exercised within one (1) year of such
retirement and the incentive stock Options must be exercised within three (3) months of such retirement and within the guidelines established by Section 6(F) (but no later than the Termination Date of such Option) and, provided that such Options are
fully exercisable as provided in Section (D)(1) above. For purposes of the Plan, “retirement” shall mean that the Participant on the date of termination of employment, cessation in the performance of services in the case of a non-employee
advisor or consultant, or cessation in service on the Board in the case of a non-employee director has attained age 65 with five years of continuous employment with M-Flex and its subsidiaries or five years of service in the case of a non-employee
advisor or director or five years of service on the Board in the case of a non-employee director. If the Participant should die within the one (1) year or three (3) month period following retirement, as applicable, the provisions contained in
Section 6(D)(5) shall apply. 
  

	 	(4)	 	In Case of Permanent and Total Disability. 

  
 If a Participant who was granted an Option terminates employment with M-Flex and its subsidiaries, ceases performance of services in the
case of a non-employer advisor or consultant, or ceases service on the Board in the case of a non-employee director because of permanent and total disability provided that such Options are fully exercisable as provided in Section (D)(1) above, all
nonqualified stock options previously awarded must be exercised within one (1) year of such termination or cessation and 

 
all incentive stock options must be exercised within one (1) year of such termination, subject to the guidelines established by Section 6(F) (but no later
than the Termination Date of such Option). If the Participant should die during such one (1) year period, as applicable, the provisions contained in Section 6(D)(5) shall apply. 
  

	 	(5)	 	In Case of Death. 

  
 If a Participant who was granted an Option dies while employed by M Flex or a subsidiary, while providing services in the case of a
non-employee advisor or consultant, or while serving on the Board in the case of a non-employee director, or during the one (1) year or three (3) month period following retirement or during the one (1) year period following termination of
employment, cessation in the performance of services in the case of a non-employee advisor or consultant, or cessation in service as a member of the Board in the case of a non-employee director due to permanent and total disability, provided that
such Options are fully exercisable as provided in Section (D)(1) above, shall be exercisable, all Options previously awarded must be exercised no later than the Termination Date of such Option by the Participant’s estate, or by a person who
acquired the right to exercise the Option by bequest or inheritance and within the guidelines established by Section 6(F). 
  

	 	(6)	 	Termination of Options. 

  
 An Option granted under the Plan shall be considered terminated in whole or in part, to the extent that, in accordance with the
provisions of the Plan, it can no longer be exercised for the Common Stock originally subject to the Option. 
  

	 	(E)	 	Manner of Exercise and Payment. 

  

	 	(1)	 	Exercise. 

  
 Each option granted under the Plan shall be deemed exercised to the extent that the Participant shall deliver to M-Flex written notice of
the number of full shares of Common Stock underlying the whole or that portion of the Option then being exercised. The Participant shall at the same time tender to M-Flex payment in full for such shares, which payment may be in cash or, subject to
Section 6(E)(2), in previously issued shares of Common Stock or partly in cash and partly in previously issued shares of Common Stock, and shall comply with such other reasonable requirements as the Board may establish, pursuant to Section 9(C).
These provisions shall not preclude exercise of an Option, or payment of the exercise price thereunder, by any other proper legal method specifically approved by the Board. 

 Subject to California law, no person, estate, or other entity shall have any of the
rights of a shareholder with reference to Shares subject to an Option until a certificate representing the shares of Common Stock has been delivered. 
  
 An Option granted under the Plan may be exercised for any lesser number of whole Shares than the full amount for which it could then be
exercised; provided, however, that the Board may require, in the agreement evidencing an Option, any partial exercise to be with respect to a specified minimum number of shares of Common Stock. Such a partial exercise of an Option shall not affect
the right to exercise the Option from time to time in accordance with the Plan for the remaining shares of Common Stock underlying the Option. 
  

	 	(2)	 	Payment in Shares of Common Stock. 

  
 The value of shares of Common Stock delivered for payment of the exercise price of an Option shall be the fair market value of the Common
Stock determined as provided in Section 6(B) on the date the Option is exercised. If certificates representing shares of Common Stock are used to pay all or part of the exercise price of an Option, separate certificates shall be delivered to M Flex
representing the number of shares of Common Stock so used, and an additional certificate or certificates shall be delivered to the Participant representing the additional shares of Common Stock to which the Participant is entitled as a result of
exercise of the Option. Notwithstanding the foregoing and the provisions of Section 6(E)(1), the Board, in its sole discretion, may refuse to accept shares of Common Stock delivered for payment of the exercise price, in which event any certificates
representing such shares of Common Stock that were actually received by M-Flex with the written notice of exercise shall be returned to the exercising Participant, together with notice by M-Flex of the refusal of M-Flex to accept such shares of
Common Stock as partial or full payment of the exercise price. 
  
 In the event Shares are delivered for payment of the exercise price of such Option as herein provided, then, at the discretion of the Board, the Participant may be granted an Option to purchase that quantity of Common
Stock equal to the quantity of Common Stock delivered in partial or full payment of the exercise price, with an exercise price equal to the current fair market value of such Common Stock, and with a term of such Option extending to the expiration
date of the Option for which partial or full payment of the exercise price thereof was accomplished by delivery of previously issued shares of Common Stock. 

	 	(3)	 	Loans. 

  
 M-Flex may make loans to Participants or their respective lawful successors as the Board, in its discretion, may determine (including a
grantee who is a director or officer of M-Flex) in connection with the exercise of Options granted under the Plan; provided, however, that the Board shall not authorize the making of any loan where the possession of such discretion or the making of
such loan would result in a “modification” (as defined in Section 424 of the Code) of any incentive stock option. Such loans shall be subject to the following terms and conditions and such other terms and conditions as the Board shall
determine at the time the loan is made as are not inconsistent with the Plan. Such loans shall bear interest at such rates as the Board shall determine from time to time, which rates may be below then current market rates (except in the case of
incentive stock options). In no event may any such loan exceed the fair market value, at the date of exercise, of the shares of Common Stock underlying the Option, or portion thereof, exercised by the Participant. No loan shall have an initial term
exceeding five (5) years, but any such loan may be renewable at the discretion of the Board. At the time a loan is made, Common stock having a fair market value at least equal to the principal amount of the loan shall be pledged by the Holder to
M-Flex as security for payment of the unpaid balance of the loan. Every loan shall comply with all applicable laws, regulations, and rules of the Board of Governors of the Federal Reserve System and any other governmental agency having jurisdiction.

  

	 	(4)	 	Award of Cash or Shares of Common Stock in Lieu of Exercise. 

  
 The Board may elect, in lieu of accepting payment of the exercise price of an Option and delivering any or all shares of Common Stock as
to which an Option has been exercised, to pay the Participant an amount in cash or shares of Common Stock, or a combination of cash and shares of Common Stock, equal to the amount by which the fair market value (determined as provided in Section
6(B)) on the date of exercise of the Option the exercise price that would otherwise be payable by the Participant for such shares of Common Stock. Subject to any then-current agreements with any third parties, the Board may also permit a Participant
simultaneously to exercise an Option and sell the shares of Common Stock acquired upon exercise, pursuant to a brokerage arrangement, approved in advance by the Board, and use the proceeds from such a sale as payment of the exercise price of such
Option. 
  

	 	(5)	 	Persons Subject to Section 16 of the Exchange Act. 

  
 Participants who are subject to Section 16 of the Exchange Act are hereby advised that reliance on Rule 16b-3 may require that any equity
security of M-Flex acquired upon exercise of an Option by such person be held at least until the date six months after the date of grant of the Option. 

	 	(F)	 	Limitations on Exercise. In the case of Options intended to be incentive stock options, the aggregate fair market value, determined as of the date of grant, of the shares of
Common Stock underlying such Options that are exercisable for the first time by a Participant shall be limited to $100,000 per calendar year. 

  
 Nonqualified stock options may be exercised by a Participant without regard to the foregoing limitation, but subject to the requirement of Section 6(D).

  

	7.	 	Stock Appreciation Rights. 

  

	 	(A)	 	Granting of Stock Appreciation Rights. The Board may, in its sole discretion and subject to the provisions of the Plan, grant to eligible employees or non-employee advisors,
consultants, or directors at such times as it deems appropriate following adoption of the Plan by the Board, SARs, subject to approval of the Plan by M-Flex Shareholders. 

  

	 	(B)	 	Stock Appreciation Rights. An SAR is a right to receive the following amount of appreciation—an amount equal to (or if the Board shall determine at the time of grant,
less than) the excess of the fair market value of one share of Common Stock on the exercise date over the fair market value of one share of Common Stock on the date of grant of the SAR, or such other price as set by the Board, multiplied by the
number of shares of Common Stock with respect to which the SAR shall have been exercised. 

  

	 	(C)	 	Terms of Grants. An SAR may be granted in tandem with, in addition to, or completely independent of an Option or any other Award under the Plan. 

  

	 	(D)	 	Manner of Exercise. An SAR may be exercised by a Participant in accordance with procedures established by the Board, and an SAR shall be exercisable as provided by the Board
on the date of grant. The Board may also provide that an SAR shall be automatically exercised on one or more specified dates. Notwithstanding the foregoing, all SARs shall be automatically exercised as of the end of the month in which the
Participant’s employment terminates or services as a non-employee advisor, consultant, or a director cease due to death, permanent, and total disability or retirement. 

  

	 	(E)	 	Form of Payment. Payment upon exercise of an SAR may be made in cash or in shares of Common Stock, or any combination thereof, as the Board shall determine.

  

	 	(F)	 	 Persons Subject to Section 16 of the Exchange Act. Participants who are subject to Section 16 of the Exchange Act are hereby advised that, unless the date of
exercise of an SAR is automatic or fixed in advance under the Plan and is outside the control of the Participant, reliance on Rule 16b-3 with respect to cash settlements of SARs requires that (1) M-Flex on a regular basis publicly releases for
publication quarterly and annual summary statements of sales and earnings and (2) exercises of SARs resulting in full or partial cash settlements must occur 

	 	 
only during the period beginning with the third business day and ending on the twelfth (12th) business day following release of such information.

  

	8.	 	Restricted Common Stock. 

  

	 	(A)	 	Granting of Restricted Common Stock. The Board may, in its sole discretion and subject to the provisions of the Plan, grant to eligible employees or non-employee advisors,
consultants, or directors at such times as it deems appropriate following adoption of the Plan by the Board, the right to purchase shares of Restricted Common Stock, subject to approval of the Plan by M-Flex shareholders. 

 

	 	(B)	 	Price of Restricted Common Stock. The price at which Restricted Common Stock may be purchased by a Participant under the Plan shall be determined by the Board and shall not
be less than one cent ($.01) per share. If the Board determines that the price per Share shall be the fair market value of a Share, fair market value shall be determined as provided in Section 6(B) hereof. The purchase price per share of Restricted
Common Stock as to any particular Restricted Common Stock grant shall also be known as the “Initial Price Per Share.” 

  

	 	(C)	 	Terms of Restricted Common Stock. At the time of a Restricted Common Stock grant, the Board shall establish a period of time (the “Restricted Period”) applicable to
the Restricted Common Stock, which shall not be more than ten (10) years from the date of grant. Each grant of Restricted Common Stock may have a different Restricted Period. The Board may in its sole discretion, at the time of the grant of
Restricted Common Stock is made, prescribe conditions for the incremental lapse of restrictions during the Restricted Period and for the lapse of termination of restrictions upon the satisfaction of other conditions with respect to all or any
portion of the Restricted Common Stock. The Board may also, in its sole discretion, at any time shorten or terminate the Restricted Period or waive any conditions for the lapse or termination of restrictions with respect to all or any portion of the
shares of Restricted Common Stock. 

  
 Unless
another date is specified, the date on which the Board approves the grant of Restricted Common Stock shall be deemed the date on which the Restricted Common Stock is granted. 
  
 In order for Participant to exercise his right to purchase shares of Restricted Common Stock under a grant (unless that
payment date is further extended by the Board), within thirty (30) days after the date of grant, such Participant shall execute, retroactive to the date of such grant, an agreement reflecting the number of shares the Participant is purchasing and
the conditions imposed upon the purchase of such shares as determined by the Board. 
  
 As payment for the purchase price of the Restricted Common Stock, the Participant may tender to M-Flex payment in cash, in previously issued shares of Common Stock (taken at their fair market value on the date the
Restricted 

 
Common Stock is granted determined as provided in Section 6(B)) or partly in cash and partly in previously issued shares of Common Stock and shall comply
with such other reasonable requirements as the Board may establish, pursuant to this Section 8(C). Notwithstanding the foregoing, the Board, in its sole discretion, may refuse to accept shares of Common Stock in payment of the purchase price, in
which event any certificates representing such shares of Common Stock that were actually received by M-Flex as attempted payment for the Restricted Common Stock shall be returned to the Participant, together with notice by M-Flex of the refusal of
M-Flex to accept such shares of Common Stock as partial or full payment for the Restricted Common Stock. 
  
 A stock certificate representing the number of shares of Restricted Common Stock granted to and purchased by a Participant shall be registered in the
Participant’s name but shall be held in custody by M-Flex for the Participant’s account. The Participant shall have the rights and privileges of a shareholder as to such shares of Restricted Common Stock, including the right to vote such
shares, except that (i) the Participant shall not be entitled to delivery of such certificate until the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Board, (ii) none of the Shares
may be sold, transferred, assigned, pledged, or otherwise encumbered or disposed of during the Restricted Period and until the satisfaction of any other conditions prescribed by the Board, and (iii) all of the Restricted Common Stock shall be
forfeited and all rights of the Participant to such Restricted Common Stock shall terminate without further obligation on the part of M-Flex (except for the obligation of M-Flex to purchase the Restricted Common Stock from the Participant at the
Initial Price Per Share) in the event the Participant has not remained in the continuous employment of M-Flex or a subsidiary or in continuous service as a non-employee advisor, consultant, or a director until the expiration or termination of the
Restricted Period and the satisfaction of any other conditions prescribed by the Board applicable to such Restricted Common Stock. The Board shall decide in each case to what extent leaves of absence for government or military service, illness,
temporary disability or other reasons shall not, for this purpose, be deemed interruption of continuous employment or service as a non-employee advisor, consultant, or director. If the Participant’s continuous employment or service as a
non-employee advisor, consultant, or director should be terminated or cease because of death, permanent, and total disability or retirement, the provisions contained in Section 8(D) shall apply. 
  
 At the discretion of the Board, cash and stock dividends may be either
currently paid or withheld by M-Flex for the Participant’s account, and interest may be paid on the amount of cash dividends withheld at a rate and subject to such terms as determined by the Board. 
  

 Each certificate evidencing shares of Restricted Common Stock shall be inscribed with a legend
substantially as follows: 
  
 “The shares
of common stock of Multi-Fineline Electronix, Inc., evidenced by this certificate are subject to the terms and restrictions of the Multi-Fineline Electronix, Inc., 1994 Stock Plan. Such shares are subject to forfeiture or cancellation under the
terms of said Plan and shall not be sold, transferred, assigned, pledged, encumbered, or otherwise alienated or hypothecated except pursuant to the provisions of said Plan, a copy of which is available from Multi-Fineline Electronix, Inc., upon
request.” 
  
 Upon the expiration or termination of the
Restricted Period and the satisfaction of any other conditions prescribed by the Board or at such earlier time as provided for in Section 9(D), the restrictions applicable to the shares of Restricted Common Stock shall lapse and a stock certificate
for the number of shares of Restricted Common Stock with respect to which the restrictions have lapsed shall be delivered, free of all such restrictions, except any that may be imposed by law, to the Participant or the Participant’s beneficiary
or estate, as the case may be. M-Flex shall not be required to deliver any fractional shares but will pay, in lieu thereof, the fair market value (determined in accordance with Section 6(B) as of the date the restrictions lapse) of such fractional
shares to the Participant. 
  

	 	(D)	 	Termination of Employment. All rights to the shares of Restricted Common Stock shall be forfeited if the Participant terminates employment with M-Flex and its subsidiaries or
ceases to serve on the Board for any reason except for death, permanent and total disability or retirement prior to the expiration of the restrictions on such Shares and such forfeited shares shall be purchased by M-Flex at the Initial Price Per
Share within a reasonable time period established by the Board. Any attempt to dispose of any such shares in contravention of the foregoing restrictions shall be null and void and without effect. 

  
 If a Participant who has been in the continuous employ of M-Flex or a
subsidiary since the date on which the Restricted Common Stock was granted dies, becomes permanently and totally disabled, or retires while in such employment and prior to the lapse of the restrictions on the Restricted Common Stock, all such
restrictions shall lapse and cease to be effective as of the end of the month in which the Participant’s employment terminates due to death, permanent and total disability, or retirement. 
  

	 	(E)	 	Persons Subject to Section 16 of the Exchange Act. Participants who are subject to Section 16 of the Exchange Act are hereby advised that reliance on Rule 16b-3 may require
that any equity security of M-Flex acquired upon exercise of Restricted Common Stock by such person be held at least until the date six months after the date of grant of the Restricted Common Stock. 

  

	9.	 	Other Provisions. 

  

	 	(A)	 	 Adjustment of Shares. In the event that the outstanding Shares are changed into or exchanged for a different number or kind of shares of M-Flex or other
securities of M-Flex by reason of merger, consolidation, recapitalization, 

  

	 	 
reclassification, stock split-up, stock dividend or combination of Shares, or issuance or exorcise of warrants or rights, the Board shall make an appropriate
and equitable adjustment in the number and kind of Common Stock subject to outstanding Awards, or portions thereof then unexercised, and the number and kind of Common Stock subject to the Plan to the end that after such event the Common Stock
subject to the Plan and the Participant’s right to a proportionate interest in M-Flex shall be maintained as before the occurrence of such event. Such adjustment in an outstanding Award shall be made without change in the total price applicable
to the Award or the unexercised portion of any Award (except for any change in the total price resulting from rounding off quantities or prices of Common Stock) and with any necessary corresponding adjustment in exercise price. Any such adjustment
made by the Board shall be final and binding upon all Participants, M-Flex and all other interested persons. Any adjustment of an incentive stock option under this paragraph shall be made in such manner so as not to constitute a
“modification” within the meaning of Section 424(h)(3) of the Code. The Board, in its sole discretion may at any time make or provide for such adjustments to the Plan or any Award granted thereunder as it shall deem appropriate to prevent
the reduction or enlargement of rights, including adjustments in the event of changes in the outstanding common stock by reason of mergers, consolidations, combinations, exchanges of shares, separations, reorganizations, liquidations, issuance, or
exercise of warrants or rights and the like in which M-Flex is not the sole surviving successor to the assets or business of M-Flex immediately prior thereto. In the event of any offer to shareholders of M-Flex generally relating to the acquisition
of their shares of Common Stock, the Board may make such adjustments as it deems equitable in respect of outstanding Awards. Any such determination of the Board shall be conclusive. 

  

	 	(B)	 	Non-Transferability. No Award granted to a Participant under the Plan shall be transferable other than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined in the Code; provided that transfer pursuant to a qualified domestic relations order shall not be permitted with respect to incentive stock options or in circumstances where such transfer would cause a
lapse of restriction for purposes of Section 83 of the Code. Any attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of, or to subject to execution, attachment, or similar process, any Award other than as permitted in the
preceding sentence shall give no right to the purported transferee. 

  

	 	(C)	 	 Compliance with Law and Approval of Regulatory Bodies. No Option shall be exercisable and no Shares shall be delivered in settlement of any Award and no
unrestricted Common Stock shall be issued for Restricted Common Stock under the Plan except in compliance with all applicable Federal and state laws and regulations including, without limitation, compliance with the rules of all domestic stock
exchanges on which M-Flex’s shares may be listed. Any certificate issued to evidence shares of Common Stock for which an Award is exercised or with respect to which Restricted Common Stock restrictions lapse, shall bear such legends and
statements as the Board deems advisable in order to assure compliance with Federal and state laws and regulations. No Award shall 

  

	 	 
be exercisable and no Common Stock shall be delivered and no Restricted Common Stock shall be issued under the Plan until M-Flex has obtained consent or
approval from such regulatory bodies, Federal or state, having jurisdiction over such matters as the Board may deem advisable. 

  
 In the case of the exercise of an Award by a person or estate acquiring the right to exercise such Award by bequest or inheritance or in the case of a
person or estate acquiring by bequest or inheritance the right to receive Restricted Common Stock because of the lapse of the restrictions, the Board may require reasonable evidence as to the ownership of the Award, may require such consents and
releases of taxing authorities as it may deem advisable. 
  

	 	(D)	 	No Right to Employment. Neither the adoption of the Plan nor its operation, nor any document describing or referring to the Plan, or any part thereof, shall confer upon any
Participant under the Plan any right to continue in the employ of M-Flex or a subsidiary or shall in any way affect the right and power of M-Flex or a subsidiary to terminate the employment of any Participant under the Plan at any time with or
without assigning a reason therefor. 

  

	 	(E)	 	Tax Withholding. The Board shall have the right to deduct from any settlement of an Award, including without limitation the delivery or vesting of Common Stock, made under
the Plan any Federal, state, or local taxes of any kind required by law to be withheld with respect to such payments or to take any such other action as may be necessary in the opinion of the Board to satisfy all obligations for payment of such
taxes. If Common Stock that would otherwise be delivered in settlement of the Award are used to satisfy tax withholding, such Common Stock shall be valued based on their Fair Market Value determined in accordance with section 6(B) when the tax
withholding is required to be made. Participants who are subject to Section 16 of the Exchange Act are hereby advised that pursuant to Rule 16b-3 thereunder the use of shares to satisfy tax withholding will be treated as the exercise of a Stock
Appreciation Right. 

  

	 	(F)	 	Amendment and Termination. The Board may at any time suspend, amend, or terminate the Plan, and, without limiting the foregoing, the Board shall have the express authority to
amend the Plan from time to time, with or without approval by the shareholders, in the manner and to the extent that the Board believes is necessary or appropriate in order to cause the Plan to conform to provisions of Rule 16b-3 under the Exchange
Act and any other rules under Section 16 of the Exchange Act, as any of such rules may be amended, supplemented, or superseded from time to time. Except for adjustments made in accordance with Section 9(A), the Board may not, without the consent of
the grantee of the Award, alter or impair any Award previously granted under the Plan. No Award may be granted during any suspension of the Plan or after termination thereof. 

  
 In addition to Board approval of an amendment, if the amendment would: (i)
materially increase the benefits accruing to Participants; (ii) increase the number of shares of Common Stock deliverable under the Plan (other than in accordance 

  

 
with the provisions of Section 9(A); or (iii) materially modify the requirements as to eligibility for participation in the Plan, then such amendment shall
be approved by the holders of a majority of M-Flex’s outstanding capital stock represented and entitled to vote at a meeting held for the purpose of approving such amendment to the extent required by Rule 16b-3 of the Exchange Act. 

 

	 	(G)	 	Effective Date of the Plan. The Plan was adopted by the Board and the shareholders holding a majority of M-Flex’s outstanding shares entitled to vote thereon on December
10, 1994. The Plan was amended by the Board as of December 14, 1996. The Plan was amended by the Board and the shareholders holding a majority of M Flex’s outstanding shares entitled to vote thereon as of June 30, 1997.

  

	 	(H)	 	Duration of the Plan. Unless previously terminated by the Board, the Plan shall terminate at the close of business on December 9, 2004, and no Award shall be granted under it
thereafter, but such termination shall not affect any Award theretofore granted. 

  

	 	(I)	 	Use of Certain Terms. The terms “parent” and “subsidiary” shall have the meanings ascribed to them in Section 424 of the Code and unless the context
otherwise requires, the other terms defined in Section 421, 422, and 424, inclusive, of the Code and regulations and revenue rulings applicable thereto, shall have the meanings attributed to them therein.Form of 2004 Stock Incentive Plan

  
 EXHIBIT 10.3

  

  
 MULTI-FINELINE ELECTRONIX, INC. 
  
 2004 STOCK INCENTIVE PLAN

  
 (Adopted by the Board on
                             , 2004) 
  

  
 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)
	  	 “Change in Control”
	  	1
	 (e)
	  	 “Code”
	  	2
	 (f)
	  	 “Committee”
	  	2
	 (g)
	  	 “Company”
	  	2
	 (h)
	  	 “Consultant”
	  	2
	 (i)
	  	 “Employee”
	  	3
	 (j)
	  	 “Exchange Act”
	  	3
	 (k)
	  	 “Exercise Price”
	  	3
	 (l)
	  	 “Fair Market Value”
	  	3
	 (m)
	  	 “ISO”
	  	3
	 (n)
	  	 “Nonstatutory Option” or “NSO”
	  	3
	 (o)
	  	 “Offeree”
	  	3
	 (p)
	  	 “Option”
	  	4
	 (q)
	  	 “Optionee”
	  	4
	 (r)
	  	 “Outside Director”
	  	4
	 (s)
	  	 “Parent”
	  	4
	 (t)
	  	 “Participant”
	  	4
	 (u)
	  	 “Plan”
	  	4
	 (v)
	  	 “Purchase Price”
	  	4
	 (w)
	  	 “Restricted Share”
	  	4
	 (x)
	  	 “Restricted Share Agreement”
	  	4
	 (y)
	  	 “SAR”
	  	4
	 (z)
	  	 “SAR Agreement”
	  	4
	 (aa)
	  	 “Service”
	  	4
	 (bb)
	  	 “Share”
	  	4
	 (cc)
	  	 “Stock”
	  	4
	 (dd)
	  	 “Stock Option Agreement”
	  	4
	 (ee)
	  	 “Stock Unit”
	  	5
	 (ff)
	  	 “Stock Unit Agreement”
	  	5
	 (gg)
	  	 “Subsidiary”
	  	5
	 (hh)
	  	 “Total and Permanent Disability”
	  	5
			
	 SECTION 3.
	  	 ADMINISTRATION
	  	5
	 (a)
	  	 Committee Composition
	  	5
	 (b)
	  	 Committee for Non-Officer Grants
	  	5

  

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2004 STOCK INCENTIVE PLAN 
  
 -i- 

					
	 (c)
	  	 Committee Procedures
	  	5
	 (d)
	  	 Committee Responsibilities
	  	6
			
	 SECTION 4.
	  	 ELIGIBILITY
	  	7
	 (a)
	  	 General Rule
	  	7
	 (b)
	  	 Automatic Grants to Outside Directors
	  	7
	 (c)
	  	 Ten-Percent Stockholders
	  	8
	 (d)
	  	 Attribution Rules
	  	8
	 (e)
	  	 Outstanding Stock
	  	8
			
	 SECTION 5.
	  	 STOCK SUBJECT TO PLAN
	  	8
	 (a)
	  	 Basic Limitation
	  	8
	 (b)
	  	 Option/SAR Limitation
	  	9
	 (c)
	  	 Additional Shares
	  	9
			
	 SECTION 6.
	  	 RESTRICTED SHARES
	  	9
	 (a)
	  	 Restricted Stock Agreement
	  	9
	 (b)
	  	 Payment for Awards
	  	9
	 (c)
	  	 Vesting
	  	9
	 (d)
	  	 Voting and Dividend Rights
	  	10
	 (e)
	  	 Restrictions on Transfer of Shares
	  	10
			
	 SECTION 7.
	  	 TERMS AND CONDITIONS OF OPTIONS
	  	10
	 (a)
	  	 Stock Option Agreement
	  	10
	 (b)
	  	 Number of Shares
	  	10
	 (c)
	  	 Exercise Price
	  	10
	 (d)
	  	 Withholding Taxes
	  	10
	 (e)
	  	 Exercisability and Term
	  	10
	 (f)
	  	 Exercise of Options Upon Termination of Service
	  	11
	 (g)
	  	 Effect of Change in Control
	  	11
	 (h)
	  	 Leaves of Absence
	  	11
	 (i)
	  	 No Rights as a Stockholder
	  	11
	 (j)
	  	 Modification, Extension and Renewal of Options
	  	11
	 (k)
	  	 Restrictions on Transfer of Shares
	  	12
	 (l)
	  	 Buyout Provisions
	  	12
			
	 SECTION 8.
	  	 PAYMENT FOR SHARES
	  	12
	 (a)
	  	 General Rule
	  	12
	 (b)
	  	 Surrender of Stock
	  	12
	 (c)
	  	 Services Rendered
	  	12
	 (d)
	  	 Cashless Exercise
	  	12
	 (e)
	  	 Exercise/Pledge
	  	12
	 (f)
	  	 Promissory Note
	  	13
	 (g)
	  	 Other Forms of Payment
	  	13
	 (h)
	  	 Limitations under Applicable Law
	  	13

  

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2004 STOCK INCENTIVE PLAN 
  
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	 SECTION 9.
	  	 STOCK APPRECIATION RIGHTS
	  	13
	 (a)
	  	 SAR Agreement
	  	13
	 (b)
	  	 Number of Shares
	  	13
	 (c)
	  	 Exercise Price
	  	13
	 (d)
	  	 Exercisability and Term
	  	13
	 (e)
	  	 Effect of Change in Control
	  	14
	 (f)
	  	 Exercise of SARs
	  	14
	 (g)
	  	 Modification or Assumption of SARs
	  	14
			
	 SECTION 10.
	  	 STOCK UNITS
	  	14
	 (a)
	  	 Stock Unit Agreement
	  	14
	 (b)
	  	 Payment for Awards
	  	14
	 (c)
	  	 Vesting Conditions
	  	14
	 (d)
	  	 Voting and Dividend Rights
	  	14
	 (e)
	  	 Form and Time of Settlement of Stock Units
	  	15
	 (f)
	  	 Death of Recipient
	  	15
	 (g)
	  	 Creditors’ Rights
	  	15
			
	 SECTION 11.
	  	 ADJUSTMENT OF SHARES
	  	15
	 (a)
	  	 Adjustments
	  	15
	 (b)
	  	 Dissolution or Liquidation
	  	16
	 (c)
	  	 Reorganizations
	  	16
	 (d)
	  	 Reservation of Rights
	  	16
			
	 SECTION 12.
	  	 DEFERRAL OF AWARDS
	  	17
			
	 SECTION 13.
	  	 AWARDS UNDER OTHER PLANS
	  	17
			
	 SECTION 14.
	  	 PAYMENT OF DIRECTOR’S FEES IN SECURITIES
	  	17
	 (a)
	  	 Effective Date
	  	17
	 (b)
	  	 Elections to Receive NSOs, Restricted Shares or Stock Units
	  	17
	 (c)
	  	 Number and Terms of NSOs, Restricted Shares or Stock Units
	  	18
			
	 SECTION 15.
	  	 LEGAL AND REGULATORY REQUIREMENTS
	  	18
			
	 SECTION 16.
	  	 WITHHOLDING TAXES
	  	18
	 (a)
	  	 General
	  	18
	 (b)
	  	 Share Withholding
	  	18
			
	 SECTION 17.
	  	 LIMITATION ON PARACHUTE PAYMENTS
	  	18
	 (a)
	  	 Scope of Limitation
	  	18
	 (b)
	  	 Basic Rule
	  	18
	 (c)
	  	 Reduction of Payments
	  	19
	 (d)
	  	 Related Corporations
	  	19
			
	 SECTION 18.
	  	 NO EMPLOYMENT RIGHTS
	  	19

  

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2004 STOCK INCENTIVE PLAN 
  
 -iii- 

					
			
	 SECTION 19.
	  	 DURATION AND AMENDMENTS
	  	19
	 (a)
	  	 Term of the Plan
	  	19
	 (b)
	  	 Right to Amend or Terminate the Plan
	  	19
	 (c)
	  	 Effect of Amendment or Termination
	  	20
			
	 SECTION 20.
	  	 EXECUTION
	  	21

  

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2004 STOCK INCENTIVE PLAN 
  
 -iv- 

  
 MULTI-FINELINE ELECTRONIX, INC. 
  
 2004 STOCK INCENTIVE PLAN 
  
 SECTION 1. ESTABLISHMENT AND PURPOSE. 
  
 The Plan was adopted by the Board of Directors on
                             , 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 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 of 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)
“Change in Control” shall mean the occurrence of any of the following events: 
  
 (i) A change in the composition of the Board of Directors occurs, as a result of which fewer than one-half of the incumbent directors are
directors who either: 
  
 (A) Had been directors
of the Company on the “look-back date” (as defined below) (the “original directors”); or 
  
 (B) Were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the aggregate
of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved (the “continuing directors”); or 
  
 (ii) Any “person” (as defined below) who by the
acquisition or aggregation of securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of
the Company’s then outstanding securities ordinarily (and apart from 

  

 MULTI-FINELINE ELECTRONIX, INC. 

2004 STOCK INCENTIVE PLAN 
  
 -1- 

 
rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); except that any change
in the relative beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of
securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company; or 
  
 (iii) The consummation of a merger or consolidation of the Company with or into another entity or any other
corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting
power of the outstanding securities of each of (A) the continuing or surviving entity and (B) any direct or indirect parent corporation of such continuing or surviving entity; or 
  
 (iv) The sale, transfer or other disposition of all or substantially all of the Company’s assets.

  
 For purposes of subsection (d)(i) above, the term
“look-back” date shall mean the later of (1)                              , 2004 or
(2) the date 24 months prior to the date of the event that may constitute a Change in Control. 
  
 For purposes of subsection (d)(ii) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (1) a trustee or other fiduciary holding
securities under an employee benefit plan maintained by the Company or a Parent or Subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the
Stock. 
  
 Any other provision of this Section 2(d)
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, and a Change in Control shall not be deemed to occur if the Company files a registration statement with the Securities and Exchange Commission for the initial
offering of Stock to the public. 
  
 (e) “Code”
shall mean the Internal Revenue Code of 1986, as amended. 
  
 (f) “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. 
  
 (g) “Company” shall mean Multi-Fineline Electronix, Inc., a
Delaware corporation. 
  
 (h) “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. 
  

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2004 STOCK INCENTIVE PLAN 
  
 -2- 

 (i) “Employee” shall mean any individual who is a common-law employee of the Company, a
Parent or a Subsidiary. 
  
 (j) “Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended. 
  
 (k) “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. 
  
 (l) “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” published by the National Quotation Bureau, Inc.; 
  
 (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; 
  
 (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. 
  
 In all cases, the determination of Fair
Market Value by the Committee shall be conclusive and binding on all persons. 
  
 (m) “ISO” shall mean an employee incentive stock option described in Section 422 of the Code. 
  
 (n) “Nonstatutory Option” or “NSO” shall mean an employee stock option that is not an ISO. 
  
 (o) “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). 
  

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2004 STOCK INCENTIVE PLAN 
  
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 (p) “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and
entitling the holder to purchase Shares. 
  
 (q)
“Optionee” shall mean an individual or estate who holds an Option or SAR. 
  
 (r) “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, a Parent 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). 
  
 (s) “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. 
  
 (t) “Participant” shall mean an
individual or estate who holds an Award. 
  
 (u)
“Plan” shall mean this 2004 Stock Incentive Plan of Multi-Fineline Electronix, Inc., as amended from time to time. 
  
 (v) “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. 
  
 (w)
“Restricted Share” shall mean a Share awarded under the Plan. 
  
 (x) “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. 
  
 (y) “SAR” shall mean a
stock appreciation right granted under the Plan. 
  
 (z)
“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. 
  
 (aa) “Service” shall mean service as an Employee, Consultant or Outside Director. 
  
 (bb) “Share” shall mean one share of Stock, as adjusted in
accordance with Section 8 (if applicable). 
  
 (cc)
“Stock” shall mean the Common Stock of the Company. 
  
 (dd) “Stock Option Agreement” shall mean the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his Option. 
  

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2004 STOCK INCENTIVE PLAN 
  
 -4- 

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

  

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2004 STOCK INCENTIVE PLAN 
  
 -5- 

 (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; 
  
 (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; 
  

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 (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 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. 
  
 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) Each Outside Director who first joins the Board of Directors after the effective date of the Plan, and who was not previously an
Employee, shall receive a Nonstatutory Option, subject to approval of the Plan by the Company’s stockholders, to purchase [            ] Shares (subject to adjustment under
Section 11) on the first business day after his or her election to the Board of Directors. One-third of the Shares subject to each Option granted under this Section 4(b)(i) shall vest and become exercisable on the first anniversary of the date of
grant. The balance of the Shares subject to such Option (i.e. the remaining two-thirds) shall vest and become exercisable monthly over a two-year period beginning on the day which is one month after the first anniversary of the date of grant, at a
monthly rate of 2.7778 % of the total number of Shares subject to such Options. Notwithstanding the foregoing, each such Option shall become vested if a Change in Control occurs with respect to the Company during the Optionee’s Service.

  
 (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 after the adoption of the Plan, 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 Option to purchase [            ] Shares (subject to adjustment under Section 11),
provided that such Outside Director has served on the Board of Directors for at least six months. Each Option granted under the proceeding sentence of this Section 4(b)(ii) shall fully vest and become exercisable on the first anniversary of the date
of grant. Notwithstanding 

  

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the foregoing, each Option granted under this Section 4(b)(ii) shall become vested if a Change in Control occurs with respect to the Company during the
Optionee’s Service. 
  
 (iii) The Exercise
Price of all Nonstatutory Options granted to an Outside Director under this Section 4(b) shall be equal to 100% of the Fair Market Value of a Share on the date of grant, payable in one of the forms described in Section 8(a), (b) or (d). 

 
 (iv) All Nonstatutory Options granted to an Outside
Director under this Section 4(b) shall terminate on the earlier of (A) the day before the tenth anniversary of the date of grant of such Options or (B) the date twelve months after the termination of such Outside Director’s Service for any
reason; provided, however, that any such Options that are not vested upon the termination of the Outside Director’s Service for any reason shall terminate immediately and may not be exercised. 
  
 (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. 
  
 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 [                    ] Shares, plus (x) any Shares
remaining available for grant of awards under the Company’s 1994 Stock Incentive Plan on the effective date of the Plan (including Shares subject to outstanding options under the Company’s 1994 Stock Incentive Plan on the effective date of
this Plan that are subsequently forfeited or terminate for any other reason before being exercised and unvested Shares that are forfeited pursuant to such plan after the effective date of this Plan) and (y) an annual increase on the first day of
each fiscal year during the term of the Plan, beginning [October 1, 2005], in each case in an amount equal to the lesser of (i)
[                    ] Shares, (ii) [        ]% of the outstanding Shares on the last day of
the immediately preceding year, or (iii) an amount determined by the Board. 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 

  

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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 [                    ] Shares, except that grants to a Participant in the calendar year in which his or her service
first commences shall not relate to more than [                    ] 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 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. The Committee may determine, at the time of granting Restricted Shares of thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in Control occurs with
respect to the Company. 
  

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 (d) 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. 
  
 (e) 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. 
  
 (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 

  

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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. The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Shares subject to such Option in
the event that a Change in Control occurs with respect to the Company. 
  
 (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. Within the limitations of the Plan, 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 

  

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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. 
  
 (l) Buyout Provisions. The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or
(b) authorize an Optionee to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish. 
  
 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 

  

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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. 
  
 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. 
  

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 (e) Effect of Change in Control. The Committee may determine, at the time of granting a SAR or
thereafter, that such SAR shall become fully exercisable as to all Common Shares subject to such SAR in the event that a Change in Control occurs with respect to the Company. 
  
 (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. Within the limitations of the Plan, 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. The Committee may determine, at the time of granting Stock Units or thereafter, that all or part of such Stock Units shall become vested in the event that a Change in Control occurs
with respect to the Company. 
  
 (d) 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 

  

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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. 
  
 (e) 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. 
  
 (f)
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. 
  
 (g) 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 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 NSOs to be granted to Outside Directors under Section 4(b); 
  

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 (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. 
  
 (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.

  

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 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.

  
 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. 
  

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2004 STOCK INCENTIVE PLAN 
  
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 (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. 
  
 SECTION 17. LIMITATION ON PARACHUTE PAYMENTS. 
  
 (a) Scope of Limitation. This Section 17 shall apply to an Award only
if the independent auditors most recently selected by the Board (the “Auditors”) determine that the after-tax value of such Award to the Optionee or Offeree, taking into account the effect of all federal, state and local income taxes,
employment taxes and excise taxes applicable to the Optionee or Offeree (including the excise tax under section 4999 of the Code), will be greater after the application of this Section 17 than it was before application of this Section 17.

  
 (b) Basic Rule. In the event that the Auditors
determine that any payment or transfer by the Company under the Plan to or for the benefit of a Participant (a “Payment”) would be nondeductible by the Company for federal income tax purposes because of the provisions concerning
“excess parachute payments” in Section 280G of the Code, then the aggregate present value of all Payments shall be reduced (but not below zero) to the Reduced Amount. For 

  

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2004 STOCK INCENTIVE PLAN 
  
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purposes of this Section 17, the “Reduced Amount” shall be the amount, expressed as a present value, which maximizes the aggregate present value of
the Payments without causing any Payment to be nondeductible by the Company because of Section 280G of the Code. 
  
 (c) Reduction of Payments. If the Auditors determine that any Payment would be nondeductible by the Company because of Section 280G of the Code,
then the Company shall promptly give the Participant notice to that effect and a copy of the detailed calculation thereof and of the Reduced Amount, and the Participant may then elect, in his or her sole discretion, which and how much of the
Payments shall be eliminated or reduced (as long as after such election the aggregate present value of the Payments equals the Reduced Amount) and shall advise the Company in writing of his or her election within 10 days of receipt of notice. If no
such election is made by the Participant within such 10-day period, then the Company may elect which and how much of the Payments shall be eliminated or reduced (as long as after such election the aggregate present value of the Payments equals the
Reduced Amount) and shall notify the Participant promptly of such election. For purposes of this Section 17, present value shall be determined in accordance with Section 280G(d)(4) of the Code. All determinations made by the Auditors under this
Section 17 shall be binding upon the Company and the Participant and shall be made within 60 days of the date when a Payment becomes payable or transferable. As promptly as practicable following such determination and the elections hereunder, the
Company shall pay or transfer to or for the benefit of the Participant such amounts as are then due to him or her under the Plan and shall promptly pay or transfer to or for the benefit of the Participant in the future such amounts as become due to
him or her under the Plan. 
  
 (d) Related Corporations.
For purposes of this Section 17, the term “Company” shall include affiliated corporations to the extent determined by the Auditors in accordance with Section 280G(d)(5) of the Code. 
  
 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 Option granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the person to whom the Option was granted. An amendment of the Plan shall be subject to the 

  

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approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules. 
  
 (c) Effect of Amendment or Termination. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an Option granted prior to such termination. The termination of the Plan, or any amendment thereof, shall not affect any Share previously issued or any Option previously
granted under the Plan. 
  
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 SECTION 20. EXECUTION. 
  

To record the adoption of the Plan by the Board of Directors on
                         , 2004, the Company has caused its authorized officer to execute the same. 
  

			
	 MULTI-FINELINE ELECTRONIX, INC.

		
	 By
	 	 
	 	 	

	 Name
	 	 
	 	 	

	 Title
	 	 
	 	 	

  

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2004 STOCK INCENTIVE PLAN 
  
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