10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003

OR

[   ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.

FOR THE TRANSITION PERIOD FROM                TO               

COMMISSION FILE NUMBER: 0-23354

FLEXTRONICS INTERNATIONAL LTD.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

SINGAPORE	NOT APPLICABLE
(STATE OR OTHER JURISDICTION OF	(I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)	IDENTIFICATION NO.)

MICHAEL E. MARKS
CHIEF EXECUTIVE OFFICER
FLEXTRONICS INTERNATIONAL LTD.
36 ROBINSON ROAD #18-01
CITY HOUSE
SINGAPORE 068877
(65) 6299-8888
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [  ]

     As of August 4, 2003, there were 522,691,077 shares of the Registrant’s ordinary shares outstanding.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
		INDEPENDENT ACCOUNTANTS’ REPORT
		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
SIGNATURES
EXHIBIT INDEX
EXHIBIT 4.01
EXHIBIT 23.01
EXHIBIT 31.01
EXHIBIT 31.02
EXHIBIT 32.01
EXHIBIT 32.02

FLEXTRONICS INTERNATIONAL LTD.

INDEX

			PAGE
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
		Independent Accountants’ Report		3
		Condensed Consolidated Balance Sheets — June 30, 2003 and March 31, 2003		4
		Condensed Consolidated Statements of Operations — Three Months Ended June 30, 2003 and June 30, 2002		5
		Condensed Consolidated Statements of Cash Flows — Three Months Ended June 30, 2003 and June 30, 2002		6
		Notes to Condensed Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk			28
Item 4.	Controls and Procedures			28
PART II. OTHER INFORMATION
Item 1.	Legal proceedings			29
Item 6.	Exhibits and Reports on Form 8-K			29
	Signatures			30

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INDEPENDENT ACCOUNTANTS’ REPORT

To the Board of Directors and Shareholders of Flextronics International Ltd.

     We have reviewed the accompanying condensed consolidated balance sheet of Flextronics International Ltd. and subsidiaries (the “Company”) as of June 30, 2003, and the related condensed consolidated statements of income and cash flows for the three-month periods ended June 30, 2003 and 2002.

     We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

     Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

     We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of the Company as of March 31, 2003, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated April 21, 2003 (May 5, 2003 as to Note 13), we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 31, 2003 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ DELOITTE & TOUCHE LLP

San Jose, California

July 23, 2003

(August 5, 2003 as to Note M)

3

FLEXTRONICS INTERNATIONAL LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

			As of			As of
			June 30, 2003			March 31, 2003
			(In thousands, except share
			and per share amounts)
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	859,751		$	424,020
	Accounts receivable, net			1,496,208			1,417,086
	Inventories, net			1,150,573			1,141,559
	Deferred income taxes			31,528			29,153
	Other current assets			487,560			466,942
		Total current assets		4,025,620			3,478,760
Property, plant and equipment, net				1,695,647			1,965,729
Deferred income taxes				453,862			415,041
Goodwill				2,200,338			2,121,997
Other intangibles, net				69,110			70,913
Other assets				422,357			341,664
		Total assets	$	8,866,934		$	8,394,104
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
	Bank borrowings and current portion of long-term debt		$	53,348		$	52,484
	Current portion of capital lease obligations			5,566			7,622
	Accounts payable			1,863,149			1,601,923
	Other current liabilities			964,913			918,990
		Total current liabilities		2,886,976			2,581,019
Long-term debt, net of current portion:
	Capital lease obligations			5,814			7,909
	8 3/4% Senior Subordinated Notes due 2007			—			150,000
	9 7/8% Senior Subordinated Notes due 2010, less $2,730 and $2,828 discount as of June 30, 2003 and March 31, 2003, respectively			497,270			497,172
	9 3/4% Senior Subordinated Notes due 2010			172,493			160,192
	6 1/2% Senior Subordinated Notes due 2013			400,000			—
	Convertible Junior Subordinated Notes due 2013			200,000			200,000
	Other			124,510			34,580
Other liabilities				233,550			221,212
Commitments and contingencies
SHAREHOLDERS’ EQUITY:
	Ordinary shares, S$.01 par value, authorized - 1,500,000,000 shares; issued and outstanding 522,151,575 and 520,228,062 as of June 30, 2003 and March 31, 2003, respectively			3,090			3,078
	Additional paid-in capital			4,959,601			4,948,601
	Retained deficit			(659,808	)		(370,093	)
	Accumulated other comprehensive income (loss)			49,223			(33,419	)
	Deferred compensation			(5,785	)		(6,147	)
		Total shareholders’ equity		4,346,321			4,542,020
		Total liabilities and shareholders’ equity	$	8,866,934		$	8,394,104

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

FLEXTRONICS INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

		Three months ended
		June 30, 2003			June 30, 2002
		(In thousands, except per share amounts)
Net sales		$	3,106,677		$	3,127,027
Cost of sales			2,941,636			2,959,930
Unusual charges			308,835			179,352
	Gross profit (loss)		(143,794	)		(12,255	)
Selling, general and administrative expenses			116,415			114,699
Intangibles amortization			8,817			3,234
Unusual charges			18,273			28,471
Interest and other expense, net			25,911			18,999
Loss on early extinguishment of debt			8,695			—
	Loss before income taxes		(321,905	)		(177,658	)
Income tax benefit			(32,190	)		(46,486	)
	Net loss	$	(289,715	)	$	(131,172	)
Net loss per share:
	Basic	$	(0.56	)	$	(0.25	)
	Diluted	$	(0.56	)	$	(0.25	)
Weighted average shares used in computing per share amounts:
	Basic		521,100			515,016
	Diluted		521,100			515,016

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

FLEXTRONICS INTERNATIONAL LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

			Three months ended
			June 30, 2003			June 30, 2002
			(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss		$	(289,715	)	$	(131,172	)
	Depreciation and amortization			91,195			82,332
	Change in working capital and other			444,801			346,545
		Net cash provided by operating activities		246,281			297,705
CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchases of property and equipment, net of dispositions			(32,316	)		(54,355	)
	Purchases of OEM facilities and related assets			—			(2,025	)
	Acquisitions of businesses, net of cash acquired			(6,252	)		(12,091	)
	Other investments and notes receivable			(24,102	)		(33,159	)
		Net cash used in investing activities		(62,670	)		(101,630	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Bank borrowings and proceeds from long-term debt			425,745			40,767
	Repayments of bank borrowings and long-term debt			(180,275	)		(171,119	)
	Repayments of capital lease obligations			(5,056	)		(8,210	)
	Proceeds from exercise of stock options and Employee Stock Purchase Plan			9,352			8,953
		Net cash provided by (used in) financing activities		249,766			(129,609	)
Effect on cash from exchange rate changes				2,354			15,411
Net increase in cash and cash equivalents				435,731			81,877
Cash and cash equivalents at beginning of period				424,020			745,124
Cash and cash equivalents at end of period			$	859,751		$	827,001

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

FLEXTRONICS INTERNATIONAL LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003
(Unaudited)

NOTE A – ORGANIZATION OF THE COMPANY

     Flextronics International Ltd. (“Flextronics” or the “Company”) was incorporated in the Republic of Singapore in May 1990. The Company is a leading provider of advanced electronics manufacturing services, or EMS, to original equipment manufacturers, or OEMs, primarily in the handheld electronics devices, information technologies infrastructure, communications infrastructure, computer and office automation, and consumer devices industries. Flextronics provides design, engineering, manufacturing, logistics, and after-market services. The Company’s strategy is to provide customers with end-to-end services where it takes responsibility for engineering, supply chain management, new product introduction and implementation, manufacturing, and logistics management, with the goal of delivering a complete packaged product. Once a complete packaged product is delivered, Flextronics also provides after-market services such as repair and warranty services and network and communications installation and maintenance.

     In addition to the assembly of printed circuit boards and complete systems and products, the Company’s manufacturing services include the fabrication and assembly of plastic and metal enclosures, the fabrication of printed circuit boards and backplanes (which are printed circuit boards into which other printed circuit boards or cards may be inserted) and the fabrication and assembly of photonics components. Throughout the production process, the Company offers design and engineering services; logistics services, such as materials procurement, inventory management, vendor management, packaging and distribution; and automation of key elements of the supply chain through advanced information technologies. The Company has recently begun providing original design manufacturing, or ODM, services where it designs, develops and manufactures products, such as cell phones and other consumer-related devices, that are sold by its OEM customers under their brand name.

NOTE B – SUMMARY OF ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

     The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements, and should be read in conjunction with the Company’s audited consolidated financial statements as of and for the fiscal year ended March 31, 2003 contained in the Company’s Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three-month period ended June 30, 2003 are not necessarily indicative of the results that may be expected for the year ending March 31, 2004.

     The Company’s fiscal year ends on March 31 of each year. Interim quarterly reporting periods end on the Friday closest to the last day of each fiscal quarter, except the third and fourth fiscal quarters which end on December 31 and March 31, respectively.

     Amounts included in the financial statements are expressed in U.S. dollars unless otherwise designated as Singapore dollars (S$) or Euros (€).

     The accompanying condensed consolidated financial statements include the accounts of Flextronics and its wholly and majority-owned subsidiaries, after elimination of all significant intercompany accounts and transactions.

Use of Estimates

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions.

7

Property, Plant and Equipment

     Property, plant and equipment are stated at cost. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the related assets (three to thirty years), with the exception of building leasehold improvements, which are amortized over the life of the lease, if shorter. Repairs and maintenance costs are expensed as incurred.

     The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of property and equipment is measured by comparing its carrying amount to the projected discounted cash flows the property and equipment are expected to generate. An impairment loss is recognized when the carrying amount of a long-lived asset exceeds its fair value.

Goodwill and Other Intangibles

     Goodwill is subject to at least an annual assessment for impairment, applying a fair value based test. Additionally, an acquired intangible asset in a business combination should be separately recognized if the benefit of the intangible asset is obtained through contractual or other legal rights, or if the intangible asset can be sold, transferred, licensed, rented or exchanged, regardless of the acquirer’s intent to do so. Other intangibles, with finite lives, will continue to be valued and amortized over their estimated useful lives; in-process research and development will continue to be written off immediately.

     Goodwill of the reporting units is tested for impairment on an annual basis and between annual tests in certain circumstances. Goodwill is tested for impairment at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit. If the carrying amount of the reporting unit exceeds its fair value, a second step is performed to measure the amount of impairment loss, if any. Further, in the event that the carrying amount of the Company as a whole is greater than its market capitalization, there is a potential likelihood that some or all of its goodwill would be considered impaired. The Company has not recognized any impairment of its goodwill except as disclosed in “Unusual Charges”. However, no assurances can be given that future impairment tests of goodwill will not result in an impairment.

     The following table summarizes the activity in the Company’s goodwill account during the three months ended June 30, 2003 (in thousands):

Balance as of April 1, 2003	$	2,121,997
Additions		20,508
Foreign currency translation adjustments		57,833
Balance as of June 30, 2003	$	2,200,338

     All of the Company’s acquired intangible assets are subject to amortization over their estimated useful lives. The Company’s intangible assets are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount of an intangible may not be recoverable. Intangible assets are comprised of contractual agreements, patents and trademarks, developed technologies and other acquired intangibles. Contractual agreements are being amortized over periods up to ten years. Patents and trademarks and developed technologies are being amortized on a straight-line basis up to ten years. Other acquired intangibles relate to favorable leases and customer lists, and are amortized on a straight-line basis over three to ten years. No residual value is estimated for the intangible assets. During the three months ended June 30, 2003, there were approximately $3.7 million of additions to intangible assets, primarily related to purchased patents and trademarks. The components of other intangible assets are as follows (in thousands):

			As of June 30, 2003							As of March 31, 2003
			Gross					Net		Gross					Net
			carrying		Accumulated			carrying		carrying		Accumulated			carrying
			amount		amortization			amount		amount		amortization			amount
Intangibles:
	Contractual agreements		$	64,792	$	(12,758	)	$	52,034	$	61,629	$	(10,875	)	$	50,754
	Patents and trademarks			2,368		(40	)		2,328		161		(34	)		127
	Developed technologies			7,633		(6,605	)		1,028		7,633		(5,546	)		2,087
	Other acquired intangibles			49,088		(35,368	)		13,720		47,639		(29,694	)		17,945
		Total	$	123,881	$	(54,771	)	$	69,110	$	117,062	$	(46,149	)	$	70,913

Expected future estimated annual amortization expense is as follows (in thousands):

8

Fiscal years ending:
	2004	$	24,109	*
	2005		16,667
	2006		7,422
	2007		4,371
	2008		3,811
	Thereafter		12,730
	Total amortization expense	$	69,110

* Represents nine-month period ending March 31, 2004.

Deferred Income Taxes

     The Company provides for income taxes in accordance with the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying the applicable statutory tax rate to the differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities.

Accounting for Stock-Based Compensation

     At June 30, 2003, the Company had six stock-based employee compensation plans. The Company accounts for its stock option awards to employees under the recognition and measurement principles of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations. No compensation expense is recorded for options granted in which the exercise price equals or exceeds the market price of the underlying stock on the date of grant in accordance with the provisions of APB Opinion No. 25. The following table illustrates the effect on net loss and net loss per share had the Company applied the fair value recognition provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock Based Compensation,” to stock-based employee compensation.

		Three months ended
		June 30, 2003			June 30, 2002
Net loss, as reported		$	(289,715	)	$	(131,172	)
Deduct: Fair value compensation cost, net of tax			(17,356	)		(20,040	)
	Proforma net loss	$	(307,071	)	$	(151,212	)
Basic net loss per share:
	As reported	$	(0.56	)	$	(0.25	)
	Proforma	$	(0.59	)	$	(0.29	)
Diluted net loss per share:
	As reported	$	(0.56	)	$	(0.25	)
	Proforma	$	(0.59	)	$	(0.29	)

     The fair value of employee stock options granted during the three months ended June 30, 2003 and June 30, 2002 were estimated at the date of grant using the Black-Scholes model and the following weighted average assumptions:

	Three months ended
	June 30, 2003			June 30, 2002
Volatility		83	%		77	%
Risk-free interest rate range		0.9% - 2.4	%		1.1% -3.8	%
Dividend yield		0	%		0	%
Expected lives range	0.5 - 3.8 years			0.5 - 3.6 years

     Due to the subjective nature of the assumptions used in the Black-Scholes model, the proforma net loss and net loss per share disclosures may not reflect the associated fair value of the outstanding options.

9

     The Company provides restricted stock grants to key employees under its 2002 Interim Incentive Plan. Shares awarded under the plan vest in installments over a five-year period and unvested shares are forfeited upon termination of employment. During fiscal 2003, 1,230,000 shares of restricted stock were granted with a fair value on the date of grant of $5.88 per share. The unearned compensation associated with the restricted stock grants was $5.8 million as of June 30, 2003. This amount is included in shareholders’ equity. Grants of restricted stock are recorded as compensation expense over the vesting period at the fair market value of the stock at the date of grant. During the three months ended June 30, 2003 compensation expense related to the restricted stock grants amounted to approximately $0.4 million.

NOTE C – INVENTORIES

Inventories

     Inventories are stated at the lower of cost (on a first-in, first-out basis) or market value. Cost is comprised of direct materials, labor and overhead. The components of inventories, net of applicable reserves, were as follows (in thousands):

	As of		As of
	June 30, 2003		March 31, 2003
Raw materials	$	704,314	$	692,881
Work-in-process		208,789		231,738
Finished goods		237,470		216,940
	$	1,150,573	$	1,141,559

NOTE D – NET LOSS PER SHARE

     Basic income (loss) per share is computed using the weighted average number of ordinary shares outstanding during the applicable periods.

     Diluted income (loss) per share is computed using the weighted average number of ordinary shares and dilutive ordinary share equivalents outstanding during the applicable periods. Ordinary share equivalents include ordinary shares issuable upon the exercise of stock options, and are computed using the treasury stock method, as well as shares issuable upon conversion of debt instruments.

     Net loss per share data were computed as follows (in thousands, except per share amounts):

		Three months ended
		June 30, 2003			June 30, 2002
Basic net loss per share:
	Net loss	$	(289,715	)	$	(131,172	)
Shares used in computation:
	Weighted average ordinary shares outstanding		521,100			515,016
Basic net loss per share		$	(0.56	)	$	(0.25	)
Diluted net loss per share:
	Net loss	$	(289,715	)	$	(131,172	)
Shares used in computation:
	Weighted average ordinary shares outstanding		521,100			515,016
Diluted net loss per share		$	(0.56	)	$	(0.25	)

(1)

Due to the Company’s net losses reported, the ordinary share equivalents from stock options to purchase 9,403,800 and 9,925,913 shares outstanding were excluded from the computation of diluted earnings per share during the three months ended June 30, 2003 and June 30, 2002, respectively because the inclusion would be anti-dilutive for the periods.

Also, the ordinary share equivalents from stock options to purchase 21,974,605 and 27,804,003 shares outstanding during the three months ended June 30, 2003 and June 30, 2002, respectively, were excluded from the computation of diluted earnings per share because the exercise price of these options was greater than the average market price of the Company’s ordinary shares during the respective periods.

10

Additionally, ordinary share equivalents from other convertible debt instruments of 19,490,807 shares outstanding were anti-dilutive for three months ended June 30, 2003, and therefore not assumed to be converted for diluted earnings per share computation.

NOTE E – OTHER COMPREHENSIVE INCOME (LOSS)

     The following table summarizes the components of other comprehensive income (loss) (in thousands):

		Three months ended
		June 30, 2003			June 30, 2002
Net loss		$	(289,715	)	$	(131,172	)
Other comprehensive income (loss):
	Foreign currency translation adjustment, net of tax		81,842			93,476
	Unrealized holding gain (loss) on investments and derivatives, net of tax		800			(3,536	)
Comprehensive loss		$	(207,073	)	$	(41,232	)

NOTE F – LONG-TERM DEBT

     In May 2003, the Company issued 6.5% senior subordinated notes due in May 2013 for gross proceeds of $400.0 million. In June 2003, the Company used $156.6 million of the proceeds from this issuance to redeem all of its outstanding 8.75% senior subordinated notes due October 2007, of which $150.0 million in principal was outstanding. In connection with the redemption, the Company incurred approximately $8.7 million of losses associated with the early extinguishment of the notes during the three months ended June 30, 2003.

NOTE G - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

     All derivative instruments are recorded on the balance sheet at fair value. If the derivative is designated as a cash flow hedge, the effective portion of changes in the fair value of the derivative is recorded in shareholders’ equity as a separate component of accumulated other comprehensive income (loss) and is recognized in the statement of operations when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are immediately recognized in earnings. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings in the current period.

     The Company is exposed to foreign currency exchange rate risk inherent in forecasted sales, cost of sales and assets and liabilities denominated in non-functional currencies. The Company has established currency risk management programs to protect against reductions in value and volatility of future cash flows caused by changes in foreign currency exchange rates. The Company enters into short-term foreign currency forward contracts to hedge only those currency exposures associated with certain assets and liabilities, mainly accounts receivable and accounts payable, and cash flows denominated in non-functional currencies.

     As of June 30, 2003, the fair value of these short-term foreign currency forward contracts was recorded as an asset amounting to $1.3 million. At the same date, the Company had recorded in other comprehensive income (loss) immaterial deferred losses relating to the Company’s foreign currency forward contracts. These losses are expected to be recognized in earnings over the next twelve months. The gains and losses recognized in earnings due to hedge ineffectiveness were immaterial.

NOTE H – TRADE RECEIVABLES SECURITIZATION

     The Company continuously sells a designated pool of trade receivables to a third party qualified special purpose entity, which in turn sells an undivided ownership interest to a conduit, administered by an unaffiliated financial institution. In addition to this financial institution, the Company participates in the securitization agreement as an investor in the conduit. The securitization agreement allows the operating subsidiaries participating in the securitization to receive a cash payment for sold receivables, less a deferred purchase price receivable. The Company’s share of the total investment varies depending on certain criteria, mainly the collection performance on the sold receivables. The agreement, which expires in March 2004, is subject to annual renewal. Currently, the unaffiliated financial institution’s maximum investment limit is $250.0 million. The Company has sold $330.0 million of its accounts receivable as of June 30, 2003, which represents the face amount of the total outstanding trade receivables on all designated customer accounts at that date. The Company received net cash proceeds of $162.9 million from the unaffiliated financial institution for the sale of these receivables. The Company has a recourse obligation that is limited to the deferred purchase price receivable, which approximates 5% of the total sold receivables, and its own investment participation, the total of which was $171.0 million as of June 30, 2003.

11

     The Company continues to service, administer and collect the receivables on behalf of the special purpose entity and receives a servicing fee of 1.0% of serviced receivables per annum. The Company pays facility and commitment fees of up to 0.24% for unused amounts and program fees of up to 0.34% of outstanding amounts.

     The accounts receivable balances that were sold were removed from the consolidated balance sheet and are reflected as cash provided by operating activities in the consolidated statement of cash flows.

NOTE I – UNUSUAL CHARGES

Fiscal 2004

     The Company accounts for costs associated with restructuring activities initiated after December 31, 2002 in accordance with SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 supersedes previous accounting guidance, principally Emerging Issues Task Force Issue (EITF) No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity.” SFAS No. 146 requires that the liability for costs associated with an exit or disposal activity be recognized when the liability is incurred.

     As a result of strategic decisions to optimize the operating efficiencies provided by the Company’s global presence and to reduce its workforce and capacity at higher-cost locations, the Company approved plans during the first quarter of fiscal 2004 to exit certain activities and involuntarily terminate employees. Accordingly, the Company recognized unusual pre-tax charges of approximately $327.1 million during the three months ended June 30, 2003, related to the closures, consolidations and long-lived asset impairments of various manufacturing facilities. As further discussed below, $308.8 million of the charge was classified as a component of cost of sales in the three months ended June 30, 2003.

     Unusual charges recorded during the three months ended June 30, 2003 by reportable geographic regions were as follows: Americas, $86.3 million; Asia, $111.3 million; and Europe, $129.5 million.

     The Company currently anticipates that the facility closures and activities to which all of these charges relate will be substantially completed within one year of the commitment dates of the respective exit plans, except for certain long-term contractual obligations.

     The components of the unusual charges recorded during the three months ended June 30, 2003 were as follows (in thousands):

Unusual charges:
	Severance	$	11,891	cash
	Long-lived asset impairment		90,572	non-cash
	Exit costs		24,645	cash/non-cash
		$	327,108

     During the first quarter of fiscal 2004, the Company recorded approximately $11.9 million of employee termination costs associated with the involuntary terminations of approximately 1,700 employees in connection with the various facility closures and consolidations. As of June 30, 2003, approximately 1,400 employees had been terminated, and the remaining 300 employees have been notified that they are to be terminated upon completion of the various facility closures and consolidations. Approximately $8.2 million of the charges were classified as a component of cost of sales in the first quarter of fiscal 2004.

     During the first quarter of fiscal 2004, the Company also recorded approximately $290.6 million for the write-down of property, plant and equipment from their carrying value of $358.2 million. Approximately $282.1 million of this amount was classified as a component of cost of sales during the three months ended June 30, 2003. Certain assets will be held for use and remain in service until their anticipated disposal dates pursuant to the exit plans. For assets being held for use, impairment is measured as the amount by which the carrying amount exceeds the fair value of the asset. The fair value of assets held for use was determined based on projected discounted cash flows of the asset using a discount rate reflecting the Company’s weighted average cost of capital, plus salvage value. Certain other assets will be held for disposal as these assets are no longer required in operations. Assets held for disposal are no longer being depreciated. For assets being held for disposal, an impairment loss is recognized if the carrying amount of the asset exceeds its fair value less cost to sell.

     The unusual pre-tax charges recorded during the first quarter of fiscal 2004, also included approximately $24.6 million for other exit costs. Approximately $18.5 million of this amount was classified as a component of cost of sales in the first quarter of fiscal 2004. Other exit costs included contractual obligations totaling $15.5 million, which were incurred directly as a result of the various exit plans. The contractual obligations consisted of facility lease terminations amounting to $9.9 million, equipment lease

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terminations amounting to $3.2 million and payments to suppliers and third parties to terminate contractual agreements amounting to $2.4 million. The Company expects to make payments associated with its contractual obligations with respect to facility and equipment leases through the end of fiscal 2024 and with respect to the other contractual obligations with suppliers and third parties through the end of fiscal 2004. Other exit costs also included charges of $7.9 million relating to asset impairments primarily resulting from customer contracts that were terminated by the Company as a result of various facility closures. The Company expects to dispose of the impaired assets, primarily through scrapping and write-offs, by the end of fiscal 2004. Other exit costs also included $1.2 million primarily related to facility refurbishment costs related to certain building repair work necessary to prepare the exited facilities for sale or to return the facilities to their respective landlords.

     The Company will be required to take additional restructuring charges in the future as a result of these activities. Such charges will be recognized when the liability is incurred.

     The following table summarizes the activity related to restructuring charges recorded during the first quarter of fiscal 2004:

					Long-lived
					Asset			Other Exit
		Severance			Impairment			Costs			Total
Provision		$	11,891		$	290,572		$	24,645		$	327,108
Cash charges			(1,372	)		—			(3,022	)		(4,394	)
Non-cash charges			—			(290,572	)		(7,899	)		(298,471	)
	Balance as of June 30, 2003		10,519			—			13,724			24,243
Less: current portion (classified as other current liabilities)			10,519			—			8,477			18,996
Accrued facility closure costs net of current portion (classified as other long-term liabilities)		$	—		$	—		$	5,247		$	5,247

Fiscal 2003

     The Company accounted for costs associated with restructuring activities initiated prior to December 31, 2002 in accordance with EITF No. 94-3.

     The Company recognized net unusual pre-tax charges of approximately $304.4 million during fiscal 2003, of which $297.0 million related to the closures and consolidations of various manufacturing facilities and $7.4 million related to the impairment of investments in certain technology companies. Approximately $179.4 million and $86.9 million of the charges relating to facility closures were classified as a component of cost of sales in the first and third quarters of fiscal 2003, respectively.

     Net unusual charges recorded during fiscal 2003 by reportable geographic regions were as follows: Americas, $174.5 million; Asia, $1.8 million; and Europe, $128.1 million.

     The components of the net unusual charges recorded during the first and third quarters of fiscal 2003 were as follows (in thousands):

			First Quarter			Third Quarter			Total
			Charges			Charges			Charges
Facility closure costs:
	Severance		$	76,901		$	41,574		$	118,475		cash
	Long-lived asset impairment			56,279			14,285			70,564		non-cash
	Exit costs			67,187			40,729			107,916		cash/non-cash
		Total facility closure costs		200,367			96,588			296,955
Other unusual charges				7,456			—			7,456		non-cash
		Net unusual charges before income tax benefit		207,823			96,588			304,411
Income tax benefit				(49,826	)		(29,460	)		(79,286	)
		Net unusual charges	$	157,997		$	67,128		$	225,125

     The following table summarizes the activity of the restructuring charges recorded during fiscal 2003 and prior years.

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				Long-lived
				Asset		Other Exit
	Severance			Impairment		Costs			Total
Balance as of March 31, 2003	$	49,791		$	—	$	69,804		$	119,595
Cash charges		(25,344	)		—		(19,118	)		(44,462	)
Balance as of June 30, 2003		24,447			—		50,686			75,133
Less: current portion (classified as other current liabilities)		22,847			—		32,885			55,732
Accrued facility closure costs net of current portion (classified as other long-term liabilities)	$	1,600		$	—	$	17,801		$	19,401

NOTE J – GEOGRAPHIC REPORTING

     The Company operates and is managed internally by two operating segments that have been combined for operating segment disclosures, as they do not meet the quantitative thresholds for separate disclosure established in SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.” Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the Chief Executive Officer of the Company.

     Geographic information is as follows (in thousands):

		Three months ended
		June 30, 2003			June 30, 2002
Net sales:
	Asia	$	1,398,265		$	984,731
	Americas		472,434			922,678
	Europe		1,395,121			1,463,466
	Intercompany eliminations		(159,143	)		(243,848	)
		$	3,106,677		$	3,127,027

		Three months ended
		June 30, 2003			June 30, 2002
Loss before income taxes:
	Asia	$	(60,816	)	$	29,889
	Americas		(95,065	)		(104,955	)
	Europe		(131,743	)		(89,565	)
	Intercompany eliminations		(34,281	)		(13,027	)
		$	(321,905	)	$	(177,658	)

		As of		As of
		June 30, 2003		March 31, 2003
Property, plant and equipment, net
	Asia	$	641,544	$	758,331
	Americas		501,389		544,348
	Europe		552,714		663,050
		$	1,695,647	$	1,965,729

     Revenues are generally attributable to the country in which the product is manufactured.

     For purposes of the preceding tables, “Asia” includes China, Japan, India, Malaysia, Mauritius, Singapore, Taiwan and Thailand, “Americas” includes Brazil, Canada, Mexico and the United States, “Europe” includes Austria, the Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Israel, Italy, Netherlands, Norway, Poland, Portugal, Scotland, South Africa, Spain, Sweden, Switzerland and the United Kingdom.

NOTE K – CONSOLIDATION OF VARIABLE INTEREST ENTITIES

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     Effective April 1, 2003, the Company adopted FASB Interpretation No. 46 (FIN 46), “Consolidation of Variable Interest Entities”, which expands upon and strengthens existing accounting guidance concerning when a company should include in its financial statements the assets, liabilities and activities of another entity. Prior to the issuance of FIN 46, a company generally included another entity in its consolidated financial statements only if it controlled the entity through voting interests. FIN 46 now requires a variable interest entity, as defined in FIN 46, to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns or both. FIN 46 also requires disclosures about variable interest entities that the company is not required to consolidate but in which it has a significant variable interest.

     The Company has variable interests in real estate assets subject to operating lease arrangements located in Mexico and Texas. The principal impact of the adoption of FIN 46 was the recording of additions to land and building and long-term debt in the amount of $89.9 million at June 30, 2003. The cumulative effect of adopting FIN 46 was not material to the Company’s financial position, results of operations or cash flows.

NOTE L – NEW ACCOUNTING STANDARDS

Derivative Instruments and Hedging Activities

     In April 2003, the FASB issued SFAS No. 149, “Amendment of SFAS No. 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. In particular, SFAS No. 149 clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative. It also clarifies when a derivative contains a financing component that warrants special reporting in the statement of cash flows. SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003 and the adoption is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity

     In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. Financial instruments that are within the scope of the statement, which previously were often classified as equity, must now be classified as liabilities. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise shall be effective at the beginning of the first interim period beginning after June 15, 2003. The Company does not expect the adoption of SFAS No. 150 to have a material impact on the Company’s financial position, results of operations or cash flows.

NOTE M – SUBSEQUENT EVENTS

     On August 5, 2003, the Company issued 1.0% convertible subordinated notes due August 2010 for gross proceeds of $500.0 million. The notes are convertible into the Company’s ordinary shares at a conversion price of approximately $15.525 per share. Upon conversion, the Company will have the right to deliver cash (or a combination of cash and ordinary shares) in lieu of ordinary shares.

     On August 5, 2003, the Company announced that it had commenced a tender offer to purchase for cash any and all of its outstanding 9 7/8% senior subordinated notes due 2010, of which $500.0 million was outstanding as of that date. The Company intends to use the net proceeds from the issuance of its 1% convertible subordinated notes to repurchase such outstanding senior subordinated notes. The tender offer is currently scheduled to expire at 12:00 midnight, New York City time, on Wednesday, September 3, 2003, unless extended by the Company in its sole discretion. The terms of the tender offer are described in the Company’s Offer to Purchase dated August 5, 2003.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     This report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. The words “expects,” “anticipates,” “believes,” “intends,” “plans” and similar expressions identify forward-looking statements. In addition, any statements which refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. We undertake no obligation to publicly disclose any revisions to these forward-looking statements to reflect events or circumstances occurring subsequent to filing this Form 10-Q with the Securities and Exchange Commission. These forward-looking statements are subject to risks and uncertainties, including, without limitation, those discussed below in “Certain Factors Affecting Operating

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Results.” Accordingly, our future results may differ materially from historical results or from those discussed or implied by these forward-looking statements.

CRITICAL ACCOUNTING POLICIES

     The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

     We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. For further discussion of our significant accounting policies, refer to Note 2, “Summary of Accounting Policies,” of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended March 31, 2003. See also the Notes to Condensed Consolidated Financial Statements in this report on Form 10-Q.

Long-Lived Assets

     We review property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized when the carrying amount of a long-lived asset exceeds its fair value. Recoverability of property and equipment is measured by comparing its carrying amount to the projected discounted cash flows the property and equipment are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property and equipment exceeds its fair value.

     We evaluate goodwill and other intangibles for impairment on an annual basis and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable from its estimated future cash flows. Recoverability of goodwill is measured at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and a second test is performed to measure the amount of impairment loss. If, at the time of our annual evaluation, the net asset value (or “book value”) of any reporting unit is greater than its fair value, some or all of the related goodwill would likely be considered to be impaired. To date, we have not recognized any impairment of our goodwill and other intangible assets in connection with our impairment evaluations. However, we have recorded impairment charges relating to our restructuring activities.

Allowance for Doubtful Accounts

     We perform ongoing credit evaluations of our customers’ financial condition and make provisions for doubtful accounts based on the outcome of our credit valuations. We evaluate the collectibility of our accounts receivable based on specific customer circumstances, current economic trends, historical experience with collections and the age of past due receivables. Unanticipated changes in the liquidity or financial position of our customers may require additional provisions for doubtful accounts.

Inventory Valuation

     Our inventories are stated at the lower of cost (on a first-in, first-out basis) or market value. Our industry is characterized by rapid technological change, short-term customer commitments and rapid changes in demand. We make provisions for estimated excess and obsolete inventory based on our regular reviews of inventory quantities on hand and the latest forecasts of product demand and production requirements from our customers. If actual market conditions or our customers’ product demands are less favorable than those projected, additional provisions may be required. In addition, unanticipated changes in liquidity or financial position of our customers and/or changes in economic conditions may require additional provisions for inventories due to our customers’ inability to fulfill their contractual obligations with regard to inventory being held on their behalf.

Exit Costs

     We recognized unusual charges during the first quarter of fiscal 2004 and in fiscal 2003, fiscal 2002 and fiscal 2001, related to our plans to close or consolidate duplicate manufacturing and administrative facilities. In connection with these exit activities, we recorded unusual charges for employee termination costs, long-lived asset impairment and other exit-related costs. These charges were incurred pursuant to formal plans developed by management. Until December 31, 2002, a liability for the exit costs was recognized at the date of our commitment to the exit plans in accordance with the provisions of Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity.” In June 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” which addresses accounting for restructuring and similar costs. SFAS No. 146 requires that the liability for costs associated with an exit or disposal activity be recognized when the liability is incurred and not at the date of our commitment

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to the exit plan. We have adopted the provisions of SFAS No. 146 for restructuring activities initiated after December 31, 2002. Accordingly, SFAS No. 146 may affect the timing of recognizing future restructuring costs as well as the amounts recognized.

     The recognition of the unusual charges required that we make certain judgments and estimates regarding the nature, timing and amount of costs associated with the planned exit activity. If our actual results in exiting these facilities differ from our estimates and assumptions, we may be required to revise the estimates of future liabilities, requiring the recording of additional unusual charges or the reduction of liabilities already recorded. At the end of each reporting period, we evaluate the remaining accrued balances to ensure that no excess accruals are retained and the utilization of the provisions are for their intended purpose in accordance with developed exit plans.

     Refer to Note I, “Unusual Charges,” of the Notes to Condensed Consolidated Financial Statements for further discussion of our restructuring activities.

Deferred Income Taxes

     Our deferred income tax assets represent temporary differences between the financial statement carrying amount and the tax basis of existing assets and liabilities that will result in deductible amounts in future years, including net operating loss carryforwards. Based on estimates, the carrying value of our net deferred tax assets assumes that it is more likely than not that we will be able to generate sufficient future taxable income in certain tax jurisdictions. Our judgments regarding future profitability may change due to future market conditions, changes in U.S. or international tax laws and other factors. If these estimates and related assumptions change in the future, we may be required to increase our valuation allowance against the deferred tax assets resulting in additional income tax expense.

ACQUISITIONS AND STRATEGIC CUSTOMER TRANSACTIONS

     We have actively pursued business acquisitions and strategic transactions with customers to expand our global reach, manufacturing capacity and service offerings and to diversify and strengthen customer relationships. Accordingly, we made a number of acquisitions and strategic customer transactions, which were accounted for using the purchase method. Our consolidated financial statements include the operating results of each business from the date of acquisition. Proforma results of operations have not been presented because the effects of these acquisitions were not material on either an individual or an aggregate basis.

RESULTS OF OPERATIONS

     Certain operating results discussed below are not based on any standardized methodology prescribed by accounting principles generally accepted in the United States of America, or GAAP, and are not necessarily comparable to similar measures presented by other companies. As a result of the significant number of acquisitions made by us during the past few years, coupled with an unprecedented downturn in the technology industry and related end market demand for electronics hardware, we believe certain non-GAAP operating results are useful measures that facilitate period-to-period operating comparisons. These non-GAAP operating results should not be considered in isolation or as a substitute for operating results prepared in accordance with GAAP. Where disclosed, we have provided a reconciliation of non-GAAP operating results to GAAP.

     The following table sets forth, for the periods indicated, certain statements of operations data expressed as a percentage of net sales.

		Three months ended
		June 30, 2003			June 30, 2002
		(In thousands, except per share amounts)
Net sales			100.0	%		100.0	%
Cost of sales			94.7	%		94.7	%
Unusual charges			9.9	%		5.7	%
	Gross margin		(4.6	)%		(0.4	)%
Selling, general and administrative expenses			3.7	%		3.7	%
Intangibles amortization			0.3	%		0.1	%
Unusual charges			0.6	%		0.9	%
Interest and other expense, net			0.8	%		0.6	%
Loss on early extinguishment of debt			0.3	%		—	%
	Loss before income taxes		(10.3	)%		(5.7	)%
Income tax benefit			(1.0	)%		(1.5	)%
	Net loss		(9.3	)%		(4.2	)%

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Net Sales

     We derive our net sales from the assembly of printed circuit boards and complete systems and products, our manufacturing services include the fabrication and assembly of plastic and metal enclosures, the fabrication of printed circuit boards and backplanes (which are printed circuit boards into which other printed circuit boards or cards may be inserted) and the fabrication and assembly of photonics components. Throughout the production process, we offer design and engineering services; logistics services, such as materials procurement, inventory management, vendor management, packaging and distribution; and automation of key elements of the supply chain through advanced information technologies. We have recently begun providing original design manufacturing, or ODM, services where we design, develop and manufacture products, such as cell phones and other consumer-related devices, that are sold by our OEM customers under their brand name. Finally, we offer after-market services such as repair and warranty services and network and communications installation and maintenance.

     Net sales for the first quarter of fiscal 2004 remained relatively flat compared to the same quarter a year ago, decreasing less than 1% to $3.11 billion from $3.13 billion. We continue to experience weakness in certain areas of customer demand, particularly in the information technology infrastructure and communications infrastructure markets. However, the weakness in our customers’ demand has been offset by contract wins with new and existing customer programs combined with the revenues associated with our acquisitions and strategic customer transactions completed in fiscal 2003, primarily our strategic transaction with Casio Computer Co., Ltd.

     Our ten largest customers during the three months ended June 30, 2003 accounted for approximately 61% of net sales, with Sony-Ericsson and Hewlett-Packard Company accounting for 12% and 11% of net sales, respectively. In the three months ended June 30, 2002, our ten largest customers accounted for approximately 72% of net sales with Hewlett-Packard Company and Sony-Ericsson accounting for 13% and 11% of net sales, respectively. No other customer accounted for more than 10% of net sales during these periods.

Gross Profit

     Gross profit varies from period to period and is affected by a number of factors, including product mix, component costs and availability, product life cycles, unit volumes, startup, expansion and consolidation of manufacturing facilities, capacity utilization, pricing, competition and new product introductions.

     Gross margin for the first quarter of fiscal 2004 decreased to (4.6%) from (0.4%) in the same quarter a year ago. This includes unusual pre-tax charges of $308.8 million and $179.4 million in the June 2003 and June 2002 quarters, respectively. The unusual charges were associated with the closures, consolidations and long-lived asset impairments of various manufacturing facilities, as more fully described below in “Unusual Charges”. Our gross margins continue to remain depressed due to industry pricing pressures as a consequence of the excess capacity resulting from the economic downturn, and under-absorbed fixed costs caused by under utilization of capacity, resulting in part from the continued decline in our customers’ product demand.

     Increased mix of products that have relatively high material costs as a percentage of total unit costs has historically been a factor that has adversely affected our gross margins. We believe that these and other factors may adversely affect our gross margins, but we do not expect that this will have a material effect on our income from operations.

Unusual Charges

     We recognized unusual pre-tax charges of approximately $327.1 million during the three months ended June 30, 2003, which was related to the closures, consolidations and long-lived asset impairments of various manufacturing facilities. Of this amount, approximately $308.8 million of the charges were classified as a component of cost of sales.

     We recognized unusual pre-tax charges of approximately $207.8 million during the three months ended June 30, 2002, of which $200.4 million related to the closures and consolidations of various manufacturing facilities and $7.4 million for the impairment of investments in certain technology companies. Of this amount, approximately $179.4 million of the charges were classified as a component of cost of sales in the first quarter of fiscal 2003.

     We believe that the potential cost of goods savings achieved through lower depreciation and reduced employee expenses will be offset in part by reduced revenues at the affected facilities. In addition, we may incur further restructuring charges in the future, as we continue to reconfigure our operations in order to address excess capacity concerns, which may materially affect our results of operations in those future periods.

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     Refer to Note I, “Unusual Charges,” of the Notes to Condensed Consolidated Financial Statements for further discussion of our restructuring activities.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses for the first quarter of fiscal 2004 increased slightly to $116.4 million from $114.5 million in the first quarter of fiscal 2003, however, remained flat as a percentage of net sales at 3.7%.

Intangibles Amortization

     Intangibles amortization for the first quarter of fiscal 2004 increased to $8.8 million from $3.2 million in the year ago quarter. The increase in intangibles amortization in the first quarter of fiscal 2004 compared to the same period of fiscal 2003 was attributed to intangible assets acquired through various business acquisitions completed in the second half of fiscal 2003, in particular due to the completion of our assessment of the value of intangible assets acquired from Telia Companies and Xerox Corporation.

Interest and Other Expense, Net

     Interest and other expense, net was $25.9 million for the first quarter of fiscal 2004 compared to $19.0 million for the corresponding quarter of fiscal 2003. The increase in net expense in fiscal 2004 was driven primarily by increased interest expense associated with our higher outstanding borrowings, including our recent issuance of $400.0 million of our 6.5% senior subordinated notes, partially offset by lower interest rates in the first quarter of fiscal 2004.

Loss on Early Extinguishment of Debt

     We recognized a loss on early extinguishment of debt amounting to $8.7 million during the first quarter of fiscal 2004. In June 2003, we used $156.6 million of the net proceeds from our issuance of $400.0 million 6.5% senior subordinated notes in May 2003 to redeem our 8.75% senior subordinated notes maturing in October 2007.

Provision for Income Taxes

     Certain of our subsidiaries have, at various times, been granted tax relief in their respective countries, resulting in lower income taxes than would otherwise be the case under ordinary tax rates.

     Our consolidated effective tax rate was a benefit of 10% for the first quarter of fiscal 2004 compared to a benefit of 26% for the comparable period of 2003. The consolidated effective tax rate for a particular period varies depending on the amount of earnings from different jurisdictions, operating loss carryforwards, income tax credits, changes in previously established valuation allowances for deferred tax assets based upon management’s current analysis of the realizability of these deferred tax assets, as well as certain tax holidays and incentives granted to us and our subsidiaries in China, Hungary and Malaysia.

LIQUIDITY AND CAPITAL RESOURCES

     As of June 30, 2003, we had cash and cash equivalents totaling $859.7 million, total bank and other debts totaling $1.5 billion. Also, we have a revolving credit facility of $880.0 million, which is subject to compliance with certain financial covenants, under which we had no borrowings as of June 30, 2003.

     Cash provided by operating activities was $246.3 million and $297.7 million in the first three months of fiscal 2004 and fiscal 2003, respectively. The decrease in cash provided by operating activities in the current fiscal year was primarily due to increased levels of payments associated with our previously recorded restructuring accruals coupled with an increase in accounts receivable.

     Cash used in investing activities was $62.7 million and $101.6 million for the first three months of fiscals 2004 and 2003, respectively. Cash used in investing activities during the first three months of fiscal 2004 primarily related to (i) net capital expenditures of $32.3 million to purchase manufacturing equipment and for continued expansion of manufacturing facilities in certain lower cost (high volume) centers, primarily in Asia, (ii) payments of $24.1 million primarily related to our participation in our trade receivables securitization program and (iii) payments of $6.3 million for acquisitions of businesses. Cash used in investing activities for the first three months of fiscal 2003 consisted of (i) net capital expenditures of $54.4 million to purchase equipment and for continued expansion of various manufacturing facilities, (ii) payment of $14.1 million for acquisitions of businesses and for purchases of certain OEM assets and (iii) payment of $33.2 million primarily related to our participation in our trade receivables securitization program.

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     Our financing activities provided net cash of $249.8 million in the first three months of fiscal 2004, compared to net cash used in financing activities of $129.6 million for the first three months of fiscal 2003. Cash provided by financing activities during the first three months of fiscal 2004 primarily related to our issuance of 6.5% senior subordinated notes due 2013 in May 2003, which generated net proceeds of $393.7 million. In June 2003, we used $156.6 million of the net proceeds from the issuance to redeem our 8.75% senior subordinated notes due October 2007. Additionally, we generated $9.4 million in proceeds from ordinary shares issued under our stock plans. Cash used in financing activities during the first three months of fiscal 2003 related to repayments of debt obligations of approximately $179.3 million, offset by additional borrowings of $40.8 million and $9.0 million in proceeds from ordinary shares under our stock plans.

     Subsequent to June 30, 2003, we issued 1.0% convertible subordinated notes due August 2010 for gross proceeds of $500.0 million. The notes are convertible into our ordinary shares at a conversion price of approximately $15.525 per share. Upon conversion, we will have the right to deliver cash (or a combination of cash and ordinary shares) in lieu of ordinary shares.

     On August 5, 2003, we announced the commencement of a tender offer to purchase for cash any and all of its outstanding 9 7/8% senior subordinated notes due 2010, of which $500.0 million was outstanding as of that date. We intend to use the net proceeds from the issuance of its 1% convertible subordinated notes to repurchase such outstanding senior subordinated notes. The tender offer is currently scheduled to expire at 12:00 midnight, New York City time, on Wednesday, September 3, 2003, unless extended by us in our sole discretion. The terms of the tender offer are described in our Offer to Purchase dated August 5, 2003.

     Our working capital requirements and capital expenditures could continue to increase in order to support future expansions of our operations. It is possible that future acquisitions may be significant and may require the payment of cash. Future liquidity needs will also depend on fluctuations in levels of inventory and accounts receivable, the timing of capital expenditures by us for new equipment, the extent to which we utilize operating leases for the new facilities and equipment, the extent of unusual cash charges associated with future restructuring activities and levels of shipments and changes in volumes of customer orders.

     We believe that our existing cash balances, together with anticipated cash flows from operations and borrowings available under our credit facility will be sufficient to fund our operations through at least the next twelve months. Historically, we have funded our operations from the proceeds of public offerings of equity and debt securities, cash and cash equivalents generated from operations, bank debt, sales of accounts receivable and capital equipment lease financings. We anticipate that we will continue to enter into debt and equity financings, sales of accounts receivable and lease transactions to fund our acquisitions and anticipated growth. The sale of equity or convertible debt securities could result in dilution to our current shareholders. Further, we may issue debt securities that have rights and privileges senior to those of holders of our ordinary shares, and the terms of this debt could impose restrictions on our operations. Such financings and other transactions may not be available on terms acceptable to us or at all.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

     We have an $880.0 million revolving credit facility with a syndicate of domestic and foreign banks. The credit facility consists of two separate credit agreements, one providing for up to $440.0 million principal amount of revolving credit loans to us and designated subsidiaries; and one providing for up to $440.0 million principal amount of revolving credit loans to a U.S. subsidiary of the Company. Of the total amount available, $173.3 million relates to a new 364-day facility and $266.7 million expires in March 2005. Borrowings under the credit facility bear interest, at our option, either at (i) the base rate (as defined in the credit facility); or (ii) the LIBOR rate (as defined in the credit facility) plus the applicable margin for LIBOR loans ranging between 1.125% and 2.50%, based on our credit ratings and facility usage. We are required to pay a quarterly commitment fee ranging from 0.15% to 0.50% per annum, based on our credit ratings, of the unutilized portion of the credit facility.

     The credit facility is unsecured, and contains certain restrictions on our ability to (i) incur certain debt, (ii) make certain investments and (iii) make certain acquisitions of other entities. The credit facility also requires that we maintain certain financial covenants, including, among other things, a maximum ratio of total indebtedness to EBITDA (earnings before interest expense, taxes, depreciation, and amortization), a minimum ratio of fixed charge coverage, and a minimum net worth, as defined, during the term of the credit facility. Borrowings under the credit facility are guaranteed by us and certain of our subsidiaries. As of June 30, 2003, there were no borrowings outstanding under the credit facility.

     As of June 30, 2003, our outstanding debt obligations included: (i) borrowings outstanding related to our senior subordinated notes, (ii) borrowings outstanding related to our convertible junior subordinated notes, (iii) amounts drawn by subsidiaries on various lines of credit, (iv) equipment and property financed under leases and (v) other term obligations, including mortgage loans. Additionally, we have leased certain of our facilities under operating lease commitments.

     We have entered into agreements with respect to properties located in Mexico and Texas, which were historically accounted for as operating leases. Construction on both properties has been completed. The amounts outstanding on the Mexico and Texas properties as of June 30, 2003, were $22.9 million and $67.0 million, respectively. Upon the expiration of these leases in 2006 and

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2007, respectively, we may renew the leases for an additional five years subject to certain approvals and conditions, or arrange a sale of the buildings to a third party. We also have the right to purchase the buildings at cost at the end of the lease terms, or to terminate the leases at any time by paying the outstanding termination value. We have provided a residual value guarantee, which means that if the building is sold to a third party, we are responsible for making up any shortfall between the actual sales price and the amount funded under the leases. The maximum potential amount of the residual value guarantee is $76.4 million. As of June 30, 2003, the Company recorded the properties as fixed assets and also the related debt. Refer to Note K, “Consolidation of Variable Interest Entities,” of the Notes to Condensed Consolidated Financial Statements.

     We continuously sell a designated pool of trade receivables to a third party qualified special purpose entity, which in turn sells an undivided ownership interest to a conduit, administered by an unaffiliated financial institution. In addition to this financial institution, we participate in the securitization agreement as an investor in the conduit. The securitization agreement allows the operating subsidiaries participating in the securitization to receive a cash payment for sold receivables, less a deferred purchase price receivable. Our share of the total investment varies depending on certain criteria, mainly the collection performance on the sold receivables. The agreement, which expires in March 2004, is subject to annual renewal. Currently, the unaffiliated financial institution’s maximum investment limit is $250.0 million. We sold $330.0 million of our accounts receivable as of June 30, 2003, which represents the face amount of the total outstanding trade receivables on all designated customer accounts at that date. We received net cash proceeds of $162.9 million from the unaffiliated financial institution for the sale of these receivables. We have a recourse obligation that is limited to the deferred purchase price receivable, which approximates 5% of the total sold receivables, and our own investment participation, the total of which was $171.0 million as of June 30, 2003. The accounts receivable balances that were sold were removed from the consolidated balance sheet and are reflected as cash provided by operating activities in the consolidated statement of cash flows.

RELATED PARTY TRANSACTIONS

     Since June 30, 2002, neither we nor any of our subsidiaries have made or will make any loans to our executive officers. Prior to that time, we loaned approximately $10.2 million to several of our executive officers. Each loan is evidenced by a promissory note in favor of Flextronics and is generally secured by a deed of trust on property of the officer. Certain notes are non-interest bearing and others have interest rates ranging from 2.48% to 7.25%. The remaining outstanding balance of the loans, including accrued interest, as of June 30, 2003, was approximately $10.7 million. Additionally, in connection with an investment partnership, we made loans to several of our executive officers to fund their contributions to the investment partnership. Each loan is evidenced by a full-recourse promissory note in favor of the subsidiary. Interest rates on the notes range from 5.05% to 6.40%. The remaining balance of these loans, including accrued interest, as of June 30, 2003 was approximately $2.6 million.

EFFECT OF NEW ACCOUNTING STANDARDS

Derivative Instruments and Hedging Activities

     In April 2003, the FASB issued SFAS No. 149, “Amendment of SFAS No. 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. In particular, SFAS No. 149 clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative. It also clarifies when a derivative contains a financing component that warrants special reporting in the statement of cash flows. SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003 and the adoption is not expected to have a material impact on our financial position, results of operations or cash flows.

Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity

     In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. Financial instruments that are within the scope of the statement, which previously were often classified as equity, must now be classified as liabilities. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise shall be effective at the beginning of the first interim period beginning after June 15, 2003. We do not expect the adoption of SFAS No. 150 to have a material impact on our financial position, results of operations or cash flows.

RISK FACTORS

If we do not manage effectively changes in our operations, our business may be harmed.

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     We have experienced growth in our business as a result of internal growth and acquisitions. Since the beginning of fiscal 2001, our global workforce has more than doubled in size. During that time, we have also reduced our workforce at some locations and closed certain facilities in connection with our restructuring activities. These changes are likely to considerably strain our management control systems and resources, including decision support, accounting management, information systems and facilities. If we do not continue to improve our financial and management controls, reporting systems and procedures to manage our employees effectively and to expand our facilities, our business could be harmed.

     We plan to continue to transition manufacturing to lower cost locations. We plan to increase our manufacturing capacity in our low-cost regions by expanding our facilities and adding new equipment. This expansion and transition involves significant risks, including, but not limited to, the following:

• we may not be able to attract and retain the management personnel and skilled employees necessary to support expanded operations;

• we may not efficiently and effectively integrate new operations and information systems, expand our existing operations and manage geographically dispersed operations;

• we may incur cost overruns;

• we may incur unusual charges related to our restructuring activities;

• we may encounter construction delays, equipment delays or shortages, labor shortages and disputes and production start-up problems that could harm our growth and our ability to meet customers’ delivery schedules; and

• we may not be able to obtain funds for this expansion, and we may not be able to obtain loans or operating leases with attractive terms.

     In addition, we expect to incur new fixed operating expenses associated with our expansion efforts that will increase our cost of sales, including increases in depreciation expense and rental expense. If our revenues do not increase sufficiently to offset these expenses, our operating results could be seriously harmed. Over the past few years, our transition to low-cost manufacturing regions has contributed to our incurring significant unusual charges that have resulted from reducing our workforce and capacity at higher-cost locations. In fiscal 2003, we recognized a pre-tax restructuring charge of $297.0 million associated with the consolidation and closure of several manufacturing facilities. In the quarter ended June 30, 2003, we incurred an after-tax restructuring charge of $293.5 million for the closure and consolidation of certain facilities, along with a long-lived asset impairment charge. We will be required to take additional restructuring charges in the future, as a result of these activities. We expect to recognize additional restructuring charges over the next few quarters, and currently anticipate that such charges will total approximately $85.0 million, although the actual amount may vary, due to changes in market and other conditions. We cannot assure you as to the timing or amount of any future restructuring charges. If we are required to take additional restructuring charges in the future, this could have a material adverse impact on operating results, financial position and cash flows.

We depend on the handheld electronics devices, computer and office automation, communications and information technologies infrastructure and consumer devices industries which continually produce technologically advanced products with short life cycles; our inability to continually manufacture such products on a cost-effective basis could harm our business.

     During the three months ended June 30, 2003, we derived approximately 31% of our revenues from customers in the handheld devices industry, whose products include cell phones, pagers and personal digital assistants; approximately 26% of our revenues from customers in the computers and office automation industry, whose products include copiers, scanners, graphic cards, desktop and notebook computers and peripheral devices such as printers and projectors; approximately 15% of our revenues from providers of communications infrastructure, whose products include equipment for optical networks, cellular base stations, radio frequency devices, telephone exchange and access switches and broadband devices; approximately 11% of our revenues from the consumer devices industry, whose products include set-top boxes, home entertainment equipment, cameras and home appliances; and approximately 9% of our revenues from providers of information technologies infrastructure, whose products include servers, workstations, storage systems, mainframes, hubs and routers. The remaining 8% of our revenues was derived from customers in a variety of other industries, including the medical, automotive, industrial and instrumentation industries.

     Factors affecting these industries in general could seriously harm our customers and, as a result, us. These factors include:

• rapid changes in technology, which result in short product life cycles;

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• seasonality of demand for our customers’ products;

• the inability of our customers to successfully market their products, and the failure of these products to gain widespread commercial acceptance; and

• recessionary periods in our customers’ markets.

Our customers have and may continue to cancel their orders, change production quantities or locations, or delay production.

     As a provider of electronics manufacturing services, we must provide increasingly rapid product turnaround for our customers. We generally do not obtain firm, long-term purchase commitments from our customers, and we often experience reduced lead-times in customer orders. Customers cancel their orders, change production quantities and delay production for a number of reasons. The uncertain economic conditions and geopolitical situation has resulted, and may continue to result, in some of our customers delaying the delivery of some of the products we manufacture for them, and placing purchase orders for lower volumes of products than previously anticipated. Cancellations, reductions or delays by a significant customer or by a group of customers have harmed, and may continue to harm, our results of operations by reducing the volumes of products manufactured by us for the customers and delivered in that period, as well as causing a delay in the repayment of our expenditures for inventory in preparation for customer orders and lower asset utilization resulting in lower gross margins. In addition, customers require that manufacturing of their products be transitioned from one facility to another to achieve cost and other objectives. Such transfers result in inefficiencies and costs due to resulting excess capacity and overhead at one facility and capacity constraints and related stresses at the other.

     In addition, we make significant decisions, including determining the levels of business that we will seek and accept, production schedules, component procurement commitments, personnel needs and other resource requirements, based on our estimates of customer requirements. The short-term nature of our customers’ commitments and the rapid changes in demand for their products reduce our ability to estimate accurately future customer requirements. This makes it difficult to schedule production and maximize utilization of our manufacturing capacity. We often increase staffing, increase capacity and incur other expenses to meet the anticipated demand of our customers, which cause reductions in our gross margins if customer orders continue to be delayed or cancelled. Anticipated orders may not materialize, and delivery schedules may be deferred as a result of changes in demand for our customers’ products. On occasion, customers require rapid increases in production, which stress our resources and reduce margins. Although we have increased our manufacturing capacity, and plan further increases, we may not have sufficient capacity at any given time to meet our customers’ demands. In addition, because many of our costs and operating expenses are relatively fixed, a reduction in customer demand harms our gross profit and operating income.

Our operating results vary significantly.

     We experience significant fluctuations in our results of operations. Some of the principal factors that contribute to these fluctuations are:

• changes in demand for our services;

• our effectiveness in managing manufacturing processes and costs in order to decrease manufacturing expenses;

• the mix of the types of manufacturing services we provide, as high-volume and low-complexity manufacturing services typically have lower gross margins than lower volume and more complex services;

• changes in the cost and availability of labor and components, which often occur in the electronics manufacturing industry and which affect our margins and our ability to meet delivery schedules;

• the degree to which we are able to utilize our available manufacturing capacity;

• our ability to manage the timing of our component purchases so that components are available when needed for production, while avoiding the risks of purchasing inventory in excess of immediate production needs; and

• local conditions and events that may affect our production volumes, such as labor conditions, political instability and local holidays.

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     Two of our significant end-markets are the handheld electronics devices market and the consumer devices market. These markets exhibit particular strength toward the end of the calendar year in connection with the holiday season. As a result, we have historically experienced stronger revenues in our third fiscal quarter as compared to our other fiscal quarters.

Our increased original design manufacturing activity may reduce our profitability.

     We have recently begun providing original design manufacturing, or ODM, activities, wherein we design and develop products that are sold to the end user by our OEM customers under their brand name. We are actively pursuing ODM projects, focusing primarily on consumer related devices, such as cell phones and related products, which requires that we make investments in research and development, technology licensing, test and tooling equipment, patent applications, facility expansion and recruitment. Our contracts with our customers can generally be terminated by either party on short notice, and there is no assurance that we will be able to maintain our current level of ODM activity at all or for an extended period of time. Due to the initial costs of investing in the resources necessary for this business, our increased ODM activities have adversely affected our profitability and may continue to do so in fiscal 2004.

     Customers for our ODM services typically require that we indemnify them against the risk of intellectual property infringement. If any claims are brought against our customers for such infringement, whether or not these have merit, we could be required to expend significant resources in defense of such claims. In the event of such an infringement claim, we may be required to spend a significant amount of money to develop non-infringing alternatives or obtain licenses. We may not be successful in developing such alternatives or obtaining such a license on reasonable terms or at all. Further, the products we design must satisfy safety and regulatory standards and some products must also receive government certifications. If we fail to timely obtain these approvals or certifications, we would be unable to sell these products, which would harm our sales, profitability and reputation.

We are exposed to intangible asset risk.

     We have a substantial amount of intangible assets. These intangible assets are generally attributable to acquisitions and represent the difference between the purchase price paid for the acquired businesses and the fair value of net tangible assets of acquired businesses. We are required to evaluate goodwill and other intangibles for impairment on at least an annual basis, and whenever changes in circumstances indicate that the carrying amount may not be recoverable from estimated future cash flows. As a result of our annual and other periodic evaluations, we may determine that the intangible asset values need to be written down to their fair values, which could result in material charges that could be adverse to our operating results and financial position.

We may encounter difficulties with acquisitions, which could harm our business.

     Since the beginning of fiscal 2001, we have completed over 40 acquisitions of businesses and we expect to continue to acquire additional businesses in the future. We are currently in preliminary discussions with respect to potential acquisitions and strategic customer transactions, however, we do not have any agreements or commitments to make any material acquisitions or strategic customer transactions. Any future acquisitions may require additional debt or equity financing, or the issuance of shares in the transaction. This could increase our leverage or be dilutive to our existing shareholders. We may not be able to complete acquisitions or strategic customer transactions in the future to the same extent as the past, or at all.

     In addition, acquisitions involve numerous risks and challenges, including:

• difficulties in integrating acquired businesses and operations;

• diversion of management’s attention from the normal operation of our business;

• potential loss of key employees and customers of the acquired companies;

• difficulties in managing and integrating operations in geographically dispersed locations;

• lack of experience operating in the geographic market or industry sector of the acquired business;

• increases in our expenses and working capital requirements, which reduce our return on invested capital; and

• exposure to unanticipated contingent liabilities of acquired companies.

     Any of these and other factors have harmed, and in the future could harm, our ability to achieve anticipated levels of profitability at acquired operations or realize other anticipated benefits of an acquisition, and could adversely affect our business and operating results.

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Our strategic relationships with major customers create risks.

     Over the past several years, we have completed numerous strategic transactions with OEM customers, including, among others, Telia Companies, Xerox, Alcatel, Casio and Ericsson. Under these arrangements, we generally acquire inventory, equipment and other assets from the OEM, and lease or acquire their manufacturing facilities, while simultaneously entering into multi-year supply agreements for the production of their products. We intend to continue to pursue these OEM divestiture transactions in the future. There is strong competition among EMS companies for these transactions, and this competition may increase. These transactions have contributed to a significant portion of our revenue growth, and if we fail to complete similar transactions in the future, our revenue growth could be harmed. As part of these arrangements, we typically enter into manufacturing services agreements with these OEMs. These agreements generally do not require any minimum volumes of purchases by the OEM, and the actual volume of purchases may be less than anticipated. The arrangements entered into with divesting OEMs typically involve many risks, including the following:

• we may need to pay a purchase price to the divesting OEMs that exceeds the value we may realize from the future business of the OEM;

• the integration into our business of the acquired assets and facilities may be time-consuming and costly;

• we, rather than the divesting OEM, bear the risk of excess capacity at the facility;

• we may not achieve anticipated cost reductions and efficiencies at the facility;

• we may be unable to meet the expectations of the OEM as to volume, product quality, timeliness and cost reductions; and

• if demand for the OEM’s products declines, the OEM may reduce its volume of purchases, and we may not be able to sufficiently reduce the expenses of operating the facility or use the facility to provide services to other OEMs.

     As a result of these and other risks, we have been, and in the future may be, unable to achieve anticipated levels of profitability under these arrangements, and they have not, and in the future may not, result in any material revenues or contribute positively to our earnings per share.

We depend on the continuing trend of outsourcing by OEMs.

     Future growth in our revenue depends on new outsourcing opportunities in which we assume additional manufacturing and supply chain management responsibilities from OEMs. To the extent that these opportunities are not available, either because OEMs decide to perform these functions internally or because they use other providers of these services, our future growth would be limited.

The majority of our sales come from a small number of customers; if we lose any of these customers, our sales could decline significantly.

     Sales to our ten largest customers have represented a significant percentage of our net sales in recent periods. Our ten largest customers accounted for approximately 61% and 72% of net sales during the three months ended June 30, 2003 and June 30, 2002, respectively. Our largest customers during the three months ended June 30, 2003 were Sony-Ericsson and Hewlett-Packard, accounting for approximately 12% and 11% of net sales, respectively. Our largest customer the three months ended June 30, 2002 were Hewlett-Packard and Sony-Ericsson, accounting for approximately 13% and 11% of net sale, respectively. No other customer accounted for more than 10% of net sales during those periods.

     Our principal customers have varied from year to year, and our principal customers may not continue to purchase services from us at current levels, if at all. Significant reductions in sales to any of these customers, or the loss of major customers, would seriously harm our business. If we are not able to timely replace expired, canceled or reduced contracts with new business, our revenues could be harmed.

Our industry is extremely competitive.

     The EMS industry is extremely competitive and includes hundreds of companies, several of which have achieved substantial market share. Current and prospective customers also evaluate our capabilities against the merits of internal production. Some of our competitors may have greater design, manufacturing, financial or other resources than us. Additionally, we face competition from Taiwanese ODM suppliers, who have a substantial share of the global market for information technology hardware

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production, primarily related to notebook and desktop computers and personal computer motherboards, as well as provide consumer products and other technology manufacturing services.

     In recent years, many participants in the industry, including us, have substantially expanded their manufacturing capacity. The overall demand for electronics manufacturing services has decreased, resulting in increased capacity and substantial pricing pressures, which has harmed our operating results. Certain sectors of the EMS industry are currently experiencing increased price competition, and if this increased level of competition should continue, our revenues and gross margin may continue to be adversely affected.

We may be adversely affected by shortages of required electronic components.

     At various times, there have been shortages of some of the electronic components that we use, as a result of strong demand for those components or problems experienced by suppliers. These unanticipated component shortages have resulted in curtailed production or delays in production, which prevented us from making scheduled shipments to customers in the past and may do so in the future. Our inability to make scheduled shipments could cause us to experience a reduction in our sales and an increase in our costs and could adversely affect our relationship with existing customers as well as prospective customers. Component shortages may also increase our cost of goods sold because we may be required to pay higher prices for components in short supply and redesign or reconfigure products to accommodate substitute components. As a result, component shortages could adversely affect our operating results for a particular period due to the resulting revenue shortfall and increased manufacturing or component costs.

Our customers may be adversely affected by rapid technological change.

     Our customers compete in markets that are characterized by rapidly changing technology, evolving industry standards and continuous improvement in products and services. These conditions frequently result in short product life cycles. Our success will depend largely on the success achieved by our customers in developing and marketing their products. If technologies or standards supported by our customers’ products become obsolete or fail to gain widespread commercial acceptance, our business could be adversely affected.

We are subject to the risk of increased income taxes.

     We have structured our operations in a manner designed to maximize income in countries where:

• tax incentives have been extended to encourage foreign investment; or

• income tax rates are low.

     We base our tax position upon the anticipated nature and conduct of our business and upon our understanding of the tax laws of the various countries in which we have assets or conduct activities. However, our tax position is subject to review and possible challenge by taxing authorities and to possible changes in law, which may have retroactive effect. We cannot determine in advance the extent to which some jurisdictions may require us to pay taxes or make payments in lieu of taxes.

     Several countries in which we are located allow for tax holidays or provide other tax incentives to attract and retain business. These tax incentives expire over various periods from 2004 to 2010 and are subject to certain conditions with which we expect to comply. We have obtained tax holidays or other incentives where available, primarily in China, Malaysia and Hungary. In these three countries, we generated an aggregate of approximately $5.8 billion of our total revenues for the fiscal year ended March 31, 2003. Our taxes could increase if certain tax holidays or incentives are not renewed upon expiration, or tax rates applicable to us in such jurisdictions are otherwise increased. In addition, further acquisitions of businesses may cause our effective tax rate to increase.

We conduct operations in a number of countries and are subject to risks of international operations.

     The geographical distances between the Americas, Asia and Europe create a number of logistical and communications challenges for us. These challenges include managing operations across multiple time zones, directing the manufacture and delivery of products across distances, coordinating procurement of components and raw materials and their delivery to multiple locations, and coordinating the activities and decisions of the core management team, which is based in a number of different countries. Facilities in several different locations may be involved at different stages of the production of a single product, leading to additional logistical difficulties.

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     Because our manufacturing operations are located in a number of countries throughout the Americas, Asia and Europe, we are subject to the risks of changes in economic and political conditions in those countries, including:

• fluctuations in the value of local currencies;

• labor unrest and difficulties in staffing;

• longer payment cycles;

• increases in duties and taxation levied on our products;

• imposition of restrictions on currency conversion or the transfer of funds;

• limitations on imports or exports of components or assembled products, or other travel restrictions;

• expropriation of private enterprises; and

• a potential reversal of current favorable policies encouraging foreign investment or foreign trade by our host countries.

     The attractiveness of our services to our U.S. customers can be affected by changes in U.S. trade policies, such as most favored nation status and trade preferences for some Asian countries. In addition, some countries in which we operate, such as Brazil, Hungary, Mexico, Malaysia and Poland, have experienced periods of slow or negative growth, high inflation, significant currency devaluations or limited availability of foreign exchange. Furthermore, in countries such as China and Mexico, governmental authorities exercise significant influence over many aspects of the economy, and their actions could have a significant effect on us. Finally, we could be seriously harmed by inadequate infrastructure, including lack of adequate power and water supplies, transportation, raw materials and parts in countries in which we operate.

     The recent outbreak of severe acute respiratory syndrome, or SARS, that began in China, Hong Kong and Singapore could have a negative impact on our operations. Our operations could be impacted by a number of SARS-related factors, including, but not limited to, disruptions at our manufacturing operations located in China, reduced demand for our customers’ products and increased supply chain costs.

We are exposed to fluctuations in foreign currency exchange rates.

     We transact business in various foreign countries. As a result, we are exposed to fluctuations in foreign currencies. We have currency exposure arising from both sales and purchases denominated in currencies other than the functional currencies of our entities. Volatility in the exchange rates between the foreign currencies and the functional currencies of our entities could seriously harm our business, operating results and financial condition. We try to manage our foreign currency exposure by borrowing in various foreign currencies and by entering into foreign exchange forward contracts. Mainly, we enter into foreign exchange forward contracts intended to reduce the short-term impact of foreign currency fluctuations on current assets and liabilities denominate in foreign currency. These exposures are primarily, but not limited to, cash, receivables, payables and inter-company balances, in currencies other than the functional currency unit of the operating entity. We will first evaluate and, to the extent possible, use non-financial techniques, such as currency of invoice, leading and lagging payments, receivable management or local borrowing to reduce transactions exposure before taking steps to minimize remaining exposure with financial instruments. Foreign exchange forward contracts are treated as cash flow hedges and such contracts generally expire within three months. The credit risk of these forward contracts if minimal since the contracts are with large financial institutions. The gains and losses on forward contracts generally offset the gains and losses on the assets, liabilities and transactions hedged.

We depend on our executive officers.

     Our success depends to a large extent upon the continued services of our executive officers. Generally our employees are not bound by employment or non-competition agreements, and we cannot assure that we will retain our executive officers and other key employees. We could be seriously harmed by the loss of any of our executive officers. In addition, in order to manage our growth, we will need to recruit and retain additional skilled management personnel and if we are not able to do so, our business and our ability to continue to grow could be harmed.

We are subject to environmental compliance risks.

     We are subject to various federal, state, local and foreign environmental laws and regulations, including those governing the use, storage, discharge and disposal of hazardous substances in the ordinary course of our manufacturing process. In addition, we

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are responsible for cleanup of contamination at some of our current and former manufacturing facilities and at some third party sites. If more stringent compliance or cleanup standards under environmental laws or regulations are imposed, or the results of future testing and analyses at our current or former operating facilities indicate that we are responsible for the release of hazardous substances, we may be subject to additional remediation liability. Further, additional environmental matters may arise in the future at sites where no problem is currently known or at sites that we may acquire in the future. Currently unexpected costs that we may incur with respect to environmental matters may result in additional loss contingencies, the quantification of which cannot be determined at this time.

The market price of our ordinary shares is volatile.

     The stock market in recent years has experienced significant price and volume fluctuations that have affected the market prices of technology companies. These fluctuations have often been unrelated to or disproportionately impacted by the operating performance of these companies. The market for our ordinary shares may be subject to similar fluctuations. Factors such as fluctuations in our operating results, announcements of technological innovations or events affecting other companies in the electronics industry, currency fluctuations and general market conditions may cause the market price of our ordinary shares to decline.

We are a defendant in several securities class action lawsuits and this litigation could harm our business whether or not determined adversely to us.

     Between June and August 2002, Flextronics and certain of our officers and directors were named as defendants in several securities class action lawsuits filed in the Untied States District Court for the Southern District of New York. These actions, which were filed on behalf of those who purchased, or otherwise acquired, Flextronics’ ordinary shares between October 2, 2001 and June 4, 2002, generally allege that, during this period, the defendants made misstatements to the investing public about the financial condition and prospects of Flextronics. After the Court consolidated these actions, plaintiffs amended their allegations to change the class period to January 18, 2001 to June 4, 2002. They also added claims on behalf of plaintiffs who purchased shares pursuant to, or traceable to, the secondary offerings of Flextronics on February 1, 2001 and January 7, 2002. In addition, plaintiffs added claims against the underwriters involved in those offerings. On April 23, 2003, the Court entered an order transferring these lawsuits to the United States District Court for the Northern District of California. On July 16, 2003, Flextronics filed a motion to dismiss on behalf of itself and its officers and directors named as defendants. A hearing on the motion to dismiss is scheduled for September 24, 2003.

     These actions seek unspecified damages. Although we believe that the plaintiffs’ claims lack merit and intend to vigorously defend these lawsuits, we are unable to predict the ultimate outcome of these lawsuits. There can be no assurance we will be successful in defending the lawsuits, and, if we are unsuccessful, we may be subject to significant damages. Even if we are successful, defending the lawsuits may be expensive and may divert management’s attention from other business concerns and harm our business.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     There were no material changes during the three months ended June 30, 2003 to our exposure to market risk for changes in interest rates and foreign currency exchange rates.

ITEM 4. CONTROLS AND PROCEDURES

(a)

Regulations under the Securities Exchange Act of 1934 require public companies to maintain “disclosure controls and procedures,” which are defined to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Our chief executive officer and our chief financial officer, based on their evaluation of the effectiveness of our disclosure controls and procedures within 90 days before the filing date of this report, concluded that our disclosure controls and procedures were effective for this purpose.

(b)

There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date we carried out this evaluation.

28

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     Between June and August 2002, Flextronics and certain of our officers and directors were named as defendants in several securities class action lawsuits filed in the United States District Court for the Southern District of New York. These actions, which were filed on behalf of those who purchased, or otherwise acquired, Flextronics’ ordinary shares between October 2, 2001 and June 4, 2002, generally allege that, during this period, the defendants made misstatements to the investing public about the financial condition and prospects of Flextronics. After the Court consolidated these actions, plaintiffs amended their allegations to change the class period to January 18, 2001 to June 4, 2002. They also added claims on behalf of plaintiffs who purchased shares pursuant to, or traceable to, the secondary offerings of Flextronics on February 1, 2001 and January 7, 2002. In addition, plaintiffs added claims against the underwriters involved in those offerings. On April 23, 2003, the Court entered an order transferring these lawsuits to the United States District Court for the Northern District of California. On July 16, 2003, Flextronics filed a motion to dismiss on behalf of itself and its officers and directors named as defendants. A hearing on the motion to dismiss is scheduled for September 24, 2003.

     These actions seek unspecified damages. Although we believe that the plaintiffs’ claims lack merit and intend to vigorously defend these lawsuits, we are unable to predict the ultimate outcome of these lawsuits. There can be no assurance we will be successful in defending these lawsuits, and, if we are unsuccessful, we may be subject to significant damages. Even if we are successful, defending the lawsuits may be expensive and may divert management’s attention from other business concerns and harm our business.

     We are also subject to legal proceedings, claims, and litigation arising in the ordinary course of business. We defend ourselves vigorously against any such claims. While the outcome of these matters is currently not determinable, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8K

     (a)  Exhibits

Exhibit No.	Exhibit
4.01	Indenture dated as of August 5, 2003 between Registrant and J.P. Morgan Trust Company, National Association, as trustee.
23.01	Consent of Deloitte & Touche LLP.
31.01	Certification of Periodic Report by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.02	Certification of Periodic Report by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32.01	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
32.02	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

* As contemplated by SEC Release No. 33-8212, these exhibits are furnished with this Quarterly Report on Form 10-Q and are not deemed filed with the Securities and Exchange Commission and are not incorporated by reference in any filing of Flextronics International Ltd. under the Securities Act of 1933 or the Securities Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in such filings.

(b)  Reports on Form 8-K

     None.

29

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused its Report to be signed on its behalf by the undersigned thereunto duly authorized.

	FLEXTRONICS INTERNATIONAL LTD. (Registrant)
Date: August 11, 2003	/s/	Michael E. Marks
		Michael E. Marks Chief Executive Officer (Principal Executive Officer)
Date: August 11, 2003	/s/	Robert R.B. Dykes
		Robert R.B. Dykes President, Systems Group and Chief Financial Officer (Principal Financial Officer)
Date: August 11, 2003	/s/	Thomas J. Smach
		Thomas J. Smach Senior Vice President, Finance (Principal Accounting Officer)

30

EXHIBIT INDEX

Exhibit No.	Exhibit
4.01	Indenture dated as of August 5, 2003 between Registrant and J.P. Morgan Trust Company, National Association, as trustee.
23.01	Consent of Deloitte & Touche LLP.
31.01	Certification of Periodic Report by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.02	Certification of Periodic Report by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32.01	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
32.02	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

* As contemplated by SEC Release No. 33-8212, these exhibits are furnished with this Quarterly Report on Form 10-Q and are not deemed filed with the Securities and Exchange Commission and are not incorporated by reference in any filing of Flextronics International Ltd. under the Securities Act of 1933 or the Securities Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in such filings.

EX-4.01 3 f92242exv4w01.txt EXHIBIT 4.01 EXHIBIT 4.01 ================================================================================ EXECUTION VERSION FLEXTRONICS INTERNATIONAL LTD. 1% CONVERTIBLE SUBORDINATED NOTES DUE AUGUST 1, 2010 -------------------- INDENTURE DATED AS OF AUGUST 5, 2003 -------------------- J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, AS TRUSTEE ================================================================================ TABLE OF CONTENTS

PAGE ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.1. DEFINITIONS................................................................................... 1 Section 1.2. OTHER DEFINITIONS............................................................................. 7 Section 1.3. TRUST INDENTURE ACT PROVISIONS................................................................ 8 Section 1.4. RULES OF CONSTRUCTION......................................................................... 8 ARTICLE 2 THE SECURITIES Section 2.1. FORM AND DATING............................................................................... 9 Section 2.2. EXECUTION AND AUTHENTICATION.................................................................. 10 Section 2.3. REGISTRAR, PAYING AGENT AND CONVERSION AGENT.................................................. 11 Section 2.4. PAYING AGENT TO HOLD MONEY IN TRUST........................................................... 11 Section 2.5. SECURITYHOLDERS LIST.......................................................................... 12 Section 2.6. TRANSFER AND EXCHANGE......................................................................... 12 Section 2.7. REPLACEMENT SECURITIES........................................................................ 13 Section 2.8. OUTSTANDING SECURITIES........................................................................ 13 Section 2.9. TREASURY SECURITIES........................................................................... 14 Section 2.10. TEMPORARY SECURITIES.......................................................................... 14 Section 2.11. CANCELLATION.................................................................................. 14 Section 2.12. LEGEND; ADDITIONAL TRANSFER AND EXCHANGE REQUIREMENTS......................................... 14 Section 2.13. CUSIP NUMBERS................................................................................. 17 ARTICLE 3 REDEMPTION Section 3.1. NO REDEMPTION BY THE COMPANY.................................................................. 17 Section 3.2. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON CHANGE OF CONTROL......................... 17 ARTICLE 4 CONVERSION Section 4.1. CONVERSION PRIVILEGE.......................................................................... 19 Section 4.2. CONVERSION PROCEDURE.......................................................................... 19 Section 4.3. FRACTIONAL SHARES............................................................................. 22 Section 4.4. TAXES ON CONVERSION........................................................................... 22 Section 4.5. COMPANY TO PROVIDE STOCK...................................................................... 22

i Section 4.6. ADJUSTMENT OF CONVERSION PRICE................................................................ 22 Section 4.7. NO ADJUSTMENT................................................................................. 26 Section 4.8. ADJUSTMENT FOR TAX PURPOSES................................................................... 27 Section 4.9. NOTICE OF ADJUSTMENT.......................................................................... 27 Section 4.10. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON CONVERSION PRIVILEGE............. 27 Section 4.11. TRUSTEE'S DISCLAIMER.......................................................................... 28 Section 4.12. VOLUNTARY REDUCTION........................................................................... 28 ARTICLE 5 SUBORDINATION Section 5.1. SECURITIES SUBORDINATED TO SENIOR DEBT........................................................ 29 Section 5.2. NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES.................................................. 29 Section 5.3. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC................................................ 30 Section 5.4. PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION..................................................... 31 Section 5.5. SUBROGATION................................................................................... 31 Section 5.6. OBLIGATIONS OF THE COMPANY UNCONDITIONAL...................................................... 31 Section 5.7. NOTICE TO TRUSTEE............................................................................. 31 Section 5.8. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT................................ 32 Section 5.9. TRUSTEE'S RELATION TO SENIOR DEBT OR GUARANTOR SENIOR DEBT.................................... 32 Section 5.10. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE COMPANY OR A GUARANTOR OR HOLDERS OF SENIOR DEBT.................................................................... 33 Section 5.11. CERTAIN CONVERSIONS NOT DEEMED PAYMENT........................................................ 33 Section 5.12. HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF SECURITIES........................... 33 Section 5.13. THIS ARTICLE 5 NOT TO PREVENT EVENTS OF DEFAULT............................................... 34 Section 5.14. TRUSTEE'S COMPENSATION NOT PREJUDICED......................................................... 34 ARTICLE 6 COVENANTS Section 6.1. PAYMENT OF SECURITIES......................................................................... 34 Section 6.2. SEC REPORTS................................................................................... 35 Section 6.3. COMPLIANCE CERTIFICATES....................................................................... 35 Section 6.4. FURTHER INSTRUMENTS AND ACTS.................................................................. 35 Section 6.5. MAINTENANCE OF CORPORATE EXISTENCE............................................................ 35 Section 6.6. RULE 144A INFORMATION REQUIREMENT............................................................. 35 Section 6.7. STAY, EXTENSION AND USURY LAWS................................................................ 36 Section 6.8. PAYMENT OF ADDITIONAL INTEREST................................................................ 36 ii ARTICLE 7 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 7.1. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.......................................... 36 Section 7.2. SUCCESSOR SUBSTITUTED......................................................................... 37 Section 7.3. ADDITIONAL CONDITIONS UPON REINCORPORATING, MERGING OR CONSOLIDATING INTO ANOTHER COUNTRY..... 37 ARTICLE 8 DEFAULT AND REMEDIES Section 8.1. EVENTS OF DEFAULT............................................................................. 38 Section 8.2. ACCELERATION.................................................................................. 40 Section 8.3. OTHER REMEDIES................................................................................ 40 Section 8.4. WAIVER OF DEFAULTS AND EVENTS OF DEFAULT...................................................... 40 Section 8.5. CONTROL BY MAJORITY........................................................................... 40 Section 8.6. LIMITATIONS ON SUITS.......................................................................... 41 Section 8.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO CONVERT........................................... 41 Section 8.8. COLLECTION SUIT BY TRUSTEE.................................................................... 41 Section 8.9. TRUSTEE MAY FILE PROOFS OF CLAIM.............................................................. 42 Section 8.10. PRIORITIES.................................................................................... 42 Section 8.11. UNDERTAKING FOR COSTS......................................................................... 42 ARTICLE 9 TRUSTEE Section 9.1. DUTIES OF TRUSTEE............................................................................. 43 Section 9.2. RIGHTS OF TRUSTEE............................................................................. 44 Section 9.3. INDIVIDUAL RIGHTS OF TRUSTEE.................................................................. 45 Section 9.4. TRUSTEE'S DISCLAIMER.......................................................................... 45 Section 9.5. NOTICE OF DEFAULTS............................................................................ 45 Section 9.6. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.................................................... 45 Section 9.7. COMPENSATION AND INDEMNITY.................................................................... 46 Section 9.8. REPLACEMENT OF TRUSTEE........................................................................ 46 Section 9.9. SUCCESSOR TRUSTEE BY MERGER, ETC.............................................................. 47 Section 9.10. ELIGIBILITY; DISQUALIFICATION................................................................. 47 Section 9.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY............................................. 47 iii ARTICLE 10 SATISFACTION AND DISCHARGE OF INDENTURE Section 10.1. SATISFACTION AND DISCHARGE OF INDENTURE....................................................... 48 Section 10.2. APPLICATION OF TRUST MONEY.................................................................... 48 Section 10.3. REPAYMENT TO COMPANY.......................................................................... 49 Section 10.4. REINSTATEMENT................................................................................. 49 ARTICLE 11 AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 11.1. WITHOUT CONSENT OF HOLDERS.................................................................... 49 Section 11.2. WITH CONSENT OF HOLDERS....................................................................... 50 Section 11.3. COMPLIANCE WITH TRUST INDENTURE ACT........................................................... 51 Section 11.4. REVOCATION AND EFFECT OF CONSENTS............................................................. 51 Section 11.5. NOTATION ON OR EXCHANGE OF SECURITIES......................................................... 51 Section 11.6. TRUSTEE TO SIGN AMENDMENTS, ETC............................................................... 51 Section 11.7. EFFECT OF SUPPLEMENTAL INDENTURES............................................................. 52 ARTICLE 12 MISCELLANEOUS Section 12.1. TRUST INDENTURE ACT CONTROLS.................................................................. 52 Section 12.2. NOTICES....................................................................................... 52 Section 12.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.................................................. 53 Section 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT............................................ 53 Section 12.5. RECORD DATE FOR VOTE OR CONSENT OF SECURITYHOLDERS............................................ 54 Section 12.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR AND CONVERSION AGENT................................ 54 Section 12.7. LEGAL HOLIDAYS................................................................................ 54 Section 12.8. GOVERNING LAW................................................................................. 54 Section 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS................................................. 55 Section 12.10. NO RECOURSE AGAINST OTHERS.................................................................... 55 Section 12.11. SUCCESSORS.................................................................................... 55 Section 12.12. MULTIPLE COUNTERPARTS......................................................................... 55 Section 12.13. SEPARABILITY.................................................................................. 55 Section 12.14. TABLE OF CONTENTS, HEADINGS, ETC.............................................................. 55 Section 12.15. BERMUDA BRANCH; FULL RECOURSE OBLIGATIONS..................................................... 55 Section 12.16. CONSENT TO JURISDICTION AND SERVICE........................................................... 55 iv CROSS-REFERENCE TABLE*

TIA INDENTURE SECTION SECTION - ------- ---------- Section 310 (a)(1).................................................................... 9.10 (a)(2).................................................................... 9.10 (a)(3).................................................................... N.A.** (a)(4).................................................................... N.A. (a)(5).................................................................... 9.10 (b)....................................................................... 9.8; 9.10 (c)....................................................................... N.A. Section 311 (a)....................................................................... 9.11 (b)....................................................................... 9.11 (c)....................................................................... N.A. Section 312 (a)....................................................................... 2.5 (b)....................................................................... 12.3 (c)....................................................................... 12.3 Section 313 (a)....................................................................... 9.6 (b)(1).................................................................... N.A. (b)(2).................................................................... 9.6 (c)....................................................................... 9.6; 12.2 (d)....................................................................... 9.6 Section 314 (a)....................................................................... 6.2; 6.4; 12.2 (b)....................................................................... N.A. (c)(1).................................................................... 12.4(a) (c)(2).................................................................... 12.4(a) (c)(3).................................................................... N.A. (d)....................................................................... N.A. (e)....................................................................... 12.4(b) (f)....................................................................... N.A. Section 315 (a)....................................................................... 9.1(b) (b)....................................................................... 9.5; 12.2 (c)....................................................................... 9.1(a) (d)....................................................................... 9.1(c) (e)....................................................................... 8.11 Section 316 (a)(last sentence)........................................................ 2.9 (a)(1)(A)................................................................. 8.5 (a)(1)(B)................................................................. 8.4 (a)(2).................................................................... N.A. (b)....................................................................... 8.7 (c)....................................................................... 12.5 Section 317 (a)(1).................................................................... 8.8 (a)(2).................................................................... 8.9 (b)....................................................................... 2.4

- ----------------- * This Cross-Reference Table shall not, for any purpose, be deemed a part of this Indenture. ** N.A. means Not Applicable. THIS INDENTURE dated as of August 5, 2003 is between Flextronics International Ltd., a Singapore corporation (the "Company"), and J.P. Morgan Trust Company, National Association, a national banking association organized and existing under the laws of the United States, as Trustee (the "Trustee"). In consideration of the premises and the purchase of the Securities by the Holders thereof, both parties agree as follows for the benefit of the other and for the equal and ratable benefit of the Holders of the Company's 1% Convertible Subordinated Notes Due August 1, 2010. ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1. DEFINITIONS. "Additional Interest" has the meaning specified in Section 5 of the Registration Rights Agreement. All references herein to interest accrued or payable as of any date shall include any Additional Interest accrued or payable as of such date as provided in the Registration Rights Agreement. "Affiliate" means, with respect to any specified person, any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, "control" when used with respect to any person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent" means any Registrar, Paying Agent or Conversion Agent. "Applicable Procedures" means, with respect to any transfer or exchange of beneficial ownership interests in a Global Security, the rules and procedures of the Depositary, in each case to the extent applicable to such transfer or exchange. "Board of Directors" means either the board of directors of the Company or any committee of the Board of Directors authorized to act for it with respect to this Indenture. "Business Day" means each day that is not a Legal Holiday. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" or "capital stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, but excluding any debt securities convertible into such equity. "Cash" or "cash" means such coin or currency of the United States as at any time of payment is legal tender for the payment of public and private debts. "Cash Equivalents" means (i) United States dollars, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than six months from the date of acquisition, (iii) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months and overnight bank deposits, in each case with any lender party to the Credit Facility or with any domestic commercial bank having capital and surplus in excess of $500 million and a Keefe Bank Watch Rating of "B" or better, (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above and (v) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each case maturing within six months after the date of acquisition. "Cash Settlement Averaging Period" means the five (5) Trading Day period beginning on the first Trading Day after the Conversion Retraction Period, provided that with respect to determining amounts payable in lieu of fractional shares pursuant to Section 4.3, if there is no Cash Settlement or Combined Settlement, Cash Settlement Averaging Period means the five (5) Trading Day period following the Conversion Date. "Certificated Security" means a Security that is in substantially the form attached hereto as Exhibit A and that does not include the information or the schedule called for by footnotes 1, 3 and 4 thereof. "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act); (ii) the adoption by the Company of a plan relating to the liquidation, judicial management or dissolution of the Company; (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above) becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the Voting Stock of the Company (measured by voting power rather than number of shares); or (iv) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors. "Common Stock" means the ordinary shares of the Company, S$0.01 par value per share, as it exists on the date of this Indenture and any shares of any class or classes of capital stock of the Company resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which are not subject to redemption by the Company; provided, however, that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable on conversion of Securities shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. "Company" means the party named as such in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Company. "Continuing Director" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the date of this Indenture or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election and who voted with respect to such nomination or election; provided that a majority of the members of the Board voting with respect thereto shall at the time have been Continuing Directors. 2 "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 12.2 hereof or such other address as to which the Trustee may give notice to the Company. "Credit Facility" means, collectively, the Revolving Credit and Term Loan Agreement dated as of March 8, 2002, as amended by Amendment No. 1 thereto dated March 7, 2003, by and among the Company, certain agents and certain lending institutions party thereto and the Revolving Credit and Term Loan Agreement dated as of March 8, 2002, as amended by Amendment No. 1 thereto dated March 7, 2003, by and among Flextronics International U.S.A. Inc., certain agents and certain lending institutions party thereto and in each case, as amended, modified, renewed, restated, refunded, replaced or refinanced from time to time. "Debt" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or bankers' acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, as well as all Debt of others secured by a Lien on any asset of such Person (whether or not such Debt is assumed by such Person) and, to the extent not otherwise included, the Guarantee by such Person of any Debt of any other Person. "Default" or "default" means, when used with respect to the Securities, any event which is or, after notice or passage of time or both, would be an Event of Default. "Designated Senior Debt" means (i) any Debt under the Credit Facility (and any guarantees thereof) and (ii) any other Senior Debt otherwise designated by the Company (which designation shall have been approved in writing by the Representative under the Credit Facility, and such approval shall have been delivered to the Trustee, so long as (A) the Credit Facility is in effect and (B) the Company shall not then be a party to a credit facility or similar arrangement (other than the Credit Facility) that provides for loans in an aggregate principal amount that is greater than the aggregate principal amount of loans to the Company that may be made under the Credit Facility and that are not entered into in violation of the Credit Facility) and the Representative thereunder as "Designated Senior Debt" and, in the case of the designation by the Company, certified in an Officers' Certificate delivered to the Trustee; provided that not less than $5.0 million aggregate principal amount is outstanding under Designated Senior Debt at the date of the designation and at the date of determination. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time. "Final Maturity Date" means August 1, 2010. "GAAP" means generally accepted accounting principles in the United States of America as in effect, including those set forth in (1) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (2) the statements and pronouncements of the Financial Accounting Standards Board, (3) such other statements by such other entity as approved by a significant segment of the accounting profession and (4) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in registration 3 statements filed under the Securities Act and periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. "Global Security" means a permanent Global Security that is in substantially the form attached hereto as Exhibit A and that includes the information and schedule called for by footnotes 1, 3 and 4 thereof and which is deposited with the Depositary or its custodian and registered in the name of the Depositary or its nominee. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Debt. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) currency exchange or interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. "Holder" or "Securityholder" means the person in whose name a Security is registered on the Primary Registrar's books. "Indenture" means this Indenture as amended or supplemented from time to time pursuant to the terms of this Indenture. "Initial Purchasers" means the parties listed on Schedule A attached hereto. "Interest Payment Dates" means the dates listed on the Notes as the dates on which interest is payable on the Notes. "Liens" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Debt. "Officer" means the Chairman or any Co-Chairman of the Board, any Vice Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Controller, the Secretary or any Assistant Controller or Assistant Secretary of the Company. "Officers' Certificate" means a certificate signed by two Officers; provided, however, that for purposes of Sections 4.11 and 6.3, "Officers' Certificate" means a certificate signed by the principal executive officer, principal financial officer or principal accounting officer of the Company and by one other Officer. "Opinion of Counsel" means a written opinion from legal counsel. The counsel may be an employee of or counsel to the Company or the Trustee. 4 "Permitted Junior Securities" means Equity Interests in the Company or debt securities that are subordinated to all Senior Debt (and any debt securities issued in exchange for Senior Debt) to substantially the same extent as, or to a greater extent than, the Notes are subordinated to Senior Debt pursuant to this Indenture. "Person" or "person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Principal" or "principal" of a debt security, including the Securities, means the principal of the security plus, when appropriate, the premium, if any, on the security. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of August 5, 2003, between the Company and the Initial Purchasers. "Regular Record Dates" means the dates listed in the Notes as the regular record dates to determine which holders are entitled to receive interest on the immediately following Interest Payment Date. "Regulation S" means Regulation S under the Securities Act or any successor to such Regulation. "Representative" means the (a) indenture trustee or other trustee, agent or representative for any Senior Debt or (b) with respect to any Senior Debt that does not have any such trustee, agent or other representative, (i) in the case of such Senior Debt issued pursuant to an agreement providing for voting arrangements as among the holders or owners of such Senior Debt, any holder or owner of such Senior Debt acting with the consent of the required persons necessary to bind such holders or owners of such Senior Debt and (ii) in the case of all other such Senior Debt, the holder or owner of such Senior Debt. "Responsible Officer," when used with respect to the Trustee, means any officer within the Corporate Trust Office of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Global Security" means a Global Security that is a Restricted Security. "Restricted Security" means a Security required to bear the restricted legend set forth in the form of Security set forth in Exhibit A of this Indenture. "Rule 144" means Rule 144 under the Securities Act or any successor to such Rule. "Rule 144A" means Rule 144A under the Securities Act or any successor to such Rule. "SEC" means the Securities and Exchange Commission. "Securities" or "Notes" means the 1% Convertible Subordinated Notes due August 1, 2010 or any of them (each, a "Security"), as amended or supplemented from time to time, that are issued under this Indenture. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time. 5 "Securities Custodian" means the Trustee, as custodian with respect to the Securities in global form, or any successor thereto. "Senior Debt" means (i) all Debt of the Company outstanding under the Credit Facility and all Hedging Obligations with respect thereto, (ii) any other Debt incurred by the Company, unless the instrument under which such Debt is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Securities, and (iii) all Obligations with respect to the foregoing. Notwithstanding anything to the contrary in the foregoing, Senior Debt will not include (w) any liability for federal, state, local or other taxes owed or owing by the Company, (x) any Debt of the Company to any of its Subsidiaries or other Affiliates, (y) any trade payables or (z) the Company's 9 7/8% Senior Subordinated Notes due 2010, 9 3/4% Senior Subordinated Notes due 2010 and Convertible Junior Subordinated Notes due 2008. "Significant Subsidiary" means, in respect of any Person, a Subsidiary of such Person that would constitute a "significant subsidiary" as such term is defined under Rule 1-02 of Regulation S-X under the Securities Act and the Exchange Act. "Subsidiary" means, in respect of any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person. "TIA" means the Trust Indenture Act of 1939, as amended, and the rules and regulations thereunder as in effect on the date of this Indenture, except as provided in Section 11.3, and except to the extent any amendment to the Trust Indenture Act expressly provides for application of the Trust Indenture Act as in effect on another date. "Trading Day" means a day during which trading in securities generally occurs on the Nasdaq National Market (or, if the Common Stock is not quoted on the Nasdaq National Market, on the principal market on which the Common Stock is then traded), other than a day on which a material suspension of or limitation on trading is imposed that affects either the Nasdaq National Market (or, if applicable, such other market) in its entirety or only the shares of Common Stock (by reason of movements in price exceeding limits permitted by the relevant market on which the shares are traded or otherwise) or on which the Nasdaq National Market (or, if applicable, such other market) cannot clear the transfer of shares due to an event beyond the Company's control. "Trustee" means the party named as such in the first paragraph of this Indenture until a successor replaces it in accordance with the provisions of this Indenture, and thereafter means such successor. "Unrestricted Certificated Security" means a Certificated Security that is not a Restricted Security. "Unrestricted Global Security" means a Global Security that is not a Restricted Security. "Vice President" when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." 6 "Volume Weighted Average Price" means, with respect to one share of Common Stock on any Trading Day, the volume weighted average prices as displayed under the heading "Bloomberg VWAP" on Bloomberg Page FLEX+ AQR in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on that Trading Day (or if such volume weighted average price is not available, the market value of one share of Common Stock on such Trading Day as the Company determines in good faith using a volume weighted method). "Voting Stock" of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. SECTION 1.2. OTHER DEFINITIONS.

TERM DEFINED IN SECTION - -------------------------------------------------------------------------------- ------------------ "Agent Members"................................................................. 2.1(b) "Bankruptcy Law"................................................................ 8.1 "Cash Distribution"............................................................. 4.6(d) "Change of Control Offer"....................................................... 3.2(a) "Change of Control Payment"..................................................... 3.2(a) "Change of Control Payment Date"................................................ 3.2(a) "Change of Control Purchase Notice"............................................. 3.2(a) "Company Order"................................................................. 2.2 "Conversion Agent".............................................................. 2.3 "Conversion Date"............................................................... 4.2(a) "Conversion Price".............................................................. 4.6 "Conversion Retraction Period".................................................. 4.2(c)(4) "Current Market Price".......................................................... 4.6(e) "Custodian"..................................................................... 8.1 "DTC"........................................................................... 2.1(a) "Depositary".................................................................... 2.1(a) "Determination Date"............................................................ 4.6(d)(1) "Events of Default"............................................................. 8.1 "Expiration Date"............................................................... 4.6(d)(2) "Expiration Time"............................................................... 4.6(d)(2) "Legal Holiday"................................................................. 12.7 "Legend" ....................................................................... 2.12(a) "Paying Agent".................................................................. 2.3 "Payment Blockage Notice"....................................................... 5.2(a) "Payment Blockage Period" ..................................................... 6.1 "Payment Default"............................................................... 8.1(5) "Primary Registrar"............................................................. 2.3 "Purchase Agreement"............................................................ 2.1 "Purchased Shares".............................................................. 4.6(c)(2) "QIB"........................................................................... 2.1 "Registrar"..................................................................... 2.3 "Rights Plan"................................................................... 4.6(c) "Share Settlement".............................................................. 4.2(b) "Subject Transaction"........................................................... 7.1 "Trigger Event" ................................................................ 4.6(c)

7 SECTION 1.3. TRUST INDENTURE ACT PROVISIONS. Whenever this Indenture refers to a provision of the TIA, that provision is incorporated by reference in and made a part of this Indenture. This Indenture shall also include those provisions of the TIA required to be included herein by the provisions of the Trust Indenture Reform Act of 1990. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Securities; "indenture security holder" means a Securityholder; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the indenture securities means the Company or any other obligor on the Securities. All other terms used in this Indenture that are defined in the TIA, defined in the TIA by reference to another statute or defined by any SEC rule and not otherwise defined herein have the meanings assigned to them therein. SECTION 1.4. RULES OF CONSTRUCTION. Unless the context otherwise requires: (A) a term has the meaning assigned to it; (B) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (C) words in the singular include the plural, and words in the plural include the singular; (D) provisions apply to successive events and transactions; (E) the term "merger" includes a statutory share exchange and the term "merged" has a correlative meaning; (F) the masculine gender includes the feminine and the neuter; (G) references to agreements and other instruments include subsequent amendments thereto; and (H) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. 8 ARTICLE 2 THE SECURITIES SECTION 2.1. FORM AND DATING. The Securities and the Trustee's certificate of authentication shall be substantially in the respective forms set forth in Exhibit A, which Exhibit is incorporated in and made part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage. The Company shall provide any such notations, legends or endorsements to the Trustee in writing. Each Security shall be dated the date of its authentication. The Securities are being offered and sold by the Company pursuant to a Purchase Agreement, dated July 31, 2003 (the "Purchase Agreement"), between the Company and the Initial Purchasers, in transactions exempt from, or not subject to, the registration requirements of the Securities Act. (a) Restricted Global Securities. All of the Securities are initially being offered and sold to qualified institutional buyers as defined in Rule 144A (collectively, "QIBs" or individually, each a "QIB") in reliance on Rule 144A under the Securities Act and to Non-U.S. Persons in offshore transactions pursuant to Regulation S and shall be issued initially in the form of one or more Restricted Global Securities, which shall be deposited on behalf of the purchasers of the Securities represented thereby with the Trustee, at its Corporate Trust Office, as custodian for the depositary, The Depository Trust Company ("DTC") (such depositary, or any successor thereto, being hereinafter referred to as the "Depositary"), and registered in the name of its nominee, Cede & Co., for the accounts of participants in the Depositary duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Restricted Global Securities may from time to time be increased or decreased by adjustments made on the records of the Securities Custodian as hereinafter provided, subject in each case to compliance with the Applicable Procedures. (b) Global Securities in General. Each Global Security shall represent such of the outstanding Securities as shall be specified therein and each shall provide that it shall represent the aggregate amount of outstanding Securities from time to time endorsed thereon and that the aggregate amount of outstanding Securities represented thereby may from time to time be reduced or increased, as appropriate, to reflect replacements, exchanges, purchases or conversions of such Securities. Any adjustment of the aggregate principal amount of a Global Security to reflect the amount of any increase or decrease in the amount of outstanding Securities represented thereby shall be made by the Trustee in accordance with instructions given by the Holder thereof as required by Section 2.12 hereof and shall be made on the records of the Trustee and the Depositary. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary or under the Global Security, and the Depositary (including, for this purpose, its nominee) may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and Holder of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall (A) prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or (B) impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Security. (c) Book Entry Provisions. The Company shall execute and the Trustee shall, in accordance with this Section 2.1(c), authenticate and deliver initially one or more Global Securities that (i) shall be 9 registered in the name of the Depositary or its nominee, (ii) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary's instructions and (iii) shall bear legends substantially to the following effect: "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO FLEXTRONICS INTERNATIONAL LTD. (THE "COMPANY") OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY." SECTION 2.2. EXECUTION AND AUTHENTICATION. An Officer shall sign the Securities for the Company by manual or facsimile signature. Typographic and other minor errors or defects in any such facsimile signature shall not affect the validity or enforceability of any Security which has been authenticated and delivered by the Trustee. If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee shall authenticate and make available for delivery Securities for original issue in the aggregate principal amount of up to $500,000,000 ($530,000,000 if the Initial Purchasers' option to purchase additional Securities is exercised in full) upon receipt of a written order or orders of the Company signed by two Officers of the Company (a "Company Order"). The Company Order shall specify the amount of Securities to be authenticated and the date on which each original issue of Securities is to be authenticated and shall provide that all such Securities will be represented by a Restricted Global Security. The aggregate principal amount of Securities outstanding at any time may not exceed $530,000,000 except as provided in Section 2.7. 10 The Trustee shall act as the initial authenticating agent. Thereafter, the Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities. An authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent shall have the same rights as an Agent to deal with the Company or an Affiliate of the Company. The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 principal amount and any integral multiple thereof and shall bear interest at the rate, calculated and paid, as provided in the form of security set forth in Exhibit A. SECTION 2.3. REGISTRAR, PAYING AGENT AND CONVERSION AGENT. The Company shall maintain one or more offices or agencies where Securities may be presented for registration of transfer or for exchange (each, a "Registrar"), one or more offices or agencies where Securities may be presented for payment (each, a "Paying Agent"), one or more offices or agencies where Securities may be presented for conversion (each, a "Conversion Agent") and one or more offices or agencies where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will at all times maintain a Paying Agent, Conversion Agent, Registrar and an office or agency where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served in the Borough of Manhattan, The City of New York. One of the Registrars (the "Primary Registrar") shall keep a register of the Securities and of their transfer and exchange. The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee of the name and address of any Agent not a party to this Indenture. If the Company fails to maintain a Registrar, Paying Agent, Conversion Agent or agent for service of notices and demands in any place required by this Indenture, or fails to give the foregoing notice, the Trustee shall act as such. The Company or any Affiliate of the Company may act as Paying Agent (except for the purposes of Section 6.1 and Article 10). The Company hereby initially designates the Trustee as Paying Agent, Registrar, Custodian and Conversion Agent, and each of the Corporate Trust Office of the Trustee and the office or agency of the Trustee in the Borough of Manhattan, The City of New York, one such office or agency of the Company for each of the aforesaid purposes. SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST. Prior to 11:00 a.m., New York City time, on each due date of the principal or interest (including Additional Interest, if any) on any Securities, the Company shall deposit with a Paying Agent a sum sufficient to pay such principal or interest (including Additional Interest, if any) so becoming due. Subject to Section 5.2, a Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money held by the Paying Agent for the payment of principal or interest (including Additional Interest, if any) on the Securities, and shall notify the Trustee of any default by the Company (or any other obligor on the Securities) in making any such payment. If the Company or an Affiliate of the Company acts as Paying Agent, it shall, before 11:00 a.m., New York City time, on each due date of the principal of or interest (including Additional Interest, if any) on any Securities, segregate the money and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee, and the Trustee may at any time during the continuance of any default, upon written request to a Paying Agent, require such Paying Agent to pay forthwith to the Trustee all sums so held in trust by 11 such Paying Agent. Upon doing so, the Paying Agent (other than the Company) shall have no further liability for the money. SECTION 2.5. SECURITYHOLDERS LIST. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Primary Registrar, the Company shall furnish to the Trustee on or before any Interest Payment Date, if any, and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders. SECTION 2.6. TRANSFER AND EXCHANGE. (a) Subject to compliance with any applicable additional requirements contained in Section 2.12, when a Security is presented to a Registrar with a request to register a transfer thereof or to exchange such Security for an equal principal amount of Securities of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested; provided, however, that every Security presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by an assignment form and, if applicable, a transfer certificate each in the form included in Exhibit A, and in form satisfactory to the Registrar duly executed by the Holder thereof or its attorney duly authorized in writing. To permit registration of transfers and exchanges, upon surrender of any Security for registration of transfer or exchange at an office or agency maintained pursuant to Section 2.3, the Company shall execute and the Trustee shall authenticate Securities of a like aggregate principal amount at the Registrar's request. Any exchange or transfer shall be without charge, except that the Company or the Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto, and provided that this sentence shall not apply to any exchange pursuant to Section 2.10, 2.12(a), 4.2(g) or 11.5. Neither the Company, any Registrar nor the Trustee shall be required to exchange or register a transfer of any Securities or portions thereof in respect of which a Change of Control Purchase Notice has been delivered and not withdrawn by the Holder thereof (except, in the case of the purchase of a Security in part, the portion thereof not to be purchased). All Securities issued upon any transfer or exchange of Securities shall be valid obligations of the Company, evidencing the same debt and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange. (b) Any Registrar appointed pursuant to Section 2.3 hereof shall provide to the Trustee such information as the Trustee may reasonably require in connection with the delivery by such Registrar of Securities upon transfer or exchange of Securities. (c) Each Holder of a Security agrees to indemnify the Company and the Trustee against any liability that may result from the transfer, exchange or assignment of such Holder's Security in violation of any provision of this Indenture and/or applicable United States federal or state securities law. The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Agent Members or other beneficial owners of interests in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when 12 expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. SECTION 2.7. REPLACEMENT SECURITIES. If any mutilated Security is surrendered to the Company, a Registrar or the Trustee, or the Company, a Registrar and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and there is delivered to the Company, the applicable Registrar and the Trustee such security or indemnity as will be required by them to save each of them harmless, then, in the absence of notice to the Company, such Registrar or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute, and upon its written request the Trustee shall authenticate and deliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, or is about to be purchased by the Company pursuant to Article 3, the Company in its discretion may, instead of issuing a new Security, pay or purchase such Security, as the case may be. Upon the issuance of any new Securities under this Section 2.7, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the reasonable fees and expenses of the Trustee or the Registrar) in connection therewith. Every new Security issued pursuant to this Section 2.7 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section 2.7 are (to the extent lawful) exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 2.8. OUTSTANDING SECURITIES. Securities outstanding at any time are all Securities authenticated by the Trustee, except for those canceled by it, those converted pursuant to Article 4, those delivered to it for cancellation or surrendered for transfer or exchange, those reductions in the interest in a Global Security effected by the Trustee hereunder and those described in this Section 2.8 as not outstanding. If a Security is replaced pursuant to Section 2.7, it ceases to be outstanding unless the Company receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. If a Paying Agent (other than the Company or an Affiliate of the Company) holds on a Change of Control Payment Date or the Final Maturity Date money sufficient to pay the principal of (including premium, if any) and interest (including Additional Interest, if any) on Securities (or portions thereof) payable on that date, then on and after such Change of Control Payment Date or the Final Maturity Date, as the case may be, such Securities (or portions thereof, as the case may be) shall cease to be outstanding and interest (including Additional Interest, if any) on them shall cease to accrue. 13 Subject to the restrictions contained in Section 2.9, a Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security. SECTION 2.9. TREASURY SECURITIES. In determining whether the Holders of the required principal amount of Securities have concurred in any notice, direction, waiver or consent, Securities owned by the Company or any other obligor on the Securities or by any Affiliate of the Company or of such other obligor shall be disregarded, except that, for purposes of determining whether the Trustee shall be protected in relying on any such notice, direction, waiver or consent, only Securities which a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to the Securities and that the pledgee is not the Company or any other obligor on the Securities or any Affiliate of the Company or of such other obligor. SECTION 2.10. TEMPORARY SECURITIES. Until definitive Securities are ready for delivery, the Company may prepare and execute, and, upon receipt of a Company Order, the Trustee shall authenticate and deliver, temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company with the consent of the Trustee considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate and deliver definitive Securities in exchange for temporary Securities. SECTION 2.11. CANCELLATION. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar, the Paying Agent and the Conversion Agent shall forward to the Trustee or its agent any Securities surrendered to them for transfer, exchange, payment or conversion. The Trustee and no one else shall cancel, in accordance with its standard procedures, all Securities surrendered for transfer, exchange, payment, conversion or cancellation and shall deliver the canceled Securities to the Company. All Securities which are purchased or otherwise acquired by the Company or any of its Subsidiaries prior to the Final Maturity Date shall be delivered to the Trustee for cancellation. The Securities so purchased while held by or on behalf of the Company or any of its Subsidiaries, shall not entitle the Holder thereof to convert or vote the Securities and shall be disregarded for voting purposes in connection with any notice, waiver, consent or direction requiring the vote or concurrence of the Holders. The Company may not hold or resell such Securities or issue any new Securities to replace any such Securities or any Securities that any Holder has converted pursuant to Article 4. SECTION 2.12. LEGEND; ADDITIONAL TRANSFER AND EXCHANGE REQUIREMENTS. (a) If Securities are issued upon the transfer, exchange or replacement of Securities subject to restrictions on transfer and bearing the legends set forth on the form of Securities attached hereto as Exhibit A (collectively, the "Legend"), or if a request is made to remove the Legend on a Security, the Securities so issued shall bear the Legend, or the Legend shall not be removed, as the case may be, unless there is delivered to the Company and the Registrar such satisfactory evidence, which shall include an Opinion of Counsel if requested by the Company or such Registrar, as may be reasonably required by the Company and the Registrar, that neither the Legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of Rule 144A, Rule 144 or Regulation S under the Securities Act or that such Securities are not "restricted" within the meaning of 14 Rule 144 under the Securities Act; provided that no such evidence need be supplied in connection with the sale of such Security pursuant to a registration statement that is effective at the time of such sale. Upon (i) provision of such satisfactory evidence if requested, or (ii) notification by the Company to the Trustee and Registrar of the sale of such Security pursuant to a registration statement that is effective at the time of such sale, the Trustee, at the written direction of the Company, shall authenticate and deliver a Security that does not bear the Legend. If the Legend is removed from the face of a Security and the Security is subsequently held by an Affiliate of the Company, the Legend shall be reinstated. (b) A Global Security may not be transferred, in whole or in part, to any Person other than the Depositary or a nominee or any successor thereof, and no such transfer to any such other Person may be registered; provided that the foregoing shall not prohibit any transfer of a Security that is issued in exchange for a Global Security but is not itself a Global Security. No transfer of a Security to any Person shall be effective under this Indenture or the Securities unless and until such Security has been registered in the name of such Person. Notwithstanding any other provisions of this Indenture or the Securities, transfers of a Global Security, in whole or in part, shall be made only in accordance with this Section 2.12. (c) Subject to the succeeding paragraph, every Security shall be subject to the restrictions on transfer provided in the Legend other than a Restricted Global Security. Whenever any Restricted Security other than a Restricted Global Security is presented or surrendered for registration of transfer or for exchange for a Security registered in a name other than that of the Holder, such Security must be accompanied by a certificate in substantially the form set forth in Exhibit A, dated the date of such surrender and signed by the Holder of such Security, as to compliance with such restrictions on transfer. The Registrar shall not be required to accept for such registration of transfer or exchange any Security not so accompanied by a properly completed certificate. (d) The restrictions imposed by the Legend upon the transferability of any Security shall cease and terminate when such Security has been sold pursuant to an effective registration statement under the Securities Act or transferred in compliance with Rule 144 under the Securities Act (or any successor provision thereto) or, if earlier, upon the expiration of the holding period applicable to sales thereof under Rule 144(k) under the Securities Act (or any successor provision). Any Security as to which such restrictions on transfer shall have expired in accordance with their terms or shall have terminated may, upon a surrender of such Security for exchange to the Registrar in accordance with the provisions of this Section 2.12 (accompanied, in the event that such restrictions on transfer have terminated by reason of a transfer in compliance with Rule 144 or any successor provision, by, if requested by the Company or the Registrar, an opinion of counsel reasonably acceptable to the Company and addressed to the Company in form acceptable to the Company, to the effect that the transfer of such Security has been made in compliance with Rule 144 or such successor provision), be exchanged for a new Security, of like tenor and aggregate principal amount, which shall not bear the restrictive Legend. The Company shall inform the Trustee of the effective date of any registration statement registering the Securities under the Securities Act. The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the aforementioned opinion of counsel or registration statement. (e) As used in the preceding two paragraphs of this Section 2.12, the term "transfer" encompasses any sale, pledge, transfer, hypothecation or other disposition of any Security. (f) The provisions of clauses (i), (ii), (iii), (iv) and (v) below shall apply only to Global Securities: 15 (i) Notwithstanding any other provisions of this Indenture or the Securities, a Global Security shall not be exchanged in whole or in part for a Security registered in the name of any Person other than the Depositary or one or more nominees thereof, provided that a Global Security may be exchanged for Securities registered in the names of any person designated by the Depositary in the event that (A) the Depositary has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or the Depositary has ceased to be a "clearing agency" registered under the Exchange Act, and a successor Depositary is not appointed by the Company within 90 days, (B) the Company has provided the Depositary with written notice that it has decided to discontinue use of the system of book-entry transfer through the Depositary or any successor Depositary or (C) an Event of Default has occurred and is continuing with respect to the Securities. Any Global Security exchanged pursuant to clauses (A) or (B) above shall be so exchanged in whole and not in part, and any Global Security exchanged pursuant to clause (C) above may be exchanged in whole or from time to time in part as directed by the Depositary. Any Security issued in exchange for a Global Security or any portion thereof shall be a Global Security; provided that any such Security so issued that is registered in the name of a Person other than the Depositary or a nominee thereof shall not be a Global Security. (ii) Securities issued in exchange for a Global Security or any portion thereof shall be issued in definitive, fully registered form, shall have an aggregate principal amount equal to that of such Global Security or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear the applicable legends provided for herein. Any Global Security to be exchanged in whole shall be surrendered by the Depositary to the Trustee, as Registrar. With regard to any Global Security to be exchanged in part, either such Global Security shall be so surrendered for exchange or, if the Trustee is acting as custodian for the Depositary or its nominee with respect to such Global Security, the principal amount thereof shall be reduced, by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the records of the Trustee. Upon any such surrender or adjustment, the Trustee shall authenticate and deliver the Security issuable on such exchange to or upon the order of the Depositary or an authorized representative thereof. (iii) Subject to the provisions of clause (v) below, the registered Holder may grant proxies and otherwise authorize any Person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities. (iv) In the event of the occurrence of any of the events specified in clause (i) above, the Company will promptly make available to the Trustee a reasonable supply of Certificated Securities in definitive, fully registered form. (v) Neither Agent Members nor any other Persons on whose behalf Agent Members may act shall have any rights under this Indenture with respect to any Global Security registered in the name of the Depositary or any nominee thereof, or under any such Global Security, and the Depositary or such nominee, as the case may be, may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and holder of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or such nominee, as the case may be, or impair, as between the Depositary, its Agent Members and any other Person on whose behalf an Agent Member may act, the operation of customary practices of such Persons governing the exercise of the rights of a holder of any Security. 16 SECTION 2.13. CUSIP NUMBERS. The Company in issuing the Securities may use one or more "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of purchase as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a purchase and that reliance may be placed only on the other identification numbers printed on the Securities, and any such purchase shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the "CUSIP" numbers. ARTICLE 3 REDEMPTION SECTION 3.1. NO REDEMPTION BY THE COMPANY. The Securities may not be redeemed by the Company prior to the Final Maturity Date. SECTION 3.2. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON CHANGE OF CONTROL. (a) Upon the occurrence of a Change of Control, each Holder of Securities will have the right to require the Company to repurchase all or any part (equal to $1,000 or integral multiples thereof) of such Holder's Securities pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest (including Additional Interest, if any) thereon, to the date of purchase (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company will mail a notice (the "Change of Control Purchase Notice") to each Holder of Securities describing the transaction or transactions that constitute the Change of Control and offering to repurchase Securities on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date the Change of Control Purchase Notice is mailed (the "Change of Control Payment Date"), pursuant to the procedures required by this Indenture and described in such notice. (b) The Company will comply with the requirements of Rule l4e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Securities as a result of a Change of Control. (c) On the Change of Control Payment Date, the Company will, to the extent lawful, (i) accept for payment all Securities or portions thereof properly tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Securities or portions thereof so tendered and (iii) deliver or cause to be delivered to the Trustee the Securities so accepted together with an Officers' Certificate stating the aggregate principal amount of Securities or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Securities so tendered the Change of Control Payment for such Securities, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Security equal in principal amount to any unpurchased portion of the Securities surrendered, if any; provided that each such new Security will be in a principal amount of $1,000 or integral multiples thereof. 17 Prior to complying with the provisions of this Section 3.2, but in any event within 90 days following a Change of Control, the Company will either repay in full in cash all outstanding Senior Debt or obtain the requisite consents, if any, under all agreements governing outstanding Senior Debt to permit the repurchase of Securities required by this Section 3.2. The Company shall notify the Trustee in writing upon satisfaction of the foregoing condition or the failure to satisfy the condition prior to the Change of Control Payment Date. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Change of Control provisions described above will be applicable whether or not any other provisions of this Indenture are applicable. (d) The Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Securities validly tendered and not withdrawn under such Change of Control Offer. Notwithstanding anything to the contrary set forth in this Section 3.2, a Change of Control will not be deemed to have occurred if either: (1) the closing sale price of the Common Stock for any five Trading Days during the ten Trading Days immediately preceding the Change of Control is at least equal to 105% of the Conversion Price in effect on such Trading Day; or (2) in the case of a merger or consolidation, all of the consideration (excluding cash payments for fractional shares and cash payments pursuant to dissenters' appraisal rights) in the merger or consolidation constituting the Change of Control consists of common stock, ordinary shares or other certificates representing common equity securities traded on a United States national securities exchange or quoted on the Nasdaq National Market (or which will be so traded or quoted when issued or exchanged in connection with such Change of Control) and as a result of such transaction or transactions the Securities become convertible solely into such common stock, ordinary shares or other certificates representing common equity securities. (e) Holders will be entitled to withdraw their election, in whole or in part, if the Paying Agent (which may not for purposes of this Section 3.2, notwithstanding anything in this Indenture to the contrary, be the Company or any Affiliate of the Company) receives, up to the close of business on the Business Day immediately preceding the Change of Control Payment Date, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Securities the Holder is withdrawing and a statement that such Holder is withdrawing its election to have such principal amount of Securities purchased. 18 ARTICLE 4 CONVERSION SECTION 4.1. CONVERSION PRIVILEGE. (a) Subject to the further provisions of this Article 4 and paragraph 6 of the Securities, a Holder of a Security may convert the principal amount of such Security (or any portion thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof) into Common Stock at any time prior to the close of business on the Final Maturity Date, at the Conversion Price then in effect. The initial Conversion Price is set forth in paragraph 6 of the Securities and is subject to adjustment as provided in this Article 4. (b) If a Security is submitted or presented for purchase pursuant to a Change of Control Purchase Notice in accordance with Article 3, such conversion right shall terminate at the close of business on the Business Day immediately preceding the Change of Control Payment Date for such Security or such earlier date as the Holder presents such Security for purchase (unless the Holder withdraws its election pursuant to Section 4.1(e)). (c) If the Company elects Share Settlement the number of shares of Common Stock issuable upon conversion of a Security shall be determined by dividing the aggregate principal amount of the Security or portion thereof surrendered for conversion by the Conversion Price in effect on the Conversion Date. (d) Provisions of this Indenture that apply to conversion of all of a Security also apply to conversion of a portion of a Security. (e) A Security in respect of which a Holder has elected to have its Securities repurchased pursuant to Section 3.2(a) exercising the option of such Holder to require the Company to purchase such Security may be converted only if such election is withdrawn by a written notice of withdrawal delivered to the Paying Agent prior to the close of business on the Business Day immediately preceding the Change of Control Payment Date. (f) A Holder of Securities is not entitled to any rights of a holder of Common Stock until such Holder has converted its Securities to Common Stock, and only to the extent such Securities are deemed to have been converted into Common Stock pursuant to this Article 4. SECTION 4.2. CONVERSION PROCEDURE. (a) To convert a Security, a Holder must (i) complete and manually sign the conversion notice on the back of the Security and deliver such notice to the Conversion Agent, (ii) surrender the Security to the Conversion Agent, (iii) furnish appropriate endorsements and transfer documents if required by a Registrar or the Conversion Agent, and (iv) pay any transfer or similar tax, if required. The date on which the Holder satisfies all of those requirements is the "Conversion Date." (b) As soon as practicable after the Conversion Date, and subject to paragraph (c), the Company shall satisfy all of its obligations ("Conversion Obligations") upon conversion of the Securities by delivering to the Holder, at the Company's option, either shares of Common Stock, cash, or a combination of cash and shares of Common Stock, in the following manner: 19 (1) If the Company elects to satisfy the entire Conversion Obligation in shares of Common Stock ("Share Settlement"), then the Company will deliver to the Holder shares of Common Stock equal to the quotient of (A) the aggregate principal amount of Securities to be converted by the Holder divided by (B) the Conversion Price in effect on the Conversion Date; (2) If the Company elects to satisfy the entire Conversion Obligation in cash ("Cash Settlement"), then the Company will deliver to the Holder cash in an amount equal to the product of (A) a number equal to the aggregate principal amount of Securities to be converted by such Holder divided by the Conversion Price in effect on the Conversion Date, and (B) the arithmetic mean of the Volume Weighted Average Prices of the Common Stock on each Trading Day during the Cash Settlement Averaging Period; or (3) If the Company elects to satisfy a portion of the Conversion Obligation in cash (the "Partial Cash Amount") and a portion in shares of Common Stock (together with the Partial Cash Amount, a "Combined Settlement"), then the Company will deliver to the Holder such Partial Cash Amount plus a number of shares of Common Stock equal to the quotient of (A) the amount of the Cash Settlement as set forth in clause (2) above minus such Partial Cash Amount divided by (B) the arithmetic mean of the Volume Weighted Average Prices of the Common Stock on each Trading Day during the applicable Cash Settlement Averaging Period. (c) Upon receipt of the conversion notice from a Holder by the Company or the Conversion Agent: (1) If such notice is received by the Conversion Agent, the Conversion Agent will promptly notify the Company. (2) If the Company elects to satisfy the Conversion Obligation by Share Settlement, then settlement in Common Stock will be made on or prior to the fifth (5th) Trading Day following the receipt of such conversion notice by the Company. (3) If the Company elects to satisfy the Conversion Obligation by Cash Settlement or Combined Settlement, then the Company will notify the Trustee in writing, who shall promptly notify the Holder, of the dollar amount to be satisfied in cash at any time on or before the date that is two Business Days following receipt of the conversion notice (the "Settlement Notice Period"). Share Settlement will apply automatically if the Company does not notify the Trustee during the Settlement Notice Period that the Company has chosen another settlement method. (4) If the Company timely elects Cash Settlement or Combined Settlement, then the Holder may retract the conversion notice at any time during the two (2) Business Day period beginning on the day after the Settlement Notice Period (the "Conversion Retraction Period") by written notice to the Trustee. The Holder cannot retract the conversion notice (and the conversion notice therefore will be irrevocable) if Share Settlement applies. If the Holder has not retracted the conversion notice during the Conversion Retraction Period, then Cash Settlement 20 or Combined Settlement will occur on the first Trading Day following the Cash Settlement Averaging Period. If the Holder timely retracts the conversion notice, then such Holder shall be deemed to be a Holder of Securities as if a conversion notice had never been delivered by such Holder for such Securities. (d) If an Event of Default (other than an Event of Default in a cash payment upon conversion of the Securities) has occurred and is continuing, the Company may not pay cash upon conversion of any Security or portion of a Security (other than cash for fractional shares). (e) The person in whose name the Common Stock certificate is registered shall be deemed to be a shareholder of record on the Conversion Date; provided, however, that no surrender of a Security on any date when the share transfer books of the Company shall be closed shall be effective to constitute the person or persons entitled to receive the shares of Common Stock upon such conversion as the record holder or holders of such shares of Common Stock on such date, but such surrender shall be effective to constitute the person or persons entitled to receive such shares of Common Stock as the record holder or holders thereof for all purposes at the close of business on the next succeeding day on which such share transfer books are open; provided, further, that such conversion shall be at the Conversion Price in effect on the Conversion Date as if the share transfer books of the Company had not been closed. Upon conversion of a Security, such person shall no longer be a Holder of such Security but shall have the rights set froth in this Section 4.2 until the Company satisfies its Conversion Obligations. No payment or adjustment will be made for interest accrued on any Security (or portion thereof) converted (except as set forth in paragraph (f) below) or for dividends or distributions payable (except as set forth in Section 4.6) on shares of Common Stock issued upon conversion of a Security. (f) Securities surrendered for conversion (in whole or in part) during the period from the close of business on any Regular Record Date to the opening of business on the next succeeding Interest Payment Date, if any (excluding Securities or portions thereof presented for purchase upon a Change of Control on a Change of Control Payment Date during the period beginning at the close of business on a Regular Record Date and ending at the opening of business on the first Business Day after the next succeeding Interest Payment Date, if any, or if such Interest Payment Date, if any, is not a Business Day, the second such Business Day) shall also be accompanied by payment in funds acceptable to the Company of an amount equal to the interest (including Additional Interest, if any), payable on such Interest Payment Date on the principal amount of such Security then being converted, and such interest (including Additional Interest, if any), shall be payable to such registered Holder notwithstanding the conversion of such Security, subject, to the provisions of this Indenture relating to the payment of defaulted interest, if any, by the Company. Except as otherwise provided in this Section 4.2, no payment or adjustment will be made for accrued interest (including Additional Interest, if any), on a converted Security. If the Company defaults in the payment of interest payable on such Interest Payment Date, the Company shall promptly repay such funds to such Holder. Nothing in this Section 4.2shall affect the right of a Holder in whose name any Security is registered at the close of business on a Regular Record Date to receive the interest (including Additional Interest, if any), payable on such Security on the related Interest Payment Date, if any, in accordance with the terms of this Indenture, the Securities and the Registration Rights Agreement. If a Holder converts more than one Security at the same time, the number of shares of Common Stock issuable upon the conversion shall be based on the aggregate principal amount of Securities converted. (g) Anything herein to the contrary notwithstanding, in the case of Global Securities, conversion notices may be delivered and such Securities may be surrendered for conversion in accordance with the Applicable Procedures as in effect from time to time. 21 (h) Upon surrender of a Security that is converted in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder, a new Security equal in principal amount to the unconverted portion of the Security surrendered. SECTION 4.3. FRACTIONAL SHARES. The Company will not issue fractional shares of Common Stock upon conversion of Securities. In lieu thereof, the Company will pay an amount in cash for the fractional shares equal to the Volume Weighted Average Price of the Common Stock determined during the Cash Settlement Averaging Period multiplied by the fractional share and rounding the product to the nearest whole cent. SECTION 4.4. TAXES ON CONVERSION. If a Holder converts a Security, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon such conversion. However, the Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a name other than the Holder's name. The Conversion Agent may refuse to deliver the certificate representing the Common Stock being issued in a name other than the Holder's name until the Conversion Agent receives a sum sufficient to pay any tax which will be due because the shares are to be issued in a name other than the Holder's name. Nothing herein shall preclude any tax withholding required by law or regulation. SECTION 4.5. COMPANY TO PROVIDE STOCK. The Company shall, prior to issuance of any Securities hereunder, and from time to time as may be necessary, make available out of its authorized but unissued Common Stock, a sufficient number of shares of Common Stock to permit the conversion of all outstanding Securities into shares of Common Stock. All shares of Common Stock delivered upon conversion of the Securities shall be newly issued shares, shall be duly authorized, validly issued, fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim. The Company will endeavor promptly to comply with all federal, state and foreign securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Securities, if any, and will list or cause to have quoted such shares of Common Stock on each national securities exchange or on the Nasdaq National Market or other over-the-counter market or such other market on which the Common Stock is then listed or quoted; provided, however, that if rules of such automated quotation system or exchange permit the Company to defer the listing of such Common Stock until the first conversion of the Securities into Common Stock in accordance with the provisions of this Indenture, the Company covenants to list such Common Stock issuable upon conversion of the Securities in accordance with the requirements of such automated quotation system or exchange at such time. Any Common Stock issued upon conversion of a Security hereunder which at the time of conversion was a Restricted Security will also be a Restricted Security. SECTION 4.6. ADJUSTMENT OF CONVERSION PRICE. The conversion price as stated in paragraph 6 of the Securities (the "Conversion Price") shall be adjusted from time to time by the Company as follows: (a) In case the Company shall (i) pay a dividend on its Common Stock in shares of Common Stock, (ii) make a distribution on its Common Stock in shares of Common Stock, (iii) 22 subdivide its outstanding Common Stock into a greater number of shares, or (iv) combine its outstanding Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior thereto shall be adjusted so that the Holder of any Security thereafter surrendered for conversion shall be entitled to receive that number of shares of Common Stock which it would have owned had such Security been converted immediately prior to the happening of such event. An adjustment made pursuant to this subsection (a) shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of subdivision or combination. (b) In case the Company shall issue rights or warrants to all or substantially all holders of its Common Stock entitling them (for a period commencing no earlier than the record date described below and expiring not more than 60 days after such record date) to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock) at a price per share (or having a conversion price per share) less than the Current Market Price per share of Common Stock on the record date for the determination of stockholders entitled to receive such rights or warrants, the Conversion Price in effect immediately prior thereto shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to such record date by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on such record date plus the number of shares which the aggregate offering price of the total number of shares of Common Stock so offered (or the aggregate conversion price of the convertible securities so offered, which shall be determined by multiplying the number of shares of Common Stock issuable upon conversion of such convertible securities by the conversion price per share of Common Stock pursuant to the terms of such convertible securities) would purchase at the Current Market Price per share of Common Stock on such record date, and of which the denominator shall be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock offered (or into which the convertible securities so offered are convertible). Such adjustment shall be made successively whenever any such rights or warrants are issued, and shall become effective immediately after such record date. If at the end of the period during which such rights or warrants are exercisable not all rights or warrants shall have been exercised, the adjusted Conversion Price shall be immediately readjusted to what it would have been based upon the number of additional shares of Common Stock actually issued (or the number of shares of Common Stock issuable upon conversion of convertible securities actually issued). (c) In case the Company shall distribute to all or substantially all holders of its Common Stock any shares of capital stock of the Company (other than Common Stock), evidences of indebtedness or other non-cash assets (including securities of any person other than the Company but excluding (1) dividends or distributions paid exclusively in cash or (2) dividends or distributions referred to in subsection (a) of this Section 4.6), or shall distribute to all or substantially all holders of its Common Stock rights or warrants to subscribe for or purchase any of its securities (excluding those rights and warrants referred to in subsection (b) of this Section 4.6 and also excluding the distribution of rights to all holders of Common Stock pursuant to the adoption of a stockholders rights plan or the detachment of such rights under the terms of such stockholder rights plan), then in each such case the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the current Conversion Price by a fraction of which the numerator shall be the Current Market Price per share of the Common Stock on the record date mentioned below less the fair market value on such record date (as determined by the Board of Directors, whose determination shall be conclusive evidence of such fair market value and which shall be evidenced by an Officers' Certificate delivered to the Trustee) of the portion of the capital stock, evidences of indebtedness or other non-cash assets so distributed or of such rights or warrants applicable to one share of Common Stock (determined on the basis of 23 the number of shares of Common Stock outstanding on the record date), and of which the denominator shall be the Current Market Price per share of the Common Stock on such record date. Such adjustment shall be made successively whenever any such distribution is made and shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. In the event the then fair market value (as so determined) of the portion of the capital stock, evidences of indebtedness or other non-cash assets so distributed or of such rights or warrants applicable to one share of Common Stock is equal to or greater than the Current Market Price per share of the Common Stock on such record date, in lieu of the foregoing adjustment, adequate provision shall be made so that each holder of a Security shall have the right to receive upon conversion the amount of capital stock, evidences of indebtedness or other non-cash assets so distributed or of such rights or warrants such holder would have received had such holder converted each Security on such record date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such dividend or distribution had not been declared. If the Board of Directors determines the fair market value of any distribution for purposes of this Section 4.6(d) by reference to the actual or when issued trading market for any securities, it must in doing so consider the prices in such market over the same period used in computing the Current Market Price of the Common Stock. In the event that the Company implements a share rights plan ("Rights Plan"), upon conversion of the Securities into Common Stock, to the extent that any such Rights Plan is still in effect upon such conversion, the holders of Securities will receive, in addition to the Common Stock, the rights described therein (whether or not the rights have separated from the Common Stock at the time of conversion), subject to the limitations set forth in the Rights Plan. Any distribution of rights or warrants pursuant to a Rights Plan complying with the requirements set forth in the immediately preceding sentence of this paragraph shall not constitute a distribution of rights or warrants pursuant to this Section 4.6(c). Rights or warrants distributed by the Company to all holders of Common Stock entitling the holders thereof to subscribe for or purchase shares of the Company's Capital Stock (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events ("Trigger Event"): (i) are deemed to be transferred with such shares of Common Stock; (ii) are not exercisable; and (iii) are also issued in respect of future issuances of Common Stock, shall be deemed not to have been distributed for purposes of this Section 4.6 (and no adjustment to the Conversion Price under this Section 4.6 will be required) until the occurrence of the earliest Trigger Event, whereupon such rights and warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Price shall be made under this Section 4.6(c). If any such right or warrant, including any such existing rights or warrants distributed prior to the date of this Indenture, are subject to events, upon the occurrence of which such rights or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and record date with respect to new rights or warrants with such rights (and a termination or expiration of the existing rights or warrants without exercise by any of the holders thereof). In addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event or other event (of the type described in the preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Price under this Section 4.6 was made, (1) in the case of any such rights or warrants which shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Price shall be 24 readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder or holders of Common Stock with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase, and (2) in the case of such rights or warrants which shall have expired or been terminated without exercise by any holders thereof, the Conversion Price shall be readjusted as if such rights and warrants had not been issued. (d) (1) In case the Company shall, by dividend or otherwise, at any time distribute cash (a "Cash Distribution") to all or substantially all holders of its Common Stock, the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying such Conversion Price in effect immediately prior to the Business Day (the "Determination Date") immediately preceding the day on which such Cash Distribution is declared by the Company by a fraction of which the numerator shall be the Current Market Price per share of the Common Stock on the Determination Date less the amount of cash applicable to one share of Common Stock (determined on the basis of the number of shares of Common Stock outstanding on the Determination Date) and the denominator shall be such Current Market Price per share of the Common Stock on the Determination Date, such reduction to become effective immediately prior to the opening of business on the day following the date on which the Cash Distribution is paid. (2) In case any tender offer made by the Company or any of its Subsidiaries for Common Stock shall expire then, immediately prior to the opening of business on the day after the last day (the "Expiration Date") tenders could have been made pursuant to such tender offer (as it may be amended) (the last time at which such tenders could have been made on the Expiration Date is hereinafter sometimes called the "Expiration Time"), the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on the Expiration Date by a fraction of which the numerator shall be the product of the number of shares of Common Stock outstanding (including tendered shares but excluding any shares held in the treasury of the Company) at the Expiration Time multiplied by the Current Market Price per share of the Common Stock on the Trading Day next succeeding the Expiration Date and the denominator shall be the sum of (x) the aggregate consideration (determined as aforesaid) payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender offer) of all shares validly tendered and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares and excluding any shares held in the treasury of the Company) at the Expiration Time and the Current Market Price per share of Common Stock on the Trading Day next succeeding the Expiration Date, such reduction to become effective immediately prior to the opening of business on the day following the Expiration Date. In the event that the Company is obligated to purchase shares pursuant to any such tender offer, but the Company is permanently prevented by applicable law from effecting any or all such purchases or any or all such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would have been in effect based upon the number of shares actually purchased. If the application of this Section 4.6(d)(2) to any tender offer would result in an increase in the Conversion Price, no adjustment shall be made for such tender offer under this Section 4.6(d)(2). (3) For purposes of this Section 4.6(d), the term "tender offer" shall mean and include both tender offers and exchange offers, all references to "purchases" of shares in tender offers (and all similar references) shall mean and include both the purchase of shares in tender 25 offers and the acquisition of shares pursuant to exchange offers, and all references to "tendered shares" (and all similar references) shall mean and include shares tendered in both tender offers and exchange offers. (e) For the purpose of any computation under subsections (b), (c) and (d) of this Section 4.6, the current market price (the "Current Market Price") per share of Common Stock on any date shall be deemed to be the average of the Sales Prices for the 30 consecutive Trading Days commencing 45 Trading Days before (i) the Determination Date or the Expiration Date, as the case may be, with respect to distributions or tender offers under subsection (d) of this Section 4.6 or (ii) the record date with respect to distributions, issuances or other events requiring such computation under subsection (b), (c) or (d) of this Section 4.6. (f) In any case in which this Section 4.6 shall require that an adjustment be made following a record date or a Determination Date or Expiration Date, as the case may be, established for purposes of this Section 4.6, the Company may elect to defer (but only until five Business Days following the filing by the Company with the Trustee of the certificate described in Section 4.9) issuing to the Holder of any Security converted after such record date or Determination Date or Expiration Date the shares of Common Stock and other capital stock of the Company issuable upon such conversion over and above the shares of Common Stock and other capital stock of the Company issuable upon such conversion only on the basis of the Conversion Price prior to adjustment; and, in lieu of the shares the issuance of which is so deferred, the Company shall issue or cause its transfer agents to issue due bills or other appropriate evidence prepared by the Company of the right to receive such shares. If any distribution in respect of which an adjustment to the Conversion Price is required to be made as of the record date or Determination Date or Expiration Date therefor is not thereafter made or paid by the Company for any reason, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect if such record date had not been fixed or such effective date or Determination Date or Expiration Date had not occurred. SECTION 4.7. NO ADJUSTMENT. No adjustment in the Conversion Price shall be required: (1) unless the adjustment would require an increase or decrease of at least 1% in the Conversion Price as last adjusted; provided, however, that any adjustments which by reason of this Section 4.7 are not required to be made shall be carried forward and taken into account in any subsequent adjustment; (2) for issuances of Common Stock pursuant to a Company plan for reinvestment of dividends or interest or for a change in the par value or a change to no par value of the Common Stock; (3) if all of the Holders may participate in the transactions that would otherwise lead to an adjustment in the Conversion Price pursuant to Section 4.6; or (4) if such adjustment would reduce the conversion price of the Securities to less than the par value of the Company's ordinary shares, which is currently S$0.01 per share. To the extent that the Securities become convertible into the right to receive cash pursuant to Section 4.2 hereof, no adjustment need be made thereafter as to the cash. Interest will not accrue on the 26 cash. All calculations under this Article 4 shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. SECTION 4.8. ADJUSTMENT FOR TAX PURPOSES. The Company shall be entitled to make such reductions in the Conversion Price, in addition to those required by Section 4.6, as it in its discretion shall determine to be advisable in order that any stock dividends, subdivisions of shares, distributions of rights to purchase stock or securities or distributions of securities convertible into or exchangeable for stock hereafter made by the Company to its stockholders shall not be taxable, provided, however, that in no event may the Company reduce the Conversion Price to be less than the par value of a share of Common Stock. SECTION 4.9. NOTICE OF ADJUSTMENT. (a) Whenever the Conversion Price or conversion privilege is adjusted, the Company shall promptly mail to Securityholders a notice of the adjustment and file with the Trustee an Officers' Certificate briefly stating the facts requiring the adjustment and the manner of computing it. Unless and until the Trustee shall receive an Officers' Certificate setting forth an adjustment of the Conversion Price, the Trustee may assume without inquiry that the Conversion Price has not been adjusted and that the last Conversion Price of which it has knowledge remains in effect. (b) In the event that: (1) the Company takes any action which would require an adjustment in the Conversion Price; (2) the Company consolidates or merges with, or transfers all or substantially all of its property and assets to, another corporation and shareholders of the Company must approve the transaction; or (3) there is a dissolution, judicial management or liquidation of the Company, the Company shall mail to Holders and file with the Trustee a notice stating the proposed record or effective date, as the case may be. The Company shall mail the notice at least ten days before such date. Failure to mail such notice or any defect therein shall not affect the validity of any transaction referred to in clause (1), (2) or (3) of this Section 4.9. SECTION 4.10. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON CONVERSION PRIVILEGE. If any of the following shall occur, namely: (a) any reclassification or change of shares of Common Stock issuable upon conversion of the Securities (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination, or any other change for which an adjustment is provided in Section 4.6); (b) any consolidation or merger or combination to which the Company is a party other than a merger in which the Company is the continuing corporation and which does not result in any reclassification of, or change (other than in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination) in, outstanding shares of Common Stock; or (c) any sale or conveyance as an entirety or substantially as an entirety of the property and assets of the Company, directly or indirectly, to any person as a result of which holders of Common Stock shall be entitled to receive stock, securities or other 27 property or assets (including cash) with respect to or in exchange for Common Stock, then the Company, or such successor, purchasing or transferee corporation, as the case may be, shall execute and deliver to the Trustee a supplemental indenture providing that the Holder of each Security then outstanding shall have the right to convert such Security into the kind and amount of shares of stock and other securities and property (including cash) receivable upon such reclassification, change, combination, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock deliverable upon conversion of such Security immediately prior to such reclassification, change, combination, consolidation, merger, sale or conveyance. Such supplemental indenture shall provide for adjustments of the Conversion Price which shall be as nearly equivalent as may be practicable to the adjustments of the Conversion Price provided for in this Article 4. If, in the case of any such consolidation, merger, combination, sale or conveyance, the stock or other securities and property (including cash) receivable thereupon by a holder of Common Stock include shares of stock or other securities and property of a person other than the successor, purchasing or transferee corporation, as the case may be, in such consolidation, merger, combination, sale or conveyance, then such supplemental indenture shall also be executed by such other person and shall contain such additional provisions to protect the interests of the Holders of the Securities as the Board of Directors and the Trustee shall reasonably consider necessary by reason of the foregoing. The provisions of this Section 4.10 shall similarly apply to successive reclassifications, changes, combinations, consolidations, mergers, sales or conveyances. In the event the Company shall execute a supplemental indenture pursuant to this Section 4.10, the Company shall promptly file with the Trustee (x) an Officers' Certificate briefly stating the reasons therefor, the kind or amount of shares of stock or other securities or property (including cash) receivable by Holders of the Securities upon the conversion of their Securities after any such reclassification, change, combination, consolidation, merger, sale or conveyance, any adjustment to be made with respect thereto and that all conditions precedent have been complied with and (y) an Opinion of Counsel that all conditions precedent have been complied with, and shall promptly mail notice thereof to all Holders. SECTION 4.11. TRUSTEE'S DISCLAIMER. The Trustee shall have no duty to determine when an adjustment under this Article 4 should be made, how it should be made or what such adjustment should be, but may accept as conclusive evidence of that fact or the correctness of any such adjustment, and shall be protected in conclusively relying upon, an Officers' Certificate including the Officers' Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 4.9. The Trustee makes no representation as to the validity or value of any securities or assets issued upon conversion of Securities, and the Trustee shall not be responsible for the Company's failure to comply with any provisions of this Article 4. The Trustee shall not be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture executed pursuant to Section 4.10, but may accept as conclusive evidence of the correctness thereof, and shall be fully protected in conclusively relying upon, the Officers' Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 4.10. SECTION 4.12. VOLUNTARY REDUCTION. The Company from time to time may reduce the Conversion Price by any amount for any period of time if the period is at least 20 days and if the reduction is irrevocable during the period if our Board of Directors determines that such reduction would be in the best interest of the Company or to avoid or diminish income tax to holders of shares of our Common Stock in connection with a dividend or distribution of stock or similar event, and the Company provides 15 days prior notice of any reduction in 28 the Conversion Price; provided, however, that in no event may the Company reduce the Conversion Price to be less than the par value of a share of Common Stock. ARTICLE 5 SUBORDINATION SECTION 5.1. SECURITIES SUBORDINATED TO SENIOR DEBT. The Company covenants and agrees, and each Holder of the Securities, by its acceptance thereof, likewise covenants and agrees, that all Securities shall be issued subject to the provisions of this Article 5; and each Person holding any Security, whether upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees that the payment of all Obligations on the Securities by the Company shall, to the extent and in the manner herein set forth, be subordinated and junior in right of payment to the prior payment in full in cash or Cash Equivalents (or such payment shall be duly provided for to the satisfaction of the holders of the Senior Debt) of all Obligations on the Senior Debt; that the subordination is for the benefit of, and shall be enforceable directly by, the holders of Senior Debt, and that each holder of Senior Debt, whether now outstanding or hereafter created, incurred, assumed or guaranteed, shall be deemed to have acquired Senior Debt, in reliance upon the covenants and provisions contained in this Indenture. SECTION 5.2. NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES. (a) If (i) a default in the payment of the principal of, premium, if any, or interest (including Additional Interest, if any), on Designated Senior Debt occurs and is continuing beyond any applicable period of grace or (ii) any other default occurs and is continuing with respect to Designated Senior Debt that permits holders of the Designated Senior Debt to which such default relates to accelerate its maturity and, the Trustee receives a written notice of such default (a "Payment Blockage Notice"), in the case of clause (i) from the Company and in the case of clause (ii) from the holders of any Designated Senior Debt then, the Company may not make any payment upon or in respect of the Securities (except in Permitted Junior Securities or from the trust described in Article 10). Payments on the Securities may and shall be resumed (x) in the case of a payment default, upon the date on which such default is cured or waived and (y) in case of a nonpayment default, the earlier of (a) the date on which such nonpayment default is cured or waived, (b) 179 days after the date on which the applicable Payment Blockage Notice is received by the Trustee, (c) the date such Designated Senior Debt shall have been discharged or paid in full in cash or (d) the date such Payment Blockage Notice shall have been terminated by written notice to the Company or the Trustee from the holders of Designated Senior Debt initiating such Payment Blockage Notice (such period from the date of the Payment Blockage Notice until the date payments shall be resumed pursuant to (a), (b), (c) or (d), a "Payment Blockage Period"). Thereafter, in the case of clauses (a), (b), (c) and (d), the Company shall resume making any and all required payments in respect of the Securities, including any payments not made to the Holders of the Securities during the Payment Blockage Period due to the foregoing prohibitions, unless a default described in clause (i) occurs and is continuing. No new period of payment blockage may be commenced unless and until 360 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 90 days. 29 The Trustee must provide the holders of Designated Senior Debt at least 10 days' prior written notice of any acceleration of the maturity of the Securities. (b) In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee or any Holder when such payment is prohibited by Section 5.2(a), such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Debt (pro rata to such holders on the basis of the respective amount of Senior Debt held by such holders) as their respective interests may appear. The Trustee shall be entitled to conclusively rely on information regarding amounts then due and owing on the Senior Debt, if any, received from the holders of Senior Debt (or their Representatives), or, if such information is not received from such holders or their Representatives, from the Company and only amounts included in the information provided to the Trustee shall be paid to the holders of Senior Debt. The Company shall keep complete and accurate records of the names, addresses and amounts owed to all holders of Senior Debt and Designated Senior Debt and their Representatives, if any and shall produce such records to the Trustee upon request and the Trustee shall be absolutely protected in relying on such records in paying over or delivering moneys or providing notice pursuant to this Article 5. Nothing contained in this Article 5 shall limit or compromise the right of the Trustee or the Holders to take any action to accelerate the maturity of the Securities pursuant to Section 8.2 or to pursue any rights or remedies hereunder or otherwise; provided, however, that all Senior Debt thereafter due or declared to be due shall first be paid in full in cash or Cash Equivalents before the Holders are entitled to receive any payment of any kind or character with respect to Obligations on the Securities. SECTION 5.3. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. (a) Upon any distribution to creditors of the Company in a total or partial liquidation, winding-up, reorganization, judicial management or dissolution of the Company or in a voluntary or involuntary bankruptcy, reorganization, insolvency, receivership, judicial management or similar proceeding relating to the Company or its property, an assignment for the benefit of creditors or any marshalling of the Company's assets and liabilities, the holders of Senior Debt will be entitled to receive payment in full in cash of all Obligations due in respect of such Senior Debt (including interest (and any Additional Interest, if any) after the commencement of any such proceeding at the rate specified in the applicable Senior Debt) before the Holders of the Securities will be entitled to receive any payment with respect to the Securities, and until all Obligations with respect to Senior Debt are paid in full in cash, any distribution to which the Holders of the Securities would be entitled shall be made to the holders of Senior Debt (except that Holders of the Securities may receive Permitted Junior Securities and payments made from the trust described in Article 10). (b) To the extent any payment of Senior Debt (whether by or on behalf of the Company, as proceeds of security or enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then, if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person, the Senior Debt or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. (c) In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, shall be received by any Holder when such payment or distribution is prohibited by Section 5.3(a), such payment or distribution shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Debt (pro rata to such holders on the basis of the respective amount of Senior Debt held by such holders) or 30 their Representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Debt may have been issued, as their respective interests may appear, for application to the payment of Senior Debt remaining unpaid until all such Senior Debt has been paid in full in cash or Cash Equivalents, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Senior Debt. (d) The consolidation of the Company with, or the merger of the Company with or into, another corporation or the liquidation, judicial management or dissolution of the Company following the conveyance or transfer of all or substantially all of its assets, to another corporation upon the terms and conditions provided in Article 7 hereof shall not be deemed a dissolution, winding-up, liquidation, judicial management or reorganization for the purposes of this Section if, in the event the Company is not the surviving corporation, such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, assume the Company's obligations hereunder in accordance with Article 7 hereof. SECTION 5.4. PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION. Nothing contained in this Article 5 or elsewhere in this Indenture shall prevent (i) the Company, except under the conditions described in Sections 5.1 and 5.2, from making payments at any time for the purpose of making payments of principal of and interest (including Additional Interest, if any) on the Securities, or from depositing with the Trustee any monies for such payments, or (ii) in the absence of actual knowledge by the Trustee that a given payment would be prohibited by Section 5.1 or 5.2, the application by the Trustee of any monies deposited with it for the purpose of making such payments of principal of, and interest (including Additional Interest, if any) on, the Securities to the Holders entitled thereto unless at least one Business Day prior to the date upon which such payment would otherwise become due and payable, the Trustee shall have received the written notice provided for in Section 5.2 or Section 5.7. The Company shall give prompt written notice to the Trustee of any dissolution, judicial management, winding-up, liquidation or reorganization of the Company. SECTION 5.5. SUBROGATION. Subject to the payment in full in cash or Cash Equivalents of all Senior Debt, the Holders shall be subrogated to the rights of the holders of Senior Debt to receive payments or distributions of cash, property or securities of the Company applicable to the Senior Debt until the Securities shall be paid in full; and, for the purposes of such subrogation, no such payments or distributions to the holders of the Senior Debt or by or on behalf of the Company or by or on behalf of the Holders by virtue of this Article 5 which otherwise would have been made to the Holders shall, as between the Company and the Holders, be deemed to be a payment by the Company to or on account of the Senior Debt, it being understood that the provisions of this Article 5 are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of the Senior Debt, on the other hand. SECTION 5.6. OBLIGATIONS OF THE COMPANY UNCONDITIONAL. Nothing contained in this Article 5 or elsewhere in this Indenture or in the Securities is intended to or shall impair, as among the Company, creditors other than the holders of Senior Debt, and the Holders, the obligation of the Company, which is absolute and unconditional, to pay to the Holders the principal of and any interest on (including Additional Interest, if any) the Securities as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Company other than the holders of any Senior Debt, nor shall anything herein or therein prevent the Holders or the Trustee on their behalf from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, 31 under this Article 5 of the holders of Senior Debt in respect of cash, property or securities of the Company received upon the exercise of any such remedy. SECTION 5.7. NOTICE TO TRUSTEE. The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Securities pursuant to the provisions of this Article 5. Regardless of anything to the contrary contained in this Article 5 or elsewhere in this Indenture, the Trustee shall not be charged with knowledge of the existence of any default or event of default with respect to any Senior Debt or of any other facts which would prohibit the making of any payment to or by the Trustee unless and until the Trustee shall have received notice in writing referencing this Indenture and the Securities from the Company, or from a holder of Senior Debt or a Representative therefor, and, prior to the receipt of any such written notice, the Trustee shall be entitled to assume (in the absence of actual knowledge of a Responsible Officer to the contrary) that no such facts exist. In the event that the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article 5, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amounts of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article 5, and if such evidence is not furnished the Trustee may defer any payment to such Person pending judicial determination as to the right of such person to receive such payment. SECTION 5.8. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT. Upon any payment or distribution of assets of the Company referred to in this Article 5, the Trustee, subject to the provisions of Article 7 hereof, and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which bankruptcy, dissolution, winding-up, liquidation, judicial management or reorganization proceedings are pending, or upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, delivered to the Trustee or the Holders, for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Debt and other Debt of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 5. SECTION 5.9. TRUSTEE'S RELATION TO SENIOR DEBT OR GUARANTOR SENIOR DEBT. The Trustee and any agent of the Company or the Trustee shall be entitled to all the rights set forth in this Article 5 with respect to any Senior Debt which may at any time be held by it in its individual capacity or any other capacity to the same extent as any other holder of Senior Debt and nothing in this Indenture shall deprive the Trustee or any such agent of any of its rights as such holder. The Trustee shall not be liable to any holder of Senior Debt if it shall mistakenly pay over or deliver to the Holders, the Company or any other Person monies or assets to which any such holder of the Senior Debt shall be entitled by virtue of this Article 5. With respect to the holders of Senior Debt, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article 5, and no implied covenants or obligations with respect to the holders of Senior Debt shall be read into this Indenture 32 against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt. Whenever a distribution is to be made or a notice given to holders or owners of Senior Debt or Designated Senior Debt, the distribution may be made and the notice may be given to their Representative, if any. SECTION 5.10. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE COMPANY OR A GUARANTOR OR HOLDERS OF SENIOR DEBT. No right of any present or future holders of any Senior Debt to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or otherwise be charged with. Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Debt may, at any time and from time to time, without the consent of or notice to the Trustee, without incurring responsibility to the Trustee or the Holders and without impairing or releasing the subordination provided in this Article 5 or the obligations hereunder of the Holders to the holders of the Senior Debt, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt, or otherwise amend or supplement in any manner Senior Debt, or any instrument evidencing or securing the same or any agreement under which Senior Debt is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt; (iii) release any Person liable in any manner for the payment or collection of Senior Debt; and (iv) exercise or refrain from exercising any rights against the Company or any other Person. SECTION 5.11. CERTAIN CONVERSIONS NOT DEEMED PAYMENT For the purposes of this Article 5 only, (1) the issuance and delivery of Permitted Junior Securities upon conversion of Securities in accordance with Article 4 shall not be deemed to constitute a payment or distribution on account of the principal of (or premium, if any) or interest on Securities or on account of the purchase or other acquisition of Securities, and (2) the payment, issuance or delivery of cash (except in satisfaction of fractional shares pursuant to Section 4.3), property or securities (other than Permitted Junior Securities) upon conversion of a Security shall be deemed to constitute payment on account of the principal of such Security. Nothing contained in this Article 5 or elsewhere in this Indenture or in the Securities is intended to or shall impair, as among the Company, its creditors other than holders of Senior Debt and the Holders, the right, which is absolute and unconditional, of the Holder of any Security to convert such Security in accordance with Article 4. SECTION 5.12. HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF SECURITIES. Each Holder by its acceptance of the Securities authorizes and expressly directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate, as between the holders of Senior Debt and the Holders, the subordination provided in this Article 5, and appoints the Trustee its attorney-in-fact for such purposes, including, in the event of any dissolution, winding-up, liquidation, judicial management or reorganization of the Company (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors or otherwise) 33 tending towards liquidation of the business and assets of the Company, the filing of a claim for the unpaid balance of its Securities and accrued interest (including Additional Interest, if any) in the form required in those proceedings. If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then the holders of the Senior Debt or their Representative are or is hereby authorized to have the right to file and are or is hereby authorized to file an appropriate claim for and on behalf of the Holders of said Securities. Nothing herein contained shall be deemed to authorize the Trustee or the holders of Senior Debt or their Representative to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee or the holders of Senior Debt or their Representative to vote in respect of the claim of any Holder in any such proceeding. SECTION 5.13. THIS ARTICLE 5 NOT TO PREVENT EVENTS OF DEFAULT. The failure to make a payment on account of principal of or interest (including Additional Interest) on the Securities by reason of any provision of this Article 5 will not be construed as preventing the occurrence of an Event of Default. SECTION 5.14. TRUSTEE'S COMPENSATION NOT PREJUDICED. Nothing in this Article 5 will apply to amounts due to the Trustee pursuant to other Sections in this Indenture. ARTICLE 6 COVENANTS SECTION 6.1. PAYMENT OF SECURITIES. The Company shall promptly make all payments in respect of the Securities on the dates and in the manner provided in the Securities and this Indenture. An installment of principal or interest (including Additional Interest), if any, shall be considered paid on the date it is due if the Paying Agent (other than the Company) holds by 11:00 a.m., New York City time, on that date money, deposited by the Company or an Affiliate thereof, sufficient to pay the installment. Subject to Section 4.2 hereof, accrued and unpaid interest (including Additional Interest, if any) on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security is registered at the close of business on the Regular Record Date for such interest at the office or agency of the Company maintained for such purpose. The Company shall, (in immediately available funds) to the fullest extent permitted by law, pay interest on overdue principal (including premium, if any) and overdue installments of interest (including Additional Interest, if any). Payment of the principal of (and premium, if any) and interest (including Additional Interest, if any) on the Securities shall be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York (which shall initially be the Trustee) or at the Corporate Trust Office of the Trustee in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest (including Additional Interest, if any) may be made by check 34 mailed to the address of the Person entitled thereto as such address appears in the Register; provided further that a Holder with an aggregate principal amount in excess of $2,000,000 will be paid by wire transfer in immediately available funds at the election of such Holder if such Holder has provided wire transfer instructions to the Company at least 10 Business Days prior to the payment date. SECTION 6.2. SEC REPORTS. The Company shall file all reports and other information and documents which it is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, and within 15 days after it files them with the SEC, the Company shall file copies of all such reports, information and other documents with the Trustee. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). SECTION 6.3. COMPLIANCE CERTIFICATES. The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of the Company (beginning with the fiscal year ending March 31, 2004), an Officers' Certificate as to the signer's knowledge of the Company's compliance with all conditions and covenants on its part contained in this Indenture and stating whether or not the signer knows of any default or Event of Default. If such signer knows of such a default or Event of Default, the Officers' Certificate shall describe the default or Event of Default and the efforts to remedy the same. For the purposes of this Section 6.3, compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture. SECTION 6.4. FURTHER INSTRUMENTS AND ACTS. Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture. SECTION 6.5. MAINTENANCE OF CORPORATE EXISTENCE. Subject to Article 7, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence. SECTION 6.6. RULE 144A INFORMATION REQUIREMENT. Within the period prior to the expiration of the holding period applicable to sales thereof under Rule 144(k) under the Securities Act (or any successor provision), the Company covenants and agrees that it shall, during any period in which it is not subject to Section 13 or 15(d) under the Exchange Act, upon the request of any Holder or beneficial holder of the Securities make available to such Holder or beneficial holder of Securities or any Common Stock issued upon conversion thereof which continue to be Restricted Securities in connection with any sale thereof and any prospective purchaser of Securities or such Common Stock designated by such Holder or beneficial holder, the information required pursuant to Rule 144A(d)(4) under the Securities Act and it will take such further action as any Holder or beneficial holder of such Securities or such Common Stock may reasonably request, all to the extent required from 35 time to time to enable such Holder or beneficial holder to sell its Securities or Common Stock without registration under the Securities Act within the limitation of the exemption provided by Rule 144A, as such Rule may be amended from time to time. Upon the request of any Holder or any beneficial holder of the Securities or such Common Stock, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements. SECTION 6.7. STAY, EXTENSION AND USURY LAWS. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of, premium, if any, or interest (including Additional Interest, if any) on the Securities as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. SECTION 6.8. PAYMENT OF ADDITIONAL INTEREST. If Additional Interest is payable by the Company pursuant to the Registration Rights Agreement, the Company shall deliver to the Trustee a certificate to that effect stating (i) the amount of such Additional Interest that is payable, (ii) the reason why such Additional Interest is payable and (iii) the date on which such Additional Interest is payable. Unless and until a Responsible Officer of the Trustee receives such a certificate, the Trustee may assume without inquiry that no such Additional Interest is payable. If the Company has paid Additional Interest directly to the Persons entitled to such Additional Interest, the Company shall deliver to the Trustee a certificate setting forth the particulars of such payment. ARTICLE 7 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 7.1. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. The Company shall not consolidate with or merge into any other Person (in a transaction in which the Company is not the surviving Person) or convey, transfer or lease or otherwise dispose of its properties and assets substantially as an entirety in one or more related transactions (a "Subject Transaction"), to any Person, unless: (1) in case the Company shall consolidate with or merge into another Person (in a transaction in which the Company is not the surviving Person) or convey, transfer or lease or otherwise dispose of its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires, or which leases, the properties and assets of the Company substantially as an entirety shall be a corporation organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia, Singapore or any other country (subject to the conditions set forth in Section 7.3) and shall, in any case, 36 expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including Additional Interest, if any) on all the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed and the conversion rights shall be provided for in accordance with Article 4, by supplemental indenture satisfactory in form to the Trustee, executed and delivered to the Trustee, by the Person (if other than the Company) formed by such consolidation or into which the Company shall have been merged or by the Person which shall have acquired the Company's assets; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer, lease or disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture complies with this Article 7 and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 7.2. SUCCESSOR SUBSTITUTED. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer, lease or other disposition of the properties and assets of the Company substantially as an entirety in accordance with Section 7.1, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer, lease or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities except with respect to any obligations that arise from, or are related to, such transaction. SECTION 7.3. ADDITIONAL CONDITIONS UPON REINCORPORATING, MERGING OR CONSOLIDATING INTO ANOTHER COUNTRY If the surviving or resulting transferee, lessee or successor Person (the "Successor Corporation") in a Subject Transaction is incorporated in a country other than the United States (or any state thereof or the District of Columbia) or Singapore, then the Company must satisfy the conditions specified in paragraphs (A), (B) and (C) below as promptly as practicable, but no later than 60 days following the date of such Subject Transaction: (A) the Company shall have delivered to the Trustee a written opinion, in form and substance satisfactory to the Trustee, of independent legal counsel of recognized standing, as to the continued validity, binding effect and enforceability of this Indenture and the Notes and to the further effect that such counsel is not aware of any pending change in, or amendment to, the laws (or any regulations promulgated thereunder) of any such country in which the proposed Successor Corporation is incorporated or maintains its principal place of business or principal executive office, or any taxing authority thereof or therein, affecting taxation, or any pending execution of or amendment to, or any pending change in application of or official position regarding, any 37 treaty or treaties affecting taxation to which any such country is a party, which, in any such case, would require the Company to withhold for taxes or other governmental charges from amounts paid on the Securities, it being understood that such counsel may, in rendering such opinion, rely, to the extent appropriate, on opinions of independent local counsel of recognized standing and the Company may instead deliver two or more opinions of counsel which together cover all of the foregoing matters; (B) the Company shall have delivered to the Trustee a certificate, in form and substance satisfactory to the Trustee, signed by two executive officers of the Successor Corporation, as to the continued validity, binding effect and enforceability of this Indenture and the Securities; and (C) the Successor Corporation shall, promptly but no later than 60 days following the date of such transaction, consent to the jurisdiction of the Courts of the State of New York. In the event of any such Subject Transaction, the Company will indemnify and hold harmless the Holder of each Security from and against any and all present and future taxes, levies, imposts, charges and withholdings (including, without limitation, estate, inheritance, capital gains and other similar taxes), and any and all present and future registration, stamp, issue, documentary or other similar taxes, duties, fees or charges, imposed, assessed, levied or collected by or for the account of any jurisdiction or political subdivision or taxing or other governmental agency or authority thereof or therein on or in respect of the Securities, this Indenture or any other agreement relating to calculations to be performed with respect to the Securities or any amount paid or payable under any of the foregoing which, in any such case, would not have been imposed had such Subject Transaction not occurred. ARTICLE 8 DEFAULT AND REMEDIES SECTION 8.1. EVENTS OF DEFAULT. "Events of Defaults" are: (1) default for 30 days in the payment when due of interest (including Additional Interest, if any) on the Notes (whether or not prohibited by the subordination provisions of this Indenture); (2) default in payment when due of the principal of, or premium, if any, on the Notes (whether or not prohibited by the subordination provisions of this Indenture); (3) failure by the Company for 30 days after notice from either the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes to comply with the provisions described in Section 3.2 or 7.1; (4) failure by the Company for 60 days after notice from either the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes to comply with any of its other agreements in this Indenture or the Notes; 38 (5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Debt for money borrowed by the Company (or the payment of which is guaranteed by the Company) whether such Debt or guarantee now exists, or is created after the date of this Indenture, which default (a) is caused by a failure to pay principal of or premium, if any, or interest (including Additional Interest, if any) on such Debt prior to the expiration of the grace period provided in such Debt on the date of such default (a "Payment Default") or (b) results in the acceleration of such Debt prior to its express maturity and, in each case, the principal amount of any such Debt, together with the principal amount of any other such Debt the maturity of which has been so accelerated, aggregates $40.0 million or more; (6) failure by the Company or any of its Subsidiaries to pay final judgments aggregating in excess of $40.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; or (7) the Company or any of its Significant Subsidiaries: (i) commences a voluntary case under any Bankruptcy Law, (ii) consents to the entry of an order for relief against it in an involuntary case under any Bankruptcy Law, (iii) consents to the appointment of a custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, (v) generally is not paying its debts as they become due; or (8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or any of its Significant Subsidiaries, (ii) appoints a custodian or judicial manager of the Company or any of its Significant Subsidiaries or for all or substantially all of the property of the Company or any of its Significant Subsidiaries, or (iii) orders the liquidation or judicial management of the Company or any of its Significant Subsidiaries; and the order or decree remains unstayed and in effect for 60 consecutive days. The term "Bankruptcy Law" means Title 11 of the United States Code (or any successor thereto) or any similar federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law. The Trustee shall not be charged with knowledge of any Event of Default unless written notice thereof shall have been given to a Responsible Officer at the Corporate Trust Office of the Trustee by the Company, a Paying Agent, any Holder or any agent of any Holder. 39 SECTION 8.2. ACCELERATION. If an Event of Default (other than an Event of Default specified in clause (7) or (8) of Section 8.1) occurs and is continuing, the Trustee may, by notice to the Company, or the Holders of at least 25% in aggregate principal amount of the Securities then outstanding may, by notice to the Company and the Trustee, declare all unpaid principal and interest (including Additional Interest, if any) to the date of acceleration on the Securities then outstanding (if not then due and payable) to be due and payable upon any such declaration, and the same shall become and be immediately due and payable. If an Event of Default specified in clause (7) or (8) of Section 8.1 occurs, all unpaid principal and interest (including Additional Interest, if any) of the Securities then outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Holders of a majority in aggregate principal amount of the Securities then outstanding by notice to the Trustee may rescind an acceleration and its consequences if (a) all existing Events of Default, other than the nonpayment of the principal and interest (including Additional Interest, if any) of the Securities which has become due solely by such declaration of acceleration, have been cured or waived; (b) to the extent the payment of such interest is lawful, interest at a rate of 3% per annum on overdue installments of interest (including Additional Interest, if any) and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid; (c) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and (d) all payments due to the Trustee and any predecessor Trustee under Section 9.7 have been made. No such rescission shall affect any subsequent default or impair any right consequent thereto. SECTION 8.3. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may, but shall not be obligated to, pursue any available remedy by proceeding at law or in equity to collect the payment of the principal of or interest (including Additional Interest, if any) on the Securities or to enforce the performance of any provision of the Securities or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law. SECTION 8.4. WAIVER OF DEFAULTS AND EVENTS OF DEFAULT. Subject to Sections 8.7 and 11.2, the Holders of a majority in aggregate principal amount of the Securities then outstanding by notice to the Trustee may waive an existing default or Event of Default and its consequence, except a default or Event of Default in the payment of the principal of, premium, if any, or interest (including Additional Interest, if any) on any Security, a failure by the Company to convert any Securities into Common Stock or any default or Event of Default in respect of any provision of this Indenture or the Securities which, under Section 11.2, cannot be modified or amended without the consent of the Holder of each Security affected. When a default or Event of Default is waived, it is cured and ceases. SECTION 8.5. CONTROL BY MAJORITY. The Holders of a majority in aggregate principal amount of the Securities then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction 40 that conflicts with law or this Indenture, that the Trustee determines may be unduly prejudicial to the rights of another Holder or the Trustee, or that may involve the Trustee in personal liability. SECTION 8.6. LIMITATIONS ON SUITS. A Holder may not pursue any remedy with respect to this Indenture or the Securities (except actions for payment of overdue principal, premium, if any, or interest (including Additional Interest, if any) for the conversion of the Securities pursuant to Article 4) unless: (1) the Holder gives to the Trustee written notice of a continuing Event of Default; (2) the Holders of at least 25% in aggregate principal amount of the then outstanding Securities make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee reasonable indemnity to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Securities then outstanding. A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over such other Securityholder. SECTION 8.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO CONVERT. Notwithstanding any other provision of this Indenture, the right of any Holder of a Security to receive payment of the principal of and interest (including Additional Interest, if any) on the Security, on or after the respective due dates expressed in the Security and this Indenture, to convert such Security in accordance with Article 4 and to bring suit for the enforcement of any such payment on or after such respective dates or the right to convert, is absolute and unconditional and shall not be impaired or affected without the consent of the Holder. SECTION 8.8. COLLECTION SUIT BY TRUSTEE. If an Event of Default in the payment of principal or interest (including Additional Interest, if any) specified in clause (1) or (2) of Section 8.1 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or another obligor on the Securities for the whole amount of principal and accrued interest (including Additional Interest, if any) remaining unpaid, together with, to the extent that payment of such interest is lawful interest on overdue principal and overdue installments of interest (including Additional Interest, if any) in each case at a rate of 3% per annum and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. 41 SECTION 8.9. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Company (or any other obligor on the Securities), its creditors or its property and shall be entitled and empowered to collect and receive any money or other property payable or deliverable on any such claims and to distribute the same, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 9.7, and to the extent that such payment of the reasonable compensation, expenses, disbursements and advances in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other property which the Holders may be entitled to receive in such proceedings, whether in liquidation, judicial management or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to, or, on behalf of any Holder, to authorize, accept or adopt any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 8.10. PRIORITIES. If the Trustee collects any money pursuant to this Article 8, it shall pay out the money in the following order: First, to the Trustee for amounts due under Section 9.7; Second, to the holders of Senior Debt to the extent required by Article 5; Third, to Holders for amounts due and unpaid on the Securities for principal and interest (including Additional Interest, if any) ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest (including Additional Interest, if any) respectively; and Fourth, the balance, if any, to the Company. The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 8.10. SECTION 8.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 8.11 does not apply to a suit made by the Trustee, a suit by a Holder pursuant to Section 8.7, or a suit by Holders of more than 10% in aggregate principal amount of the Securities then outstanding. 42 ARTICLE 9 TRUSTEE SECTION 9.1. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the occurrence and continuance of an Event of Default: (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates (or similar documents) or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates (or similar documents) and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein or otherwise verify the contents thereof). (c) The Trustee may not be relieved from liabilities for its own grossly negligent action, its own grossly negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section 9.1; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was grossly negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 8.5 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee, the Paying Agent, Registrar or Note Custodian is subject to this Section 9.1. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any financial liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense including reasonable attorneys' fees that might be incurred by it in compliance with such request or direction. 43 (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. SECTION 9.2. RIGHTS OF TRUSTEE. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in any such document. The Trustee shall receive and retain financial reports and statements of the Company as provided herein, but it shall have no duty to review or analyze such reports or statements to determine compliance with covenants or other obligations of the Company. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel of its selection and the advice of such counsel or any opinion of counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any such attorney or agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. (g) Prior to the occurrence of an Event of Default hereunder and after the curing of all Events of Default which may have occurred, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, order, approval, bond or other paper or document unless requested in writing to do so by the Holders representing more than 25% in aggregate principal amount of Securities then outstanding, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters it may see fit; provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require indemnity reasonably satisfactory to it against such cost, expense or liability as a condition to so proceeding. (h) The permissive rights of the Trustee to do things enumerated in this Indenture should not be construed as a duty unless so specified herein. 44 SECTION 9.3. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 9.10 and 9.11 hereof. SECTION 9.4. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy or priority of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities or any money paid to the Company or upon the Company's direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Securities or any other document in connection with the sale of the Securities or pursuant to this Indenture other than its certificate of authentication. SECTION 9.5. NOTICE OF DEFAULTS. (a) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture. (b) If a Default or Event of Default occurs and is continuing and if it is known to the Trustee in accordance with the provisions of paragraph (a) of this Section 9.5, the Trustee shall mail to Holders a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest (including Additional Interest, if any) on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Securities. SECTION 9.6. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES. Within 60 days after each August 1 beginning with the August 1 following the date of this Indenture, and for so long as Securities remain outstanding, the Trustee shall mail to the Holders of the Securities a brief report dated as of such reporting date that complies with TIA Section 313(a) (but if no event described in TIA Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA Section 313(b)(2) to the extent applicable. The Trustee shall also transmit by mail all reports as required by TIA Section 313(c). A copy of each report at the time of its mailing to the Holders shall be mailed to the Company and filed with the Commission and each stock exchange on which the Securities are listed in accordance with TIA Section 313(d). The Company shall promptly notify the Trustee when the Securities are listed on any stock exchange. 45 SECTION 9.7. COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder as the parties shall agree from time to time. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee and hold it harmless against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the company (including this Section 9.7) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its gross negligence or bad faith. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement, made without its consent, which consent shall not be unreasonably withheld or delayed. The obligations of the Company under this Section 9.7 shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee. To secure the Company's payment obligations in this Section, the Trustee shall have a Lien prior to the Securities on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest (including Additional Interest, if any) on particular Securities. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 8.1(7) or (8) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee shall comply with the provisions of TIA Section 313(b)(2) to the extent applicable. SECTION 9.8. REPLACEMENT OF TRUSTEE. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 9.8. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of a majority in principal amount of the then outstanding Securities may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 9.10 hereof; (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; 46 (c) a custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of at least 10% in principal amount of the then outstanding Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 9.10 hereof, such Holder of a Note may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Securities. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 9.7 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 9.8, the Company's obligations under Section 9.7 hereof shall continue for the benefit of the retiring Trustee. SECTION 9.9. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates, merges or converts into, or transfers by sale or otherwise all or substantially all of its corporate trust business to (including the administration of this Indenture), another corporation, the successor corporation without any further act shall be the successor Trustee. SECTION 9.10. ELIGIBILITY; DISQUALIFICATION. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has (or in the case of a subsidiary of a bank holding company, its parent shall have) a combined capital and surplus of at least $100.0 million as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA Sections 310(a)(1), (2) and (5). The Trustee is subject to TIA Section 310(b). SECTION 9.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. 47 ARTICLE 10 SATISFACTION AND DISCHARGE OF INDENTURE SECTION 10.1. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture shall cease to be of further effect (except as to any surviving rights of conversion, registration of transfer or exchange of Securities herein expressly provided for and except as further provided below), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.7 and (ii) Securities for whose payment money has theretofore been deposited in trust and thereafter repaid to the Company as provided in Section 10.3) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at the Final Maturity Date within one year, and the Company has irrevocably deposited or caused to be irrevocably deposited cash with the Trustee or a Paying Agent (other than the Company or any of its Affiliates) as trust funds in trust for the purpose of and in an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and interest (including Additional Interest, if any) to the date of such deposit (in the case of Securities which have become due and payable) or the Final Maturity Date; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 9.7 shall survive and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the provisions of Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.12, 3.2, 12.8, 12.15 and 12.16, Article 4, the last paragraph of Section 6.2 and this Article 10, shall survive until the Securities have been paid in full. SECTION 10.2. APPLICATION OF TRUST MONEY. Subject to the provisions of Section 10.3, the Trustee or a Paying Agent shall hold in trust, for the benefit of the Holders, all money deposited with it pursuant to Section 10.1 and shall apply the deposited 48 money in accordance with this Indenture and the Securities to the payment of the principal of and interest (including Additional Interest, if any) on the Securities. Money so held in trust shall not be subject to the subordination provisions of Article 5. SECTION 10.3. REPAYMENT TO COMPANY. The Trustee and each Paying Agent shall promptly pay to the Company upon request any excess money (i) deposited with them pursuant to Section 10.1 and (ii) held by them at any time. The Trustee and each Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest (including Additional Interest, if any) that remains unclaimed for two years after a right to such money has matured; provided, however, that the Trustee or such Paying Agent, before being required to make any such payment, may at the expense of the Company cause to be mailed to each Holder entitled to such money notice that such money remains unclaimed and that after a date specified therein, which shall be at least 30 days from the date of such mailing, any unclaimed balance of such money then remaining will be repaid to the Company. After payment to the Company, Holders entitled to money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person. SECTION 10.4. REINSTATEMENT. If the Trustee or any Paying Agent is unable to apply any money in accordance with Section 10.2 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 10.1 until such time as the Trustee or such Paying Agent is permitted to apply all such money in accordance with Section 10.2; provided, however, that if the Company has made any payment of the principal of or interest (including Additional Interest, if any) on any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive any such payment from the money held by the Trustee or such Paying Agent. ARTICLE 11 AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 11.1. WITHOUT CONSENT OF HOLDERS. The Company and the Trustee may amend or supplement this Indenture or the Securities without notice to or consent of any Securityholder: (a) to comply with Sections 4.10 and 7.1; (b) to cure any ambiguity, defect or inconsistency; (c) to make any other change that does not adversely affect the rights of any Securityholder; (d) to comply with the provisions of the TIA; 49 (e) to add to the covenants of the Company for the equal and ratable benefit of the Securityholders or to surrender any right, power or option conferred upon the Company; (f) to appoint a successor Trustee; or (g) to make all payments of principal and interest (including Additional Interest, if any) through its branch office in any foreign country instead of its Bermuda foreign branch office; provided that such change shall not have an adverse effect on the Holders; and provided, further, that Section 12.15 shall be amended accordingly. SECTION 11.2. WITH CONSENT OF HOLDERS. The Company and the Trustee may amend or supplement this Indenture or the Securities with the written consent of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding. The Holders of at least a majority in aggregate principal amount of the Securities then outstanding may waive compliance in a particular instance by the Company with any provision of this Indenture or the Securities without notice to any Securityholder. However, notwithstanding the foregoing but subject to Section 11.4, without the written consent of each Securityholder affected, an amendment, supplement or waiver, including a waiver pursuant to Section 8.4, may not: (a) change the stated maturity of the principal of any Security; (b) reduce the principal amount of, or any premium or interest (including Additional Interest, if any) on, any Security; (c) reduce the amount of principal payable upon acceleration of the maturity of any Security; (d) change the place or currency of payment of principal of, or any premium or interest (including Additional Interest, if any) on, any Security; (e) impair the right to institute suit for the enforcement of any payment on, or with respect to, any Security; (f) modify the provisions with respect to the purchase right of Holders pursuant to Article 3 upon a Change of Control in a manner adverse to Holders; (g) modify the subordination provisions of Article 5 in a manner materially adverse to the Holders of Securities; (h) adversely affect the right of Holders to convert Securities other than as provided in or under Article 4 of this Indenture; (i) reduce the percentage of the aggregate principal amount of the outstanding Securities whose Holders must consent to a modification or amendment; (j) reduce the percentage of the aggregate principal amount of the outstanding Securities necessary for the waiver of compliance with certain provisions of this Indenture or the waiver of certain defaults under this Indenture; and 50 (k) modify any of the provisions of this Section or Section 8.4, except to increase any such percentage or to provide that certain provisions of this Indenture cannot be modified or waived without the consent of the Holder of each outstanding Security affected thereby. It shall not be necessary for the consent of the Holders under this Section 11.2 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section 11.2 becomes effective, the Company shall mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, supplement or waiver. An amendment or supplement under this Section 11.2 or under Section 11.1 may not make any change that adversely affects the rights under Article 5 of any holder of an issue of Senior Debt unless the holders of that issue, pursuant to its terms, consent to the change. SECTION 11.3. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to or supplement of this Indenture or the Securities shall comply with the TIA as in effect at the date of such amendment or supplement. SECTION 11.4. REVOCATION AND EFFECT OF CONSENTS. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to its Security or portion of a Security if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective. After an amendment, supplement or waiver becomes effective, it shall bind every Securityholder, unless it makes a change described in any of clauses (a) through (k) of Section 11.2. In that case the amendment, supplement or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security. SECTION 11.5. NOTATION ON OR EXCHANGE OF SECURITIES. If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. SECTION 11.6. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall sign any amendment or supplemental indenture authorized pursuant to this Article 11 if the amendment or supplemental indenture does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, in its sole discretion, but need not sign it. In signing or refusing to sign such amendment or supplemental indenture, the Trustee shall be entitled to receive and, subject to Section 9.1, shall be fully protected in relying upon, an Opinion of Counsel 51 stating that such amendment or supplemental indenture is authorized or permitted by this Indenture. The Company may not sign an amendment or supplement indenture until the Board of Directors approves it. SECTION 11.7. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. ARTICLE 12 MISCELLANEOUS SECTION 12.1. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of the TIA through operation of Section 318(c) thereof, such imposed duties shall control. SECTION 12.2. NOTICES. Any demand, authorization notice, request, consent or communication shall be given in writing and delivered in person or mailed by first-class mail, postage prepaid, addressed as follows or transmitted by facsimile transmission (confirmed by delivery in person or mail by first-class mail, postage prepaid, or by guaranteed overnight courier) to the following facsimile numbers: If to the Company, to: Flextronics International Ltd. 2090 Fortune Drive San Jose, CA 95131 Attention: Investors Relations Telephone: (408) 428-1300 with a copy to: Fenwick & West LLP 801 California Street Mountain View, CA 04041 Attention: David K. Michaels, Esq. Telephone: (415) 875-2455 52 if to the Trustee, to: J.P. Morgan Trust Company, National Association 560 Mission Street, 13th Floor San Francisco, CA Attention: James Nagy Telephone: (415) 315-7533 with a copy to: Nixon Peabody LLP Two Embarcadero Center Suite 2700 San Francisco, CA 94111-3996 Attention: Varya Simpson Telephone: (415) 984-8200 Such notices or communications shall be effective when received. The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Securityholder shall be mailed by first-class mail or delivered by an overnight delivery service to it at its address shown on the register kept by the Primary Registrar. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication to a Securityholder is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 12.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and any other person shall have the protection of TIA Section 312(c). SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. (a) Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee at the request of the Trustee: (1) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent (including any covenants, compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent (including any covenants, compliance with which constitutes a condition precedent) have been complied with. 53 (b) Each Officers' Certificate and Opinion of Counsel with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with; provided however, that with respect to matters of fact an Opinion of Counsel may rely on an Officers' Certificate or certificates of public officials. SECTION 12.5. RECORD DATE FOR VOTE OR CONSENT OF SECURITYHOLDERS. The Company (or, in the event deposits have been made pursuant to Section 10.1, the Trustee) may set a record date for purposes of determining the identity of Holders entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture, which record date shall not be more than thirty (30) days prior to the date of the commencement of solicitation of such action. Notwithstanding the provisions of Section 11.4, if a record date is fixed, those persons who were Holders of Securities at the close of business on such record date (or their duly designated proxies), and only those persons, shall be entitled to take such action by vote or consent or to revoke any vote or consent previously given, whether or not such persons continue to be Holders after such record date. SECTION 12.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR AND CONVERSION AGENT. The Trustee may make reasonable rules (not inconsistent with the terms of this Indenture) for action by or at a meeting of Holders. Any Registrar, Paying Agent or Conversion Agent may make reasonable rules for its functions. SECTION 12.7. LEGAL HOLIDAYS. A "Legal Holiday" is a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York and the state in which the Corporate Trust Office is located are not required to be open. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest (including Additional Interest, if any) shall accrue for the intervening period. If a Regular Record Date is a Legal Holiday, the record date shall not be affected. SECTION 12.8. GOVERNING LAW. This Indenture and the Securities shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of laws. 54 SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary of the Company. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 12.10. NO RECOURSE AGAINST OTHERS. All liability described in paragraph 15 of the Securities of any director, officer, employee or stockholder, as such, of the Company is waived and released. SECTION 12.11. SUCCESSORS. All agreements of the Company in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. SECTION 12.12. MULTIPLE COUNTERPARTS. The parties may sign multiple counterparts of this Indenture. Each signed counterpart shall be deemed an original, but all of them together represent the same agreement. SECTION 12.13. SEPARABILITY. In case any provisions in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 12.14. TABLE OF CONTENTS, HEADINGS, ETC. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 12.15. BERMUDA BRANCH; FULL RECOURSE OBLIGATIONS. Notwithstanding anything to the contrary contained herein, all payments of principal and interest (including Additional Interest, if any, and Cash Settlement of Conversion Obligations as necessary to ensure no withholding on such payments) by the Company with respect to the Securities will be made by the Company through its Bermuda branch office; provided, however, that notwithstanding the foregoing, the Company acknowledges that its Obligations hereunder are full recourse to the Company and are in no manner limited to any extent to any branch thereof and shall in no manner impair the Trustee's ability to collect any Obligation from the Company. SECTION 12.16. CONSENT TO JURISDICTION AND SERVICE. To the fullest extent permitted by applicable law, the Company hereby irrevocably submits to the jurisdiction of any Federal or State court located in the Borough of Manhattan in The City of New York, New York in any suit, action or proceeding based on or arising out of or relating to this Indenture or any Notes, and irrevocably agree that all claims in respect of such suit or proceeding may be determined in any such court. The Company irrevocably waives, to the fullest extent permitted by laws, any objection which they may have to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any suit, action or proceeding brought in such a court has been brought in an 55 inconvenient forum. The Company agrees that final judgment in any such suit, action or proceeding brought in such a court may be enforced in the courts of any jurisdiction to which the Company is subject by a suit upon such judgment, provided that service of process is effected upon the Company in the manner specified herein or as otherwise permitted by law. To the extent that the Company has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of now, attachment prior to judgment, attachment in aid of execution, executor or otherwise) with respect to itself or its property, the Company hereby irrevocably waives such immunity in respect of their respective obligations under this Indenture, to the extent permitted by law. [SIGNATURE PAGE FOLLOWS] 56 IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the date and year first above written. FLEXTRONICS INTERNATIONAL LTD. By: /s/ Bernard Liew Jin Yang ___________________________________________ Name: Bernard Liew Jin Yang Title: Company Secretary J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION By: /s/ James Nagy ___________________________________________ Name: James Nagy Title: Assistant Vice President (Signature Page to Indenture) S-1 SCHEDULE A CREDIT SUISSE FIRST BOSTON LLC BANC OF AMERICA SECURITIES LLC DEUTSCHE BANK SECURITIES INC. LEHMAN BROTHERS INC. GOLDMAN, SACHS & CO. CITIGROUP GLOBAL MARKETS INC. BEAR, STEARNS & CO. INC. ABN AMRO ROTHSCHILD LLC FLEET SECURITIES, INC. BNP PARIBAS SECURITIES CORP. RBC DOMINION SECURITIES CORPORATION SCOTIA CAPITAL (USA) INC. A-1 EXHIBIT A [FORM OF FACE OF SECURITY] [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.](1) [THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF - ------------------ (1) These paragraphs should be included only if the Security is a Global Security. A-1 CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. IN ANY CASE THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THE SECURITIES EXCEPT AS PERMITTED BY THE SECURITIES ACT.] [THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A REGISTRATION RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.](2) - ------------------ (2) These paragraphs should be included only if the Security is a Registered Security. A-2 FLEXTRONICS INTERNATIONAL LTD. CUSIP: 33938E AK 3 $______ 1% CONVERTIBLE SUBORDINATED NOTES DUE AUGUST 1, 2010 Flextronics International Ltd., a Singapore corporation (the "Company", which term shall include any successor corporation under the Indenture referred to on the reverse hereof), promises to pay to___________ _________________, or registered assigns, the principal sum of _____________________________ Dollars ($__________) on August 1, 2010 [or such greater or lesser amount as is indicated on the Schedule of Exchanges of Notes on the other side of this Note.](3) Interest Payment Dates: August 1 and February 1 Regular Record Dates: July 15 and January 15 This Note is convertible as specified on the other side of this Note. Additional provisions of this Note are set forth on the other side of this Note. SIGNATURE PAGE FOLLOWS - ------------------ (3) This phase should be included only if the Security is a Global Security. A-3 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. FLEXTRONICS INTERNATIONAL LTD. By: _______________________________ Name: Title: Dated: Trustee's Certificate of Authentication: This is one of the Securities referred to in the within-mentioned Indenture. J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee ________________________________________________ Authorized Signatory By: A-4 [FORM OF REVERSE SIDE OF SECURITY] FLEXTRONICS INTERNATIONAL LTD. 1% CONVERTIBLE SUBORDINATED NOTES DUE AUGUST 1, 2010 1. INTEREST Flextronics International Ltd., a Singapore corporation (the "Company", which term shall include any successor corporation under the Indenture hereinafter referred to), promises to pay interest on the principal amount of this Note at the rate of 1% per annum. The Company shall pay interest semiannually on August 1 and February 1 of each year, commencing February 1, 2004. Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 5, 2003; provided, however, that if there is not an existing default in the payment of interest and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding interest payment date, interest shall accrue from such interest payment date. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Any reference herein to interest accrued or payable as of any date shall include any Additional Interest accrued or payable on such date as provided in the Registration Rights Agreement. 2. METHOD OF PAYMENT The Company shall pay interest (and Additional Interest, if any,) on this Note to the person who is the Holder of this Note at the close of business on July 15 or January 15, as the case may be, preceding the related interest payment date. The Holder must surrender this Note to a Paying Agent to collect payment of principal. The Company will pay principal and interest (and Additional Interest, if any), in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company may, however, pay principal and interest (and Additional Interest, if any), in respect of any Certificated Security by check or wire payable in such money; provided, however, that a Holder with an aggregate principal amount in excess of $2,000,000 will be paid by wire transfer in immediately available funds at the election of such Holder if such Holder has provided wire transfer instructions to the Company. The Company may mail an interest check, if any, to the Holder's registered address. Notwithstanding the foregoing, so long as this Note is registered in the name of a Depositary or its nominee, all payments hereon shall be made by wire transfer of immediately available funds to the account of the Depositary or its nominee. 3. PAYING AGENT, REGISTRAR AND CONVERSION AGENT Initially, J.P. Morgan Trust Company, National Association (the "Trustee", which term shall include any successor trustee under the Indenture hereinafter referred to) will act as Paying Agent, Registrar and Conversion Agent. The Company may change any Paying Agent, Registrar or Conversion Agent without notice to the Holder. The Company or any of its Subsidiaries may, subject to certain limitations set forth in the Indenture, act as Paying Agent or Registrar. 4. INDENTURE, LIMITATIONS This Note is one of a duly authorized issue of Securities of the Company designated as its 1% Convertible Subordinated Notes Due August 1, 2010 (the "Notes"), issued under an Indenture dated as of August 5, 2003 (together with any supplemental indentures thereto, the "Indenture"), between the Company and the Trustee. The terms of this Note include those stated in the Indenture and those required by or made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended, as in effect A-5 on the date of the Indenture. This Note is subject to all such terms, and the Holder of this Note is referred to the Indenture and said Act for a statement of them. The Notes are subordinated unsecured obligations of the Company limited to $500,000,000 ($530,000,000 if the Initial Purchasers' option to purchase additional notes is exercised in full) aggregate principal amount. The Indenture does not limit other debt of the Company, secured or unsecured, including Senior Debt. 5. PURCHASE OF NOTES AT OPTION OF HOLDER UPON A CHANGE OF CONTROL Upon the occurrence of a Change of Control, each Holder of Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or integral multiples thereof) of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest (including Additional Interest) thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company will mail a notice to each Holder of Notes describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"), pursuant to the procedures required by the Indenture and described in such notice. The Company will comply with the requirements of Rule l4e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. On the Change of Control Payment Date, the Company will, to the extent lawful, (i) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered and (iii) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or integral multiples thereof. 6. CONVERSION A Holder of a Note may convert the principal amount of such Note (or any portion thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof) into shares of Common Stock at any time prior to the close of business on August 1, 2010; provided, however, that if the Note is submitted or presented for purchase pursuant to a Change of Control Notice, the conversion right will terminate at the close of business on the Business Day immediately preceding the Change of Control Payment Date for such Note or such earlier date as the Holder presents such Note for purchase (unless the Holder withdraws its election pursuant to the Indenture). The initial Conversion Price is $15.525 per share, subject to adjustment under certain circumstances as provided in the Indenture. The number of shares of Common Stock issuable upon conversion of a Note is determined by dividing the principal amount of the Note or portion thereof converted by the Conversion Price in effect on the Conversion Date. A-6 To convert a Note, a Holder must (a) complete and manually sign the conversion notice set forth below and deliver such notice to the Conversion Agent, (b) surrender the Note to the Conversion Agent, (c) furnish appropriate endorsements and transfer documents if required by a Registrar or the Conversion Agent, and (d) pay any transfer or similar tax, if required. A Holder may convert a portion of a Note equal to $1,000 or any integral multiple thereof. A Note in respect of which a Holder had delivered a Change of Control Purchase Notice exercising the option of such Holder to require the Company to purchase such Note may be converted only if the Change of Control Purchase Notice is withdrawn in accordance with the terms of the Indenture. As soon as practicable after the Conversion Date, the Company shall satisfy all of its Conversion Obligations by delivering to the Holder, at the Company's option, either shares of Common Stock, cash, or a combination of cash and shares of Common Stock. If the Company elects to satisfy the entire Conversion Obligation by Share Settlement, then the Company will deliver to the Holder shares of Common Stock equal to the quotient of (A) the aggregate principal amount of Notes to be converted by the Holder divided by (B) the Conversion Price in effect on the Conversion Date. If the Company elects to satisfy the entire Conversion Obligation by Cash Settlement, then the Company will deliver to the Holder cash in an amount equal to the product of (A) a number equal to the aggregate principal amount of Notes to be converted by such Holder divided by the Conversion Price in effect on the Conversion Date, and (B) the arithmetic mean of the Volume Weighted Average Prices of the Common Stock on each Trading Day during the Cash Settlement Averaging Period. If the Company elects to satisfy the Conversion Obligation in a Combined Settlement, then the Company will deliver to the Holder a Partial Cash Amount plus a number of shares of Common Stock equal to the quotient of (A) the amount of the Cash Settlement minus such Partial Cash Amount divided by (B) the arithmetic mean of the Volume Weighted Average Prices of the Common Stock on each Trading Day during the applicable Cash Settlement Averaging Period. Upon receipt of the conversion notice from a Holder by the Company (1) if the Company elects to satisfy the Conversion Obligation by Share Settlement, then settlement in Common Stock will be made on or prior to the fifth (5th) Trading Day following the receipt of such conversion notice; or (2) if the Company elects to satisfy the Conversion Obligation by Cash Settlement or Combined Settlement, then the Company will notify the Holder, through the Trustee, of the dollar amount to be satisfied in cash at any time during the Settlement Notice Period. Share Settlement will apply automatically if the Company does not notify the Holder that the Company has chosen another settlement method. If the Company timely elects Cash Settlement or Combined Settlement, then the Holder may retract the conversion notice at any time during the Conversion Retraction Period by notice to the Trustee. The Holder cannot retract the conversion notice (and the conversion notice therefore will be irrevocable) if the Company elects Share Settlement. If the Holder has not retracted the conversion notice during the Conversion Retraction Period, then Cash Settlement or Combined Settlement will occur on the first Trading Day following the Cash Settlement Averaging Period. 7. SUBORDINATION The indebtedness evidenced by the Notes is, to the extent and in the manner provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt of the Company. Any Holder by accepting this Note agrees to and shall be bound by such subordination provisions and authorizes the Trustee to give them effect. In addition to all other rights of Senior Debt described in the Indenture, the Senior Debt shall continue to be Senior Debt and entitled to the benefits of A-7 the subordination provisions irrespective of any amendment, modification or waiver of any terms of any instrument relating to the Senior Debt or any extension or renewal of the Senior Debt. 8. DENOMINATIONS, TRANSFER, EXCHANGE The Notes are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder may register the transfer of or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes or other governmental charges that may be imposed in relation thereto by law or permitted by the Indenture. 9. PERSONS DEEMED OWNERS The Holder of a Note may be treated as the owner of it for all purposes. 10. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company, subject to applicable unclaimed property law. After that, Holders entitled to money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person. 11. AMENDMENT, SUPPLEMENT AND WAIVER Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, and an existing default or Event of Default and its consequence or compliance with any provision of the Indenture or the Notes may be waived in a particular instance with the consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without the consent of or notice to any Holder, the Company and the Trustee may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency or make any other change that does not adversely affect the rights of any Holder. 12. SUCCESSOR ENTITY When a successor corporation assumes all the obligations of its predecessor under the Notes and the Indenture in accordance with the terms and conditions of the Indenture, the predecessor corporation (except in certain circumstances specified in the Indenture) be released from those obligations. 13. DEFAULTS AND REMEDIES Under the Indenture, an Event of Default includes: (i) default for 30 days in payment of interest (including Additional Interest, if any), on any Notes; (ii) default in payment of any principal (including any premium) on the Notes when due; (iii) failure by the Company for 30 days after notice from either the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes to comply with Sections 3.2 or 7.1 of the Indenture; (iv) failure by the Company for 60 days after notice from either the Trustee or the Holders of at least 25% in principal of the then outstanding Notes to comply with any of its other agreements contained in the Indenture or the Notes; (v) default in the payment of certain indebtedness of the Company; and (vi) certain events of bankruptcy, insolvency or reorganization of the Company or any Significant Subsidiary. If an Event of Default (other than as a result of certain events of bankruptcy, insolvency or reorganization) occurs and is continuing, the Trustee or the Holders of at least A-8 25% in aggregate principal amount of the Notes then outstanding may, by notice to the Company, declare all unpaid principal and accrued and unpaid interest thereon to the date of acceleration on the Notes then outstanding to be due and payable upon any such declaration, all as and to the extent provided in the Indenture. If an Event of Default occurs as a result of certain events of bankruptcy, insolvency or reorganization of the Company, unpaid principal of the Notes then outstanding and accrued and unpaid interest thereon shall become due and payable immediately without any declaration or other act on the part of the Trustee or any Holder, all as and to the extent provided in the Indenture. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in aggregate principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or interest (including Additional Interest, if any) if it determines that withholding notice is in their interests. The Company is required to file periodic reports with the Trustee as to the absence of default. 14. TRUSTEE DEALINGS WITH THE COMPANY J.P. Morgan Trust Company, National Association, the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from and perform services for the Company or an Affiliate of the Company, and may otherwise deal with the Company or an Affiliate of the Company, as if it were not the Trustee. 15. NO RECOURSE AGAINST OTHERS A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Notes or the Indenture nor for any claim based on, in respect of or by reason of such obligations or their creation. The Holder of this Note by accepting this Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of this Note. 16. AUTHENTICATION This Note shall not be valid until the Trustee or an authenticating agent manually signs the certificate of authentication on the other side of this Note. 17. ABBREVIATIONS AND DEFINITIONS Customary abbreviations may be used in the name of the Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act). All terms defined in the Indenture and used in this Note but not specifically defined herein are defined in the Indenture and are used herein as so defined. 18. INDENTURE TO CONTROL; GOVERNING LAW In the case of any conflict between the provisions of this Note and the Indenture, the provisions of the Indenture shall control. This Note shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principals of conflicts of law. The Company will furnish to any Holder, upon written request and without charge, a copy of the Indenture. Requests may be made to: Flextronics International Ltd., 2090 Fortune Drive, San Jose, CA 95131, (408) 428-1300, Attention: Investor Relations. A-9 ASSIGNMENT FORM To assign this Note, fill in the form below: I or we assign and transfer this Note to ________________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint ________________________________________________________________________________ agent to transfer this Note on the books of the Company. The agent may substitute another to act for him or her. Your Signature: Date: _________________________________ ___________________________________ (Sign exactly as your name appears on the other side of this Note) *Signature guaranteed by: By: ________________________________ * The signature must be guaranteed by an institution which is a member of one of the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee. A-10 CONVERSION NOTICE To convert this Note into Common Stock of the Company, check the box: [ ] To convert only part of this Note, state the principal amount to be converted (must be $1,000 or a integral multiple of $1,000): $____________. If you want the stock certificate made out in another person's name, fill in the form below: ________________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) Your Signature: Date: _________________________________ ___________________________________ (Sign exactly as your name appears on the other side of this Note) *Signature guaranteed by: By: ________________________________ * The signature must be guaranteed by an institution which is a member of one of the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee. A-11 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 3.2 of the Indenture, check the box below: [ ] Section 3.2 If you want to elect to have only part of the Note purchased by the Company Section 3.2 of the Indenture, state the amount you elect to have purchased: $ Date: _________________________________ Your Signature________________________ (Sign exactly as your name appears on the face of this Note) Tax Identification No:________________ SIGNATURE GUARANTEE: ______________________________________ Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-12 SCHEDULE OF EXCHANGES OF NOTES(4) The following exchanges, repurchases or conversions of a part of this global Note have been made:

PRINCIPAL AMOUNT AUTHORIZED AMOUNT OF AMOUNT OF OF THIS GLOBAL NOTE SIGNATORY OF DECREASE IN INCREASE IN FOLLOWING SUCH SECURITIES PRINCIPAL AMOUNT PRINCIPAL AMOUNT DATE OF EXCHANGE DECREASE (OR INCREASE) CUSTODIAN OF THIS GLOBAL NOTE OF THIS GLOBAL NOTE - ---------------- --------------------- --------- ------------------- -------------------

- ----------------- (4) This schedule should be included only if the Security is a Global Security. A-13 CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF RESTRICTED SECURITIES(5) Re: 1% Convertible Subordinated Notes Due August 1, 2010 (the "Notes") of Flextronics International Ltd. This certificate relates to $_______ principal amount of Notes owned in (check applicable box) [ ] book-entry or [ ] definitive form by ___________________ (the "Transferor"). The Transferor has requested a Registrar or the Trustee to exchange or register the transfer of such Notes. In connection with such request and in respect of each such Note, the Transferor does hereby certify that the Transferor is familiar with transfer restrictions relating to the Notes as provided in Section 2.12 of the Indenture dated as of August 5, 2003 between Flextronics International Ltd. and J.P. Morgan Trust Company, National Association, as trustee (the "Indenture"), and the transfer of such Note is being made pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act") (check applicable box) or the transfer or exchange, as the case may be, of such Note does not require registration under the Securities Act because (check applicable box): [ ] Such Note is being transferred pursuant to an effective registration statement under the Securities Act. [ ] Such Note is being acquired for the Transferor's own account, without transfer. [ ] Such Note is being transferred to the Company or a Subsidiary (as defined in the Indenture) of the Company. [ ] Such Note is being transferred to a person the Transferor reasonably believes is a "qualified institutional buyer" (as defined in Rule 144A or any successor provision thereto ("Rule 144A") under the Securities Act) that is purchasing for its own account or for the account of a "qualified institutional buyer", in each case to whom notice has been given that the transfer is being made in reliance on such Rule 144A, and in each case in reliance on Rule 144A. [ ] Such Note is being transferred pursuant to and in compliance with an exemption from the registration requirements under the Securities Act in accordance with Rule 144 (or any successor thereto) ("Rule 144") under the Securities Act. [ ] Such Note is being transferred to a non-U.S. Person in an offshore transaction in compliance with Rule 904 of Regulation S under the Securities Act (or any successor thereto). Such Note is being transferred pursuant to and in compliance with an exemption from the registration requirements of the Securities Act (other than an exemption referred to above) and as a result - ------------------ (5) This certificate should be included if this Security is a Transfer Restricted Security. A-14 of which such Note will, upon such transfer, cease to be a "restricted security" within the meaning of Rule 144 under the Securities Act. The Transferor acknowledges and agrees that, if the transferee will hold any such Notes in the form of beneficial interests in a global Note which is a "restricted security" within the meaning of Rule 144 under the Securities Act, then such transfer can only be made pursuant to (i) Rule 144A under the Securities Act and such transferee must be a "qualified institutional buyer" (as defined in Rule 144A) or (ii) Regulation S under the Securities Act. Date: _________________________________ __________________________________ (Insert Name of Transferor) A-15 EX-23.01 4 f92242exv23w01.txt EXHIBIT 23.01 EXHIBIT 23.01 August 5, 2003 Flextronics International Ltd. 36 Robinson Road #18-01 City House Singapore, 068877 We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of Flextronics International Ltd. and subsidiaries for the three-month periods ended June 30, 2003 and 2002, as indicated in our reports dated July 23, 2003 (August 5, 2003 as to Note J) and July 19, 2002; because we did not perform an audit, we expressed no opinion on that information. We are aware that our reports referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 and June 30, 2002, are incorporated by reference in Registration Statements on Form S-8 Nos. 333-42255, 333-71049, 333-95189, 333-34016, 333-34698, 333-46166, 333-55528, 333-55850, 333-57680, 333-60270, 333-69452 and 333-75526 and on Form S-3 Nos. 333-87139, 333-87601, 333-94941, 333-41646, 333-46200, 333-46770, 333-55530, 333-56230, 333-60968, 333-68238, 333-70492 and 333-101327. We also are aware that the aforementioned reports, pursuant to Rule 436(c) under the Securities Act of 1933, are not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. /s/ DELOITTE & TOUCHE LLP San Jose, California EX-31.01 5 f92242exv31w01.txt EXHIBIT 31.01 EXHIBIT 31.01 CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Michael E. Marks, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Flextronics International Ltd.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 11, 2003 /s/ Michael E. Marks - --------------------------- Michael E. Marks Chief Executive Officer Flextronics International Ltd. EX-31.02 6 f92242exv31w02.txt EXHIBIT 31.02 EXHIBIT 31.02 CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Robert R.B. Dykes, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Flextronics International Ltd.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 11, 2003 /s/ Robert R.B. Dykes - --------------------------- Robert R.B. Dykes President, Systems Group and Chief Financial Officer Flextronics International Ltd. EX-32.01 7 f92242exv32w01.txt EXHIBIT 32.01 EXHIBIT 32.01 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned, in his capacity as Chief Executive Officer of Flextronics International Ltd. (the "Company"), does hereby certify, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: - the Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2003, as filed with the Securities and Exchange Commission on August 11, 2003 (the "Report"), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and - the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein. Date: August 11, 2003 /s/ Michael E. Marks -------------------------- Michael E. Marks Chief Executive Officer Flextronics International Ltd. A signed original of this written statement required by Section 906 has been provided to Flextronics International Ltd. and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request. EX-32.02 8 f92242exv32w02.txt EXHIBIT 32.02 EXHIBIT 32.02 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned, in his capacity as Chief Executive Officer of Flextronics International Ltd. (the "Company"), does hereby certify, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: - the Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2003, as filed with the Securities and Exchange Commission on August 11, 2003 (the "Report"), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and - the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein. Date: August 11, 2003 /s/ Robert R.B. Dykes -------------------------- Robert R.B. Dykes President, Systems Group and Chief Financial Officer Flextronics International Ltd. A signed original of this written statement required by Section 906 has been provided to Flextronics International Ltd. and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----

EX-4.01

                                                                    EXHIBIT 4.01

================================================================================
                                                               EXECUTION VERSION

                         FLEXTRONICS INTERNATIONAL LTD.

              1% CONVERTIBLE SUBORDINATED NOTES DUE AUGUST 1, 2010

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

                                    INDENTURE
                           DATED AS OF AUGUST 5, 2003

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

                J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION,
                                   AS TRUSTEE

================================================================================



                                TABLE OF CONTENTS



                                                                                                                     PAGE
                                                                                                               
                                    ARTICLE 1

                  DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.1.      DEFINITIONS...................................................................................      1
Section 1.2.      OTHER DEFINITIONS.............................................................................      7
Section 1.3.      TRUST INDENTURE ACT PROVISIONS................................................................      8
Section 1.4.      RULES OF CONSTRUCTION.........................................................................      8

                                    ARTICLE 2

                                 THE SECURITIES

Section 2.1.      FORM AND DATING...............................................................................      9
Section 2.2.      EXECUTION AND AUTHENTICATION..................................................................     10
Section 2.3.      REGISTRAR, PAYING AGENT AND CONVERSION AGENT..................................................     11
Section 2.4.      PAYING AGENT TO HOLD MONEY IN TRUST...........................................................     11
Section 2.5.      SECURITYHOLDERS LIST..........................................................................     12
Section 2.6.      TRANSFER AND EXCHANGE.........................................................................     12
Section 2.7.      REPLACEMENT SECURITIES........................................................................     13
Section 2.8.      OUTSTANDING SECURITIES........................................................................     13
Section 2.9.      TREASURY SECURITIES...........................................................................     14
Section 2.10.     TEMPORARY SECURITIES..........................................................................     14
Section 2.11.     CANCELLATION..................................................................................     14
Section 2.12.     LEGEND; ADDITIONAL TRANSFER AND EXCHANGE REQUIREMENTS.........................................     14
Section 2.13.     CUSIP NUMBERS.................................................................................     17

                                    ARTICLE 3

                                   REDEMPTION

Section 3.1.      NO REDEMPTION BY THE COMPANY..................................................................     17
Section 3.2.      PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON CHANGE OF CONTROL.........................     17

                                    ARTICLE 4

                                   CONVERSION

Section 4.1.      CONVERSION PRIVILEGE..........................................................................     19
Section 4.2.      CONVERSION PROCEDURE..........................................................................     19
Section 4.3.      FRACTIONAL SHARES.............................................................................     22
Section 4.4.      TAXES ON CONVERSION...........................................................................     22
Section 4.5.      COMPANY TO PROVIDE STOCK......................................................................     22


                                        i



                                                                                                               
Section 4.6.      ADJUSTMENT OF CONVERSION PRICE................................................................     22
Section 4.7.      NO ADJUSTMENT.................................................................................     26
Section 4.8.      ADJUSTMENT FOR TAX PURPOSES...................................................................     27
Section 4.9.      NOTICE OF ADJUSTMENT..........................................................................     27
Section 4.10.     EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON CONVERSION PRIVILEGE.............     27
Section 4.11.     TRUSTEE'S DISCLAIMER..........................................................................     28
Section 4.12.     VOLUNTARY REDUCTION...........................................................................     28

                                    ARTICLE 5

                                  SUBORDINATION

Section 5.1.      SECURITIES SUBORDINATED TO SENIOR DEBT........................................................     29
Section 5.2.      NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES..................................................     29
Section 5.3.      PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC................................................     30
Section 5.4.      PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION.....................................................     31
Section 5.5.      SUBROGATION...................................................................................     31
Section 5.6.      OBLIGATIONS OF THE COMPANY UNCONDITIONAL......................................................     31
Section 5.7.      NOTICE TO TRUSTEE.............................................................................     31
Section 5.8.      RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT................................     32
Section 5.9.      TRUSTEE'S RELATION TO SENIOR DEBT OR GUARANTOR SENIOR DEBT....................................     32
Section 5.10.     SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE COMPANY OR A GUARANTOR OR
                      HOLDERS OF SENIOR DEBT....................................................................     33
Section 5.11.     CERTAIN CONVERSIONS NOT DEEMED PAYMENT........................................................     33
Section 5.12.     HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF SECURITIES...........................     33
Section 5.13.     THIS ARTICLE 5 NOT TO PREVENT EVENTS OF DEFAULT...............................................     34
Section 5.14.     TRUSTEE'S COMPENSATION NOT PREJUDICED.........................................................     34

                                    ARTICLE 6

                                    COVENANTS

Section 6.1.      PAYMENT OF SECURITIES.........................................................................     34
Section 6.2.      SEC REPORTS...................................................................................     35
Section 6.3.      COMPLIANCE CERTIFICATES.......................................................................     35
Section 6.4.      FURTHER INSTRUMENTS AND ACTS..................................................................     35
Section 6.5.      MAINTENANCE OF CORPORATE EXISTENCE............................................................     35
Section 6.6.      RULE 144A INFORMATION REQUIREMENT.............................................................     35
Section 6.7.      STAY, EXTENSION AND USURY LAWS................................................................     36
Section 6.8.      PAYMENT OF ADDITIONAL INTEREST................................................................     36



                                       ii



                                                                                                               
                                    ARTICLE 7

              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

Section 7.1.      COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS..........................................     36
Section 7.2.      SUCCESSOR SUBSTITUTED.........................................................................     37
Section 7.3.      ADDITIONAL CONDITIONS UPON REINCORPORATING, MERGING OR CONSOLIDATING INTO ANOTHER COUNTRY.....     37

                                    ARTICLE 8

                              DEFAULT AND REMEDIES

Section 8.1.      EVENTS OF DEFAULT.............................................................................     38
Section 8.2.      ACCELERATION..................................................................................     40
Section 8.3.      OTHER REMEDIES................................................................................     40
Section 8.4.      WAIVER OF DEFAULTS AND EVENTS OF DEFAULT......................................................     40
Section 8.5.      CONTROL BY MAJORITY...........................................................................     40
Section 8.6.      LIMITATIONS ON SUITS..........................................................................     41
Section 8.7.      RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO CONVERT...........................................     41
Section 8.8.      COLLECTION SUIT BY TRUSTEE....................................................................     41
Section 8.9.      TRUSTEE MAY FILE PROOFS OF CLAIM..............................................................     42
Section 8.10.     PRIORITIES....................................................................................     42
Section 8.11.     UNDERTAKING FOR COSTS.........................................................................     42

                                    ARTICLE 9

                                     TRUSTEE

Section 9.1.      DUTIES OF TRUSTEE.............................................................................     43
Section 9.2.      RIGHTS OF TRUSTEE.............................................................................     44
Section 9.3.      INDIVIDUAL RIGHTS OF TRUSTEE..................................................................     45
Section 9.4.      TRUSTEE'S DISCLAIMER..........................................................................     45
Section 9.5.      NOTICE OF DEFAULTS............................................................................     45
Section 9.6.      REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES....................................................     45
Section 9.7.      COMPENSATION AND INDEMNITY....................................................................     46
Section 9.8.      REPLACEMENT OF TRUSTEE........................................................................     46
Section 9.9.      SUCCESSOR TRUSTEE BY MERGER, ETC..............................................................     47
Section 9.10.     ELIGIBILITY; DISQUALIFICATION.................................................................     47
Section 9.11.     PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.............................................     47



                                       iii



                                                                                                               
                                   ARTICLE 10

                     SATISFACTION AND DISCHARGE OF INDENTURE

Section 10.1.     SATISFACTION AND DISCHARGE OF INDENTURE.......................................................     48
Section 10.2.     APPLICATION OF TRUST MONEY....................................................................     48
Section 10.3.     REPAYMENT TO COMPANY..........................................................................     49
Section 10.4.     REINSTATEMENT.................................................................................     49

                                   ARTICLE 11

                       AMENDMENTS, SUPPLEMENTS AND WAIVERS

Section 11.1.     WITHOUT CONSENT OF HOLDERS....................................................................     49
Section 11.2.     WITH CONSENT OF HOLDERS.......................................................................     50
Section 11.3.     COMPLIANCE WITH TRUST INDENTURE ACT...........................................................     51
Section 11.4.     REVOCATION AND EFFECT OF CONSENTS.............................................................     51
Section 11.5.     NOTATION ON OR EXCHANGE OF SECURITIES.........................................................     51
Section 11.6.     TRUSTEE TO SIGN AMENDMENTS, ETC...............................................................     51
Section 11.7.     EFFECT OF SUPPLEMENTAL INDENTURES.............................................................     52

                                   ARTICLE 12

                                  MISCELLANEOUS

Section 12.1.     TRUST INDENTURE ACT CONTROLS..................................................................     52
Section 12.2.     NOTICES.......................................................................................     52
Section 12.3.     COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS..................................................     53
Section 12.4.     CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT............................................     53
Section 12.5.     RECORD DATE FOR VOTE OR CONSENT OF SECURITYHOLDERS............................................     54
Section 12.6.     RULES BY TRUSTEE, PAYING AGENT, REGISTRAR AND CONVERSION AGENT................................     54
Section 12.7.     LEGAL HOLIDAYS................................................................................     54
Section 12.8.     GOVERNING LAW.................................................................................     54
Section 12.9.     NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.................................................     55
Section 12.10.    NO RECOURSE AGAINST OTHERS....................................................................     55
Section 12.11.    SUCCESSORS....................................................................................     55
Section 12.12.    MULTIPLE COUNTERPARTS.........................................................................     55
Section 12.13.    SEPARABILITY..................................................................................     55
Section 12.14.    TABLE OF CONTENTS, HEADINGS, ETC..............................................................     55
Section 12.15.    BERMUDA BRANCH; FULL RECOURSE OBLIGATIONS.....................................................     55
Section 12.16.    CONSENT TO JURISDICTION AND SERVICE...........................................................     55



                                       iv



                             CROSS-REFERENCE TABLE*



  TIA                                                                                       INDENTURE
SECTION                                                                                      SECTION
- -------                                                                                     ----------
                                                                                         
Section 310   (a)(1)....................................................................    9.10
              (a)(2)....................................................................    9.10
              (a)(3)....................................................................    N.A.**
              (a)(4)....................................................................    N.A.
              (a)(5)....................................................................    9.10
              (b).......................................................................    9.8; 9.10
              (c).......................................................................    N.A.
Section 311   (a).......................................................................    9.11
              (b).......................................................................    9.11
              (c).......................................................................    N.A.
Section 312   (a).......................................................................    2.5
              (b).......................................................................    12.3
              (c).......................................................................    12.3
Section 313   (a).......................................................................    9.6
              (b)(1)....................................................................    N.A.
              (b)(2)....................................................................    9.6
              (c).......................................................................    9.6; 12.2
              (d).......................................................................    9.6
Section 314   (a).......................................................................    6.2; 6.4; 12.2
              (b).......................................................................    N.A.
              (c)(1)....................................................................    12.4(a)
              (c)(2)....................................................................    12.4(a)
              (c)(3)....................................................................    N.A.
              (d).......................................................................    N.A.
              (e).......................................................................    12.4(b)
              (f).......................................................................    N.A.
Section 315   (a).......................................................................    9.1(b)
              (b).......................................................................    9.5; 12.2
              (c).......................................................................    9.1(a)
              (d).......................................................................    9.1(c)
              (e).......................................................................    8.11
Section 316   (a)(last sentence)........................................................    2.9
              (a)(1)(A).................................................................    8.5
              (a)(1)(B).................................................................    8.4
              (a)(2)....................................................................    N.A.
              (b).......................................................................    8.7
              (c).......................................................................    12.5
Section 317   (a)(1)....................................................................    8.8
              (a)(2)....................................................................    8.9
              (b).......................................................................    2.4


- -----------------
*   This Cross-Reference Table shall not, for any purpose, be deemed a part of
    this Indenture.

**  N.A. means Not Applicable.



         THIS INDENTURE dated as of August 5, 2003 is between Flextronics
International Ltd., a Singapore corporation (the "Company"), and J.P. Morgan
Trust Company, National Association, a national banking association organized
and existing under the laws of the United States, as Trustee (the "Trustee").

         In consideration of the premises and the purchase of the Securities by
the Holders thereof, both parties agree as follows for the benefit of the other
and for the equal and ratable benefit of the Holders of the Company's 1%
Convertible Subordinated Notes Due August 1, 2010.

                                   ARTICLE 1

                   DEFINITIONS AND INCORPORATION BY REFERENCE

         SECTION  1.1.     DEFINITIONS.

         "Additional Interest" has the meaning specified in Section 5 of the
Registration Rights Agreement. All references herein to interest accrued or
payable as of any date shall include any Additional Interest accrued or payable
as of such date as provided in the Registration Rights Agreement.

         "Affiliate" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of this
definition, "control" when used with respect to any person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

         "Agent" means any Registrar, Paying Agent or Conversion Agent.

         "Applicable Procedures" means, with respect to any transfer or exchange
of beneficial ownership interests in a Global Security, the rules and procedures
of the Depositary, in each case to the extent applicable to such transfer or
exchange.

         "Board of Directors" means either the board of directors of the Company
or any committee of the Board of Directors authorized to act for it with respect
to this Indenture.

         "Business Day" means each day that is not a Legal Holiday.

         "Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.

         "Capital Stock" or "capital stock" of any Person means any and all
shares, interests, rights to purchase, warrants, options, participations or
other equivalents of or interests in (however designated) equity of such Person,
but excluding any debt securities convertible into such equity.

         "Cash" or "cash" means such coin or currency of the United States as at
any time of payment is legal tender for the payment of public and private debts.

         "Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having



maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any lender party to the Credit Facility or with any domestic commercial
bank having capital and surplus in excess of $500 million and a Keefe Bank Watch
Rating of "B" or better, (iv) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses (ii)
and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above and (v) commercial paper having
the highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Corporation and in each case maturing within six months after the date of
acquisition.

         "Cash Settlement Averaging Period" means the five (5) Trading Day
period beginning on the first Trading Day after the Conversion Retraction
Period, provided that with respect to determining amounts payable in lieu of
fractional shares pursuant to Section 4.3, if there is no Cash Settlement or
Combined Settlement, Cash Settlement Averaging Period means the five (5) Trading
Day period following the Conversion Date.

         "Certificated Security" means a Security that is in substantially the
form attached hereto as Exhibit A and that does not include the information or
the schedule called for by footnotes 1, 3 and 4 thereof.

         "Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition, in one or a series
of related transactions, of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole to any "person" (as such term is
used in Section 13(d)(3) of the Exchange Act); (ii) the adoption by the Company
of a plan relating to the liquidation, judicial management or dissolution of the
Company; (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above) becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the Voting Stock of the Company (measured by
voting power rather than number of shares); or (iv) the first day on which a
majority of the members of the Board of Directors of the Company are not
Continuing Directors.

         "Common Stock" means the ordinary shares of the Company, S$0.01 par
value per share, as it exists on the date of this Indenture and any shares of
any class or classes of capital stock of the Company resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which are
not subject to redemption by the Company; provided, however, that if at any time
there shall be more than one such resulting class, the shares of each such class
then so issuable on conversion of Securities shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.

         "Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to the applicable provisions of
this Indenture, and thereafter "Company" shall mean such successor Company.

         "Continuing Director" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election and who voted with respect to such nomination or
election; provided that a majority of the members of the Board voting with
respect thereto shall at the time have been Continuing Directors.

                                        2



         "Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.2 hereof or such other address as to which the
Trustee may give notice to the Company.

         "Credit Facility" means, collectively, the Revolving Credit and Term
Loan Agreement dated as of March 8, 2002, as amended by Amendment No. 1 thereto
dated March 7, 2003, by and among the Company, certain agents and certain
lending institutions party thereto and the Revolving Credit and Term Loan
Agreement dated as of March 8, 2002, as amended by Amendment No. 1 thereto dated
March 7, 2003, by and among Flextronics International U.S.A. Inc., certain
agents and certain lending institutions party thereto and in each case, as
amended, modified, renewed, restated, refunded, replaced or refinanced from time
to time.

         "Debt" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or bankers' acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all Debt of others secured
by a Lien on any asset of such Person (whether or not such Debt is assumed by
such Person) and, to the extent not otherwise included, the Guarantee by such
Person of any Debt of any other Person.

         "Default" or "default" means, when used with respect to the Securities,
any event which is or, after notice or passage of time or both, would be an
Event of Default.

         "Designated Senior Debt" means (i) any Debt under the Credit Facility
(and any guarantees thereof) and (ii) any other Senior Debt otherwise designated
by the Company (which designation shall have been approved in writing by the
Representative under the Credit Facility, and such approval shall have been
delivered to the Trustee, so long as (A) the Credit Facility is in effect and
(B) the Company shall not then be a party to a credit facility or similar
arrangement (other than the Credit Facility) that provides for loans in an
aggregate principal amount that is greater than the aggregate principal amount
of loans to the Company that may be made under the Credit Facility and that are
not entered into in violation of the Credit Facility) and the Representative
thereunder as "Designated Senior Debt" and, in the case of the designation by
the Company, certified in an Officers' Certificate delivered to the Trustee;
provided that not less than $5.0 million aggregate principal amount is
outstanding under Designated Senior Debt at the date of the designation and at
the date of determination.

         "Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

         "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, as in effect from time to
time.

         "Final Maturity Date" means August 1, 2010.

         "GAAP" means generally accepted accounting principles in the United
States of America as in effect, including those set forth in (1) the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants, (2) the statements and pronouncements of the
Financial Accounting Standards Board, (3) such other statements by such other
entity as approved by a significant segment of the accounting profession and (4)
the rules and regulations of the SEC governing the inclusion of financial
statements (including pro forma financial statements) in registration

                                        3



statements filed under the Securities Act and periodic reports required to be
filed pursuant to Section 13 of the Exchange Act, including opinions and
pronouncements in staff accounting bulletins and similar written statements from
the accounting staff of the SEC.

         "Global Security" means a permanent Global Security that is in
substantially the form attached hereto as Exhibit A and that includes the
information and schedule called for by footnotes 1, 3 and 4 thereof and which is
deposited with the Depositary or its custodian and registered in the name of the
Depositary or its nominee.

         "Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any Debt.

         "Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) currency exchange or interest rate swap
agreements, interest rate cap agreements and interest rate collar agreements and
(ii) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates or currency exchange rates.

         "Holder" or "Securityholder" means the person in whose name a Security
is registered on the Primary Registrar's books.

         "Indenture" means this Indenture as amended or supplemented from time
to time pursuant to the terms of this Indenture.

         "Initial Purchasers" means the parties listed on Schedule A attached
hereto.

         "Interest Payment Dates" means the dates listed on the Notes as the
dates on which interest is payable on the Notes.

         "Liens" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).

         "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Debt.

         "Officer" means the Chairman or any Co-Chairman of the Board, any Vice
Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer, the Controller, the Secretary or any
Assistant Controller or Assistant Secretary of the Company.

         "Officers' Certificate" means a certificate signed by two Officers;
provided, however, that for purposes of Sections 4.11 and 6.3, "Officers'
Certificate" means a certificate signed by the principal executive officer,
principal financial officer or principal accounting officer of the Company and
by one other Officer.

         "Opinion of Counsel" means a written opinion from legal counsel. The
counsel may be an employee of or counsel to the Company or the Trustee.

                                        4



         "Permitted Junior Securities" means Equity Interests in the Company or
debt securities that are subordinated to all Senior Debt (and any debt
securities issued in exchange for Senior Debt) to substantially the same extent
as, or to a greater extent than, the Notes are subordinated to Senior Debt
pursuant to this Indenture.

         "Person" or "person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.

         "Principal" or "principal" of a debt security, including the
Securities, means the principal of the security plus, when appropriate, the
premium, if any, on the security.

         "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 5, 2003, between the Company and the Initial
Purchasers.

         "Regular Record Dates" means the dates listed in the Notes as the
regular record dates to determine which holders are entitled to receive interest
on the immediately following Interest Payment Date.

         "Regulation S" means Regulation S under the Securities Act or any
successor to such Regulation.

         "Representative" means the (a) indenture trustee or other trustee,
agent or representative for any Senior Debt or (b) with respect to any Senior
Debt that does not have any such trustee, agent or other representative, (i) in
the case of such Senior Debt issued pursuant to an agreement providing for
voting arrangements as among the holders or owners of such Senior Debt, any
holder or owner of such Senior Debt acting with the consent of the required
persons necessary to bind such holders or owners of such Senior Debt and (ii) in
the case of all other such Senior Debt, the holder or owner of such Senior Debt.

         "Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Office of the Trustee (or any successor group
of the Trustee) or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.

         "Restricted Global Security" means a Global Security that is a
Restricted Security.

         "Restricted Security" means a Security required to bear the restricted
legend set forth in the form of Security set forth in Exhibit A of this
Indenture.

         "Rule 144" means Rule 144 under the Securities Act or any successor to
such Rule.

         "Rule 144A" means Rule 144A under the Securities Act or any successor
to such Rule.

         "SEC" means the Securities and Exchange Commission.

         "Securities" or "Notes" means the 1% Convertible Subordinated Notes due
August 1, 2010 or any of them (each, a "Security"), as amended or supplemented
from time to time, that are issued under this Indenture.

         "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, as in effect from time to time.

                                        5



         "Securities Custodian" means the Trustee, as custodian with respect to
the Securities in global form, or any successor thereto.

         "Senior Debt" means (i) all Debt of the Company outstanding under the
Credit Facility and all Hedging Obligations with respect thereto, (ii) any other
Debt incurred by the Company, unless the instrument under which such Debt is
incurred expressly provides that it is on a parity with or subordinated in right
of payment to the Securities, and (iii) all Obligations with respect to the
foregoing. Notwithstanding anything to the contrary in the foregoing, Senior
Debt will not include (w) any liability for federal, state, local or other taxes
owed or owing by the Company, (x) any Debt of the Company to any of its
Subsidiaries or other Affiliates, (y) any trade payables or (z) the Company's 9
7/8% Senior Subordinated Notes due 2010, 9 3/4% Senior Subordinated Notes due
2010 and Convertible Junior Subordinated Notes due 2008.

         "Significant Subsidiary" means, in respect of any Person, a Subsidiary
of such Person that would constitute a "significant subsidiary" as such term is
defined under Rule 1-02 of Regulation S-X under the Securities Act and the
Exchange Act.

         "Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers, general partners or
trustees thereof is at the time owned or controlled, directly or indirectly, by
(i) such Person; (ii) such Person and one or more Subsidiaries of such Person;
or (iii) one or more Subsidiaries of such Person.

         "TIA" means the Trust Indenture Act of 1939, as amended, and the rules
and regulations thereunder as in effect on the date of this Indenture, except as
provided in Section 11.3, and except to the extent any amendment to the Trust
Indenture Act expressly provides for application of the Trust Indenture Act as
in effect on another date.

         "Trading Day" means a day during which trading in securities generally
occurs on the Nasdaq National Market (or, if the Common Stock is not quoted on
the Nasdaq National Market, on the principal market on which the Common Stock is
then traded), other than a day on which a material suspension of or limitation
on trading is imposed that affects either the Nasdaq National Market (or, if
applicable, such other market) in its entirety or only the shares of Common
Stock (by reason of movements in price exceeding limits permitted by the
relevant market on which the shares are traded or otherwise) or on which the
Nasdaq National Market (or, if applicable, such other market) cannot clear the
transfer of shares due to an event beyond the Company's control.

         "Trustee" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
this Indenture, and thereafter means such successor.

         "Unrestricted Certificated Security" means a Certificated Security that
is not a Restricted Security.

         "Unrestricted Global Security" means a Global Security that is not a
Restricted Security.

         "Vice President" when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."

                                        6



         "Volume Weighted Average Price" means, with respect to one share of
Common Stock on any Trading Day, the volume weighted average prices as displayed
under the heading "Bloomberg VWAP" on Bloomberg Page FLEX+ AQR in
respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on that
Trading Day (or if such volume weighted average price is not available, the
market value of one share of Common Stock on such Trading Day as the Company
determines in good faith using a volume weighted method).

         "Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.

         SECTION 1.2.      OTHER DEFINITIONS.



                                       TERM                                            DEFINED IN SECTION
- --------------------------------------------------------------------------------       ------------------
                                                                                    
"Agent Members".................................................................              2.1(b)
"Bankruptcy Law"................................................................              8.1
"Cash Distribution".............................................................              4.6(d)
"Change of Control Offer".......................................................              3.2(a)
"Change of Control Payment".....................................................              3.2(a)
"Change of Control Payment Date"................................................              3.2(a)
"Change of Control Purchase Notice".............................................              3.2(a)
"Company Order".................................................................              2.2
"Conversion Agent"..............................................................              2.3
"Conversion Date"...............................................................              4.2(a)
"Conversion Price"..............................................................              4.6
"Conversion Retraction Period"..................................................              4.2(c)(4)
"Current Market Price"..........................................................              4.6(e)
"Custodian".....................................................................              8.1
"DTC"...........................................................................              2.1(a)
"Depositary"....................................................................              2.1(a)
"Determination Date"............................................................              4.6(d)(1)
"Events of Default".............................................................              8.1
"Expiration Date"...............................................................              4.6(d)(2)
"Expiration Time"...............................................................              4.6(d)(2)
"Legal Holiday".................................................................             12.7
"Legend" .......................................................................              2.12(a)
"Paying Agent"..................................................................              2.3
"Payment Blockage Notice".......................................................              5.2(a)
"Payment Blockage Period"  .....................................................              6.1
"Payment Default"...............................................................              8.1(5)
"Primary Registrar".............................................................              2.3
"Purchase Agreement"............................................................              2.1
"Purchased Shares"..............................................................              4.6(c)(2)
"QIB"...........................................................................              2.1
"Registrar".....................................................................              2.3
"Rights Plan"...................................................................              4.6(c)
"Share Settlement"..............................................................              4.2(b)
"Subject Transaction"...........................................................              7.1
"Trigger Event" ................................................................              4.6(c)


                                       7



         SECTION 1.3.      TRUST INDENTURE ACT PROVISIONS.

         Whenever this Indenture refers to a provision of the TIA, that
provision is incorporated by reference in and made a part of this Indenture.
This Indenture shall also include those provisions of the TIA required to be
included herein by the provisions of the Trust Indenture Reform Act of 1990. The
following TIA terms used in this Indenture have the following meanings:

                  "indenture securities" means the Securities;

                  "indenture security holder" means a Securityholder;

                  "indenture to be qualified" means this Indenture;

                  "indenture trustee" or "institutional trustee" means the
         Trustee; and

                  "obligor" on the indenture securities means the Company or any
         other obligor on the Securities.

         All other terms used in this Indenture that are defined in the TIA,
defined in the TIA by reference to another statute or defined by any SEC rule
and not otherwise defined herein have the meanings assigned to them therein.

         SECTION 1.4.      RULES OF CONSTRUCTION.

         Unless the context otherwise requires:

                  (A)      a term has the meaning assigned to it;

                  (B)      an accounting term not otherwise defined has the
         meaning assigned to it in accordance with GAAP;

                  (C)      words in the singular include the plural, and words
         in the plural include the singular;

                  (D)      provisions apply to successive events and
         transactions;

                  (E)      the term "merger" includes a statutory share exchange
         and the term "merged" has a correlative meaning;

                  (F)      the masculine gender includes the feminine and the
         neuter;

                  (G)      references to agreements and other instruments
         include subsequent amendments thereto; and

                  (H)      "herein," "hereof" and other words of similar import
         refer to this Indenture as a whole and not to any particular Article,
         Section or other subdivision.

                                        8



                                    ARTICLE 2

                                 THE SECURITIES

         SECTION 2.1.      FORM AND DATING.

         The Securities and the Trustee's certificate of authentication shall be
substantially in the respective forms set forth in Exhibit A, which Exhibit is
incorporated in and made part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule or
usage. The Company shall provide any such notations, legends or endorsements to
the Trustee in writing. Each Security shall be dated the date of its
authentication. The Securities are being offered and sold by the Company
pursuant to a Purchase Agreement, dated July 31, 2003 (the "Purchase
Agreement"), between the Company and the Initial Purchasers, in transactions
exempt from, or not subject to, the registration requirements of the Securities
Act.

         (a)      Restricted Global Securities. All of the Securities are
initially being offered and sold to qualified institutional buyers as defined in
Rule 144A (collectively, "QIBs" or individually, each a "QIB") in reliance on
Rule 144A under the Securities Act and to Non-U.S. Persons in offshore
transactions pursuant to Regulation S and shall be issued initially in the form
of one or more Restricted Global Securities, which shall be deposited on behalf
of the purchasers of the Securities represented thereby with the Trustee, at its
Corporate Trust Office, as custodian for the depositary, The Depository Trust
Company ("DTC") (such depositary, or any successor thereto, being hereinafter
referred to as the "Depositary"), and registered in the name of its nominee,
Cede & Co., for the accounts of participants in the Depositary duly executed by
the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the Restricted Global Securities may from time to
time be increased or decreased by adjustments made on the records of the
Securities Custodian as hereinafter provided, subject in each case to compliance
with the Applicable Procedures.

         (b)      Global Securities in General. Each Global Security shall
represent such of the outstanding Securities as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Securities from time to time endorsed thereon and that the aggregate amount of
outstanding Securities represented thereby may from time to time be reduced or
increased, as appropriate, to reflect replacements, exchanges, purchases or
conversions of such Securities. Any adjustment of the aggregate principal amount
of a Global Security to reflect the amount of any increase or decrease in the
amount of outstanding Securities represented thereby shall be made by the
Trustee in accordance with instructions given by the Holder thereof as required
by Section 2.12 hereof and shall be made on the records of the Trustee and the
Depositary.

         Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or under the Global Security, and the Depositary
(including, for this purpose, its nominee) may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner and
Holder of such Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall (A) prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depositary or (B)
impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Security.

         (c)      Book Entry Provisions. The Company shall execute and the
Trustee shall, in accordance with this Section 2.1(c), authenticate and deliver
initially one or more Global Securities that (i) shall be

                                        9



registered in the name of the Depositary or its nominee, (ii) shall be delivered
by the Trustee to the Depositary or pursuant to the Depositary's instructions
and (iii) shall bear legends substantially to the following effect:

         "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
         OF THE DEPOSITORY TRUST COMPANY TO FLEXTRONICS INTERNATIONAL LTD. (THE
         "COMPANY") OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
         PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
         CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
         REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON
         IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
         AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY
         TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
         ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
         HAS AN INTEREST HEREIN. THIS SECURITY IS A GLOBAL SECURITY WITHIN THE
         MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN
         THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY IS
         EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
         THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
         DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN
         WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY
         NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF
         THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
         ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH
         NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
         DEPOSITARY."

         SECTION 2.2.      EXECUTION AND AUTHENTICATION.

         An Officer shall sign the Securities for the Company by manual or
facsimile signature. Typographic and other minor errors or defects in any such
facsimile signature shall not affect the validity or enforceability of any
Security which has been authenticated and delivered by the Trustee.

         If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.

         A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.

         The Trustee shall authenticate and make available for delivery
Securities for original issue in the aggregate principal amount of up to
$500,000,000 ($530,000,000 if the Initial Purchasers' option to purchase
additional Securities is exercised in full) upon receipt of a written order or
orders of the Company signed by two Officers of the Company (a "Company Order").
The Company Order shall specify the amount of Securities to be authenticated and
the date on which each original issue of Securities is to be authenticated and
shall provide that all such Securities will be represented by a Restricted
Global Security. The aggregate principal amount of Securities outstanding at any
time may not exceed $530,000,000 except as provided in Section 2.7.

                                       10



         The Trustee shall act as the initial authenticating agent. Thereafter,
the Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent shall have the same rights as an Agent to deal with the
Company or an Affiliate of the Company.

         The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 principal amount and any integral
multiple thereof and shall bear interest at the rate, calculated and paid, as
provided in the form of security set forth in Exhibit A.

         SECTION 2.3.      REGISTRAR, PAYING AGENT AND CONVERSION AGENT.

         The Company shall maintain one or more offices or agencies where
Securities may be presented for registration of transfer or for exchange (each,
a "Registrar"), one or more offices or agencies where Securities may be
presented for payment (each, a "Paying Agent"), one or more offices or agencies
where Securities may be presented for conversion (each, a "Conversion Agent")
and one or more offices or agencies where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served. The
Company will at all times maintain a Paying Agent, Conversion Agent, Registrar
and an office or agency where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served in the Borough of
Manhattan, The City of New York. One of the Registrars (the "Primary Registrar")
shall keep a register of the Securities and of their transfer and exchange.

         The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall notify
the Trustee of the name and address of any Agent not a party to this Indenture.
If the Company fails to maintain a Registrar, Paying Agent, Conversion Agent or
agent for service of notices and demands in any place required by this
Indenture, or fails to give the foregoing notice, the Trustee shall act as such.
The Company or any Affiliate of the Company may act as Paying Agent (except for
the purposes of Section 6.1 and Article 10).

         The Company hereby initially designates the Trustee as Paying Agent,
Registrar, Custodian and Conversion Agent, and each of the Corporate Trust
Office of the Trustee and the office or agency of the Trustee in the Borough of
Manhattan, The City of New York, one such office or agency of the Company for
each of the aforesaid purposes.

         SECTION 2.4.      PAYING AGENT TO HOLD MONEY IN TRUST.

         Prior to 11:00 a.m., New York City time, on each due date of the
principal or interest (including Additional Interest, if any) on any Securities,
the Company shall deposit with a Paying Agent a sum sufficient to pay such
principal or interest (including Additional Interest, if any) so becoming due.
Subject to Section 5.2, a Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal or interest (including Additional Interest, if any) on the
Securities, and shall notify the Trustee of any default by the Company (or any
other obligor on the Securities) in making any such payment. If the Company or
an Affiliate of the Company acts as Paying Agent, it shall, before 11:00 a.m.,
New York City time, on each due date of the principal of or interest (including
Additional Interest, if any) on any Securities, segregate the money and hold it
as a separate trust fund. The Company at any time may require a Paying Agent to
pay all money held by it to the Trustee, and the Trustee may at any time during
the continuance of any default, upon written request to a Paying Agent, require
such Paying Agent to pay forthwith to the Trustee all sums so held in trust by

                                       11



such Paying Agent. Upon doing so, the Paying Agent (other than the Company)
shall have no further liability for the money.

         SECTION 2.5.      SECURITYHOLDERS LIST.

         The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Primary Registrar, the Company shall
furnish to the Trustee on or before any Interest Payment Date, if any, and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of Securityholders.

         SECTION 2.6.      TRANSFER AND EXCHANGE.

         (a)      Subject to compliance with any applicable additional
requirements contained in Section 2.12, when a Security is presented to a
Registrar with a request to register a transfer thereof or to exchange such
Security for an equal principal amount of Securities of other authorized
denominations, the Registrar shall register the transfer or make the exchange as
requested; provided, however, that every Security presented or surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied by an
assignment form and, if applicable, a transfer certificate each in the form
included in Exhibit A, and in form satisfactory to the Registrar duly executed
by the Holder thereof or its attorney duly authorized in writing. To permit
registration of transfers and exchanges, upon surrender of any Security for
registration of transfer or exchange at an office or agency maintained pursuant
to Section 2.3, the Company shall execute and the Trustee shall authenticate
Securities of a like aggregate principal amount at the Registrar's request. Any
exchange or transfer shall be without charge, except that the Company or the
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto, and provided that
this sentence shall not apply to any exchange pursuant to Section 2.10, 2.12(a),
4.2(g) or 11.5.

         Neither the Company, any Registrar nor the Trustee shall be required to
exchange or register a transfer of any Securities or portions thereof in respect
of which a Change of Control Purchase Notice has been delivered and not
withdrawn by the Holder thereof (except, in the case of the purchase of a
Security in part, the portion thereof not to be purchased).

         All Securities issued upon any transfer or exchange of Securities shall
be valid obligations of the Company, evidencing the same debt and entitled to
the same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.

         (b)      Any Registrar appointed pursuant to Section 2.3 hereof shall
provide to the Trustee such information as the Trustee may reasonably require in
connection with the delivery by such Registrar of Securities upon transfer or
exchange of Securities.

         (c)      Each Holder of a Security agrees to indemnify the Company and
the Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Security in violation of any provision of this
Indenture and/or applicable United States federal or state securities law.

         The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Agent Members or other
beneficial owners of interests in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when

                                       12



expressly required by the terms of, this Indenture, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.

         SECTION 2.7.      REPLACEMENT SECURITIES.

         If any mutilated Security is surrendered to the Company, a Registrar or
the Trustee, or the Company, a Registrar and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any Security, and there
is delivered to the Company, the applicable Registrar and the Trustee such
security or indemnity as will be required by them to save each of them harmless,
then, in the absence of notice to the Company, such Registrar or the Trustee
that such Security has been acquired by a bona fide purchaser, the Company shall
execute, and upon its written request the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount, bearing a number not contemporaneously outstanding.

         In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, or is about to be purchased by the
Company pursuant to Article 3, the Company in its discretion may, instead of
issuing a new Security, pay or purchase such Security, as the case may be.

         Upon the issuance of any new Securities under this Section 2.7, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the reasonable fees and expenses of the Trustee
or the Registrar) in connection therewith.

         Every new Security issued pursuant to this Section 2.7 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.

         The provisions of this Section 2.7 are (to the extent lawful) exclusive
and shall preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Securities.

         SECTION 2.8.      OUTSTANDING SECURITIES.

         Securities outstanding at any time are all Securities authenticated by
the Trustee, except for those canceled by it, those converted pursuant to
Article 4, those delivered to it for cancellation or surrendered for transfer or
exchange, those reductions in the interest in a Global Security effected by the
Trustee hereunder and those described in this Section 2.8 as not outstanding.

         If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Company receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.

         If a Paying Agent (other than the Company or an Affiliate of the
Company) holds on a Change of Control Payment Date or the Final Maturity Date
money sufficient to pay the principal of (including premium, if any) and
interest (including Additional Interest, if any) on Securities (or portions
thereof) payable on that date, then on and after such Change of Control Payment
Date or the Final Maturity Date, as the case may be, such Securities (or
portions thereof, as the case may be) shall cease to be outstanding and interest
(including Additional Interest, if any) on them shall cease to accrue.

                                       13



         Subject to the restrictions contained in Section 2.9, a Security does
not cease to be outstanding because the Company or an Affiliate of the Company
holds the Security.

         SECTION 2.9.      TREASURY SECURITIES.

         In determining whether the Holders of the required principal amount of
Securities have concurred in any notice, direction, waiver or consent,
Securities owned by the Company or any other obligor on the Securities or by any
Affiliate of the Company or of such other obligor shall be disregarded, except
that, for purposes of determining whether the Trustee shall be protected in
relying on any such notice, direction, waiver or consent, only Securities which
a Responsible Officer of the Trustee actually knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith shall not
be disregarded if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to the Securities and that the pledgee is
not the Company or any other obligor on the Securities or any Affiliate of the
Company or of such other obligor.

         SECTION 2.10.     TEMPORARY SECURITIES.

         Until definitive Securities are ready for delivery, the Company may
prepare and execute, and, upon receipt of a Company Order, the Trustee shall
authenticate and deliver, temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Company with the consent of the Trustee considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate and deliver definitive Securities in exchange for
temporary Securities.

         SECTION 2.11.     CANCELLATION.

         The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, the Paying Agent and the Conversion Agent shall
forward to the Trustee or its agent any Securities surrendered to them for
transfer, exchange, payment or conversion. The Trustee and no one else shall
cancel, in accordance with its standard procedures, all Securities surrendered
for transfer, exchange, payment, conversion or cancellation and shall deliver
the canceled Securities to the Company. All Securities which are purchased or
otherwise acquired by the Company or any of its Subsidiaries prior to the Final
Maturity Date shall be delivered to the Trustee for cancellation. The Securities
so purchased while held by or on behalf of the Company or any of its
Subsidiaries, shall not entitle the Holder thereof to convert or vote the
Securities and shall be disregarded for voting purposes in connection with any
notice, waiver, consent or direction requiring the vote or concurrence of the
Holders. The Company may not hold or resell such Securities or issue any new
Securities to replace any such Securities or any Securities that any Holder has
converted pursuant to Article 4.

         SECTION 2.12.     LEGEND; ADDITIONAL TRANSFER AND EXCHANGE
                           REQUIREMENTS.

         (a)      If Securities are issued upon the transfer, exchange or
replacement of Securities subject to restrictions on transfer and bearing the
legends set forth on the form of Securities attached hereto as Exhibit A
(collectively, the "Legend"), or if a request is made to remove the Legend on a
Security, the Securities so issued shall bear the Legend, or the Legend shall
not be removed, as the case may be, unless there is delivered to the Company and
the Registrar such satisfactory evidence, which shall include an Opinion of
Counsel if requested by the Company or such Registrar, as may be reasonably
required by the Company and the Registrar, that neither the Legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
thereof comply with the provisions of Rule 144A, Rule 144 or Regulation S under
the Securities Act or that such Securities are not "restricted" within the
meaning of

                                       14



Rule 144 under the Securities Act; provided that no such evidence need be
supplied in connection with the sale of such Security pursuant to a registration
statement that is effective at the time of such sale. Upon (i) provision of such
satisfactory evidence if requested, or (ii) notification by the Company to the
Trustee and Registrar of the sale of such Security pursuant to a registration
statement that is effective at the time of such sale, the Trustee, at the
written direction of the Company, shall authenticate and deliver a Security that
does not bear the Legend. If the Legend is removed from the face of a Security
and the Security is subsequently held by an Affiliate of the Company, the Legend
shall be reinstated.

         (b)      A Global Security may not be transferred, in whole or in part,
to any Person other than the Depositary or a nominee or any successor thereof,
and no such transfer to any such other Person may be registered; provided that
the foregoing shall not prohibit any transfer of a Security that is issued in
exchange for a Global Security but is not itself a Global Security. No transfer
of a Security to any Person shall be effective under this Indenture or the
Securities unless and until such Security has been registered in the name of
such Person. Notwithstanding any other provisions of this Indenture or the
Securities, transfers of a Global Security, in whole or in part, shall be made
only in accordance with this Section 2.12.

         (c)      Subject to the succeeding paragraph, every Security shall be
subject to the restrictions on transfer provided in the Legend other than a
Restricted Global Security. Whenever any Restricted Security other than a
Restricted Global Security is presented or surrendered for registration of
transfer or for exchange for a Security registered in a name other than that of
the Holder, such Security must be accompanied by a certificate in substantially
the form set forth in Exhibit A, dated the date of such surrender and signed by
the Holder of such Security, as to compliance with such restrictions on
transfer. The Registrar shall not be required to accept for such registration of
transfer or exchange any Security not so accompanied by a properly completed
certificate.

         (d)      The restrictions imposed by the Legend upon the
transferability of any Security shall cease and terminate when such Security has
been sold pursuant to an effective registration statement under the Securities
Act or transferred in compliance with Rule 144 under the Securities Act (or any
successor provision thereto) or, if earlier, upon the expiration of the holding
period applicable to sales thereof under Rule 144(k) under the Securities Act
(or any successor provision). Any Security as to which such restrictions on
transfer shall have expired in accordance with their terms or shall have
terminated may, upon a surrender of such Security for exchange to the Registrar
in accordance with the provisions of this Section 2.12 (accompanied, in the
event that such restrictions on transfer have terminated by reason of a transfer
in compliance with Rule 144 or any successor provision, by, if requested by the
Company or the Registrar, an opinion of counsel reasonably acceptable to the
Company and addressed to the Company in form acceptable to the Company, to the
effect that the transfer of such Security has been made in compliance with Rule
144 or such successor provision), be exchanged for a new Security, of like tenor
and aggregate principal amount, which shall not bear the restrictive Legend. The
Company shall inform the Trustee of the effective date of any registration
statement registering the Securities under the Securities Act. The Trustee shall
not be liable for any action taken or omitted to be taken by it in good faith in
accordance with the aforementioned opinion of counsel or registration statement.

         (e)      As used in the preceding two paragraphs of this Section 2.12,
the term "transfer" encompasses any sale, pledge, transfer, hypothecation or
other disposition of any Security.

         (f)      The provisions of clauses (i), (ii), (iii), (iv) and (v) below
shall apply only to Global Securities:

                                       15



                  (i)      Notwithstanding any other provisions of this
         Indenture or the Securities, a Global Security shall not be exchanged
         in whole or in part for a Security registered in the name of any Person
         other than the Depositary or one or more nominees thereof, provided
         that a Global Security may be exchanged for Securities registered in
         the names of any person designated by the Depositary in the event that
         (A) the Depositary has notified the Company that it is unwilling or
         unable to continue as Depositary for such Global Security or the
         Depositary has ceased to be a "clearing agency" registered under the
         Exchange Act, and a successor Depositary is not appointed by the
         Company within 90 days, (B) the Company has provided the Depositary
         with written notice that it has decided to discontinue use of the
         system of book-entry transfer through the Depositary or any successor
         Depositary or (C) an Event of Default has occurred and is continuing
         with respect to the Securities. Any Global Security exchanged pursuant
         to clauses (A) or (B) above shall be so exchanged in whole and not in
         part, and any Global Security exchanged pursuant to clause (C) above
         may be exchanged in whole or from time to time in part as directed by
         the Depositary. Any Security issued in exchange for a Global Security
         or any portion thereof shall be a Global Security; provided that any
         such Security so issued that is registered in the name of a Person
         other than the Depositary or a nominee thereof shall not be a Global
         Security.

                  (ii)     Securities issued in exchange for a Global Security
         or any portion thereof shall be issued in definitive, fully registered
         form, shall have an aggregate principal amount equal to that of such
         Global Security or portion thereof to be so exchanged, shall be
         registered in such names and be in such authorized denominations as the
         Depositary shall designate and shall bear the applicable legends
         provided for herein. Any Global Security to be exchanged in whole shall
         be surrendered by the Depositary to the Trustee, as Registrar. With
         regard to any Global Security to be exchanged in part, either such
         Global Security shall be so surrendered for exchange or, if the Trustee
         is acting as custodian for the Depositary or its nominee with respect
         to such Global Security, the principal amount thereof shall be reduced,
         by an amount equal to the portion thereof to be so exchanged, by means
         of an appropriate adjustment made on the records of the Trustee. Upon
         any such surrender or adjustment, the Trustee shall authenticate and
         deliver the Security issuable on such exchange to or upon the order of
         the Depositary or an authorized representative thereof.

                  (iii)    Subject to the provisions of clause (v) below, the
         registered Holder may grant proxies and otherwise authorize any Person,
         including Agent Members and persons that may hold interests through
         Agent Members, to take any action which a Holder is entitled to take
         under this Indenture or the Securities.

                  (iv)     In the event of the occurrence of any of the events
         specified in clause (i) above, the Company will promptly make available
         to the Trustee a reasonable supply of Certificated Securities in
         definitive, fully registered form.

                  (v)      Neither Agent Members nor any other Persons on whose
         behalf Agent Members may act shall have any rights under this Indenture
         with respect to any Global Security registered in the name of the
         Depositary or any nominee thereof, or under any such Global Security,
         and the Depositary or such nominee, as the case may be, may be treated
         by the Company, the Trustee and any agent of the Company or the Trustee
         as the absolute owner and holder of such Global Security for all
         purposes whatsoever. Notwithstanding the foregoing, nothing herein
         shall prevent the Company, the Trustee or any agent of the Company or
         the Trustee from giving effect to any written certification, proxy or
         other authorization furnished by the Depositary or such nominee, as the
         case may be, or impair, as between the Depositary, its Agent Members
         and any other Person on whose behalf an Agent Member may act, the
         operation of customary practices of such Persons governing the exercise
         of the rights of a holder of any Security.

                                       16



         SECTION 2.13.     CUSIP NUMBERS.

         The Company in issuing the Securities may use one or more "CUSIP"
numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP"
numbers in notices of purchase as a convenience to Holders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice
of a purchase and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such purchase shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the "CUSIP" numbers.

                                   ARTICLE 3

                                   REDEMPTION

         SECTION 3.1.      NO REDEMPTION BY THE COMPANY.

         The Securities may not be redeemed by the Company prior to the Final
Maturity Date.

         SECTION 3.2.      PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON
                           CHANGE OF CONTROL.

         (a)      Upon the occurrence of a Change of Control, each Holder of
Securities will have the right to require the Company to repurchase all or any
part (equal to $1,000 or integral multiples thereof) of such Holder's Securities
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash equal to 100% of the aggregate principal amount thereof,
plus accrued and unpaid interest (including Additional Interest, if any)
thereon, to the date of purchase (the "Change of Control Payment"). Within 30
days following any Change of Control, the Company will mail a notice (the
"Change of Control Purchase Notice") to each Holder of Securities describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Securities on the date specified in such notice, which date shall
be no earlier than 30 days and no later than 60 days from the date the Change of
Control Purchase Notice is mailed (the "Change of Control Payment Date"),
pursuant to the procedures required by this Indenture and described in such
notice.

         (b)      The Company will comply with the requirements of Rule l4e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Securities as a result of a Change of Control.

         (c)      On the Change of Control Payment Date, the Company will, to
the extent lawful, (i) accept for payment all Securities or portions thereof
properly tendered pursuant to the Change of Control Offer, (ii) deposit with the
Paying Agent an amount equal to the Change of Control Payment in respect of all
Securities or portions thereof so tendered and (iii) deliver or cause to be
delivered to the Trustee the Securities so accepted together with an Officers'
Certificate stating the aggregate principal amount of Securities or portions
thereof being purchased by the Company. The Paying Agent will promptly mail to
each Holder of Securities so tendered the Change of Control Payment for such
Securities, and the Trustee will promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Security equal in principal
amount to any unpurchased portion of the Securities surrendered, if any;
provided that each such new Security will be in a principal amount of $1,000 or
integral multiples thereof.

                                       17



         Prior to complying with the provisions of this Section 3.2, but in any
event within 90 days following a Change of Control, the Company will either
repay in full in cash all outstanding Senior Debt or obtain the requisite
consents, if any, under all agreements governing outstanding Senior Debt to
permit the repurchase of Securities required by this Section 3.2. The Company
shall notify the Trustee in writing upon satisfaction of the foregoing condition
or the failure to satisfy the condition prior to the Change of Control Payment
Date. The Company shall publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Payment Date.

         The Change of Control provisions described above will be applicable
whether or not any other provisions of this Indenture are applicable.

         (d)      The Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control Offer
made by the Company and purchases all Securities validly tendered and not
withdrawn under such Change of Control Offer.

         Notwithstanding anything to the contrary set forth in this Section 3.2,
a Change of Control will not be deemed to have occurred if either:

                  (1)      the closing sale price of the Common Stock for any
         five Trading Days during the ten Trading Days immediately preceding the
         Change of Control is at least equal to 105% of the Conversion Price in
         effect on such Trading Day; or

                  (2)      in the case of a merger or consolidation, all of the
         consideration (excluding cash payments for fractional shares and cash
         payments pursuant to dissenters' appraisal rights) in the merger or
         consolidation constituting the Change of Control consists of common
         stock, ordinary shares or other certificates representing common equity
         securities traded on a United States national securities exchange or
         quoted on the Nasdaq National Market (or which will be so traded or
         quoted when issued or exchanged in connection with such Change of
         Control) and as a result of such transaction or transactions the
         Securities become convertible solely into such common stock, ordinary
         shares or other certificates representing common equity securities.

         (e)      Holders will be entitled to withdraw their election, in whole
or in part, if the Paying Agent (which may not for purposes of this Section 3.2,
notwithstanding anything in this Indenture to the contrary, be the Company or
any Affiliate of the Company) receives, up to the close of business on the
Business Day immediately preceding the Change of Control Payment Date, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Securities the Holder is withdrawing and a statement that such
Holder is withdrawing its election to have such principal amount of Securities
purchased.

                                       18



                                   ARTICLE 4

                                   CONVERSION

         SECTION 4.1.      CONVERSION PRIVILEGE.

         (a)      Subject to the further provisions of this Article 4 and
paragraph 6 of the Securities, a Holder of a Security may convert the principal
amount of such Security (or any portion thereof equal to $1,000 or any integral
multiple of $1,000 in excess thereof) into Common Stock at any time prior to the
close of business on the Final Maturity Date, at the Conversion Price then in
effect. The initial Conversion Price is set forth in paragraph 6 of the
Securities and is subject to adjustment as provided in this Article 4.

         (b)      If a Security is submitted or presented for purchase pursuant
to a Change of Control Purchase Notice in accordance with Article 3, such
conversion right shall terminate at the close of business on the Business Day
immediately preceding the Change of Control Payment Date for such Security or
such earlier date as the Holder presents such Security for purchase (unless the
Holder withdraws its election pursuant to Section 4.1(e)).

         (c)      If the Company elects Share Settlement the number of shares of
Common Stock issuable upon conversion of a Security shall be determined by
dividing the aggregate principal amount of the Security or portion thereof
surrendered for conversion by the Conversion Price in effect on the Conversion
Date.

         (d)      Provisions of this Indenture that apply to conversion of all
of a Security also apply to conversion of a portion of a Security.

         (e)      A Security in respect of which a Holder has elected to have
its Securities repurchased pursuant to Section 3.2(a) exercising the option of
such Holder to require the Company to purchase such Security may be converted
only if such election is withdrawn by a written notice of withdrawal delivered
to the Paying Agent prior to the close of business on the Business Day
immediately preceding the Change of Control Payment Date.

         (f)      A Holder of Securities is not entitled to any rights of a
holder of Common Stock until such Holder has converted its Securities to Common
Stock, and only to the extent such Securities are deemed to have been converted
into Common Stock pursuant to this Article 4.

         SECTION 4.2.      CONVERSION PROCEDURE.

         (a)      To convert a Security, a Holder must (i) complete and manually
sign the conversion notice on the back of the Security and deliver such notice
to the Conversion Agent, (ii) surrender the Security to the Conversion Agent,
(iii) furnish appropriate endorsements and transfer documents if required by a
Registrar or the Conversion Agent, and (iv) pay any transfer or similar tax, if
required. The date on which the Holder satisfies all of those requirements is
the "Conversion Date."

         (b)      As soon as practicable after the Conversion Date, and subject
to paragraph (c), the Company shall satisfy all of its obligations ("Conversion
Obligations") upon conversion of the Securities by delivering to the Holder, at
the Company's option, either shares of Common Stock, cash, or a combination of
cash and shares of Common Stock, in the following manner:

                                       19



                                    (1)      If the Company elects to satisfy
                           the entire Conversion Obligation in shares of Common
                           Stock ("Share Settlement"), then the Company will
                           deliver to the Holder shares of Common Stock equal to
                           the quotient of (A) the aggregate principal amount of
                           Securities to be converted by the Holder divided by
                           (B) the Conversion Price in effect on the Conversion
                           Date;

                                    (2)      If the Company elects to satisfy
                           the entire Conversion Obligation in cash ("Cash
                           Settlement"), then the Company will deliver to the
                           Holder cash in an amount equal to the product of (A)
                           a number equal to the aggregate principal amount of
                           Securities to be converted by such Holder divided by
                           the Conversion Price in effect on the Conversion
                           Date, and (B) the arithmetic mean of the Volume
                           Weighted Average Prices of the Common Stock on each
                           Trading Day during the Cash Settlement Averaging
                           Period; or

                                    (3)      If the Company elects to satisfy a
                           portion of the Conversion Obligation in cash (the
                           "Partial Cash Amount") and a portion in shares of
                           Common Stock (together with the Partial Cash Amount,
                           a "Combined Settlement"), then the Company will
                           deliver to the Holder such Partial Cash Amount plus a
                           number of shares of Common Stock equal to the
                           quotient of (A) the amount of the Cash Settlement as
                           set forth in clause (2) above minus such Partial Cash
                           Amount divided by (B) the arithmetic mean of the
                           Volume Weighted Average Prices of the Common Stock on
                           each Trading Day during the applicable Cash
                           Settlement Averaging Period.

         (c)      Upon receipt of the conversion notice from a Holder by the
Company or the Conversion Agent:

                                    (1)      If such notice is received by the
                           Conversion Agent, the Conversion Agent will promptly
                           notify the Company.

                                    (2)      If the Company elects to satisfy
                           the Conversion Obligation by Share Settlement, then
                           settlement in Common Stock will be made on or prior
                           to the fifth (5th) Trading Day following the receipt
                           of such conversion notice by the Company.

                                    (3)      If the Company elects to satisfy
                           the Conversion Obligation by Cash Settlement or
                           Combined Settlement, then the Company will notify the
                           Trustee in writing, who shall promptly notify the
                           Holder, of the dollar amount to be satisfied in cash
                           at any time on or before the date that is two
                           Business Days following receipt of the conversion
                           notice (the "Settlement Notice Period"). Share
                           Settlement will apply automatically if the Company
                           does not notify the Trustee during the Settlement
                           Notice Period that the Company has chosen another
                           settlement method.

                                    (4)      If the Company timely elects Cash
                           Settlement or Combined Settlement, then the Holder
                           may retract the conversion notice at any time during
                           the two (2) Business Day period beginning on the day
                           after the Settlement Notice Period (the "Conversion
                           Retraction Period") by written notice to the Trustee.
                           The Holder cannot retract the conversion notice (and
                           the conversion notice therefore will be irrevocable)
                           if Share Settlement applies. If the Holder has not
                           retracted the conversion notice during the Conversion
                           Retraction Period, then Cash Settlement

                                       20


                           or Combined Settlement will occur on the first
                           Trading Day following the Cash Settlement Averaging
                           Period. If the Holder timely retracts the conversion
                           notice, then such Holder shall be deemed to be a
                           Holder of Securities as if a conversion notice had
                           never been delivered by such Holder for such
                           Securities.

         (d)      If an Event of Default (other than an Event of Default in a
cash payment upon conversion of the Securities) has occurred and is continuing,
the Company may not pay cash upon conversion of any Security or portion of a
Security (other than cash for fractional shares).

         (e)      The person in whose name the Common Stock certificate is
registered shall be deemed to be a shareholder of record on the Conversion Date;
provided, however, that no surrender of a Security on any date when the share
transfer books of the Company shall be closed shall be effective to constitute
the person or persons entitled to receive the shares of Common Stock upon such
conversion as the record holder or holders of such shares of Common Stock on
such date, but such surrender shall be effective to constitute the person or
persons entitled to receive such shares of Common Stock as the record holder or
holders thereof for all purposes at the close of business on the next succeeding
day on which such share transfer books are open; provided, further, that such
conversion shall be at the Conversion Price in effect on the Conversion Date as
if the share transfer books of the Company had not been closed. Upon conversion
of a Security, such person shall no longer be a Holder of such Security but
shall have the rights set froth in this Section 4.2 until the Company satisfies
its Conversion Obligations. No payment or adjustment will be made for interest
accrued on any Security (or portion thereof) converted (except as set forth in
paragraph (f) below) or for dividends or distributions payable (except as set
forth in Section 4.6) on shares of Common Stock issued upon conversion of a
Security.

         (f)      Securities surrendered for conversion (in whole or in part)
during the period from the close of business on any Regular Record Date to the
opening of business on the next succeeding Interest Payment Date, if any
(excluding Securities or portions thereof presented for purchase upon a Change
of Control on a Change of Control Payment Date during the period beginning at
the close of business on a Regular Record Date and ending at the opening of
business on the first Business Day after the next succeeding Interest Payment
Date, if any, or if such Interest Payment Date, if any, is not a Business Day,
the second such Business Day) shall also be accompanied by payment in funds
acceptable to the Company of an amount equal to the interest (including
Additional Interest, if any), payable on such Interest Payment Date on the
principal amount of such Security then being converted, and such interest
(including Additional Interest, if any), shall be payable to such registered
Holder notwithstanding the conversion of such Security, subject, to the
provisions of this Indenture relating to the payment of defaulted interest, if
any, by the Company. Except as otherwise provided in this Section 4.2, no
payment or adjustment will be made for accrued interest (including Additional
Interest, if any), on a converted Security. If the Company defaults in the
payment of interest payable on such Interest Payment Date, the Company shall
promptly repay such funds to such Holder.

         Nothing in this Section 4.2shall affect the right of a Holder in whose
name any Security is registered at the close of business on a Regular Record
Date to receive the interest (including Additional Interest, if any), payable on
such Security on the related Interest Payment Date, if any, in accordance with
the terms of this Indenture, the Securities and the Registration Rights
Agreement. If a Holder converts more than one Security at the same time, the
number of shares of Common Stock issuable upon the conversion shall be based on
the aggregate principal amount of Securities converted.

         (g)      Anything herein to the contrary notwithstanding, in the case
of Global Securities, conversion notices may be delivered and such Securities
may be surrendered for conversion in accordance with the Applicable Procedures
as in effect from time to time.

                                       21



         (h)      Upon surrender of a Security that is converted in part, the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder, a new Security equal in principal amount to the unconverted portion of
the Security surrendered.

         SECTION 4.3.      FRACTIONAL SHARES.

         The Company will not issue fractional shares of Common Stock upon
conversion of Securities. In lieu thereof, the Company will pay an amount in
cash for the fractional shares equal to the Volume Weighted Average Price of the
Common Stock determined during the Cash Settlement Averaging Period multiplied
by the fractional share and rounding the product to the nearest whole cent.

         SECTION 4.4.      TAXES ON CONVERSION.

         If a Holder converts a Security, the Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon such conversion. However, the Holder shall pay any such tax which is
due because the Holder requests the shares to be issued in a name other than the
Holder's name. The Conversion Agent may refuse to deliver the certificate
representing the Common Stock being issued in a name other than the Holder's
name until the Conversion Agent receives a sum sufficient to pay any tax which
will be due because the shares are to be issued in a name other than the
Holder's name. Nothing herein shall preclude any tax withholding required by law
or regulation.

         SECTION 4.5.      COMPANY TO PROVIDE STOCK.

         The Company shall, prior to issuance of any Securities hereunder, and
from time to time as may be necessary, make available out of its authorized but
unissued Common Stock, a sufficient number of shares of Common Stock to permit
the conversion of all outstanding Securities into shares of Common Stock.

         All shares of Common Stock delivered upon conversion of the Securities
shall be newly issued shares, shall be duly authorized, validly issued, fully
paid and nonassessable and shall be free from preemptive rights and free of any
lien or adverse claim.

         The Company will endeavor promptly to comply with all federal, state
and foreign securities laws regulating the offer and delivery of shares of
Common Stock upon conversion of Securities, if any, and will list or cause to
have quoted such shares of Common Stock on each national securities exchange or
on the Nasdaq National Market or other over-the-counter market or such other
market on which the Common Stock is then listed or quoted; provided, however,
that if rules of such automated quotation system or exchange permit the Company
to defer the listing of such Common Stock until the first conversion of the
Securities into Common Stock in accordance with the provisions of this
Indenture, the Company covenants to list such Common Stock issuable upon
conversion of the Securities in accordance with the requirements of such
automated quotation system or exchange at such time. Any Common Stock issued
upon conversion of a Security hereunder which at the time of conversion was a
Restricted Security will also be a Restricted Security.

         SECTION 4.6.      ADJUSTMENT OF CONVERSION PRICE.

         The conversion price as stated in paragraph 6 of the Securities (the
"Conversion Price") shall be adjusted from time to time by the Company as
follows:

                  (a)      In case the Company shall (i) pay a dividend on its
         Common Stock in shares of Common Stock, (ii) make a distribution on its
         Common Stock in shares of Common Stock, (iii)

                                       22



         subdivide its outstanding Common Stock into a greater number of shares,
         or (iv) combine its outstanding Common Stock into a smaller number of
         shares, the Conversion Price in effect immediately prior thereto shall
         be adjusted so that the Holder of any Security thereafter surrendered
         for conversion shall be entitled to receive that number of shares of
         Common Stock which it would have owned had such Security been converted
         immediately prior to the happening of such event. An adjustment made
         pursuant to this subsection (a) shall become effective immediately
         after the record date in the case of a dividend or distribution and
         shall become effective immediately after the effective date in the case
         of subdivision or combination.

                  (b)      In case the Company shall issue rights or warrants to
         all or substantially all holders of its Common Stock entitling them
         (for a period commencing no earlier than the record date described
         below and expiring not more than 60 days after such record date) to
         subscribe for or purchase shares of Common Stock (or securities
         convertible into Common Stock) at a price per share (or having a
         conversion price per share) less than the Current Market Price per
         share of Common Stock on the record date for the determination of
         stockholders entitled to receive such rights or warrants, the
         Conversion Price in effect immediately prior thereto shall be adjusted
         so that the same shall equal the price determined by multiplying the
         Conversion Price in effect immediately prior to such record date by a
         fraction of which the numerator shall be the number of shares of Common
         Stock outstanding on such record date plus the number of shares which
         the aggregate offering price of the total number of shares of Common
         Stock so offered (or the aggregate conversion price of the convertible
         securities so offered, which shall be determined by multiplying the
         number of shares of Common Stock issuable upon conversion of such
         convertible securities by the conversion price per share of Common
         Stock pursuant to the terms of such convertible securities) would
         purchase at the Current Market Price per share of Common Stock on such
         record date, and of which the denominator shall be the number of shares
         of Common Stock outstanding on such record date plus the number of
         additional shares of Common Stock offered (or into which the
         convertible securities so offered are convertible). Such adjustment
         shall be made successively whenever any such rights or warrants are
         issued, and shall become effective immediately after such record date.
         If at the end of the period during which such rights or warrants are
         exercisable not all rights or warrants shall have been exercised, the
         adjusted Conversion Price shall be immediately readjusted to what it
         would have been based upon the number of additional shares of Common
         Stock actually issued (or the number of shares of Common Stock issuable
         upon conversion of convertible securities actually issued).

                  (c)      In case the Company shall distribute to all or
         substantially all holders of its Common Stock any shares of capital
         stock of the Company (other than Common Stock), evidences of
         indebtedness or other non-cash assets (including securities of any
         person other than the Company but excluding (1) dividends or
         distributions paid exclusively in cash or (2) dividends or
         distributions referred to in subsection (a) of this Section 4.6), or
         shall distribute to all or substantially all holders of its Common
         Stock rights or warrants to subscribe for or purchase any of its
         securities (excluding those rights and warrants referred to in
         subsection (b) of this Section 4.6 and also excluding the distribution
         of rights to all holders of Common Stock pursuant to the adoption of a
         stockholders rights plan or the detachment of such rights under the
         terms of such stockholder rights plan), then in each such case the
         Conversion Price shall be adjusted so that the same shall equal the
         price determined by multiplying the current Conversion Price by a
         fraction of which the numerator shall be the Current Market Price per
         share of the Common Stock on the record date mentioned below less the
         fair market value on such record date (as determined by the Board of
         Directors, whose determination shall be conclusive evidence of such
         fair market value and which shall be evidenced by an Officers'
         Certificate delivered to the Trustee) of the portion of the capital
         stock, evidences of indebtedness or other non-cash assets so
         distributed or of such rights or warrants applicable to one share of
         Common Stock (determined on the basis of

                                       23


         the number of shares of Common Stock outstanding on the record date),
         and of which the denominator shall be the Current Market Price per
         share of the Common Stock on such record date. Such adjustment shall be
         made successively whenever any such distribution is made and shall
         become effective immediately after the record date for the
         determination of shareholders entitled to receive such distribution.

                  In the event the then fair market value (as so determined) of
         the portion of the capital stock, evidences of indebtedness or other
         non-cash assets so distributed or of such rights or warrants applicable
         to one share of Common Stock is equal to or greater than the Current
         Market Price per share of the Common Stock on such record date, in lieu
         of the foregoing adjustment, adequate provision shall be made so that
         each holder of a Security shall have the right to receive upon
         conversion the amount of capital stock, evidences of indebtedness or
         other non-cash assets so distributed or of such rights or warrants such
         holder would have received had such holder converted each Security on
         such record date. In the event that such dividend or distribution is
         not so paid or made, the Conversion Price shall again be adjusted to be
         the Conversion Price which would then be in effect if such dividend or
         distribution had not been declared. If the Board of Directors
         determines the fair market value of any distribution for purposes of
         this Section 4.6(d) by reference to the actual or when issued trading
         market for any securities, it must in doing so consider the prices in
         such market over the same period used in computing the Current Market
         Price of the Common Stock.

                  In the event that the Company implements a share rights plan
         ("Rights Plan"), upon conversion of the Securities into Common Stock,
         to the extent that any such Rights Plan is still in effect upon such
         conversion, the holders of Securities will receive, in addition to the
         Common Stock, the rights described therein (whether or not the rights
         have separated from the Common Stock at the time of conversion),
         subject to the limitations set forth in the Rights Plan. Any
         distribution of rights or warrants pursuant to a Rights Plan complying
         with the requirements set forth in the immediately preceding sentence
         of this paragraph shall not constitute a distribution of rights or
         warrants pursuant to this Section 4.6(c).

                  Rights or warrants distributed by the Company to all holders
         of Common Stock entitling the holders thereof to subscribe for or
         purchase shares of the Company's Capital Stock (either initially or
         under certain circumstances), which rights or warrants, until the
         occurrence of a specified event or events ("Trigger Event"): (i) are
         deemed to be transferred with such shares of Common Stock; (ii) are not
         exercisable; and (iii) are also issued in respect of future issuances
         of Common Stock, shall be deemed not to have been distributed for
         purposes of this Section 4.6 (and no adjustment to the Conversion Price
         under this Section 4.6 will be required) until the occurrence of the
         earliest Trigger Event, whereupon such rights and warrants shall be
         deemed to have been distributed and an appropriate adjustment (if any
         is required) to the Conversion Price shall be made under this Section
         4.6(c). If any such right or warrant, including any such existing
         rights or warrants distributed prior to the date of this Indenture, are
         subject to events, upon the occurrence of which such rights or warrants
         become exercisable to purchase different securities, evidences of
         indebtedness or other assets, then the date of the occurrence of any
         and each such event shall be deemed to be the date of distribution and
         record date with respect to new rights or warrants with such rights
         (and a termination or expiration of the existing rights or warrants
         without exercise by any of the holders thereof). In addition, in the
         event of any distribution (or deemed distribution) of rights or
         warrants, or any Trigger Event or other event (of the type described in
         the preceding sentence) with respect thereto that was counted for
         purposes of calculating a distribution amount for which an adjustment
         to the Conversion Price under this Section 4.6 was made, (1) in the
         case of any such rights or warrants which shall all have been redeemed
         or repurchased without exercise by any holders thereof, the Conversion
         Price shall be

                                       24



         readjusted upon such final redemption or repurchase to give effect to
         such distribution or Trigger Event, as the case may be, as though it
         were a cash distribution, equal to the per share redemption or
         repurchase price received by a holder or holders of Common Stock with
         respect to such rights or warrants (assuming such holder had retained
         such rights or warrants), made to all holders of Common Stock as of the
         date of such redemption or repurchase, and (2) in the case of such
         rights or warrants which shall have expired or been terminated without
         exercise by any holders thereof, the Conversion Price shall be
         readjusted as if such rights and warrants had not been issued.

                  (d)      (1) In case the Company shall, by dividend or
         otherwise, at any time distribute cash (a "Cash Distribution") to all
         or substantially all holders of its Common Stock, the Conversion Price
         shall be reduced so that the same shall equal the price determined by
         multiplying such Conversion Price in effect immediately prior to the
         Business Day (the "Determination Date") immediately preceding the day
         on which such Cash Distribution is declared by the Company by a
         fraction of which the numerator shall be the Current Market Price per
         share of the Common Stock on the Determination Date less the amount of
         cash applicable to one share of Common Stock (determined on the basis
         of the number of shares of Common Stock outstanding on the
         Determination Date) and the denominator shall be such Current Market
         Price per share of the Common Stock on the Determination Date, such
         reduction to become effective immediately prior to the opening of
         business on the day following the date on which the Cash Distribution
         is paid.

                  (2)      In case any tender offer made by the Company or any
         of its Subsidiaries for Common Stock shall expire then, immediately
         prior to the opening of business on the day after the last day (the
         "Expiration Date") tenders could have been made pursuant to such tender
         offer (as it may be amended) (the last time at which such tenders could
         have been made on the Expiration Date is hereinafter sometimes called
         the "Expiration Time"), the Conversion Price shall be reduced so that
         the same shall equal the price determined by multiplying the Conversion
         Price in effect immediately prior to the close of business on the
         Expiration Date by a fraction of which the numerator shall be the
         product of the number of shares of Common Stock outstanding (including
         tendered shares but excluding any shares held in the treasury of the
         Company) at the Expiration Time multiplied by the Current Market Price
         per share of the Common Stock on the Trading Day next succeeding the
         Expiration Date and the denominator shall be the sum of (x) the
         aggregate consideration (determined as aforesaid) payable to
         stockholders based on the acceptance (up to any maximum specified in
         the terms of the tender offer) of all shares validly tendered and not
         withdrawn as of the Expiration Time (the shares deemed so accepted, up
         to any such maximum, being referred to as the "Purchased Shares") and
         (y) the product of the number of shares of Common Stock outstanding
         (less any Purchased Shares and excluding any shares held in the
         treasury of the Company) at the Expiration Time and the Current Market
         Price per share of Common Stock on the Trading Day next succeeding the
         Expiration Date, such reduction to become effective immediately prior
         to the opening of business on the day following the Expiration Date. In
         the event that the Company is obligated to purchase shares pursuant to
         any such tender offer, but the Company is permanently prevented by
         applicable law from effecting any or all such purchases or any or all
         such purchases are rescinded, the Conversion Price shall again be
         adjusted to be the Conversion Price which would have been in effect
         based upon the number of shares actually purchased. If the application
         of this Section 4.6(d)(2) to any tender offer would result in an
         increase in the Conversion Price, no adjustment shall be made for such
         tender offer under this Section 4.6(d)(2).

                  (3)      For purposes of this Section 4.6(d), the term "tender
         offer" shall mean and include both tender offers and exchange offers,
         all references to "purchases" of shares in tender offers (and all
         similar references) shall mean and include both the purchase of shares
         in tender
                                       25



         offers and the acquisition of shares pursuant to exchange offers, and
         all references to "tendered shares" (and all similar references) shall
         mean and include shares tendered in both tender offers and exchange
         offers.

                  (e)      For the purpose of any computation under subsections
         (b), (c) and (d) of this Section 4.6, the current market price (the
         "Current Market Price") per share of Common Stock on any date shall be
         deemed to be the average of the Sales Prices for the 30 consecutive
         Trading Days commencing 45 Trading Days before (i) the Determination
         Date or the Expiration Date, as the case may be, with respect to
         distributions or tender offers under subsection (d) of this Section 4.6
         or (ii) the record date with respect to distributions, issuances or
         other events requiring such computation under subsection (b), (c) or
         (d) of this Section 4.6.

                  (f)      In any case in which this Section 4.6 shall require
         that an adjustment be made following a record date or a Determination
         Date or Expiration Date, as the case may be, established for purposes
         of this Section 4.6, the Company may elect to defer (but only until
         five Business Days following the filing by the Company with the Trustee
         of the certificate described in Section 4.9) issuing to the Holder of
         any Security converted after such record date or Determination Date or
         Expiration Date the shares of Common Stock and other capital stock of
         the Company issuable upon such conversion over and above the shares of
         Common Stock and other capital stock of the Company issuable upon such
         conversion only on the basis of the Conversion Price prior to
         adjustment; and, in lieu of the shares the issuance of which is so
         deferred, the Company shall issue or cause its transfer agents to issue
         due bills or other appropriate evidence prepared by the Company of the
         right to receive such shares. If any distribution in respect of which
         an adjustment to the Conversion Price is required to be made as of the
         record date or Determination Date or Expiration Date therefor is not
         thereafter made or paid by the Company for any reason, the Conversion
         Price shall be readjusted to the Conversion Price which would then be
         in effect if such record date had not been fixed or such effective date
         or Determination Date or Expiration Date had not occurred.

         SECTION 4.7.      NO ADJUSTMENT.

         No adjustment in the Conversion Price shall be required:

                                    (1)      unless the adjustment would require
                           an increase or decrease of at least 1% in the
                           Conversion Price as last adjusted; provided, however,
                           that any adjustments which by reason of this Section
                           4.7 are not required to be made shall be carried
                           forward and taken into account in any subsequent
                           adjustment;

                                    (2)      for issuances of Common Stock
                           pursuant to a Company plan for reinvestment of
                           dividends or interest or for a change in the par
                           value or a change to no par value of the Common
                           Stock;

                                    (3)      if all of the Holders may
                           participate in the transactions that would otherwise
                           lead to an adjustment in the Conversion Price
                           pursuant to Section 4.6; or

                                    (4)      if such adjustment would reduce the
                           conversion price of the Securities to less than the
                           par value of the Company's ordinary shares, which is
                           currently S$0.01 per share.

         To the extent that the Securities become convertible into the right to
receive cash pursuant to Section 4.2 hereof, no adjustment need be made
thereafter as to the cash. Interest will not accrue on the

                                       26



cash. All calculations under this Article 4 shall be made to the nearest cent or
to the nearest one-hundredth of a share, as the case may be.

         SECTION 4.8.      ADJUSTMENT FOR TAX PURPOSES.

         The Company shall be entitled to make such reductions in the Conversion
Price, in addition to those required by Section 4.6, as it in its discretion
shall determine to be advisable in order that any stock dividends, subdivisions
of shares, distributions of rights to purchase stock or securities or
distributions of securities convertible into or exchangeable for stock hereafter
made by the Company to its stockholders shall not be taxable, provided, however,
that in no event may the Company reduce the Conversion Price to be less than the
par value of a share of Common Stock.

         SECTION 4.9.      NOTICE OF ADJUSTMENT.

         (a)      Whenever the Conversion Price or conversion privilege is
adjusted, the Company shall promptly mail to Securityholders a notice of the
adjustment and file with the Trustee an Officers' Certificate briefly stating
the facts requiring the adjustment and the manner of computing it. Unless and
until the Trustee shall receive an Officers' Certificate setting forth an
adjustment of the Conversion Price, the Trustee may assume without inquiry that
the Conversion Price has not been adjusted and that the last Conversion Price of
which it has knowledge remains in effect.

         (b)      In the event that:

                                    (1)      the Company takes any action which
                           would require an adjustment in the Conversion Price;

                                    (2)      the Company consolidates or merges
                           with, or transfers all or substantially all of its
                           property and assets to, another corporation and
                           shareholders of the Company must approve the
                           transaction; or

                                    (3)      there is a dissolution, judicial
                           management or liquidation of the Company,

the Company shall mail to Holders and file with the Trustee a notice stating the
proposed record or effective date, as the case may be. The Company shall mail
the notice at least ten days before such date. Failure to mail such notice or
any defect therein shall not affect the validity of any transaction referred to
in clause (1), (2) or (3) of this Section 4.9.

         SECTION 4.10.     EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR
                           SALE ON CONVERSION PRIVILEGE.

         If any of the following shall occur, namely: (a) any reclassification
or change of shares of Common Stock issuable upon conversion of the Securities
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination, or any
other change for which an adjustment is provided in Section 4.6); (b) any
consolidation or merger or combination to which the Company is a party other
than a merger in which the Company is the continuing corporation and which does
not result in any reclassification of, or change (other than in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination) in, outstanding shares of Common Stock;
or (c) any sale or conveyance as an entirety or substantially as an entirety of
the property and assets of the Company, directly or indirectly, to any person as
a result of which holders of Common Stock shall be entitled to receive stock,
securities or other

                                       27



property or assets (including cash) with respect to or in exchange for Common
Stock, then the Company, or such successor, purchasing or transferee
corporation, as the case may be, shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Security then
outstanding shall have the right to convert such Security into the kind and
amount of shares of stock and other securities and property (including cash)
receivable upon such reclassification, change, combination, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
deliverable upon conversion of such Security immediately prior to such
reclassification, change, combination, consolidation, merger, sale or
conveyance. Such supplemental indenture shall provide for adjustments of the
Conversion Price which shall be as nearly equivalent as may be practicable to
the adjustments of the Conversion Price provided for in this Article 4. If, in
the case of any such consolidation, merger, combination, sale or conveyance, the
stock or other securities and property (including cash) receivable thereupon by
a holder of Common Stock include shares of stock or other securities and
property of a person other than the successor, purchasing or transferee
corporation, as the case may be, in such consolidation, merger, combination,
sale or conveyance, then such supplemental indenture shall also be executed by
such other person and shall contain such additional provisions to protect the
interests of the Holders of the Securities as the Board of Directors and the
Trustee shall reasonably consider necessary by reason of the foregoing. The
provisions of this Section 4.10 shall similarly apply to successive
reclassifications, changes, combinations, consolidations, mergers, sales or
conveyances.

         In the event the Company shall execute a supplemental indenture
pursuant to this Section 4.10, the Company shall promptly file with the Trustee
(x) an Officers' Certificate briefly stating the reasons therefor, the kind or
amount of shares of stock or other securities or property (including cash)
receivable by Holders of the Securities upon the conversion of their Securities
after any such reclassification, change, combination, consolidation, merger,
sale or conveyance, any adjustment to be made with respect thereto and that all
conditions precedent have been complied with and (y) an Opinion of Counsel that
all conditions precedent have been complied with, and shall promptly mail notice
thereof to all Holders.

         SECTION 4.11.     TRUSTEE'S DISCLAIMER.

         The Trustee shall have no duty to determine when an adjustment under
this Article 4 should be made, how it should be made or what such adjustment
should be, but may accept as conclusive evidence of that fact or the correctness
of any such adjustment, and shall be protected in conclusively relying upon, an
Officers' Certificate including the Officers' Certificate with respect thereto
which the Company is obligated to file with the Trustee pursuant to Section 4.9.
The Trustee makes no representation as to the validity or value of any
securities or assets issued upon conversion of Securities, and the Trustee shall
not be responsible for the Company's failure to comply with any provisions of
this Article 4.

         The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 4.10, but may accept as conclusive evidence of the
correctness thereof, and shall be fully protected in conclusively relying upon,
the Officers' Certificate with respect thereto which the Company is obligated to
file with the Trustee pursuant to Section 4.10.

         SECTION 4.12.     VOLUNTARY REDUCTION.

         The Company from time to time may reduce the Conversion Price by any
amount for any period of time if the period is at least 20 days and if the
reduction is irrevocable during the period if our Board of Directors determines
that such reduction would be in the best interest of the Company or to avoid or
diminish income tax to holders of shares of our Common Stock in connection with
a dividend or distribution of stock or similar event, and the Company provides
15 days prior notice of any reduction in

                                       28



the Conversion Price; provided, however, that in no event may the Company reduce
the Conversion Price to be less than the par value of a share of Common Stock.

                                   ARTICLE 5

                                  SUBORDINATION

         SECTION 5.1.      SECURITIES SUBORDINATED TO SENIOR DEBT.

         The Company covenants and agrees, and each Holder of the Securities, by
its acceptance thereof, likewise covenants and agrees, that all Securities shall
be issued subject to the provisions of this Article 5; and each Person holding
any Security, whether upon original issue or upon transfer, assignment or
exchange thereof, accepts and agrees that the payment of all Obligations on the
Securities by the Company shall, to the extent and in the manner herein set
forth, be subordinated and junior in right of payment to the prior payment in
full in cash or Cash Equivalents (or such payment shall be duly provided for to
the satisfaction of the holders of the Senior Debt) of all Obligations on the
Senior Debt; that the subordination is for the benefit of, and shall be
enforceable directly by, the holders of Senior Debt, and that each holder of
Senior Debt, whether now outstanding or hereafter created, incurred, assumed or
guaranteed, shall be deemed to have acquired Senior Debt, in reliance upon the
covenants and provisions contained in this Indenture.

         SECTION 5.2.      NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES.

         (a)      If (i) a default in the payment of the principal of, premium,
if any, or interest (including Additional Interest, if any), on Designated
Senior Debt occurs and is continuing beyond any applicable period of grace or
(ii) any other default occurs and is continuing with respect to Designated
Senior Debt that permits holders of the Designated Senior Debt to which such
default relates to accelerate its maturity and, the Trustee receives a written
notice of such default (a "Payment Blockage Notice"), in the case of clause (i)
from the Company and in the case of clause (ii) from the holders of any
Designated Senior Debt then, the Company may not make any payment upon or in
respect of the Securities (except in Permitted Junior Securities or from the
trust described in Article 10). Payments on the Securities may and shall be
resumed (x) in the case of a payment default, upon the date on which such
default is cured or waived and (y) in case of a nonpayment default, the earlier
of (a) the date on which such nonpayment default is cured or waived, (b) 179
days after the date on which the applicable Payment Blockage Notice is received
by the Trustee, (c) the date such Designated Senior Debt shall have been
discharged or paid in full in cash or (d) the date such Payment Blockage Notice
shall have been terminated by written notice to the Company or the Trustee from
the holders of Designated Senior Debt initiating such Payment Blockage Notice
(such period from the date of the Payment Blockage Notice until the date
payments shall be resumed pursuant to (a), (b), (c) or (d), a "Payment Blockage
Period"). Thereafter, in the case of clauses (a), (b), (c) and (d), the Company
shall resume making any and all required payments in respect of the Securities,
including any payments not made to the Holders of the Securities during the
Payment Blockage Period due to the foregoing prohibitions, unless a default
described in clause (i) occurs and is continuing. No new period of payment
blockage may be commenced unless and until 360 days have elapsed since the
effectiveness of the immediately prior Payment Blockage Notice. No nonpayment
default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice unless such default shall have been cured or waived for
a period of not less than 90 days.

                                       29



         The Trustee must provide the holders of Designated Senior Debt at least
10 days' prior written notice of any acceleration of the maturity of the
Securities.

         (b)      In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by Section 5.2(a), such payment shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of Senior Debt (pro rata to such
holders on the basis of the respective amount of Senior Debt held by such
holders) as their respective interests may appear. The Trustee shall be entitled
to conclusively rely on information regarding amounts then due and owing on the
Senior Debt, if any, received from the holders of Senior Debt (or their
Representatives), or, if such information is not received from such holders or
their Representatives, from the Company and only amounts included in the
information provided to the Trustee shall be paid to the holders of Senior Debt.
The Company shall keep complete and accurate records of the names, addresses and
amounts owed to all holders of Senior Debt and Designated Senior Debt and their
Representatives, if any and shall produce such records to the Trustee upon
request and the Trustee shall be absolutely protected in relying on such records
in paying over or delivering moneys or providing notice pursuant to this Article
5.

                  Nothing contained in this Article 5 shall limit or compromise
the right of the Trustee or the Holders to take any action to accelerate the
maturity of the Securities pursuant to Section 8.2 or to pursue any rights or
remedies hereunder or otherwise; provided, however, that all Senior Debt
thereafter due or declared to be due shall first be paid in full in cash or Cash
Equivalents before the Holders are entitled to receive any payment of any kind
or character with respect to Obligations on the Securities.

         SECTION 5.3.      PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.

         (a)      Upon any distribution to creditors of the Company in a total
or partial liquidation, winding-up, reorganization, judicial management or
dissolution of the Company or in a voluntary or involuntary bankruptcy,
reorganization, insolvency, receivership, judicial management or similar
proceeding relating to the Company or its property, an assignment for the
benefit of creditors or any marshalling of the Company's assets and liabilities,
the holders of Senior Debt will be entitled to receive payment in full in cash
of all Obligations due in respect of such Senior Debt (including interest (and
any Additional Interest, if any) after the commencement of any such proceeding
at the rate specified in the applicable Senior Debt) before the Holders of the
Securities will be entitled to receive any payment with respect to the
Securities, and until all Obligations with respect to Senior Debt are paid in
full in cash, any distribution to which the Holders of the Securities would be
entitled shall be made to the holders of Senior Debt (except that Holders of the
Securities may receive Permitted Junior Securities and payments made from the
trust described in Article 10).

         (b)      To the extent any payment of Senior Debt (whether by or on
behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then, if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person, the Senior Debt or part thereof originally intended to
be satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred.

         (c)      In the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, shall be received by any Holder when such payment
or distribution is prohibited by Section 5.3(a), such payment or distribution
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Senior Debt (pro rata to such holders on the basis of the
respective amount of Senior Debt held by such holders) or

                                       30



their Representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of Senior Debt
remaining unpaid until all such Senior Debt has been paid in full in cash or
Cash Equivalents, after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Debt.

         (d)      The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation, judicial
management or dissolution of the Company following the conveyance or transfer of
all or substantially all of its assets, to another corporation upon the terms
and conditions provided in Article 7 hereof shall not be deemed a dissolution,
winding-up, liquidation, judicial management or reorganization for the purposes
of this Section if, in the event the Company is not the surviving corporation,
such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, assume the Company's obligations hereunder in accordance
with Article 7 hereof.

         SECTION 5.4.      PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION.

         Nothing contained in this Article 5 or elsewhere in this Indenture
shall prevent (i) the Company, except under the conditions described in Sections
5.1 and 5.2, from making payments at any time for the purpose of making payments
of principal of and interest (including Additional Interest, if any) on the
Securities, or from depositing with the Trustee any monies for such payments, or
(ii) in the absence of actual knowledge by the Trustee that a given payment
would be prohibited by Section 5.1 or 5.2, the application by the Trustee of any
monies deposited with it for the purpose of making such payments of principal
of, and interest (including Additional Interest, if any) on, the Securities to
the Holders entitled thereto unless at least one Business Day prior to the date
upon which such payment would otherwise become due and payable, the Trustee
shall have received the written notice provided for in Section 5.2 or Section
5.7. The Company shall give prompt written notice to the Trustee of any
dissolution, judicial management, winding-up, liquidation or reorganization of
the Company.

         SECTION 5.5.      SUBROGATION.

         Subject to the payment in full in cash or Cash Equivalents of all
Senior Debt, the Holders shall be subrogated to the rights of the holders of
Senior Debt to receive payments or distributions of cash, property or securities
of the Company applicable to the Senior Debt until the Securities shall be paid
in full; and, for the purposes of such subrogation, no such payments or
distributions to the holders of the Senior Debt or by or on behalf of the
Company or by or on behalf of the Holders by virtue of this Article 5 which
otherwise would have been made to the Holders shall, as between the Company and
the Holders, be deemed to be a payment by the Company to or on account of the
Senior Debt, it being understood that the provisions of this Article 5 are and
are intended solely for the purpose of defining the relative rights of the
Holders, on the one hand, and the holders of the Senior Debt, on the other hand.

         SECTION 5.6.      OBLIGATIONS OF THE COMPANY UNCONDITIONAL.

         Nothing contained in this Article 5 or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as among the Company,
creditors other than the holders of Senior Debt, and the Holders, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders the
principal of and any interest on (including Additional Interest, if any) the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Company other than the holders of any Senior Debt,
nor shall anything herein or therein prevent the Holders or the Trustee on their
behalf from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any,

                                       31



under this Article 5 of the holders of Senior Debt in respect of cash, property
or securities of the Company received upon the exercise of any such remedy.

         SECTION 5.7.      NOTICE TO TRUSTEE.

         The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities pursuant to the provisions of this Article
5. Regardless of anything to the contrary contained in this Article 5 or
elsewhere in this Indenture, the Trustee shall not be charged with knowledge of
the existence of any default or event of default with respect to any Senior Debt
or of any other facts which would prohibit the making of any payment to or by
the Trustee unless and until the Trustee shall have received notice in writing
referencing this Indenture and the Securities from the Company, or from a holder
of Senior Debt or a Representative therefor, and, prior to the receipt of any
such written notice, the Trustee shall be entitled to assume (in the absence of
actual knowledge of a Responsible Officer to the contrary) that no such facts
exist.

         In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article 5, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amounts of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article 5, and if such evidence is not furnished the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such person to receive such payment.

         SECTION 5.8.      RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
                           LIQUIDATING AGENT.

         Upon any payment or distribution of assets of the Company referred to
in this Article 5, the Trustee, subject to the provisions of Article 7 hereof,
and the Holders shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which bankruptcy, dissolution, winding-up,
liquidation, judicial management or reorganization proceedings are pending, or
upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, delivered to the
Trustee or the Holders, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Debt and other Debt
of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article 5.

         SECTION 5.9.      TRUSTEE'S RELATION TO SENIOR DEBT OR GUARANTOR SENIOR
                           DEBT.

         The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article 5 with respect to any
Senior Debt which may at any time be held by it in its individual capacity or
any other capacity to the same extent as any other holder of Senior Debt and
nothing in this Indenture shall deprive the Trustee or any such agent of any of
its rights as such holder. The Trustee shall not be liable to any holder of
Senior Debt if it shall mistakenly pay over or deliver to the Holders, the
Company or any other Person monies or assets to which any such holder of the
Senior Debt shall be entitled by virtue of this Article 5.

         With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article 5, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture

                                       32



against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Debt.

         Whenever a distribution is to be made or a notice given to holders or
owners of Senior Debt or Designated Senior Debt, the distribution may be made
and the notice may be given to their Representative, if any.

         SECTION 5.10.     SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR
                           OMISSIONS OF THE COMPANY OR A GUARANTOR OR HOLDERS OF
                           SENIOR DEBT.

         No right of any present or future holders of any Senior Debt to enforce
subordination as provided herein shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Company with the terms of this Indenture, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with.

         Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee, without incurring responsibility to the
Trustee or the Holders and without impairing or releasing the subordination
provided in this Article 5 or the obligations hereunder of the Holders to the
holders of the Senior Debt, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Debt, or otherwise amend or supplement in any manner Senior Debt,
or any instrument evidencing or securing the same or any agreement under which
Senior Debt is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Debt; (iii) release
any Person liable in any manner for the payment or collection of Senior Debt;
and (iv) exercise or refrain from exercising any rights against the Company or
any other Person.

         SECTION 5.11.     CERTAIN CONVERSIONS NOT DEEMED PAYMENT

         For the purposes of this Article 5 only, (1) the issuance and delivery
of Permitted Junior Securities upon conversion of Securities in accordance with
Article 4 shall not be deemed to constitute a payment or distribution on account
of the principal of (or premium, if any) or interest on Securities or on account
of the purchase or other acquisition of Securities, and (2) the payment,
issuance or delivery of cash (except in satisfaction of fractional shares
pursuant to Section 4.3), property or securities (other than Permitted Junior
Securities) upon conversion of a Security shall be deemed to constitute payment
on account of the principal of such Security. Nothing contained in this Article
5 or elsewhere in this Indenture or in the Securities is intended to or shall
impair, as among the Company, its creditors other than holders of Senior Debt
and the Holders, the right, which is absolute and unconditional, of the Holder
of any Security to convert such Security in accordance with Article 4.

         SECTION 5.12.     HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION
                           OF SECURITIES.

         Each Holder by its acceptance of the Securities authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Senior Debt
and the Holders, the subordination provided in this Article 5, and appoints the
Trustee its attorney-in-fact for such purposes, including, in the event of any
dissolution, winding-up, liquidation, judicial management or reorganization of
the Company (whether in bankruptcy, insolvency, receivership, reorganization or
similar proceedings or upon an assignment for the benefit of creditors or
otherwise)

                                       33


tending towards liquidation of the business and assets of the Company, the
filing of a claim for the unpaid balance of its Securities and accrued interest
(including Additional Interest, if any) in the form required in those
proceedings.

         If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Debt or their
Representative are or is hereby authorized to have the right to file and are or
is hereby authorized to file an appropriate claim for and on behalf of the
Holders of said Securities. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Debt or their Representative to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee or the holders
of Senior Debt or their Representative to vote in respect of the claim of any
Holder in any such proceeding.

         SECTION 5.13.     THIS ARTICLE 5 NOT TO PREVENT EVENTS OF DEFAULT.

         The failure to make a payment on account of principal of or interest
(including Additional Interest) on the Securities by reason of any provision of
this Article 5 will not be construed as preventing the occurrence of an Event of
Default.

         SECTION 5.14.     TRUSTEE'S COMPENSATION NOT PREJUDICED.

         Nothing in this Article 5 will apply to amounts due to the Trustee
pursuant to other Sections in this Indenture.

                                   ARTICLE 6

                                    COVENANTS

         SECTION 6.1.      PAYMENT OF SECURITIES.

         The Company shall promptly make all payments in respect of the
Securities on the dates and in the manner provided in the Securities and this
Indenture. An installment of principal or interest (including Additional
Interest), if any, shall be considered paid on the date it is due if the Paying
Agent (other than the Company) holds by 11:00 a.m., New York City time, on that
date money, deposited by the Company or an Affiliate thereof, sufficient to pay
the installment. Subject to Section 4.2 hereof, accrued and unpaid interest
(including Additional Interest, if any) on any Security that is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security is registered at the close of business
on the Regular Record Date for such interest at the office or agency of the
Company maintained for such purpose. The Company shall, (in immediately
available funds) to the fullest extent permitted by law, pay interest on overdue
principal (including premium, if any) and overdue installments of interest
(including Additional Interest, if any).

         Payment of the principal of (and premium, if any) and interest
(including Additional Interest, if any) on the Securities shall be made at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York (which shall initially be the Trustee) or at the
Corporate Trust Office of the Trustee in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the Company
payment of interest (including Additional Interest, if any) may be made by check

                                       34



mailed to the address of the Person entitled thereto as such address appears in
the Register; provided further that a Holder with an aggregate principal amount
in excess of $2,000,000 will be paid by wire transfer in immediately available
funds at the election of such Holder if such Holder has provided wire transfer
instructions to the Company at least 10 Business Days prior to the payment date.

         SECTION 6.2.      SEC REPORTS.

         The Company shall file all reports and other information and documents
which it is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act, and within 15 days after it files them with the SEC, the Company
shall file copies of all such reports, information and other documents with the
Trustee.

         Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).

         SECTION 6.3.      COMPLIANCE CERTIFICATES.

         The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year of the Company (beginning with the fiscal year ending March
31, 2004), an Officers' Certificate as to the signer's knowledge of the
Company's compliance with all conditions and covenants on its part contained in
this Indenture and stating whether or not the signer knows of any default or
Event of Default. If such signer knows of such a default or Event of Default,
the Officers' Certificate shall describe the default or Event of Default and the
efforts to remedy the same. For the purposes of this Section 6.3, compliance
shall be determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture.

         SECTION 6.4.      FURTHER INSTRUMENTS AND ACTS.

         Upon request of the Trustee, the Company will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purposes of this Indenture.

         SECTION 6.5.      MAINTENANCE OF CORPORATE EXISTENCE.

         Subject to Article 7, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence.

         SECTION 6.6.      RULE 144A INFORMATION REQUIREMENT.

         Within the period prior to the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act (or any
successor provision), the Company covenants and agrees that it shall, during any
period in which it is not subject to Section 13 or 15(d) under the Exchange Act,
upon the request of any Holder or beneficial holder of the Securities make
available to such Holder or beneficial holder of Securities or any Common Stock
issued upon conversion thereof which continue to be Restricted Securities in
connection with any sale thereof and any prospective purchaser of Securities or
such Common Stock designated by such Holder or beneficial holder, the
information required pursuant to Rule 144A(d)(4) under the Securities Act and it
will take such further action as any Holder or beneficial holder of such
Securities or such Common Stock may reasonably request, all to the extent
required from

                                       35


time to time to enable such Holder or beneficial holder to sell its Securities
or Common Stock without registration under the Securities Act within the
limitation of the exemption provided by Rule 144A, as such Rule may be amended
from time to time. Upon the request of any Holder or any beneficial holder of
the Securities or such Common Stock, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.

         SECTION 6.7.      STAY, EXTENSION AND USURY LAWS.

         The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law or other
law which would prohibit or forgive the Company from paying all or any portion
of the principal of, premium, if any, or interest (including Additional
Interest, if any) on the Securities as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture, and the Company (to the extent it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law and
covenants that it will not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been enacted.

         SECTION 6.8.      PAYMENT OF ADDITIONAL INTEREST.

         If Additional Interest is payable by the Company pursuant to the
Registration Rights Agreement, the Company shall deliver to the Trustee a
certificate to that effect stating (i) the amount of such Additional Interest
that is payable, (ii) the reason why such Additional Interest is payable and
(iii) the date on which such Additional Interest is payable. Unless and until a
Responsible Officer of the Trustee receives such a certificate, the Trustee may
assume without inquiry that no such Additional Interest is payable. If the
Company has paid Additional Interest directly to the Persons entitled to such
Additional Interest, the Company shall deliver to the Trustee a certificate
setting forth the particulars of such payment.

                                    ARTICLE 7

              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

         SECTION 7.1.      COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.

         The Company shall not consolidate with or merge into any other Person
(in a transaction in which the Company is not the surviving Person) or convey,
transfer or lease or otherwise dispose of its properties and assets
substantially as an entirety in one or more related transactions (a "Subject
Transaction"), to any Person, unless:

                                    (1)      in case the Company shall
                           consolidate with or merge into another Person (in a
                           transaction in which the Company is not the surviving
                           Person) or convey, transfer or lease or otherwise
                           dispose of its properties and assets substantially as
                           an entirety to any Person, the Person formed by such
                           consolidation or into which the Company is merged or
                           the Person which acquires, or which leases, the
                           properties and assets of the Company substantially as
                           an entirety shall be a corporation organized and
                           validly existing under the laws of the United States
                           of America, any State thereof or the District of
                           Columbia, Singapore or any other country (subject to
                           the conditions set forth in Section 7.3) and shall,
                           in any case,

                                       36


                           expressly assume, by an indenture supplemental
                           hereto, executed and delivered to the Trustee, in
                           form satisfactory to the Trustee, the due and
                           punctual payment of the principal of and any premium
                           and interest (including Additional Interest, if any)
                           on all the Securities and the performance or
                           observance of every covenant of this Indenture on the
                           part of the Company to be performed or observed and
                           the conversion rights shall be provided for in
                           accordance with Article 4, by supplemental indenture
                           satisfactory in form to the Trustee, executed and
                           delivered to the Trustee, by the Person (if other
                           than the Company) formed by such consolidation or
                           into which the Company shall have been merged or by
                           the Person which shall have acquired the Company's
                           assets;

                                    (2)      immediately after giving effect to
                           such transaction, no Event of Default, and no event
                           which, after notice or lapse of time or both, would
                           become an Event of Default, shall have happened and
                           be continuing; and

                                    (3)      the Company has delivered to the
                           Trustee an Officers' Certificate and an Opinion of
                           Counsel, each stating that such consolidation,
                           merger, conveyance, transfer, lease or disposition
                           and, if a supplemental indenture is required in
                           connection with such transaction, such supplemental
                           indenture complies with this Article 7 and that all
                           conditions precedent herein provided for relating to
                           such transaction have been complied with.

         SECTION 7.2.      SUCCESSOR SUBSTITUTED.

         Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer, lease or other disposition
of the properties and assets of the Company substantially as an entirety in
accordance with Section 7.1, the successor Person formed by such consolidation
or into which the Company is merged or to which such conveyance, transfer, lease
or other disposition is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein,
and thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Indenture and the
Securities except with respect to any obligations that arise from, or are
related to, such transaction.

         SECTION 7.3.      ADDITIONAL CONDITIONS UPON REINCORPORATING, MERGING
                           OR CONSOLIDATING INTO ANOTHER COUNTRY

         If the surviving or resulting transferee, lessee or successor Person
(the "Successor Corporation") in a Subject Transaction is incorporated in a
country other than the United States (or any state thereof or the District of
Columbia) or Singapore, then the Company must satisfy the conditions specified
in paragraphs (A), (B) and (C) below as promptly as practicable, but no later
than 60 days following the date of such Subject Transaction:

                  (A)      the Company shall have delivered to the Trustee a
         written opinion, in form and substance satisfactory to the Trustee, of
         independent legal counsel of recognized standing, as to the continued
         validity, binding effect and enforceability of this Indenture and the
         Notes and to the further effect that such counsel is not aware of any
         pending change in, or amendment to, the laws (or any regulations
         promulgated thereunder) of any such country in which the proposed
         Successor Corporation is incorporated or maintains its principal place
         of business or principal executive office, or any taxing authority
         thereof or therein, affecting taxation, or any pending execution of or
         amendment to, or any pending change in application of or official
         position regarding, any

                                       37


         treaty or treaties affecting taxation to which any such country is a
         party, which, in any such case, would require the Company to withhold
         for taxes or other governmental charges from amounts paid on the
         Securities, it being understood that such counsel may, in rendering
         such opinion, rely, to the extent appropriate, on opinions of
         independent local counsel of recognized standing and the Company may
         instead deliver two or more opinions of counsel which together cover
         all of the foregoing matters;

                  (B)      the Company shall have delivered to the Trustee a
         certificate, in form and substance satisfactory to the Trustee, signed
         by two executive officers of the Successor Corporation, as to the
         continued validity, binding effect and enforceability of this Indenture
         and the Securities; and

                  (C)      the Successor Corporation shall, promptly but no
         later than 60 days following the date of such transaction, consent to
         the jurisdiction of the Courts of the State of New York.

         In the event of any such Subject Transaction, the Company will
indemnify and hold harmless the Holder of each Security from and against any and
all present and future taxes, levies, imposts, charges and withholdings
(including, without limitation, estate, inheritance, capital gains and other
similar taxes), and any and all present and future registration, stamp, issue,
documentary or other similar taxes, duties, fees or charges, imposed, assessed,
levied or collected by or for the account of any jurisdiction or political
subdivision or taxing or other governmental agency or authority thereof or
therein on or in respect of the Securities, this Indenture or any other
agreement relating to calculations to be performed with respect to the
Securities or any amount paid or payable under any of the foregoing which, in
any such case, would not have been imposed had such Subject Transaction not
occurred.

                                    ARTICLE 8

                              DEFAULT AND REMEDIES

         SECTION 8.1.      EVENTS OF DEFAULT.

         "Events of Defaults" are:

                                    (1)      default for 30 days in the payment
                           when due of interest (including Additional Interest,
                           if any) on the Notes (whether or not prohibited by
                           the subordination provisions of this Indenture);

                                    (2)      default in payment when due of the
                           principal of, or premium, if any, on the Notes
                           (whether or not prohibited by the subordination
                           provisions of this Indenture);

                                    (3)      failure by the Company for 30 days
                           after notice from either the Trustee or the Holders
                           of at least 25% in principal amount of the then
                           outstanding Notes to comply with the provisions
                           described in Section 3.2 or 7.1;

                                    (4)      failure by the Company for 60 days
                           after notice from either the Trustee or the Holders
                           of at least 25% in principal amount of the then
                           outstanding Notes to comply with any of its other
                           agreements in this Indenture or the Notes;

                                       38


                                    (5)      default under any mortgage,
                           indenture or instrument under which there may be
                           issued or by which there may be secured or evidenced
                           any Debt for money borrowed by the Company (or the
                           payment of which is guaranteed by the Company)
                           whether such Debt or guarantee now exists, or is
                           created after the date of this Indenture, which
                           default (a) is caused by a failure to pay principal
                           of or premium, if any, or interest (including
                           Additional Interest, if any) on such Debt prior to
                           the expiration of the grace period provided in such
                           Debt on the date of such default (a "Payment
                           Default") or (b) results in the acceleration of such
                           Debt prior to its express maturity and, in each case,
                           the principal amount of any such Debt, together with
                           the principal amount of any other such Debt the
                           maturity of which has been so accelerated, aggregates
                           $40.0 million or more;

                                    (6)      failure by the Company or any of
                           its Subsidiaries to pay final judgments aggregating
                           in excess of $40.0 million, which judgments are not
                           paid, discharged or stayed for a period of 60 days;
                           or

                                    (7)      the Company or any of its
                           Significant Subsidiaries:

                           (i)      commences a voluntary case under any
                  Bankruptcy Law,

                           (ii)     consents to the entry of an order for relief
                  against it in an involuntary case under any Bankruptcy Law,

                           (iii)    consents to the appointment of a custodian
                  of it or for all or substantially all of its property,

                           (iv)     makes a general assignment for the benefit
                  of its creditors,

                           (v)      generally is not paying its debts as they
                  become due; or

                                    (8)      a court of competent jurisdiction
                           enters an order or decree under any Bankruptcy Law
                           that:

                           (i)      is for relief against the Company or any of
                  its Significant Subsidiaries,

                           (ii)     appoints a custodian or judicial manager of
                  the Company or any of its Significant Subsidiaries or for all
                  or substantially all of the property of the Company or any of
                  its Significant Subsidiaries, or

                           (iii)    orders the liquidation or judicial
                  management of the Company or any of its Significant
                  Subsidiaries; and the order or decree remains unstayed and in
                  effect for 60 consecutive days.

         The term "Bankruptcy Law" means Title 11 of the United States Code (or
any successor thereto) or any similar federal or state law for the relief of
debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.

         The Trustee shall not be charged with knowledge of any Event of Default
unless written notice thereof shall have been given to a Responsible Officer at
the Corporate Trust Office of the Trustee by the Company, a Paying Agent, any
Holder or any agent of any Holder.

                                       39


         SECTION 8.2.      ACCELERATION.

         If an Event of Default (other than an Event of Default specified in
clause (7) or (8) of Section 8.1) occurs and is continuing, the Trustee may, by
notice to the Company, or the Holders of at least 25% in aggregate principal
amount of the Securities then outstanding may, by notice to the Company and the
Trustee, declare all unpaid principal and interest (including Additional
Interest, if any) to the date of acceleration on the Securities then outstanding
(if not then due and payable) to be due and payable upon any such declaration,
and the same shall become and be immediately due and payable. If an Event of
Default specified in clause (7) or (8) of Section 8.1 occurs, all unpaid
principal and interest (including Additional Interest, if any) of the Securities
then outstanding shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
The Holders of a majority in aggregate principal amount of the Securities then
outstanding by notice to the Trustee may rescind an acceleration and its
consequences if (a) all existing Events of Default, other than the nonpayment of
the principal and interest (including Additional Interest, if any) of the
Securities which has become due solely by such declaration of acceleration, have
been cured or waived; (b) to the extent the payment of such interest is lawful,
interest at a rate of 3% per annum on overdue installments of interest
(including Additional Interest, if any) and overdue principal, which has become
due otherwise than by such declaration of acceleration, has been paid; (c) the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction; and (d) all payments due to the Trustee and any
predecessor Trustee under Section 9.7 have been made. No such rescission shall
affect any subsequent default or impair any right consequent thereto.

         SECTION 8.3.      OTHER REMEDIES.

         If an Event of Default occurs and is continuing, the Trustee may, but
shall not be obligated to, pursue any available remedy by proceeding at law or
in equity to collect the payment of the principal of or interest (including
Additional Interest, if any) on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.

         The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.

         SECTION 8.4.      WAIVER OF DEFAULTS AND EVENTS OF DEFAULT.

         Subject to Sections 8.7 and 11.2, the Holders of a majority in
aggregate principal amount of the Securities then outstanding by notice to the
Trustee may waive an existing default or Event of Default and its consequence,
except a default or Event of Default in the payment of the principal of,
premium, if any, or interest (including Additional Interest, if any) on any
Security, a failure by the Company to convert any Securities into Common Stock
or any default or Event of Default in respect of any provision of this Indenture
or the Securities which, under Section 11.2, cannot be modified or amended
without the consent of the Holder of each Security affected. When a default or
Event of Default is waived, it is cured and ceases.

         SECTION 8.5.      CONTROL BY MAJORITY.

         The Holders of a majority in aggregate principal amount of the
Securities then outstanding may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on it. However, the Trustee may refuse to follow any
direction

                                       40


that conflicts with law or this Indenture, that the Trustee determines may be
unduly prejudicial to the rights of another Holder or the Trustee, or that may
involve the Trustee in personal liability.

         SECTION 8.6.      LIMITATIONS ON SUITS.

         A Holder may not pursue any remedy with respect to this Indenture or
the Securities (except actions for payment of overdue principal, premium, if
any, or interest (including Additional Interest, if any) for the conversion of
the Securities pursuant to Article 4) unless:

                                    (1)      the Holder gives to the Trustee
                           written notice of a continuing Event of Default;

                                    (2)      the Holders of at least 25% in
                           aggregate principal amount of the then outstanding
                           Securities make a written request to the Trustee to
                           pursue the remedy;

                                    (3)      such Holder or Holders offer to the
                           Trustee reasonable indemnity to the Trustee against
                           any loss, liability or expense;

                                    (4)      the Trustee does not comply with
                           the request within 60 days after receipt of the
                           request and the offer of indemnity; and

                                    (5)      no direction inconsistent with such
                           written request has been given to the Trustee during
                           such 60-day period by the Holders of a majority in
                           aggregate principal amount of the Securities then
                           outstanding.

         A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.

         SECTION 8.7.      RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO CONVERT.

         Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of the principal of and interest
(including Additional Interest, if any) on the Security, on or after the
respective due dates expressed in the Security and this Indenture, to convert
such Security in accordance with Article 4 and to bring suit for the enforcement
of any such payment on or after such respective dates or the right to convert,
is absolute and unconditional and shall not be impaired or affected without the
consent of the Holder.

         SECTION 8.8.      COLLECTION SUIT BY TRUSTEE.

         If an Event of Default in the payment of principal or interest
(including Additional Interest, if any) specified in clause (1) or (2) of
Section 8.1 occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Company or another
obligor on the Securities for the whole amount of principal and accrued interest
(including Additional Interest, if any) remaining unpaid, together with, to the
extent that payment of such interest is lawful interest on overdue principal and
overdue installments of interest (including Additional Interest, if any) in each
case at a rate of 3% per annum and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.

                                       41


         SECTION 8.9.      TRUSTEE MAY FILE PROOFS OF CLAIM.

         The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and the Holders allowed in
any judicial proceedings relative to the Company (or any other obligor on the
Securities), its creditors or its property and shall be entitled and empowered
to collect and receive any money or other property payable or deliverable on any
such claims and to distribute the same, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 9.7, and to the extent that such payment of the reasonable compensation,
expenses, disbursements and advances in any such proceedings shall be denied for
any reason, payment of the same shall be secured by a lien on, and shall be paid
out of, any and all distributions, dividends, money, securities and other
property which the Holders may be entitled to receive in such proceedings,
whether in liquidation, judicial management or under any plan of reorganization
or arrangement or otherwise. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to, or, on behalf of any Holder,
to authorize, accept or adopt any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.

         SECTION 8.10.     PRIORITIES.

         If the Trustee collects any money pursuant to this Article 8, it shall
pay out the money in the following order:

                  First, to the Trustee for amounts due under Section 9.7;

                  Second, to the holders of Senior Debt to the extent required
         by Article 5;

                  Third, to Holders for amounts due and unpaid on the Securities
         for principal and interest (including Additional Interest, if any)
         ratably, without preference or priority of any kind, according to the
         amounts due and payable on the Securities for principal and interest
         (including Additional Interest, if any) respectively; and

                  Fourth, the balance, if any, to the Company.

         The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 8.10.

         SECTION 8.11.     UNDERTAKING FOR COSTS.

         In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 8.11 does not apply to a suit made by the Trustee, a suit
by a Holder pursuant to Section 8.7, or a suit by Holders of more than 10% in
aggregate principal amount of the Securities then outstanding.

                                       42


                                    ARTICLE 9

                                     TRUSTEE

         SECTION 9.1.      DUTIES OF TRUSTEE.

         (a)      If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.

         (b)      Except during the occurrence and continuance of an Event of
Default:

                  (i)      the duties of the Trustee shall be determined solely
         by the express provisions of this Indenture and the Trustee need
         perform only those duties that are specifically set forth in this
         Indenture and no others, and no implied covenants or obligations shall
         be read into this Indenture against the Trustee; and

                  (ii)     the absence of bad faith on its part, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon certificates (or
         similar documents) or opinions furnished to the Trustee and conforming
         to the requirements of this Indenture. However, the Trustee shall
         examine the certificates (or similar documents) and opinions to
         determine whether or not they conform to the requirements of this
         Indenture (but need not confirm or investigate the accuracy of
         mathematical calculations or other facts stated therein or otherwise
         verify the contents thereof).

         (c)      The Trustee may not be relieved from liabilities for its own
grossly negligent action, its own grossly negligent failure to act, or its own
willful misconduct, except that:

                  (i)      this paragraph does not limit the effect of paragraph
         (b) of this Section 9.1;

                  (ii)     the Trustee shall not be liable for any error of
         judgment made in good faith by a Responsible Officer, unless it is
         proved that the Trustee was grossly negligent in ascertaining the
         pertinent facts; and

                  (iii)    the Trustee shall not be liable with respect to any
         action it takes or omits to take in good faith in accordance with a
         direction received by it pursuant to Section 8.5 hereof.

         (d)      Whether or not therein expressly so provided, every provision
of this Indenture that in any way relates to the Trustee, the Paying Agent,
Registrar or Note Custodian is subject to this Section 9.1.

         (e)      No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any financial liability. The Trustee shall
be under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense including reasonable attorneys' fees that might be incurred
by it in compliance with such request or direction.

                                       43


         (f)      The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.

         SECTION 9.2.      RIGHTS OF TRUSTEE.

         (a)      The Trustee may conclusively rely upon any document believed
by it to be genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in any such document.
The Trustee shall receive and retain financial reports and statements of the
Company as provided herein, but it shall have no duty to review or analyze such
reports or statements to determine compliance with covenants or other
obligations of the Company.

         (b)      Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel of its selection and the advice of such counsel or any
opinion of counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon.

         (c)      The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any such attorney or
agent appointed with due care.

         (d)      The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.

         (e)      Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.

         (f)      The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.

         (g)      Prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default which may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report, notice,
request, order, approval, bond or other paper or document unless requested in
writing to do so by the Holders representing more than 25% in aggregate
principal amount of Securities then outstanding, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters it may see fit; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it by
the terms of this Indenture, the Trustee may require indemnity reasonably
satisfactory to it against such cost, expense or liability as a condition to so
proceeding.

         (h)      The permissive rights of the Trustee to do things enumerated
in this Indenture should not be construed as a duty unless so specified herein.

                                       44


         SECTION 9.3.      INDIVIDUAL RIGHTS OF TRUSTEE.

         The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the Commission
for permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 9.10 and 9.11
hereof.

         SECTION 9.4.      TRUSTEE'S DISCLAIMER.

         The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy or priority of this Indenture or the Securities, it
shall not be accountable for the Company's use of the proceeds from the
Securities or any money paid to the Company or upon the Company's direction
under any provision of this Indenture, it shall not be responsible for the use
or application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Securities or any other document in connection with the sale of
the Securities or pursuant to this Indenture other than its certificate of
authentication.

         SECTION 9.5.      NOTICE OF DEFAULTS.

         (a)      The Trustee shall not be deemed to have notice of any Default
or Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Securities and this Indenture.

         (b)      If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee in accordance with the provisions of paragraph (a)
of this Section 9.5, the Trustee shall mail to Holders a notice of the Default
or Event of Default within 90 days after it occurs. Except in the case of a
Default or Event of Default in payment of principal of, premium, if any, or
interest (including Additional Interest, if any) on any Note, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of the
Holders of the Securities.

         SECTION 9.6.      REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.

         Within 60 days after each August 1 beginning with the August 1
following the date of this Indenture, and for so long as Securities remain
outstanding, the Trustee shall mail to the Holders of the Securities a brief
report dated as of such reporting date that complies with TIA Section 313(a)
(but if no event described in TIA Section 313(a) has occurred within the twelve
months preceding the reporting date, no report need be transmitted). The Trustee
also shall comply with TIA Section 313(b)(2) to the extent applicable. The
Trustee shall also transmit by mail all reports as required by TIA Section
313(c).

         A copy of each report at the time of its mailing to the Holders shall
be mailed to the Company and filed with the Commission and each stock exchange
on which the Securities are listed in accordance with TIA Section 313(d). The
Company shall promptly notify the Trustee when the Securities are listed on any
stock exchange.

                                       45


         SECTION 9.7.      COMPENSATION AND INDEMNITY.

         The Company shall pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services hereunder as the
parties shall agree from time to time. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.

         The Company shall indemnify the Trustee and hold it harmless against
any and all losses, liabilities or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the company (including this Section 9.7) and defending itself against any claim
(whether asserted by the Company or any Holder or any other person) or liability
in connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its gross negligence or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need not
pay for any settlement, made without its consent, which consent shall not be
unreasonably withheld or delayed.

         The obligations of the Company under this Section 9.7 shall survive the
satisfaction and discharge of this Indenture or the resignation or removal of
the Trustee.

         To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest (including Additional Interest, if any) on particular Securities. Such
Lien shall survive the satisfaction and discharge of this Indenture.

         When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 8.1(7) or (8) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.

         The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.

         SECTION 9.8.      REPLACEMENT OF TRUSTEE.

         A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 9.8.

         The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Securities may remove the Trustee by
so notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:

                  (a)      the Trustee fails to comply with Section 9.10 hereof;

                  (b)      the Trustee is adjudged a bankrupt or an insolvent or
         an order for relief is entered with respect to the Trustee under any
         Bankruptcy Law;

                                       46


                  (c)      a custodian or public officer takes charge of the
         Trustee or its property; or

                  (d)      the Trustee becomes incapable of acting.

         If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Securities may appoint
a successor Trustee to replace the successor Trustee appointed by the Company.

         If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.

         If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
9.10 hereof, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.

         A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Securities. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 9.7 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 9.8, the Company's obligations under Section 9.7 hereof
shall continue for the benefit of the retiring Trustee.

         SECTION 9.9.      SUCCESSOR TRUSTEE BY MERGER, ETC.

         If the Trustee consolidates, merges or converts into, or transfers by
sale or otherwise all or substantially all of its corporate trust business to
(including the administration of this Indenture), another corporation, the
successor corporation without any further act shall be the successor Trustee.

         SECTION 9.10.     ELIGIBILITY; DISQUALIFICATION.

         There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has (or in the case of a subsidiary of a bank holding
company, its parent shall have) a combined capital and surplus of at least
$100.0 million as set forth in its most recent published annual report of
condition.

         This Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).

         SECTION 9.11.     PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

         The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.

                                       47


                                   ARTICLE 10

                     SATISFACTION AND DISCHARGE OF INDENTURE

         SECTION 10.1.     SATISFACTION AND DISCHARGE OF INDENTURE.

         This Indenture shall cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for and except as further provided below),
and the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when

                                    (1)      either

                           (A)      all Securities theretofore authenticated and
                  delivered (other than (i) Securities which have been
                  destroyed, lost or stolen and which have been replaced or paid
                  as provided in Section 2.7 and (ii) Securities for whose
                  payment money has theretofore been deposited in trust and
                  thereafter repaid to the Company as provided in Section 10.3)
                  have been delivered to the Trustee for cancellation; or

                           (B)      all such Securities not theretofore
                  delivered to the Trustee for cancellation

                           (i)      have become due and payable, or

                           (ii)     will become due and payable at the Final
                  Maturity Date within one year,

         and the Company has irrevocably deposited or caused to be irrevocably
         deposited cash with the Trustee or a Paying Agent (other than the
         Company or any of its Affiliates) as trust funds in trust for the
         purpose of and in an amount sufficient to pay and discharge the entire
         indebtedness on such Securities not theretofore delivered to the
         Trustee for cancellation, for principal and interest (including
         Additional Interest, if any) to the date of such deposit (in the case
         of Securities which have become due and payable) or the Final Maturity
         Date;

                                    (2)      the Company has paid or caused to
                           be paid all other sums payable hereunder by the
                           Company; and

                                    (3)      the Company has delivered to the
                           Trustee an Officers' Certificate and an Opinion of
                           Counsel, each stating that all conditions precedent
                           herein relating to the satisfaction and discharge of
                           this Indenture have been complied with.

         Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 9.7 shall survive and,
if money shall have been deposited with the Trustee pursuant to subclause (B) of
clause (1) of this Section, the provisions of Sections 2.3, 2.4, 2.5, 2.6, 2.7,
2.12, 3.2, 12.8, 12.15 and 12.16, Article 4, the last paragraph of Section 6.2
and this Article 10, shall survive until the Securities have been paid in full.

         SECTION 10.2.     APPLICATION OF TRUST MONEY.

         Subject to the provisions of Section 10.3, the Trustee or a Paying
Agent shall hold in trust, for the benefit of the Holders, all money deposited
with it pursuant to Section 10.1 and shall apply the deposited

                                       48


money in accordance with this Indenture and the Securities to the payment of the
principal of and interest (including Additional Interest, if any) on the
Securities. Money so held in trust shall not be subject to the subordination
provisions of Article 5.

         SECTION 10.3.     REPAYMENT TO COMPANY.

         The Trustee and each Paying Agent shall promptly pay to the Company
upon request any excess money (i) deposited with them pursuant to Section 10.1
and (ii) held by them at any time.

         The Trustee and each Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal or interest (including
Additional Interest, if any) that remains unclaimed for two years after a right
to such money has matured; provided, however, that the Trustee or such Paying
Agent, before being required to make any such payment, may at the expense of the
Company cause to be mailed to each Holder entitled to such money notice that
such money remains unclaimed and that after a date specified therein, which
shall be at least 30 days from the date of such mailing, any unclaimed balance
of such money then remaining will be repaid to the Company. After payment to the
Company, Holders entitled to money must look to the Company for payment as
general creditors unless an applicable abandoned property law designates another
person.

         SECTION 10.4.     REINSTATEMENT.

         If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 10.2 by reason of any legal proceeding or by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Company's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 10.1 until such
time as the Trustee or such Paying Agent is permitted to apply all such money in
accordance with Section 10.2; provided, however, that if the Company has made
any payment of the principal of or interest (including Additional Interest, if
any) on any Securities because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive any such payment from the money held by the Trustee or such Paying
Agent.

                                   ARTICLE 11

                       AMENDMENTS, SUPPLEMENTS AND WAIVERS

         SECTION 11.1.     WITHOUT CONSENT OF HOLDERS.

         The Company and the Trustee may amend or supplement this Indenture or
the Securities without notice to or consent of any Securityholder:

                  (a)      to comply with Sections 4.10 and 7.1;

                  (b)      to cure any ambiguity, defect or inconsistency;

                  (c)      to make any other change that does not adversely
         affect the rights of any Securityholder;

                  (d)      to comply with the provisions of the TIA;

                                       49


                  (e)      to add to the covenants of the Company for the equal
         and ratable benefit of the Securityholders or to surrender any right,
         power or option conferred upon the Company;

                  (f)      to appoint a successor Trustee; or

                  (g)      to make all payments of principal and interest
         (including Additional Interest, if any) through its branch office in
         any foreign country instead of its Bermuda foreign branch office;
         provided that such change shall not have an adverse effect on the
         Holders; and provided, further, that Section 12.15 shall be amended
         accordingly.

         SECTION 11.2.     WITH CONSENT OF HOLDERS.

         The Company and the Trustee may amend or supplement this Indenture or
the Securities with the written consent of the Holders of at least a majority in
aggregate principal amount of the Securities then outstanding. The Holders of at
least a majority in aggregate principal amount of the Securities then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Securities without notice to any
Securityholder. However, notwithstanding the foregoing but subject to Section
11.4, without the written consent of each Securityholder affected, an amendment,
supplement or waiver, including a waiver pursuant to Section 8.4, may not:

                  (a)      change the stated maturity of the principal of any
         Security;

                  (b)      reduce the principal amount of, or any premium or
         interest (including Additional Interest, if any) on, any Security;

                  (c)      reduce the amount of principal payable upon
         acceleration of the maturity of any Security;

                  (d)      change the place or currency of payment of principal
         of, or any premium or interest (including Additional Interest, if any)
         on, any Security;

                  (e)      impair the right to institute suit for the
         enforcement of any payment on, or with respect to, any Security;

                  (f)      modify the provisions with respect to the purchase
         right of Holders pursuant to Article 3 upon a Change of Control in a
         manner adverse to Holders;

                  (g)      modify the subordination provisions of Article 5 in
         a manner materially adverse to the Holders of Securities;

                  (h)      adversely affect the right of Holders to convert
         Securities other than as provided in or under Article 4 of this
         Indenture;

                  (i)      reduce the percentage of the aggregate principal
         amount of the outstanding Securities whose Holders must consent to a
         modification or amendment;

                  (j)      reduce the percentage of the aggregate principal
         amount of the outstanding Securities necessary for the waiver of
         compliance with certain provisions of this Indenture or the waiver of
         certain defaults under this Indenture; and

                                       50


                  (k)      modify any of the provisions of this Section or
         Section 8.4, except to increase any such percentage or to provide that
         certain provisions of this Indenture cannot be modified or waived
         without the consent of the Holder of each outstanding Security affected
         thereby.

         It shall not be necessary for the consent of the Holders under this
Section 11.2 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.

         After an amendment, supplement or waiver under this Section 11.2
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver. An amendment or supplement under this Section 11.2 or under Section 11.1
may not make any change that adversely affects the rights under Article 5 of any
holder of an issue of Senior Debt unless the holders of that issue, pursuant to
its terms, consent to the change.

         SECTION 11.3.     COMPLIANCE WITH TRUST INDENTURE ACT.

         Every amendment to or supplement of this Indenture or the Securities
shall comply with the TIA as in effect at the date of such amendment or
supplement.

         SECTION 11.4.     REVOCATION AND EFFECT OF CONSENTS.

         Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to its Security or portion of a Security if the Trustee receives the
notice of revocation before the date the amendment, supplement or waiver becomes
effective.

         After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(a) through (k) of Section 11.2. In that case the amendment, supplement or
waiver shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security.

         SECTION 11.5.     NOTATION ON OR EXCHANGE OF SECURITIES.

         If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.

         SECTION 11.6.     TRUSTEE TO SIGN AMENDMENTS, ETC.

         The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 11 if the amendment or supplemental
indenture does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, in its sole discretion,
but need not sign it. In signing or refusing to sign such amendment or
supplemental indenture, the Trustee shall be entitled to receive and, subject to
Section 9.1, shall be fully protected in relying upon, an Opinion of Counsel

                                       51


stating that such amendment or supplemental indenture is authorized or permitted
by this Indenture. The Company may not sign an amendment or supplement indenture
until the Board of Directors approves it.

         SECTION 11.7.     EFFECT OF SUPPLEMENTAL INDENTURES.

         Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

                                   ARTICLE 12

                                  MISCELLANEOUS

         SECTION 12.1.     TRUST INDENTURE ACT CONTROLS.

         If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by any of Sections 310 to 317, inclusive, of the TIA through
operation of Section 318(c) thereof, such imposed duties shall control.

         SECTION 12.2.     NOTICES.

         Any demand, authorization notice, request, consent or communication
shall be given in writing and delivered in person or mailed by first-class mail,
postage prepaid, addressed as follows or transmitted by facsimile transmission
(confirmed by delivery in person or mail by first-class mail, postage prepaid,
or by guaranteed overnight courier) to the following facsimile numbers:

                  If to the Company, to:

                  Flextronics International Ltd.
                  2090 Fortune Drive
                  San Jose, CA  95131
                  Attention: Investors Relations
                  Telephone: (408) 428-1300

                  with a copy to:

                  Fenwick & West LLP
                  801 California Street
                  Mountain View, CA  04041
                  Attention: David K. Michaels, Esq.
                  Telephone: (415) 875-2455

                                       52


                  if to the Trustee, to:

                  J.P. Morgan Trust Company,
                       National Association
                  560 Mission Street, 13th Floor
                  San Francisco, CA
                  Attention: James Nagy
                  Telephone: (415) 315-7533

                  with a copy to:

                  Nixon Peabody LLP
                  Two Embarcadero Center
                  Suite 2700
                  San Francisco, CA  94111-3996
                  Attention: Varya Simpson
                  Telephone: (415) 984-8200

         Such notices or communications shall be effective when received.

         The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.

         Any notice or communication mailed to a Securityholder shall be mailed
by first-class mail or delivered by an overnight delivery service to it at its
address shown on the register kept by the Primary Registrar.

         Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication to a Securityholder is mailed in
the manner provided above, it is duly given, whether or not the addressee
receives it.

         SECTION 12.3.     COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.

         Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other person shall
have the protection of TIA Section 312(c).

         SECTION 12.4.     CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

         (a)      Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee at the request of the Trustee:

                                    (1)      an Officers' Certificate stating
                           that, in the opinion of the signers, all conditions
                           precedent (including any covenants, compliance with
                           which constitutes a condition precedent), if any,
                           provided for in this Indenture relating to the
                           proposed action have been complied with; and

                                    (2)      an Opinion of Counsel stating that,
                           in the opinion of such counsel, all such conditions
                           precedent (including any covenants, compliance with
                           which constitutes a condition precedent) have been
                           complied with.

                                       53


         (b)      Each Officers' Certificate and Opinion of Counsel with respect
to compliance with a condition or covenant provided for in this Indenture shall
include:

                                    (1)      a statement that the person making
                           such certificate or opinion has read such covenant or
                           condition;

                                    (2)      a brief statement as to the nature
                           and scope of the examination or investigation upon
                           which the statements or opinions contained in such
                           certificate or opinion are based;

                                    (3)      a statement that, in the opinion of
                           such person, he or she has made such examination or
                           investigation as is necessary to enable him or her to
                           express an informed opinion as to whether or not such
                           covenant or condition has been complied with; and

                                    (4)      a statement as to whether or not,
                           in the opinion of such person, such condition or
                           covenant has been complied with;

provided however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.

         SECTION 12.5.     RECORD DATE FOR VOTE OR CONSENT OF SECURITYHOLDERS.

         The Company (or, in the event deposits have been made pursuant to
Section 10.1, the Trustee) may set a record date for purposes of determining the
identity of Holders entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture, which record date shall not be
more than thirty (30) days prior to the date of the commencement of solicitation
of such action. Notwithstanding the provisions of Section 11.4, if a record date
is fixed, those persons who were Holders of Securities at the close of business
on such record date (or their duly designated proxies), and only those persons,
shall be entitled to take such action by vote or consent or to revoke any vote
or consent previously given, whether or not such persons continue to be Holders
after such record date.

         SECTION 12.6.     RULES BY TRUSTEE, PAYING AGENT, REGISTRAR AND
                           CONVERSION AGENT.

         The Trustee may make reasonable rules (not inconsistent with the terms
of this Indenture) for action by or at a meeting of Holders. Any Registrar,
Paying Agent or Conversion Agent may make reasonable rules for its functions.

         SECTION 12.7.     LEGAL HOLIDAYS.

         A "Legal Holiday" is a Saturday, Sunday or a day on which state or
federally chartered banking institutions in New York, New York and the state in
which the Corporate Trust Office is located are not required to be open. If a
payment date is a Legal Holiday, payment shall be made on the next succeeding
day that is not a Legal Holiday, and no interest (including Additional Interest,
if any) shall accrue for the intervening period. If a Regular Record Date is a
Legal Holiday, the record date shall not be affected.

         SECTION 12.8.     GOVERNING LAW.

         This Indenture and the Securities shall be governed by, and construed
in accordance with, the laws of the State of New York, without regard to
principles of conflicts of laws.

                                       54


         SECTION 12.9.     NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

         This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary of the Company. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.

         SECTION 12.10.    NO RECOURSE AGAINST OTHERS.

         All liability described in paragraph 15 of the Securities of any
director, officer, employee or stockholder, as such, of the Company is waived
and released.

         SECTION 12.11.    SUCCESSORS.

         All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture shall
bind its successor.

         SECTION 12.12.    MULTIPLE COUNTERPARTS.

         The parties may sign multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an original, but all of them together
represent the same agreement.

         SECTION 12.13.    SEPARABILITY.

         In case any provisions in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

         SECTION 12.14.    TABLE OF CONTENTS, HEADINGS, ETC.

         The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.

         SECTION 12.15.    BERMUDA BRANCH; FULL RECOURSE OBLIGATIONS.

         Notwithstanding anything to the contrary contained herein, all payments
of principal and interest (including Additional Interest, if any, and Cash
Settlement of Conversion Obligations as necessary to ensure no withholding on
such payments) by the Company with respect to the Securities will be made by the
Company through its Bermuda branch office; provided, however, that
notwithstanding the foregoing, the Company acknowledges that its Obligations
hereunder are full recourse to the Company and are in no manner limited to any
extent to any branch thereof and shall in no manner impair the Trustee's ability
to collect any Obligation from the Company.

         SECTION 12.16.    CONSENT TO JURISDICTION AND SERVICE.

         To the fullest extent permitted by applicable law, the Company hereby
irrevocably submits to the jurisdiction of any Federal or State court located in
the Borough of Manhattan in The City of New York, New York in any suit, action
or proceeding based on or arising out of or relating to this Indenture or any
Notes, and irrevocably agree that all claims in respect of such suit or
proceeding may be determined in any such court. The Company irrevocably waives,
to the fullest extent permitted by laws, any objection which they may have to
the laying of the venue of any such suit, action or proceeding brought in such a
court and any claim that any suit, action or proceeding brought in such a court
has been brought in an

                                       55


inconvenient forum. The Company agrees that final judgment in any such suit,
action or proceeding brought in such a court may be enforced in the courts of
any jurisdiction to which the Company is subject by a suit upon such judgment,
provided that service of process is effected upon the Company in the manner
specified herein or as otherwise permitted by law. To the extent that the
Company has or hereafter may acquire any immunity from jurisdiction of any court
or from any legal process (whether through service of now, attachment prior to
judgment, attachment in aid of execution, executor or otherwise) with respect to
itself or its property, the Company hereby irrevocably waives such immunity in
respect of their respective obligations under this Indenture, to the extent
permitted by law.

                            [SIGNATURE PAGE FOLLOWS]

                                       56


         IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as
of the date and year first above written.

                                 FLEXTRONICS INTERNATIONAL LTD.

                                 By: /s/ Bernard Liew Jin Yang
                                     ___________________________________________
                                     Name:   Bernard Liew Jin Yang
                                     Title:  Company Secretary

                                 J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION

                                 By: /s/ James Nagy
                                     ___________________________________________
                                     Name:   James Nagy
                                     Title:  Assistant Vice President

                          (Signature Page to Indenture)

                                       S-1


                                   SCHEDULE A

CREDIT SUISSE FIRST BOSTON LLC
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
LEHMAN BROTHERS INC.
GOLDMAN, SACHS & CO.
CITIGROUP GLOBAL MARKETS INC.
BEAR, STEARNS & CO. INC.
ABN AMRO ROTHSCHILD LLC
FLEET SECURITIES, INC.
BNP PARIBAS SECURITIES CORP.
RBC DOMINION SECURITIES CORPORATION
SCOTIA CAPITAL (USA) INC.

                                       A-1


                                    EXHIBIT A
                           [FORM OF FACE OF SECURITY]

         [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY IS A
GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.](1)

         [THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THIS SECURITY AND THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION THEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

         THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
THEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN
THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF

- ------------------
(1)      These paragraphs should be included only if the Security is a Global
         Security.

                                       A-1


CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE. IN ANY CASE THE HOLDER HEREOF WILL NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THE
SECURITIES EXCEPT AS PERMITTED BY THE SECURITIES ACT.]

         [THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A
REGISTRATION RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED
TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY
AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.](2)

- ------------------
(2)      These paragraphs should be included only if the Security is a
         Registered Security.

                                       A-2


         FLEXTRONICS INTERNATIONAL LTD.

CUSIP:  33938E AK 3                                                      $______

              1% CONVERTIBLE SUBORDINATED NOTES DUE AUGUST 1, 2010

         Flextronics International Ltd., a Singapore corporation (the "Company",
which term shall include any successor corporation under the Indenture referred
to on the reverse hereof), promises to pay to___________ _________________, or
registered assigns, the principal sum of _____________________________ Dollars
($__________) on August 1, 2010 [or such greater or lesser amount as is
indicated on the Schedule of Exchanges of Notes on the other side of this
Note.](3)

         Interest Payment Dates:  August 1 and February 1

         Regular Record Dates:  July 15 and January 15

         This Note is convertible as specified on the other side of this Note.
Additional provisions of this Note are set forth on the other side of this Note.

                             SIGNATURE PAGE FOLLOWS

- ------------------
(3)      This phase should be included only if the Security is a Global
         Security.

                                       A-3


         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.

                                             FLEXTRONICS INTERNATIONAL LTD.

                                             By: _______________________________
                                                 Name:
                                                 Title:

Dated:

Trustee's Certificate of Authentication:  This is one of the
Securities referred to in the within-mentioned Indenture.

J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee

________________________________________________
Authorized Signatory

By:

                                       A-4


                       [FORM OF REVERSE SIDE OF SECURITY]

                         FLEXTRONICS INTERNATIONAL LTD.
              1% CONVERTIBLE SUBORDINATED NOTES DUE AUGUST 1, 2010

         1.       INTEREST

         Flextronics International Ltd., a Singapore corporation (the "Company",
which term shall include any successor corporation under the Indenture
hereinafter referred to), promises to pay interest on the principal amount of
this Note at the rate of 1% per annum. The Company shall pay interest
semiannually on August 1 and February 1 of each year, commencing February 1,
2004. Interest on the Notes shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from August 5, 2003;
provided, however, that if there is not an existing default in the payment of
interest and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding interest payment date, interest shall
accrue from such interest payment date. Interest will be computed on the basis
of a 360-day year of twelve 30-day months. Any reference herein to interest
accrued or payable as of any date shall include any Additional Interest accrued
or payable on such date as provided in the Registration Rights Agreement.

         2.       METHOD OF PAYMENT

         The Company shall pay interest (and Additional Interest, if any,) on
this Note to the person who is the Holder of this Note at the close of business
on July 15 or January 15, as the case may be, preceding the related interest
payment date. The Holder must surrender this Note to a Paying Agent to collect
payment of principal. The Company will pay principal and interest (and
Additional Interest, if any), in money of the United States that at the time of
payment is legal tender for payment of public and private debts. The Company
may, however, pay principal and interest (and Additional Interest, if any), in
respect of any Certificated Security by check or wire payable in such money;
provided, however, that a Holder with an aggregate principal amount in excess of
$2,000,000 will be paid by wire transfer in immediately available funds at the
election of such Holder if such Holder has provided wire transfer instructions
to the Company. The Company may mail an interest check, if any, to the Holder's
registered address. Notwithstanding the foregoing, so long as this Note is
registered in the name of a Depositary or its nominee, all payments hereon shall
be made by wire transfer of immediately available funds to the account of the
Depositary or its nominee.

         3.       PAYING AGENT, REGISTRAR AND CONVERSION AGENT

         Initially, J.P. Morgan Trust Company, National Association (the
"Trustee", which term shall include any successor trustee under the Indenture
hereinafter referred to) will act as Paying Agent, Registrar and Conversion
Agent. The Company may change any Paying Agent, Registrar or Conversion Agent
without notice to the Holder. The Company or any of its Subsidiaries may,
subject to certain limitations set forth in the Indenture, act as Paying Agent
or Registrar.

         4.       INDENTURE, LIMITATIONS

         This Note is one of a duly authorized issue of Securities of the
Company designated as its 1% Convertible Subordinated Notes Due August 1, 2010
(the "Notes"), issued under an Indenture dated as of August 5, 2003 (together
with any supplemental indentures thereto, the "Indenture"), between the Company
and the Trustee. The terms of this Note include those stated in the Indenture
and those required by or made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended, as in effect

                                       A-5


on the date of the Indenture. This Note is subject to all such terms, and the
Holder of this Note is referred to the Indenture and said Act for a statement of
them.

         The Notes are subordinated unsecured obligations of the Company limited
to $500,000,000 ($530,000,000 if the Initial Purchasers' option to purchase
additional notes is exercised in full) aggregate principal amount. The Indenture
does not limit other debt of the Company, secured or unsecured, including Senior
Debt.

         5.       PURCHASE OF NOTES AT OPTION OF HOLDER UPON A CHANGE OF CONTROL

         Upon the occurrence of a Change of Control, each Holder of Notes will
have the right to require the Company to repurchase all or any part (equal to
$1,000 or integral multiples thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid
interest (including Additional Interest) thereon, if any, to the date of
purchase (the "Change of Control Payment"). Within 30 days following any Change
of Control, the Company will mail a notice to each Holder of Notes describing
the transaction or transactions that constitute the Change of Control and
offering to repurchase Notes on the date specified in such notice, which date
shall be no earlier than 30 days and no later than 60 days from the date such
notice is mailed (the "Change of Control Payment Date"), pursuant to the
procedures required by the Indenture and described in such notice.

         The Company will comply with the requirements of Rule l4e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.

         On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or integral multiples thereof.

         6.       CONVERSION

         A Holder of a Note may convert the principal amount of such Note (or
any portion thereof equal to $1,000 or any integral multiple of $1,000 in excess
thereof) into shares of Common Stock at any time prior to the close of business
on August 1, 2010; provided, however, that if the Note is submitted or presented
for purchase pursuant to a Change of Control Notice, the conversion right will
terminate at the close of business on the Business Day immediately preceding the
Change of Control Payment Date for such Note or such earlier date as the Holder
presents such Note for purchase (unless the Holder withdraws its election
pursuant to the Indenture).

         The initial Conversion Price is $15.525 per share, subject to
adjustment under certain circumstances as provided in the Indenture. The number
of shares of Common Stock issuable upon conversion of a Note is determined by
dividing the principal amount of the Note or portion thereof converted by the
Conversion Price in effect on the Conversion Date.

                                       A-6


         To convert a Note, a Holder must (a) complete and manually sign the
conversion notice set forth below and deliver such notice to the Conversion
Agent, (b) surrender the Note to the Conversion Agent, (c) furnish appropriate
endorsements and transfer documents if required by a Registrar or the Conversion
Agent, and (d) pay any transfer or similar tax, if required. A Holder may
convert a portion of a Note equal to $1,000 or any integral multiple thereof.

         A Note in respect of which a Holder had delivered a Change of Control
Purchase Notice exercising the option of such Holder to require the Company to
purchase such Note may be converted only if the Change of Control Purchase
Notice is withdrawn in accordance with the terms of the Indenture.

         As soon as practicable after the Conversion Date, the Company shall
satisfy all of its Conversion Obligations by delivering to the Holder, at the
Company's option, either shares of Common Stock, cash, or a combination of cash
and shares of Common Stock. If the Company elects to satisfy the entire
Conversion Obligation by Share Settlement, then the Company will deliver to the
Holder shares of Common Stock equal to the quotient of (A) the aggregate
principal amount of Notes to be converted by the Holder divided by (B) the
Conversion Price in effect on the Conversion Date. If the Company elects to
satisfy the entire Conversion Obligation by Cash Settlement, then the Company
will deliver to the Holder cash in an amount equal to the product of (A) a
number equal to the aggregate principal amount of Notes to be converted by such
Holder divided by the Conversion Price in effect on the Conversion Date, and (B)
the arithmetic mean of the Volume Weighted Average Prices of the Common Stock on
each Trading Day during the Cash Settlement Averaging Period. If the Company
elects to satisfy the Conversion Obligation in a Combined Settlement, then the
Company will deliver to the Holder a Partial Cash Amount plus a number of shares
of Common Stock equal to the quotient of (A) the amount of the Cash Settlement
minus such Partial Cash Amount divided by (B) the arithmetic mean of the Volume
Weighted Average Prices of the Common Stock on each Trading Day during the
applicable Cash Settlement Averaging Period.

         Upon receipt of the conversion notice from a Holder by the Company (1)
if the Company elects to satisfy the Conversion Obligation by Share Settlement,
then settlement in Common Stock will be made on or prior to the fifth (5th)
Trading Day following the receipt of such conversion notice; or (2) if the
Company elects to satisfy the Conversion Obligation by Cash Settlement or
Combined Settlement, then the Company will notify the Holder, through the
Trustee, of the dollar amount to be satisfied in cash at any time during the
Settlement Notice Period. Share Settlement will apply automatically if the
Company does not notify the Holder that the Company has chosen another
settlement method.

         If the Company timely elects Cash Settlement or Combined Settlement,
then the Holder may retract the conversion notice at any time during the
Conversion Retraction Period by notice to the Trustee. The Holder cannot retract
the conversion notice (and the conversion notice therefore will be irrevocable)
if the Company elects Share Settlement. If the Holder has not retracted the
conversion notice during the Conversion Retraction Period, then Cash Settlement
or Combined Settlement will occur on the first Trading Day following the Cash
Settlement Averaging Period.

         7.       SUBORDINATION

         The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, subordinate and junior in right of payment to
the prior payment in full of all Senior Debt of the Company. Any Holder by
accepting this Note agrees to and shall be bound by such subordination
provisions and authorizes the Trustee to give them effect. In addition to all
other rights of Senior Debt described in the Indenture, the Senior Debt shall
continue to be Senior Debt and entitled to the benefits of

                                       A-7


the subordination provisions irrespective of any amendment, modification or
waiver of any terms of any instrument relating to the Senior Debt or any
extension or renewal of the Senior Debt.

         8.       DENOMINATIONS, TRANSFER, EXCHANGE

         The Notes are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000. A Holder may register the transfer of
or exchange Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes or other governmental charges that may be imposed
in relation thereto by law or permitted by the Indenture.

         9.       PERSONS DEEMED OWNERS

         The Holder of a Note may be treated as the owner of it for all
purposes.

         10.      UNCLAIMED MONEY

         If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent will pay the money back to the Company,
subject to applicable unclaimed property law. After that, Holders entitled to
money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another person.

         11.      AMENDMENT, SUPPLEMENT AND WAIVER

         Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in aggregate principal amount of the Notes then outstanding, and an existing
default or Event of Default and its consequence or compliance with any provision
of the Indenture or the Notes may be waived in a particular instance with the
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding. Without the consent of or notice to any Holder, the Company
and the Trustee may amend or supplement the Indenture or the Notes to, among
other things, cure any ambiguity, defect or inconsistency or make any other
change that does not adversely affect the rights of any Holder.

         12.      SUCCESSOR ENTITY

         When a successor corporation assumes all the obligations of its
predecessor under the Notes and the Indenture in accordance with the terms and
conditions of the Indenture, the predecessor corporation (except in certain
circumstances specified in the Indenture) be released from those obligations.

         13.      DEFAULTS AND REMEDIES

         Under the Indenture, an Event of Default includes: (i) default for 30
days in payment of interest (including Additional Interest, if any), on any
Notes; (ii) default in payment of any principal (including any premium) on the
Notes when due; (iii) failure by the Company for 30 days after notice from
either the Trustee or the Holders of at least 25% in principal amount of the
then outstanding Notes to comply with Sections 3.2 or 7.1 of the Indenture; (iv)
failure by the Company for 60 days after notice from either the Trustee or the
Holders of at least 25% in principal of the then outstanding Notes to comply
with any of its other agreements contained in the Indenture or the Notes; (v)
default in the payment of certain indebtedness of the Company; and (vi) certain
events of bankruptcy, insolvency or reorganization of the Company or any
Significant Subsidiary. If an Event of Default (other than as a result of
certain events of bankruptcy, insolvency or reorganization) occurs and is
continuing, the Trustee or the Holders of at least

                                       A-8


25% in aggregate principal amount of the Notes then outstanding may, by notice
to the Company, declare all unpaid principal and accrued and unpaid interest
thereon to the date of acceleration on the Notes then outstanding to be due and
payable upon any such declaration, all as and to the extent provided in the
Indenture. If an Event of Default occurs as a result of certain events of
bankruptcy, insolvency or reorganization of the Company, unpaid principal of the
Notes then outstanding and accrued and unpaid interest thereon shall become due
and payable immediately without any declaration or other act on the part of the
Trustee or any Holder, all as and to the extent provided in the Indenture.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in aggregate principal amount of the Notes then outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing default (except a default in
payment of principal or interest (including Additional Interest, if any) if it
determines that withholding notice is in their interests. The Company is
required to file periodic reports with the Trustee as to the absence of default.

         14.      TRUSTEE DEALINGS WITH THE COMPANY

         J.P. Morgan Trust Company, National Association, the Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from and perform services for the Company or an Affiliate of the
Company, and may otherwise deal with the Company or an Affiliate of the Company,
as if it were not the Trustee.

         15.      NO RECOURSE AGAINST OTHERS

         A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the Notes
or the Indenture nor for any claim based on, in respect of or by reason of such
obligations or their creation. The Holder of this Note by accepting this Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of this Note.

         16.      AUTHENTICATION

         This Note shall not be valid until the Trustee or an authenticating
agent manually signs the certificate of authentication on the other side of this
Note.

         17.      ABBREVIATIONS AND DEFINITIONS

         Customary abbreviations may be used in the name of the Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act).

         All terms defined in the Indenture and used in this Note but not
specifically defined herein are defined in the Indenture and are used herein as
so defined.

         18.      INDENTURE TO CONTROL; GOVERNING LAW

         In the case of any conflict between the provisions of this Note and the
Indenture, the provisions of the Indenture shall control. This Note shall be
governed by, and construed in accordance with, the laws of the State of New
York, without regard to principals of conflicts of law.

         The Company will furnish to any Holder, upon written request and
without charge, a copy of the Indenture. Requests may be made to: Flextronics
International Ltd., 2090 Fortune Drive, San Jose, CA 95131, (408) 428-1300,
Attention: Investor Relations.

                                       A-9


                                 ASSIGNMENT FORM

         To assign this Note, fill in the form below:

         I or we assign and transfer this Note to

________________________________________________________________________________
                 (Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
              (Print or type assignee's name, address and zip code)

and irrevocably appoint

________________________________________________________________________________

agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him or her.

                                             Your Signature:
Date: _________________________________      ___________________________________
                                             (Sign exactly as your name appears
                                             on the other side of this Note)

*Signature guaranteed by:

By:  ________________________________

         *    The signature must be guaranteed by an institution which is a
              member of one of the following recognized signature guaranty
              programs: (i) the Securities Transfer Agent Medallion Program
              (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP);
              (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such
              other guaranty program acceptable to the Trustee.

                                      A-10


                                CONVERSION NOTICE

         To convert this Note into Common Stock of the Company, check the box:
         [ ]

         To convert only part of this Note, state the principal amount to be
converted (must be $1,000 or a integral multiple of $1,000): $____________.

         If you want the stock certificate made out in another person's name,
fill in the form below:

________________________________________________________________________________
                 (Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
              (Print or type assignee's name, address and zip code)

                                             Your Signature:
Date: _________________________________      ___________________________________
                                             (Sign exactly as your name appears
                                             on the other side of this Note)

*Signature guaranteed by:

By:  ________________________________

         *    The signature must be guaranteed by an institution which is a
              member of one of the following recognized signature guaranty
              programs: (i) the Securities Transfer Agent Medallion Program
              (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP);
              (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such
              other guaranty program acceptable to the Trustee.

                                      A-11


                       OPTION OF HOLDER TO ELECT PURCHASE

         If you want to elect to have this Note purchased by the Company
pursuant to Section 3.2 of the Indenture, check the box below:

                                 [ ] Section 3.2

         If you want to elect to have only part of the Note purchased by the
Company Section 3.2 of the Indenture, state the amount you elect to have
purchased: $

Date: _________________________________   Your Signature________________________
                                          (Sign exactly as your name appears on
                                           the face of this Note)

                                          Tax Identification No:________________

                                          SIGNATURE GUARANTEE:
                                          ______________________________________

                                          Signatures must be guaranteed by an
                                          "eligible guarantor institution"
                                          meeting the requirements of the
                                          Registrar, which requirements include
                                          membership or participation in the
                                          Security Transfer Agent Medallion
                                          Program ("STAMP") or such other
                                          "signature guarantee program" as may
                                          be determined by the Registrar in
                                          addition to, or in substitution for,
                                          STAMP, all in accordance with the
                                          Securities Exchange Act of 1934, as
                                          amended.

                                      A-12


                        SCHEDULE OF EXCHANGES OF NOTES(4)

         The following exchanges, repurchases or conversions of a part of this
global Note have been made:



                         PRINCIPAL AMOUNT            AUTHORIZED                AMOUNT OF                AMOUNT OF
                       OF THIS GLOBAL NOTE          SIGNATORY OF              DECREASE IN              INCREASE IN
                          FOLLOWING SUCH             SECURITIES            PRINCIPAL AMOUNT          PRINCIPAL AMOUNT
DATE OF EXCHANGE      DECREASE (OR INCREASE)          CUSTODIAN           OF THIS GLOBAL NOTE      OF THIS GLOBAL NOTE
- ----------------      ---------------------           ---------           -------------------      -------------------
                                                                                       


- -----------------
(4)      This schedule should be included only if the Security is a Global
         Security.

                                      A-13


            CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
                     OF TRANSFER OF RESTRICTED SECURITIES(5)

Re:      1% Convertible Subordinated Notes Due August 1, 2010 (the "Notes") of
         Flextronics International Ltd.

         This certificate relates to $_______ principal amount of Notes owned in
         (check applicable box)

         [ ] book-entry or  [ ] definitive form by ___________________ (the
         "Transferor").

         The Transferor has requested a Registrar or the Trustee to exchange or
register the transfer of such Notes.

         In connection with such request and in respect of each such Note, the
Transferor does hereby certify that the Transferor is familiar with transfer
restrictions relating to the Notes as provided in Section 2.12 of the Indenture
dated as of August 5, 2003 between Flextronics International Ltd. and J.P.
Morgan Trust Company, National Association, as trustee (the "Indenture"), and
the transfer of such Note is being made pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act")
(check applicable box) or the transfer or exchange, as the case may be, of such
Note does not require registration under the Securities Act because (check
applicable box):

         [ ]      Such Note is being transferred pursuant to an effective
                  registration statement under the Securities Act.

         [ ]      Such Note is being acquired for the Transferor's own account,
                  without transfer.

         [ ]      Such Note is being transferred to the Company or a Subsidiary
                  (as defined in the Indenture) of the Company.

         [ ]      Such Note is being transferred to a person the Transferor
                  reasonably believes is a "qualified institutional buyer" (as
                  defined in Rule 144A or any successor provision thereto ("Rule
                  144A") under the Securities Act) that is purchasing for its
                  own account or for the account of a "qualified institutional
                  buyer", in each case to whom notice has been given that the
                  transfer is being made in reliance on such Rule 144A, and in
                  each case in reliance on Rule 144A.

         [ ]      Such Note is being transferred pursuant to and in compliance
                  with an exemption from the registration requirements under the
                  Securities Act in accordance with Rule 144 (or any successor
                  thereto) ("Rule 144") under the Securities Act.

         [ ]      Such Note is being transferred to a non-U.S. Person in an
                  offshore transaction in compliance with Rule 904 of Regulation
                  S under the Securities Act (or any successor thereto).

         Such Note is being transferred pursuant to and in compliance with an
exemption from the registration requirements of the Securities Act (other than
an exemption referred to above) and as a result

- ------------------
(5)      This certificate should be included if this Security is a Transfer
         Restricted Security.

                                      A-14


of which such Note will, upon such transfer, cease to be a "restricted security"
within the meaning of Rule 144 under the Securities Act.

         The Transferor acknowledges and agrees that, if the transferee will
hold any such Notes in the form of beneficial interests in a global Note which
is a "restricted security" within the meaning of Rule 144 under the Securities
Act, then such transfer can only be made pursuant to (i) Rule 144A under the
Securities Act and such transferee must be a "qualified institutional buyer" (as
defined in Rule 144A) or (ii) Regulation S under the Securities Act.

Date: _________________________________   __________________________________
                                          (Insert Name of Transferor)

                                      A-15

EX-23.01

                                                                   EXHIBIT 23.01

August 5, 2003

Flextronics International Ltd.
36 Robinson Road #18-01
City House
Singapore, 068877

We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Flextronics International Ltd. and subsidiaries for the
three-month periods ended June 30, 2003 and 2002, as indicated in our reports
dated July 23, 2003 (August 5, 2003 as to Note J) and July 19, 2002; because we
did not perform an audit, we expressed no opinion on that information.

We are aware that our reports referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 and June 30,
2002, are incorporated by reference in Registration Statements on Form S-8 Nos.
333-42255, 333-71049, 333-95189, 333-34016, 333-34698, 333-46166, 333-55528,
333-55850, 333-57680, 333-60270, 333-69452 and 333-75526 and on Form S-3 Nos.
333-87139, 333-87601, 333-94941, 333-41646, 333-46200, 333-46770, 333-55530,
333-56230, 333-60968, 333-68238, 333-70492 and 333-101327.

We also are aware that the aforementioned reports, pursuant to Rule 436(c) under
the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.

/s/ DELOITTE & TOUCHE LLP

San Jose, California

EX-31.01

                                                                   EXHIBIT 31.01

              CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002

I, Michael E. Marks, certify that:

   1.       I have reviewed this quarterly report on Form 10-Q of Flextronics
            International Ltd.;

   2.       Based on my knowledge, this quarterly report does not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this quarterly report;

   3.       Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the registrant as of, and for, the periods presented
            in this quarterly report;

   4.       The registrant's other certifying officer and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
            registrant and have:


            a.     Designed such disclosure controls and procedures, or caused
                   such disclosure controls and procedures to be designed under
                   our supervision, to ensure that material information relating
                   to the registrant, including its consolidated subsidiaries,
                   is made known to us by others within those entities,
                   particularly during the period in which this quarterly report
                   is being prepared;

            b.     Evaluated the effectiveness of the registrant's disclosure
                   controls and procedures and presented in this report our
                   conclusions about the effectiveness of the disclosure
                   controls and procedures, as of the end of the period covered
                   by this report based on such evaluation; and

            c.     Disclosed in this report any change in the registrant's
                   internal control over financial reporting that occurred
                   during the registrant's most recent fiscal quarter that has
                   materially affected, or is reasonably likely to materially
                   affect, the registrant's internal control over financial
                   reporting; and


   5.       The registrant's other certifying officer and I have disclosed,
            based on our most recent evaluation of internal control over
            financial reporting, to the registrant's auditors and the audit
            committee of the registrant's board of directors:


            a.     All significant deficiencies and material weaknesses in the
                   design or operation of internal control over financial
                   reporting which are reasonably likely to adversely affect the
                   registrant's ability to record, process, summarize and report
                   financial information; and


            b.     Any fraud, whether or not material, that involves management
                   or other employees who have a significant role in the
                   registrant's internal control over financial reporting.

Date: August 11, 2003

/s/ Michael E. Marks
- ---------------------------
Michael E. Marks
Chief Executive Officer
Flextronics International Ltd.

EX-31.02

                                                                   EXHIBIT 31.02

              CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF
                         THE SARBANES-OXLEY ACT OF 2002

I, Robert R.B. Dykes, certify that:

   1.       I have reviewed this quarterly report on Form 10-Q of Flextronics
            International Ltd.;

   2.       Based on my knowledge, this quarterly report does not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this quarterly report;

   3.       Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the registrant as of, and for, the periods presented
            in this quarterly report;

   4.       The registrant's other certifying officer and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
            registrant and have:


            a.     Designed such disclosure controls and procedures, or caused
                   such disclosure controls and procedures to be designed under
                   our supervision, to ensure that material information relating
                   to the registrant, including its consolidated subsidiaries,
                   is made known to us by others within those entities,
                   particularly during the period in which this quarterly report
                   is being prepared;

            b.     Evaluated the effectiveness of the registrant's disclosure
                   controls and procedures and presented in this report our
                   conclusions about the effectiveness of the disclosure
                   controls and procedures, as of the end of the period covered
                   by this report based on such evaluation; and

            c.     Disclosed in this report any change in the registrant's
                   internal control over financial reporting that occurred
                   during the registrant's most recent fiscal quarter that has
                   materially affected, or is reasonably likely to materially
                   affect, the registrant's internal control over financial
                   reporting; and

   5.       The registrant's other certifying officer and I have disclosed,
            based on our most recent evaluation of internal control over
            financial reporting, to the registrant's auditors and the audit
            committee of the registrant's board of directors:


            a.     All significant deficiencies and material weaknesses in the
                   design or operation of internal control over financial
                   reporting which are reasonably likely to adversely affect the
                   registrant's ability to record, process, summarize and report
                   financial information; and


            b.     Any fraud, whether or not material, that involves management
                   or other employees who have a significant role in the
                   registrant's internal control over financial reporting.

Date: August 11, 2003

/s/ Robert R.B. Dykes
- ---------------------------
Robert R.B. Dykes
President, Systems Group and
Chief Financial Officer
Flextronics International Ltd.

EX-32.01

                                                                   EXHIBIT 32.01

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                       AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, in his capacity as Chief Executive Officer of Flextronics
International Ltd. (the "Company"), does hereby certify, pursuant to 18 U.S.C
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:

         -        the Quarterly Report on Form 10-Q of the Company for the
                  period ended June 30, 2003, as filed with the Securities and
                  Exchange Commission on August 11, 2003 (the "Report"), fully
                  complies with the requirements of Section 13(a) of the
                  Securities Exchange Act of 1934; and

         -        the information contained in the Report fairly presents, in
                  all material respects, the financial condition and results of
                  operations of the Company for the periods presented therein.

Date: August 11, 2003                             /s/ Michael E. Marks
                                                  --------------------------
                                                  Michael E. Marks
                                                  Chief Executive Officer
                                                  Flextronics International Ltd.

A signed original of this written statement required by Section 906 has been
provided to Flextronics International Ltd. and will be retained by it and
furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.02

                                                                   EXHIBIT 32.02

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                       AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, in his capacity as Chief Executive Officer of Flextronics
International Ltd. (the "Company"), does hereby certify, pursuant to 18 U.S.C
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:

         -        the Quarterly Report on Form 10-Q of the Company for the
                  period ended June 30, 2003, as filed with the Securities and
                  Exchange Commission on August 11, 2003 (the "Report"), fully
                  complies with the requirements of Section 13(a) of the
                  Securities Exchange Act of 1934; and

         -        the information contained in the Report fairly presents, in
                  all material respects, the financial condition and results of
                  operations of the Company for the periods presented therein.

Date: August 11, 2003                             /s/ Robert R.B. Dykes
                                                  --------------------------
                                                  Robert R.B. Dykes
                                                  President, Systems Group and
                                                  Chief Financial Officer
                                                  Flextronics International Ltd.

A signed original of this written statement required by Section 906 has been
provided to Flextronics International Ltd. and will be retained by it and
furnished to the Securities and Exchange Commission or its staff upon request.