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Exhibit
10.5
SUN MICROSYSTEMS,
INC.
PERFORMANCE RESTRICTED
STOCK UNIT AGREEMENT
NOTICE OF
GRANT
Sun Microsystems, Inc.
(“Sun”) is pleased to inform you that you, [
], have been granted the number of Performance Restricted Stock
Units (“Performance Restricted Stock Units”) indicated
below under Sun’s 1990 Long-Term Equity Incentive Plan (the
“Plan”) and the terms of this Performance Restricted
Stock Unit agreement (including the Notice of Grant and Appendices
A and B, all of which are the “Agreement”). Subject to
the provisions of the Agreement and the Plan, the principal
features of this grant are as follows:
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Grant Date:
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[Date] |
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Total Number of Performance Restricted
Stock Units:
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[To
come] |
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Scheduled Vesting:
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[To
come] |
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Purchase Price per Share:
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$0.00067
USD payable in services rendered by you (no cash payment
required) |
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Acceptance Deadline:
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You must
accept this grant of Performance Restricted Stock Units prior to
the Acceptance Deadline, which is sixty (60) days from the Grant
Date. |
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Except as otherwise provided in the Agreement or by the terms
of the Plan, you will not vest in the Performance Restricted Stock
Units unless you remain employed by Sun or one of its Subsidiaries
through the applicable vesting date. |
Your acceptance of this grant
either by signature below or by electronic acceptance indicates
your understanding that this grant is subject to all of the terms
described in this Agreement, including Appendices A and B, and
the Plan. Important additional information on vesting and
forfeiture of the Performance Restricted Stock Units covered by
this grant is contained in paragraphs 4 through 5 and
paragraph 7 of Appendix A. PLEASE BE SURE TO READ ALL OF
APPENDIX A, WHICH CONTAINS THE SPECIFIC TERMS OF THIS
GRANT.
THIS AGREEMENT MUST BE
ACCEPTED BY YOU BY THE ACCEPTANCE DEADLINE, OR THIS GRANT OF
PERFORMANCE RESTRICTED STOCK UNITS WILL AUTOMATICALLY BE
CANCELED.
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SUN MICROSYSTEMS, INC.
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GRANTEE |
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By:
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/s/ Michael A.
Dillon
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Title:
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Executive
VP, General Counsel and Secretary |
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[Name] |
April 2007
APPENDIX A
TERMS OF Performance
Restricted Stock Units
| 1. |
Grant . Sun hereby grants to you under the Plan at the
per share price of $0.00067 USD (the “Purchase Price”),
the number of Performance Restricted Stock Units indicated in the
Notice of Grant, subject to all of the terms in this Agreement and
the Plan. |
| 2. |
Payment of Purchase Price . When Shares are issued to
you in payment for the Performance Restricted Stock Units, the
Purchase Price will be deemed paid through services rendered by you
(not in cash), and will be subject to the appropriate tax
withholdings. |
| 3. |
Sun’s Obligation to Pay . Unless and until the
Performance Restricted Stock Units have vested in the manner set
forth in paragraphs 4 or 5, you will have no right to payment
of the Performance Restricted Stock Units. Until any vested
Performance Restricted Stock Units actually are paid, the
Performance Restricted Stock Units will be an unsecured obligation
of Sun. Any vested Performance Restricted Stock Units will be paid
in Shares. Only whole Shares will be issued. |
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(a) |
General . Except as otherwise provided in this paragraph
4 and paragraph 5 of this Agreement, and subject to paragraph
7, the Performance Restricted Stock Units are scheduled to vest in
accordance with the vesting schedule shown in the Notice of Grant.
Performance Restricted Stock Units scheduled to vest on any date
actually will vest only if you continue to be employed by Sun or
one of its Subsidiaries through the applicable vesting date, except
to the extent otherwise provided in this Agreement, by Sun in a
written agreement between you and an authorized officer of Sun or
in accordance with the then-applicable written policies of Sun. In
all instances in which Performance Restricted Stock Units continue
to vest after you cease to be employed by Sun or one of its
Subsidiaries, the payment of such accelerated Performance
Restricted Stock Units nevertheless will be made at the same time
or times such Performance Restricted Stock Units would have been
paid had they vested in accordance with the vesting schedule shown
in the Notice of Grant. |
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(b)
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Leave of Absence .
Notwithstanding the above, vesting of the Performance Restricted
Stock Units will be suspended if you take an authorized unpaid
leave of absence (including a leave of absence for military,
educational, disability or personal purposes, but except as may be
required by law) of more than thirty (30) days or an
authorized paid leave of absence of more than ninety
(90) days. The vesting schedule shown in the Notice of Grant
will be delayed for the number of days that the authorized unpaid
leave of absence or authorized paid leave of absence extends beyond
the periods set forth above. The suspension of vesting will
commence on the thirty-first (31 st ) day of an authorized unpaid leave of absence of more
than thirty (30) days or, in the case of an authorized paid
leave of absence of more than ninety (90) days, on the
ninety-first (91 st ) day of the leave and the suspension will end on the
earlier of: (i) the last business day preceding the date
on
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April 2007
which your leave of absence
terminates; or (ii) a date twelve (12) months after the
beginning of the leave of absence. These vesting suspension
provisions will be applied in compliance with local law. Sun
policies on leave of absence may vary outside the United States, in
accordance with local law. The preceding two sentences will apply
only to those employees who are not subject to United States
taxes.
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(c) |
Disability . Notwithstanding the above, if your
employment with Sun (or the employing Subsidiary) terminates as a
result of your Disability, during the twelve (12) months
following your termination, you will continue to vest as to the
number of Performance Restricted Stock Units that would have vested
if you had remained an employee of Sun (or the employing
Subsidiary) during that period. For purposes of this Agreement,
“Disability” means your total and permanent disability
as defined in Section 22(e)(3) of the Code. |
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(d) |
Death . Notwithstanding the above, if your employment
with Sun (or the employing Subsidiary) terminates as a result of
your death, the Performance Restricted Stock Units granted under
this Agreement will continue to vest during the twelve
(12) months following your death as to the number of
Performance Restricted Stock Units that would have vested had you
remained an employee of Sun (or the employing Subsidiary) during
that period. |
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(e) |
Performance Target. The “Performance
Target” shall be achieved if Sun has Operating Income of at
least 4% for the fiscal quarter ended June 30, 2006 and
Revenue of at least $13.4 billion for the fiscal year ended
June 30, 2007, as such terms are defined under the
Section 162(m) Executive Officer Performance-Based Bonus
Plan. The determination of whether or not the Performance
Target is achieved shall be made by the Leadership Development and
Compensation Committee of the Board of Directors in its sole
discretion as soon as practicable after the end of the fiscal year,
and no Shares will be issued until such determination is
made. |
| 5. |
Committee Discretion . The Committee, in its discretion,
may accelerate the vesting of some or all of the Performance
Restricted Stock Units at any time, subject to the terms of the
Plan. If so accelerated, the Performance Restricted Stock Units
will be considered as having vested as of the date specified by the
Committee. If the Committee, in its discretion, accelerates the
vesting of any Performance Restricted Stock Units, the payment of
the accelerated Performance Restricted Stock Units nevertheless
will be made at the same time or times as if the Performance
Restricted Stock Units had vested in accordance with the vesting
schedule shown on the Notice of Grant (whether or not you remain
employed by Sun or one of its Subsidiaries). |
| 6. |
Payment after Vesting . Any Performance Restricted Stock
Units that vest while you remain employed by Sun or one of its
Subsidiaries in accordance with paragraph 4 will be paid to you (or
in the event of your death, to your estate) in Shares as soon as
administratively practicable following the date of vesting, subject
to paragraph 9. Any Performance Restricted Stock Units that
continue to vest after you cease to be employed by Sun or one of
its Subsidiaries as provided in paragraph 4 or that vest in
accordance with paragraph 5 will be paid to you (or in the event of
your death, to your estate) in Shares in accordance with the
provision of such paragraphs, subject to paragraph 9. For each
Performance Restricted Stock Unit that vests, you will receive one
Share. |
April 2007
| 7. |
Forfeiture . Except as expressly provided herein, any
Performance Restricted Stock Units that have not vested at the time
you cease to be employed by Sun or one of its Subsidiaries will be
forfeited and automatically transferred to and reacquired by Sun at
no cost to Sun. |
| 8. |
Death . Any distribution or delivery to be made to you
under this Agreement will, if you are then deceased, be made to the
administrator or executor of your estate. The administrator or
executor must furnish Sun with (a) written notice of his or
her status as transferee, and (b) evidence satisfactory to Sun
to establish the validity of the transfer and compliance with any
applicable laws or regulations. |
| 9. |
Withholding of Taxes . Regardless of any action Sun or
the company that employs you (the “Employer”) takes
with respect to any or all income tax, social insurance, payroll
tax, payment on account or other tax-related withholding
(“Tax-Related Items”), you acknowledge that the
ultimate liability for all Tax-Related Items legally due by you is
and remains your responsibility and that Sun and/or the Employer
(1) make no representations or undertakings regarding the
treatment of any Tax-Related Items in connection with any aspect of
the grant of Performance Restricted Stock Units, including the
grant, vesting and lapse of repurchase rights, the subsequent sale
of Shares and/or the receipt of any dividends; and (2) do not
commit to structure the terms of the grant or any aspect of the
grant of Performance Restricted Stock Units to reduce or eliminate
your liability for Tax-Related Items. When the Shares are issued as
payment for vested Performance Restricted Stock Units, you will
recognize immediate U.S. taxable income if you are a U.S. taxpayer.
If you are a non-U.S. taxpayer, you will be subject to applicable
taxes in your jurisdiction. Sun or the Employer is required to
withhold from you an amount that is sufficient to pay the minimum
federal, state and local income, employment and any other
applicable taxes required to be withheld by Sun or the Employer
with respect to the Shares. Sun or the Employer may, in its
discretion, meet this withholding requirement in any one or more of
the following ways: |
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(a) |
by withholding or selling a portion of the Shares that
otherwise would be paid out for your vested Performance Restricted
Stock Units; |
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(b) |
by withholding the amount necessary to pay the applicable taxes
from your paycheck, with no withholding of Shares; |
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(c) |
by requiring you to make alternate arrangements to meet the
withholding obligation; or |
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(d) |
such other method as Sun or the Committee may elect in
compliance with local law. |
No payment of Shares will be
made to you (or your estate) for Performance Restricted Stock Units
unless and until satisfactory arrangements (as determined by Sun)
have been made by you to fulfill Sun’s (or the
Employer’s) obligation to withhold or collect any income and
other taxes with respect to the Performance Restricted Stock Units.
By accepting this grant, you expressly consent to the withholding
of Shares and to any additional (or alternative) cash withholding
as provided for in this paragraph 9. All income and other taxes
related to the Performance Restricted Stock Unit award and any
Shares delivered in payment thereof are your sole
responsibility.
April 2007
| 10. |
Rights as Stockholder . Neither you nor any person
claiming under or through you will have any of the rights or
privileges of a stockholder of Sun in respect of any Shares
deliverable hereunder unless and until certificates representing
the Shares (which may be in book entry form) have been issued,
recorded on the records of Sun or its transfer agents or
registrars, and delivered to you (including through electronic
delivery to a brokerage account). Notwithstanding any other part of
this Agreement, any quarterly or other regular, periodic dividends
or distributions (as determined by Sun) will not affect unvested
Performance Restricted Stock Units, and no dividends or other
distributions will be paid on unvested Performance Restricted Stock
Units. Notwithstanding any other part of this Agreement, any
quarterly or other regular, periodic dividends or distributions (as
determined by Sun) paid on Shares will accrue with respect to
Performance Restricted Stock Units that are vested but unpaid
pursuant to paragraph 4 or 5, and will be paid out at the same
time or time(s) as the underlying Shares on which such dividends or
other distributions have accrued. After the issuance, recordation
and delivery of any shares, you will have all the rights of a
stockholder of Sun with respect to voting the Shares and receiving
dividends and distributions on the Shares. |
| 11. |
Nature of Grant . In accepting the offer to acquire
Shares, you acknowledge that: (a) the Plan is established
voluntarily by Sun, it is discretionary in nature and it may be
modified, amended, suspended or terminated by Sun at any time,
unless otherwise provided in the Plan and this Agreement;
(b) the grant of Performance Restricted Stock Units is
voluntary and occasional and does not create any contractual or
other right to receive future grants of Performance Restricted
Stock Units, or benefits in lieu of such grants even if Performance
Restricted Stock Units have been granted repeatedly in the past;
(c) all decisions with respect to future Performance
Restricted Stock Unit grants, if any, will be at the sole
discretion of Sun; (d) you are voluntarily participating in
the Plan; (e) the grant of Performance Restricted Stock Units
is an extraordinary item that does not constitute compensation of
any kind for services of any kind rendered to Sun or the Employer,
and which is outside the scope of your employment contract, if any;
(f) the Performance Restricted Stock Units are not part of
normal or expected compensation or salary for any purposes,
including, but not limited to, calculating any severance,
resignation, termination, redundancy, end of service payments,
bonuses, long-service awards, pension or retirement benefits or
similar payments; (g) the future value of the Shares is
unknown and cannot be predicted with certainty; (h) in
consideration of the grant of Performance Restricted Stock Units,
no claim or entitlement to compensation or damages will arise from
the termination of vesting or diminution in value of the Shares
resulting from termination of your active employment by Sun or the
Employer (for any reason whatsoever and whether or not in breach of
contract or local labor laws) and you irrevocably release Sun and
the Employer from any such claim that may arise; if,
notwithstanding the foregoing, any such claim is found by a court
of competent jurisdiction to have arisen, then, by signing this
Agreement, you will be deemed irrevocably to have waived your
entitlement to pursue such claim; and (i) notwithstanding any
terms or conditions of the Plan to the contrary, in the event of
involuntary termination of your active employment (whether or not
in breach of contract or local labor laws), your right to continued
vesting, if any, will terminate effective as of the date that you
are no longer actively employed and will not be extended by any
notice period mandated under local law (e.g., active employment
would not include a period of “garden leave” or similar
period pursuant to local law), except as expressly provided herein,
and that Sun will have the exclusive discretion to determine when
you are no longer actively employed for purposes of administering
your grant of Performance Restricted Stock Units. |
April 2007
| 12. |
Address for Notices . Any notice to be given to Sun
under the terms of this Agreement must be addressed to Sun, in care
of its Secretary, at 4150 Network Circle, Santa Clara, CA 95054, or
at such other address as Sun may hereafter designate in
writing. |
| 13. |
Grant is Not Transferable . Except to the limited extent
provided in paragraph 8 above, this grant (and the associated
rights and privileges) cannot be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise)
and will not be subject to sale under execution, attachment or
similar process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of this grant, or of any
associated right or privilege, or upon any attempted sale under any
execution, attachment or similar process, this grant and the
associated rights and privileges will immediately become null and
void. |
| 14. |
Restrictions on Sale of Securities . The Shares issued
as payment for vested Performance Restricted Stock Units will be
registered under the U.S. federal securities laws and will be
freely tradable upon receipt. However, your subsequent sale of the
Shares will be subject to any market blackout-period that may be
imposed by Sun and must comply with Sun’s insider trading
policies, and any other applicable securities or other
laws. |
| 15. |
Delay in Payment . Notwithstanding any other part
of |
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