Stock Information
Reverse Stock Split FAQs
1. Who should I call if I have questions regarding how the reverse stock split will impact my shares of common stock? 1. Who should I call if I have questions regarding how the reverse stock split will impact my shares of common stock?
A: If you are a direct stockholder of record (in other words, you hold paper certificates), you should call our transfer agent, BNY Mellon, at (877) 480-5282 or (201) 680.6578. You may be asked to submit a letter of transmittal if you have not yet completed, to exchange your Old Common Stock for the New Common Stock to reflect the one-for-four reverse stock split. You may download a .pdf of that file here.
2. What are the anticipated benefits of the reverse stock split? A: Highlights: Increased, more attractive share price:
(ii)The reverse split should be well received by our customers and potential customers, who expect our stock price to be in line with those of our peers; and (iii)A higher stock price may also meet investing guidelines for certain institutional investors and investment funds that are currently prevented under their guidelines from investing in our stock at its current price levels. Reduced stockholder transaction costs:
(ii)Stockholders who hold only a few shares of our stock may not have an economic way to sell their shares. To the extent these stockholders are left with fractional shares as a result of the stock split, they would receive cash for their shares without incurring transaction costs. Increased earnings visibility: A decrease in our outstanding shares would result in increased visibility for our earnings per share and changes in our earnings per share. 3. What are the risks associated with the reverse stock split? A: The following are the risks associated with the reverse stock split:
4. What is the effect on registration and stock trading? A: The stock split does not affect the registration of our common stock. Through December 10 (twenty trading days following the effective date of the reverse stock split, which is November 12, 2007) a "D" will be added to the end of our regular ticker symbol to indicate that a reverse split has recently taken place. As a result, during that time, our trading symbol will be "JAVAD." On December 11, 2007, our ticker symbol will go back to "JAVA". In addition, as of December 12, 2007, our common stock has a new CUSIP number: 866810-20-3. 5. Will Sun's CUSIP number change? A: Yes. Sun's new CUSIP number will be 866810-20-3. The new CUSIP number will be effective at the beginning of pre-market trading on Monday, November 12th. 6. What is the effective date? A: The reverse stock split will become effective on Monday, November 12th. 7. What is the effect on existing shares of common stock? A: The proposed reverse stock split would affect all of our stockholders uniformly and would not affect any stockholder's percentage ownership interest in Sun, except to the extent that the reverse stock split results in any of our stockholders owning a fractional share, as discussed further below. Proportionate voting rights and other rights and preferences of the holders of our common stock would not be affected by a reverse stock split (other than as a result of the payment of cash in lieu of fractional shares). 8. What is the effect on authorized but unissued shares of common stock? A: The total of authorized number of shares of common stock will be reduced from 7,200,000,000 to 1,800,000,000. 9. Does Sun currently have any outstanding preferred stock? A: No, Sun does not currently have any outstanding preferred stock. 10. What is the effect on authorized but unissued shares of preferred stock? A: The reverse stock split will not impact the total authorized number of shares of preferred stock. 11. How many shares of preferred stock does Sun have authorized? A: 10 million shares. 12. What is the effect on par value? A: The par value of our common stock would change from $0.00067 to $0.001 per share. 13. Why does the par value change from $0.00067 to $0.001 when four times $0.00067 equals $0.00268 (not $0.001)? A: We decided that it would be preferable to change our par value to a simple number like $0.001 rather than to proportionately adjust it with the reverse stock split. The change will have no material impact on our financial statements. 14. What are the accounting consequences of the reverse stock split? A: On the effective date of the reverse stock split, the stated capital on our balance sheet attributable to the common stock would be reduced to reflect the new par value per share of $0.001, and the additional paid-in capital would be credited with the amount by which the stated capital is reduced. The per-share common stock net income or loss and net book value will be increased because there will be fewer shares of our common stock outstanding. We do not anticipate that any other accounting consequence would arise as a result of the reverse stock split. 15. What is the effect on convertible debt? A: The number of shares into which our $700 million in convertible senior notes are convertible and the conversion price for those notes will be automatically adjusted as a result of the reverse stock split as provided in the indenture that governs the terms of the notes. In addition, the number of shares represented by the warrants we sold concurrently with the convertible senior notes and the exercise prices for the warrants will also be automatically adjusted as a result of the reverse stock split pursuant to their terms. 16. What is the effect on equity compensation plans? A: The reverse stock split would reduce the number of shares of common stock authorized and available for issuance under our equity compensation plans. In addition, the number of shares represented by each outstanding stock option, whether vested or unvested, and each outstanding restricted stock unit award would be rounded down to the nearest whole share. No payment would be made with respect to the fractional interests that are eliminated as a result of the rounding-down. Finally, the exercise price per share for each option would be multiplied by four. 17. If the reverse stock split is approved, how will it be implemented? A: The implementation of the reverse stock split will differ depending on whether the shares are held beneficially in street name or whether they are registered directly in a stockholder's name. If you are a beneficial holder, the number of shares you hold will automatically be adjusted to reflect the reverse stock split on the effective date and you generally will receive cash for any resulting fractional shares in your brokerage account, subject to your broker's particular processes with respect to these types of transactions. If you have questions with respect to how your broker will process the reverse stock split, you should contact your broker. If you are a direct stockholder of record, in exchange for a properly completed Exchange Form and your certificates representing pre-split shares, our transfer agent, BNY Mellon, will issue your post-split shares through DRS (which is discussed further below) and send you a check for any resulting fractional shares. 18. What happens to fractional shares? A: Whether shares are held beneficially or directly, we will not issue fractional shares of common stock to our stockholders. Instead, fractional shares will be cashed out as explained below. 19. How will the cash be paid for fractional shares? A: If you are a beneficial holder, payment for the fractional shares will be deposited directly into your account with the organization that holds your shares. Each broker has its own processes for handling the cash received from Sun in exchange for fractional shares. You should contact your broker for more information. Your bank or broker should also be able to tell you when you can expect to receive payment for any fractional shares. If you are a direct holder of record, payment for the fractional shares will be made by check, sent to you directly from BNY Mellon upon receipt of your properly completed and executed Exchange Form and original stock certificates. The check will be sent approximately ten business days after your request is received in good order. Please allow additional time for mailing. 20. How much cash will I receive for my fractional shares? A: The amount of cash to be paid for fractional shares will be equal to the product obtained by multiplying the average closing sales price of our common stock as reported on NASDAQ for the four trading days preceding the effective date of the reverse stock split by four, and then by the amount of the fractional share. For example, if the average closing sales price of our common stock on NASDAQ for the four trading days preceding the effective date of the reverse stock split were $5.00 and you held post split .5 shares, you would receive $10 ($5 x 4 x .5) before taxes, if any. 21. Why is the price paid for fractional shares based upon the average closing sales price of Sun's common stock as reported on NASDAQ for the four trading days preceding the effective date of the reverse stock split? A: If we had based the purchase price on any single trading day's closing price, it might have been unusually high or low. We decided to use the average closing price over the four days preceding the effective date in order to be as equitable as possible. 22. What if I cannot find my stock certificates? A: If, after trying to locate your stock certificates, you determine that some or all of your certificates are lost, stolen or destroyed, follow the instructions provided in Box A on the back of the Exchange Form you receive in the mail or you can call BNY Mellon at (800) 777-3674. 23. What if I am a stockholder of record and take no action? A: You will not receive new, post-split shares or payment for your fractional shares until you submit your certificate(s), together with your properly completed and executed Exchange Form, to our transfer agent, BNY Mellon. Stockholders should not destroy any stock certificates and should not submit any certificates until requested to do so. 24. Am I entitled to appraisal rights? A: Under the Delaware General Corporation Law, our stockholders are not entitled to appraisal rights with respect to the reverse stock split described in the proposal, and we will not independently provide our stockholders with any such rights. What are appraisal rights? A: Appraisal rights give objecting stockholders the option to sell their shares back to the corporation for "fair value" following certain fundamental corporate changes. 25. What is the Oddlot Sales Program? A: Some of our stockholders hold odd lots of shares (less than 100 shares of Sun common stock). Because it is often inconvenient and uneconomical to sell a small number of shares, BNY Mellon is offering those stockholders an opportunity to sell their shares for a fee that may be less than the fees they would otherwise incur to sell those shares. Information regarding the Oddlot Sales Program will be sent to odd lot holders shortly after the Annual Meeting. 26. How do I sell my Sun shares under the Oddlot Sales Program? A: All odd lot stockholders will receive a letter in the mail from BNY Mellon with instructions for taking advantage of the Oddlot Sales Program shortly after the Annual Meeting. If you are a beneficial holder, you must contact your broker or account representative and inform them of your decision to sell through the Oddlot Sales Program. If you are a stockholder of record, you must complete the Exchange Form enclosed with the letter and send it, along with your stock certificate, to our transfer agent, BNY Mellon. 27. When will I receive my money from my sale under the Oddlot Sales Program? A: If you are a stockholder of record, BNY Mellon, acting as exchange agent, will mail your check approximately ten business days after your request is received in good order. If you are a beneficial stockholder, payment will be deposited directly into your account with the organization holding your shares as soon as possible after they process the sale. 28. If I am a stockholder of record and I surrender my certificates, will I receive new paper certificates? A: At the same time it is implementing the reverse stock split, Sun is converting to a paperless stock certificate system. As a result, if you are a stockholder of record, you will not receive new, post-split paper certificates in exchange for your old, pre-split paper certificates. Instead, you will receive a statement that indicates how many new, post-split shares you hold through the Direct Registration System ("DRS"). The system works like a bank, with our transfer agent, BNY Mellon, holding the shares in your account. Each time you have a transaction with respect to your DRS shares, you will receive a new DRS statement from BNY Mellon. If you need information with respect to your DRS shares, you can visit BNY Mellon's website at www.bnymellon.com/shareowner/isd or call them at (877) 480-5282 or (201) 680-6578. 29. Can I transfer my DRS shares to my bank or broker? A: Yes, you may transfer your new DRS shares to a bank or broker of your choice rather than keeping them at BNY Mellon. Simply follow the instructions provided to you with your DRS statement. |
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