Exhibit 10.11
SUN MICROSYSTEMS,
INC.
SECTION 162(M) EXECUTIVE
OFFICER
PERFORMANCE-BASED BONUS
PLAN
SECTION 1
BACKGROUND, PURPOSE AND
DURATION
1.1 Effective
Date.
Sun Microsystems, Inc., having
established the Plan effective as of August 9, 1995 and
amended and restated the Plan effective as of July 1, 2001,
hereby amends and restates the Plan, effective as of July 1,
2006, subject to ratification by an affirmative vote of the holders
of a majority of the Shares that are present in person or by proxy
and entitled to vote at the 2006 Annual Meeting of Stockholders of
the Company.
1.2 Purpose of the
Plan.
The Plan is intended to increase
shareholder value and the success of the Company by motivating key
executives (1) to perform to the best of their abilities, and
(2) to achieve the Company’s objectives. The
Plan’s goals are to be achieved by providing such executives
with incentive awards based on the achievement of goals relating to
the performance of the Company. The Plan is intended to permit the
grant of awards that qualify as performance-based compensation
under section 162(m) of the Code.
SECTION 2
DEFINITIONS
The following words and phrases
shall have the following meanings unless a different meaning is
plainly required by the context:
2.1 “1934
Act”
means the Securities Exchange Act of
1934, as amended. Reference to a specific section of the 1934 Act
or regulation thereunder shall include such section or regulation,
any valid regulation promulgated under such section, and any
comparable provision of any future legislation or regulation
amending, supplementing or superseding such section or
regulation.
2.2 “Actual
Award”
means as to any Performance Period,
the actual award (if any) payable to a Participant for the
Performance Period. Each Actual Award is determined by the Payout
Formula for the Performance Period, subject to the
Committee’s authority under Section 3.7 to eliminate or
reduce the award otherwise determined by the Payout
Formula.
2.3 “Affiliate”
means any corporation or other
entity (including, but not limited to, partnerships and joint
ventures) controlled by the Company.
2.4
“Board”
means the Board of Directors of the
Company.
2.5
“Code”
means the Internal Revenue Code of
1986, as amended. Reference to a specific section of the Code or
regulation thereunder shall include such section or regulation, any
valid regulation promulgated thereunder, and any comparable
provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.
2.6
“Committee”
means the committee appointed by the
Board (pursuant to Section 5.1) to administer the
Plan.
2.7
“Company”
means Sun Microsystems, Inc., a
Delaware corporation, or any successor thereto.
2.8
“Disability”
means a permanent and total
disability determined in accordance with uniform and
nondiscriminatory standards adopted by the Committee from time to
time.
2.9
“Employee”
means any employee of the Company or
of an Affiliate, whether such employee is so employed at the time
the Plan is adopted or becomes so employed subsequent to the
adoption of the Plan.
2.10
“Participant”
means as to any Performance Period,
an Employee who has been selected by the Committee for
participation in the Plan for that Performance Period.
2.11 “Payout
Formula”
means as to any Performance Period,
the formula or payout matrix established by the Committee pursuant
to Section 3.5 in order to determine the Actual Awards (if
any) to be paid to Participants. The formula or matrix may differ
from Participant to Participant.
2.12 “Performance
Period”
means the period of time established
by the Committee in its sole discretion.
2.13 “Performance
Goals”
means the goal(s) (or combined
goal(s)) determined by the Committee (in its discretion) to be
applicable to a Participant for a Target Award for a Performance
Period. As determined by the Committee, the Performance Goals for
any Target Award applicable to a Participant may provide for a
targeted level or levels of achievement using one or more of the
following measures: (a) earnings (or loss) per share,
(b) individual objectives that are measurable and consistent
with Section 162(m) of the Code, (c) net income (or loss)
before or after taxes and before or after allocation or corporate
overhead and bonus, (d) cash flow, operating cash flow, or
cash flow or operating cash flow per share (before or after
dividends), (e) operating income, (or loss) before or after
taxes (f) return on assets or net assets, (g) return on
equity, (h) return on sales or net sales, (i) revenue,
revenue growth or product revenue growth, (j) total
shareholder return, (k) earnings or loss per share;
(l) attainment of strategic and operational initiatives,
(m) appreciation in and/or maintenance of the price of the
Shares or any other publicly traded securities of the Company,
(n) market shares, (o) gross profits, (p) earnings
(or losses), including earnings or losses before taxes, earnings or
losses before interest and taxes, earnings or losses before
interest, taxes and depreciation or earnings or losses before
interest, taxes depreciation and amortization, (q) economic
value-added models (or equivalent metrics), (r) comparisons
with various stock market indices, (s) reduction in costs,
(t) return on capital, including return on total capital or
return on invested capital, (u) cash flow return on
investment, (v) improvement in or attainment of expense levels
or working capital levels, (w) operating margin or gross
margin, (x) year-end cash, (y) cash margin, (z) debt
reduction, (aa) stockholders’ equity, (bb) market share; (cc)
research progress, including the development or programs, and (dd)
recruiting and maintaining personnel. Such performance goals also
may be based solely by reference to the Company’s performance
or the performance of an Affiliate, division, business segment or
business unit of the Company, or based upon the relative
performance of other companies or upon comparisons of any of the
indicators of performance relative to other companies.
2.14
“Plan”
means the Sun Microsystems, Inc.
Section 162(m) Executive Officer Performance-Based Bonus Plan,
as set forth in this instrument and as hereafter amended from time
to time.
2.15
“Retirement”
means, with respect to any
Participant, a Termination of Service after attaining at least
(a) age 65, (b) age 60 and 5 years of service with the
Company or an Affiliate, or (c) age 55 and 10 years of service
with the Company or an Affiliate.
2.16
“Shares”
means shares of the Company’s
common stock.
2.17 “Target Award”
means the target award payable under
the Plan to a Participant for the Performance Period as determined
by the Committee in accordance with Section 3.4.
2.18 “Termination of
Service”
means a cessation of the
employee-employer relationship between a Participant and the
Company or an Affiliate for any reason, including, but not by way
of limitation, a termination by resignation, discharge, death,
Disability, Retirement, or the disaffiliation of an Affiliate, but
excluding any such termination where there is a simultaneous
reemployment by the Company or an Affiliate.
SECTION 3
SELECTION OF PARTICIPANTS AND
DETERMINATION OF AWARDS
3.1 Selection of
Participants.
The Committee, in its sole
discretion, shall select the Employees who are executive officers
of the Company (within the meaning of Rule 3b-7 under the 1934 Act)
and who shall be Participants for any Performance Period.
Participation in the Plan is in the sole discretion of the
Committee, and on a Performance Period by Performance Period basis.
Accordingly, an Employee who is a Participant for a given
Performance Period in no way is guaranteed or assured of being
selected for participation in any subsequent Performance
Period.
3.2 Determination of Performance
Period.
The Committee, in its sole
discretion, shall establish in writing whether the Performance
period shall be the Company’s fiscal year or such other
period of time.
3.3 Determination of Performance
Goals.
The Committee, in its sole
discretion, shall establish the Performance Goals for each
Participant for the Performance Period. Such Performance Goals
shall be set forth in writing. The Performance Goals may differ
from Participant to Participant and from award to award. The
Committee shall also determine and set forth in writing whether any
significant elements shall be included in or excl
