EXHIBIT 10.5
<<FIRSTNAME>> <<MI>> <<LASTNAME>>
<<ADDRESS1>>
<<ADDRESS2>>
<<ADDRESS3>>
<<CITY>>, <<STATE>> <<POSTALCODE>>
<<COUNTRY>>
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NOTICE OF GRANT OF STOCK OPTIONS AND OPTION AGREEMENT
Solectron Corporation
ID: 94-2447045
847 Gibraltar Drive
Milpitas, CA 95035
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Employee ID: <<ID>>
Location: <<Location>>
Payroll: <<Payroll>>
Option Number: <<OptionNo>>
Plan: <<Plan>>
Class: <<Class>>
Effective <<GrantDate>>, you have been granted a(n) <<Type2>> Grant (<<Type1>>)
to buy <<NoShares>> shares of SOLECTRON CORPORATION common stock at
<<OptPrice1>> per share.
The total option price of the shares granted is <<TotOptPrice>>.
The shares will vest monthly at a rate of 1/48 of the total granted, subject to
your continued status as a Service Provider on each such date. The first date
shares will be available for exercise is one month from the vesting commencement
date of <<VestBaseDate>>.
Shares in each period will become fully vested on the date shown.
Shares Vest Type Full Vest Expiration
- --------- ------------- ------------- -----------
<<Vest1>> <<VestType1>> <<VestDate1>> <<Expire1>>
<<Vest2>> <<VestType2>> <<VestDate2>> <<Expire2>>
<<Vest3>> <<VestType3>> <<VestDate3>> <<Expire3>>
<<Vest4>> <<VestType4>> <<VestDate4>> <<Expire4>>
<<Vest5>> <<VestType5>> <<VestDate5>> <<Expire5>>
SOLECTRON CORPORATION
2002 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.
1. Grant of Option. The Administrator of the Company hereby grants to the
Optionee named in the Notice of Grant delivered with this Option Agreement, an
Option to purchase a number of Shares, as set forth in the Notice of Grant, at
the exercise price per Share set forth in the Notice of Grant (the "Exercise
Price"), subject to the terms and conditions of the Plan, which is incorporated
herein by reference. Subject to Section 15(c) of the Plan, in event of a
conflict between the terms and conditions of the Plan and the terms and
conditions of this Option Agreement, the terms and conditions of the Plan shall
prevail.
If designated in the Notice of Grant as an Incentive Stock Option, this
Option is intended to qualify as an Incentive Stock Option under Section 422 of
the Code ("ISO"). If this Option is not designated as an ISO, or specifically
designated as a Nonstatutory Stock Option or a non-qualified stock option in the
Notice of Grant ("NSO"), then this Option shall be treated as a NSO.
Furthermore, if this Option is intended to be an ISO, to the extent that it
exceeds the $100,000 rule of Section 422(d), it shall be treated as a NSO.
2. Vesting Schedule. This Option shall vest and become exercisable as set
forth in the Notice of Grant, subject to the terms and conditions of this Option
Agreement and the Plan. In addition, if the Optionee ceases to be a Service
Provider as a result of the Optionee's death or Disability, all of the shares
covered by this Option will vest and become exercisable on the date that the
Optionee ceases to be a Service Provider.
3. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set forth in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. This Option may not
be exercised for a fraction of a Share.
(b) Termination Period. This Option may be exercised, to the extent
vested and unexercised, for ninety (90) days after the Optionee ceases to be a
Service Provider for any reason other than the Optionee's death or Disability.
If the Optionee ceases to be a Service Provider as a result of the Optionee's
Disability, this Option may be exercised, to the extent vested and unexercised,
until the Expiration Date set forth in the Notice of Grant. If the Optionee
ceases to be a Service Provider as a result of the Optionee's death, this Option
may be exercised, to the extent vested and unexercised, by the Optionee's
properly designated beneficiary (if any) or his or her estate (as applicable),
until the Expiration Date set forth in the Notice of Grant.
(c) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, as provided by the Company (the "Exercise Notice"), which shall
state the election to exercise the Option, the number of Shares in respect of
which the Option is being exercised (the "Exercised Shares"), and such other
representations and agreements as may be required by the Company pursuant to the
provisions of the Plan and Applicable Laws.
The Exercise Notice shall be completed by the Optionee and shall be
delivered to the Company as indicated on the Exercise Notice. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares and any required tax withholding amounts. This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.
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No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all Applicable Laws. Assuming
such compliance, for income tax purposes the Exercised Shares shall be
considered transferred to the Optionee on the date the Option is exercised with
respect to such Exercised Shares.
In lieu of, or in addition to the foregoing exercise procedure, the
Company may require or permit the Optionee to utilize prescribed electronic or
telegraphic procedures for the exercise of this Option and to utilize a broker
or third party administrator for such exercise.
4. Methods of Payment. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash;
(b) check; or
(c) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan.
5. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of the Optionee only by the Optionee. The
terms of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
6. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
7. U.S. Tax Consequences. Some of the U.S. federal tax consequences
relating to this Option, as of the date of this Option, are set forth below.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercising the Option.
(i) Nonstatutory Stock Option. If this Option does not qualify
as an ISO, the Optionee will incur regular U.S. federal income tax liability
upon exercise. The Optionee will be treated as having received compensation
income (taxable at ordinary income tax rates) equal to the excess of the Fair
Market Value of the Exercised Shares on the exercise date over their aggregate
Exercise Price. If the Optionee is an Employee at the time of grant, the Company
will be required to withhold from his or her compensation or collect from the
Optionee and pay to the applicable taxing authorities an amount equal to the
income tax liability for this compensation income at the time of exercise.
(ii) Incentive Stock Option. If this Option qualifies as an
ISO, the Optionee will have no regular U.S. federal income tax liability upon
its exercise, although the excess, if any, of the Fair Market Value of the
Exercised Shares on the exercise date over their aggregate Exercise Price will
be treated as an adjustment to the alternative minimum tax for U.S. federal
income tax purposes and may subject the Optionee to alternative minimum tax in
the year of exercise.
(b) Disposition of Shares.
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(i) Nonstatutory Stock Option. If the Optionee holds Shares
acquired upon exercise of a NSO for more than twelve (12) months, any gain
realized on disposition of the Shares will be treated as long-term capital gain
for U.S. federal income tax purposes.
(ii) Incentive Stock Option. If the Optionee holds Shares
acquired upon exercise of an ISO for more than one year after exercise and two
years after the grant date, any gain realized on disposition of the Shares will
be treated as long-term capital gain for U.S. federal income tax purposes. If
the Optionee disposes of the Shares acquired upon exercise of an ISO within one
year after the exercise date or within two years after the grant date, any gain
realized on such disposition will be treated as compensation income (taxable at
ordinary income tax rates) to the extent of the excess, if any, of the lesser of
(A) the difference between the Fair Market Value of the Shares acquired on the
exercise date and the aggregate Exercise Price, or (B) the difference between
the sale price of such Shares and the aggregate Exercise Price.
(c) Notice of Disqualifying Disposition of ISO Shares. If this
Option is an ISO, and if the Optionee sells or otherwise disposes of any of the
Shares acquired upon exercise of an ISO within two years after the grant date or
one year after the exercise date, the Optionee shall immediately notify the
Company in writing of such disposition. The Optionee agrees and understands that
he or she may be subject to income and social security tax withholding by the
Company on the compensation income recognized from such early disposition by the
Optionee. The Company or, if the Optionee is not employed by the Company, the
Optionee's employer (the "Employer"), may satisfy its withholding obligations by
the means described in Section 8 below.
8. Responsibility for Taxes. Regardless of any action the Company or the
Employer takes with respect to any or all income tax, social insurance, payroll
tax or other tax-related withholding ("Tax-Related Items"), the Optionee
acknowledges that the ultimate liability for all Tax-Related Items is and
remains the Optionee's responsibility and that the Company and/or the Employer
(a) make no representations or undertakings regarding the treatment of any
Tax-Related Items in connection with any aspect of the Option grant, including
the grant, vesting or exercise of this Option, the subsequent sale of Shares
acquired pursuant to such exercise and the receipt of any dividends; and (b) do
not commit to structure the terms of the grant or any aspect of this Option to
reduce or eliminate the Optionee's liability for Tax-Related Items.
Prior to exercise of this Option, the Optionee shall pay or make adequate
arrangements satisfactory to the Company and/or the Employer to satisfy all
withholding and payment on account obligations of the Company and/or the
Employer. In this regard, the Optionee authorizes the Company and/or the
Employer to withhold all applicable Tax-Related Items legally payable by the
Optionee from his or her wages or other cash compensation paid to the Optionee
by the Company and/or the Employer or from proceeds of the sale of the Shares.
Alternatively, or in addition, if permissible under the Applicable Laws, the
Company may (1) sell or arrange for the sale of Shares acquired to meet the
withholding and payment on account obligation for Tax-Related Items, and/or (2)
withhold in Shares, provided that the Company only withholds the amount of
Shares necessary to satisfy the minimum withholding amount. Finally, the
Optionee shall pay to the Company or the Employer any amount of Tax-Related
Items that the Company or the Employer may be required to withhold as a result
of the Optionee's exercise of this Option that cannot be satisfied by the means
previously described. The Company may refuse to honor the exercise and refuse to
deliver the Shares if the Optionee fails to comply with his or her obligations
in connection with the Tax-Related Items as described in this section.
9. Nature of Grant. In accepting this Option, the Optionee acknowledges
and agrees that:
(a) the vesting of Shares pursuant to this Option is earned only by
continuing employment at the will of the Company or the Employer (not through
the act of being hired, being granted this Option or acquiring Shares hereunder;
(b) the Plan is established voluntarily by the Company, it is
discretionary in nature and it may be modified, suspended or terminated by the
Company at any time, as provided in the Plan and this Option Agreement;
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(c) the grant of this Option is voluntary and occasional and does
not create any contractual or other right to receive future grants of options,
or benefits in lieu of options, even if options have been granted repeatedly in
the past;
(d) all decisions with respect to future option grants, if any, will
be at the sole discretion of the Company;
(e) Optionee's participation in the Plan shall not create a right to
further employment with the Company or the Employer and shall not interfere with
the ability of the Company or the Employer to terminate Optionee's employment
relationship at any time with or without cause;
(f) Optionee is voluntarily participating in the Plan;
(g) this Option is an extraordinary item that does not constitute
compensation of any kind for services of any kind rendered to the Company or the
Employer, and which is outside the scope of the Optionee's employment contract,
if any;
(h) this Option is not part of normal or expected compensation or
salary for any purposes, including, but not limited to, calculating any
severance, resignation, termination, redundancy, end of service payments,
bonuses, long-service awards, pension or retirement benefits or similar
payments;
(i) in the event that the Optionee is not an Employee of the
Company, this Option grant will not be interpreted to form an employment
contract or relationship with the Company; and furthermore, this Option grant
will not be interpreted to form an employment contract with any Subsidiary or
affiliate of the Company;
(j) the future value of the underlying Shares is unknown and cannot
be predicted with certainty;
(k) if the underlying Shares do not increase in value, this Option
will have no value;
(l) if the Optionee exercises this Option and obtains Shares, the
value of those Shares acquired upon exercise may increase or decrease in value,
even below the Exercise Price; and
(m) no claim or entitlement to compensation or damages arises from
termination of this Option or diminution in value of this Option or Shares
purchased through exercise of this Option and the Optionee irrevocably releases
the Company and the Employer from any such claim that may arise.
10. Severability. The provisions of this Option Agreement are severable
and if any one or more provisions are determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be binding and enforceable.
11. Disclosure of Optionee's Personal Information. By accepting this
option, the Optionee consents to the collection, use and transfer of personal
information as described in this paragraph. The Optionee understands that the
Company and its affiliates hold certain personal information about him or her,
including his or her name, home address and telephone number, date of birth,
social security or identity number, salary, nationality, job title, any shares
of stock or directorships held in the Company, details of all stock options or
any other entitlement to shares of stock awarded, canceled, exercised, vested,
unvested or outstanding in his or her favor, for the purpose of managing and
administering the Plan ("Data"). The Optionee further understands that the
Company and/or its affiliates will transfer Data amongst themselves as necessary
for the purpose of implementation, administration and management of his or her
participation in the Plan, and that the Company and/or any of its affiliates may
each further transfer Data to any third parties assisting the Company in the
implementation, administration and management of the Plan. The Optionee
understands that these recipients may be located in the European Economic Area,
or elsewhere, such as in the
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U.S. or Asia. The Optionee authorizes the Company to receive, possess, use,
retain and transfer the Data in electronic or other form, for the purposes of
implementing, administering and managing his or her participation in the Plan,
including any requisite transfer to a broker or other third party with whom he
or she may elect to deposit any shares of stock acquired upon exercise of this
option of such Data as may be required for the administration of the Plan and/or
the subsequent holding of shares of stock on his or her behalf. The Optionee
understands that he or she may, at any time, view the Data, require any
necessary amendments to the Data or withdraw the consent herein in writing by
contacting the human resources department and/or the stock option administrator
for his or her employer.
12. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan, the Notice of Grant and this Option Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and agreements of the
Company and the Optionee with respect to the subject matter hereof, and may not
be modified except by means of a written document accepted and agreed to by the
Company and the Optionee. This Option Agreement is governed by the internal
substantive laws, but not the choice of law rules, of California.
The Optionee and the Company agree that this Option is granted under and
governed by the terms and conditions of the Plan, the Notice of Grant and this
Option Agreement. Capitalized terms that are used in this Option Agreement but
not defined in this Option Agreement shall have the meaning set forth in the
Plan. The Optionee has reviewed the Plan, the Notice of Grant and this Option
Agreement in their entirety, has had an opportunity to obtain the advise of
counsel prior to accepting this Option and fully understands all provisions of
the Plan, the Notice of Grant and this Option Agreement. The Optionee hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator in response to any questions by the
Optionee relating to the Plan, the Notice of Grant and Option Agreement.
ACCEPTANCE OF THIS OPTION AND THE TERMS AND CONDITIONS OF THIS OPTION
AGREEMENT IS MADE BY FAILING TO REJECT IT IN THE FOLLOWING MANNER: IF YOU DO NOT
NOTIFY SOLECTRON TO THE CONTRARY, YOUR ACCEPTANCE OF THIS OPTION AND THE TERMS
AND CONDITIONS OF THIS OPTION AGREEMENT WILL BE IMPLIED AND SHALL BECOME
ENFORCEABLE BY LAW. IF YOU DO NOT WISH TO ACCEPT THIS OPTION AND THE TERMS AND
CONDITIONS OF THIS STOCK OPTION AGREEMENT, YOU MUST NOTIFY SOLECTRON VIA E-MAIL
TO STOCKADMINISTRATION@CA.SLR.COM WITHIN 30 DAYS OF THE DATE OF RECEIPT
REGARDING YOUR DECISION. WITHIN TWO BUSINESS DAYS, YOU WILL RECEIVE A RETURN
E-MAIL FROM STOCK ADMINISTRATION CONFIRMING YOUR REJECTION OF THIS OPTION AND
THE TERMS AND CONDITIONS OF THIS OPTION AGREEMENT. IF A CONFIRMATION IS NOT
RECEIVED WITHIN TWO BUSINESS DAYS, CALL 408-956-6731. YOU MUST ENSURE YOU
RECEIVE CONFIRMATION OF YOUR REJECTION, OR YOUR ACCEPTANCE OF THIS OPTION AND
THE TERMS AND CONDITIONS OF THIS OPTION AGREEMENT WILL BE IMPLIED AND SHALL
BECOME ENFORCEABLE BY LAW. BY NOTIFYING SOLECTRON THAT YOU DO NOT ACCEPT THIS
OPTION AND THE TERMS AND CONDITIONS OF THIS OPTION AGREEMENT, YOU WILL BE
ELECTING TO REFUSE THE GRANT AND TO WITHDRAW FROM PARTICIPATION IN THE PLAN.
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