<PAGE> 1
As filed with the Securities and Exchange Commission on November 23, 1994
Registration No. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------------------
SUN MICROSYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 94-2805249
(State of Incorporation) (I.R.S. Employer
Identification Number)
2550 Garcia Avenue
Mountain View, CA 94043
(415) 960-1300
(Address and telephone number of Registrant's principal executive offices)
-------------------------------------
1990 EMPLOYEE STOCK PURCHASE PLAN
1990 LONG-TERM EQUITY INCENTIVE PLAN
(Full Title of the Plans)
-------------------------------------
Scott G. McNealy
President
SUN MICROSYSTEMS, INC.
2550 Garcia Avenue
Mountain View, CA 94043
(415) 960-1300
(Name, address and telephone number of agent for service)
-------------------------------------
Copy to:
Judith M. O'Brien
WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
<PAGE> 2
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------
Proposed Proposed
Amount Maximum Maximum Amount of
to be Offering Price Aggregate Registration
Title of Securities to be Registered Registered Per Share Offering Price Fee
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.00067 par value, to be issued:
- -------------------------------------------------------------------------------------------------------------------
Pursuant to the 1990 Employee Stock Purchase Plan 1,250,000 shares $33.5625(1) $41,953,125(1) $14,466.57
- -------------------------------------------------------------------------------------------------------------------
Pursuant to the 1990 Long-Term Equity Incentive Plan 3,350,000 shares $33.5625(1) $112,434,375(1) $38,770.41
- -------------------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . . 4,600,000 shares $33.5625(1) $154,387,500(1) $53,236.98
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated in accordance with Rule 457 (c) solely for the purpose of
calculating the registration fee on the basis of the average of the high
and low price for the Common Stock as reported on the Nasdaq National
Market System on November 18, 1994.
<PAGE> 3
The contents of the Registrant's Form S-8 Registration Statement,
Registration No. 33-38220, dated December 14, 1990 relating to the 1990
Employee Stock Purchase Plan and the 1990 Long-Term Equity Incentive Plan are
incorporated herein by reference.
PART II: INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 8. Exhibits
Exhibit
Number Documents
------- ---------
4.1 1990 Employee Stock Purchase Plan
4.2 1990 Long-Term Equity Incentive Plan
5.1 Opinion of counsel as to legality of securities being registered
23.1 Consent of Counsel (contained in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors
24.1 Power of Attorney (see page II-3)
II-1
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Sun Microsystems, Inc., a corporation organized and existing under
the laws of the State of Delaware, certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-8 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Mountain View, State of
California, on this 23 day of November, 1994.
SUN MICROSYSTEMS, INC.
By: /s/ MICHAEL E. LEHMAN
---------------------------------
Michael E. Lehman, Vice President
and Chief Financial Officer
II-2
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Scott G. McNealy and Michael E. Lehman,
jointly and severally, his attorneys#in#fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to this
Registration Statement on Form S-8 and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ SCOTT G. McNEALY Chairman of the Board November 23, 1994
- -------------------------------------- of Directors, President
(Scott G. McNealy) and Chief Executive Officer
(Principal Executive Officer)
/s/ MICHAEL E. LEHMAN Vice President and November 23, 1994
- -------------------------------------- Chief Financial Officer
(Michael E. Lehman) (Principal Financial Officer
/s/ GEORGE REYES Vice President and November 23, 1994
- -------------------------------------- Controller (Principal
(George Reyes) Accounting Officer)
/s/ L. JOHN DOERR Director November 23, 1994
- --------------------------------------
(L. John Doerr)
/s/ WILLIAM RANDOLPH HEARST III Director November 23, 1994
- --------------------------------------
(William Randolph Hearst III)
/s/ ROBERT L. LONG Director November 23, 1994
- --------------------------------------
(Robert L. Long)
/s/ M. KENNETH OSHMAN Director November 23, 1994
- --------------------------------------
(M. Kenneth Oshman)
/s/ A. MICHAEL SPENCE Director November 23, 1994
- --------------------------------------
(A. Michael Spence)
</TABLE>
II-3
<PAGE> 6
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
EXHIBITS
------------------------
Registration Statement on Form S-8
SUN MICROSYSTEMS, INC.
November 23, 1994
<PAGE> 7
SUN MICROSYSTEMS, INC.
REGISTRATION STATEMENT ON FORM S-8
INDEX TO EXHIBITS
Exhibit
Number Description
------- -----------
4.1 1990 Employee Stock Purchase Plan
4.2 1990 Long-Term Equity Incentive Plan
5.1 Opinion of counsel as to legality of securities being
registered
23.1 Consent of Counsel (contained in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors
24.1 Power of Attorney (contained in page II-3)
<PAGE> 1
EXHIBIT 4.1
SUN MICROSYSTEMS, INC.
1990 EMPLOYEE STOCK PURCHASE PLAN
(Last amended August 10, 1994)
The following constitute the provisions of the 1990 Employee Stock
Purchase Plan of Sun Microsystems, Inc.
1. Purpose. The purpose of the Plan is to provide Employees of
the Company and its Designated Subsidiaries with an opportunity to purchase
Common Stock of the Company through accumulated payroll deductions. It is
the intention of the Company to have the Plan qualify as an "Employee Stock
Purchase Plan" under Section 423 of the Code. The provisions of the Plan
shall, accordingly, be construed so as to extend and limit participation in
a manner consistent with the requirements of that section of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(c) "Committee" shall mean a Committee designated by the
Board to administer the Plan. If at any time no Committee shall be in office,
then the functions of the Committee specified in the Plan shall be exercised
by the Board and any references herein to the Committee shall be construed
as references to the Board.
(d) "Common Stock" shall mean the Common Stock, $0.00067
par value (as adjusted from time to time), of the Company.
(e) "Company" shall mean Sun Microsystems, Inc., a Delaware
corporation.
(f) "Compensation", unless otherwise determined by the
Committee, shall mean regular straight time gross earnings, variable
compensation for field sales personnel, certain incentive bonuses, payments for
overtime, shift premium, lead pay and automobile allowances, but shall exclude
other compensation.
(g) "Designated Subsidiary" shall mean any Subsidiary which
has been designated by the Committee from time to time in its sole discretion
as eligible to participate in the Plan.
(h) "Employee" shall mean any individual whose customary
employment with the Company or any Designated Subsidiary is at least 20 hours
per week and more than five months in any calendar year. For purposes of the
Plan, the employment relationship shall be treated as continuing intact while
the individual is on sick leave or other leave of absence approved by the
Company; provided that where the period of leave exceeds 90 days and the
individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship will be deemed to have terminated on the
91st day of such leave.
(i) "Enrollment Date" shall mean the first day of each
Offering Period.
<PAGE> 2
(j) "Exercise Date" shall mean the last day of each Exercise
Period.
(k) "Exercise Period" shall mean a period commencing on an
Enrollment Date or on the day after an Exercise Date and which is of such
duration as the Committee shall determine.
(l) "Fair Market Value" shall mean, as of any date, the value
of Common Stock determined as follows:
(i) the last reported sale of the Common Stock of
the Company on the NASDAQ National Market System or, if no such reported sale
takes place on any such day, the average of the closing bid and asked prices,
or
(ii) if such Common Stock shall then be listed on
a national securities exchange, the last reported sale price or, if no such
reported sale takes place on any such day, the average of the closing bid and
asked prices on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or
(iii) if such Common Stock shall not be quoted
on such National Market System nor listed or admitted to trading on a national
securities exchange, then the average of the closing bid and asked prices,
as reported by The Wall Street Journal for the over-the-counter market, or
(iv) if none of the foregoing is applicable, then
the fair market value of a share of Common Stock shall be determined by the
Committee in its discretion.
(m) "Offering Period" shall mean the period beginning with
the date an option is granted under the Plan and ending with the date
determined
by the Committee. During the term of the Plan, the duration of each Offering
Period shall be determined from time to time by the Committee, provided that
no Offering Period may exceed 27 months in duration. If determined by the
Committee, an Offering Period may include one or more Exercise Periods.
(n) "Plan" shall mean this 1990 Employee Stock Purchase Plan.
(o) "Purchase Price" shall mean an amount equal to 85% of
the Fair Market Value of a share of Common Stock on the Enrollment Date or
on the Exercise Date, whichever is lower.
(p) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which has not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(q) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the
Company or by a Subsidiary, whether or not such corporation now exists or is
hereafter organized or acquired by the Company or by a Subsidiary.
(r) "Trading Day" shall mean a day on which national stock
exchanges and the National Association of Securities Dealers Automated Quotation
(NASDAQ) System are open for trading.
3. Stock Subject to the Plan. Subject to the provisions of Section
13 of the Plan, the total number of shares reserved and available for issuance
pursuant to the Plan shall be 7,550,000. The shares may be either authorized
but unissued or reacquired Common Stock.
<PAGE> 3
4. Eligibility.
(a) Any Employee as defined in Section 2 who shall be employed
by the Company on a given Enrollment Date shall be eligible to participate in
the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding,
no Employee shall be granted an option under the Plan (i) if, immediately
after the grant, such Employee (or any other person whose stock would be
attributed to such Employee pursuant to Section 424(d) of the Code) would own
stock and/or hold outstanding options to purchase stock possessing five percent
or more of the total combined voting power or value of all classes of stock
of the Company or of any Subsidiary of the Company, or (ii) which permits his
or her rights to purchase stock in any calendar year under all employee stock
purchase plans of the Company and its Subsidiaries to exceed $25,000 worth of
stock (determined at the Fair Market Value of the shares at the time such
option is granted).
5. Offering Periods. The Plan shall be implemented by consecutive
Offering Periods, each consisting of such number of Exercise Periods as the
Committee shall determine, and shall continue until terminated in accordance
with Section 20 hereof. The first Offering Period shall commence on a date to
be determined by the Committee. The Committee shall have the power to change
the duration of Offering Periods and Exercise Periods with respect to future
offerings without stockholder approval if such change is announced at least 15
days prior to the scheduled beginning of the first Offering Period and Exercise
Period to be affected.
6. Participation.
(a) An eligible Employee may become a participant in any
Offering Period under the Plan only by completing a subscription agreement
authorizing payroll deductions in form and substance satisfactory to the
Committee and filing it with the Company during the open enrollment period
prior to the applicable Enrollment Date, unless a later time for filing the
subscription agreement is set by the Committee for all eligible Employees with
respect to a given Offering Period.
(b) Payroll deductions for a participant shall commence on the
first payday following the Enrollment Date and shall continue until terminated
by the participant as provided in Section 11.
7. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made (under this
Plan and all employee stock purchase plans of the Company) on each payday
during the Offering Period in an amount not exceeding a total of 10% (or such
other percentage as the Committee may determine) of the Compensation which he
or she receives on each payday during the Offering Period, and the aggregate of
such payroll deductions (under this Plan and all employee stock purchase plans
of the Company) during the Offering Period shall not exceed a total of 10% (or
such other percentage as the Committee may determine) of the participant's
Compensation during said Offering Period.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and will be withheld in whole
percentages only. A participant may not make any additional payments into
such account.
(c) A participant may discontinue his or her participation in
the Plan as provided in Section 11. A participant's subscription agreement
shall remain in effect for successive Offering
3
<PAGE> 4
Periods unless terminated as provided in Section 11. To increase or decrease
the rate of payroll deductions (within the limitations of Section 7(a)), (i)
with respect to the next Offering Period, a participant must complete and file
with the Company during the open enrollment period prior to the Enrollment Date
for such Offering Period, or (ii) with respect to the next Exercise Period
within the same Offering Period, a participant must complete and file with the
Company prior to the commencement of the new Exercise Period within such
Offering Period, a new subscription agreement authorizing a change in payroll
deduction rate. Except in the case of authorized leaves of absence (which
shall be governed by Section 11(c) below), such change in rate shall be
effective at the beginning of the next Offering Period or Exercise Period, as
the case may be, following the Company's receipt of the new subscription
agreement.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 4(b) herein, a
participant's payroll deductions may be decreased to 0% by the Company at such
time during any Exercise Period which is scheduled to end during the current
calendar year (the "Current Exercise Period") that the aggregate of all payroll
deductions which were previously used to purchase stock under the Plan (and any
other employee stock purchase plans of the Company) in a prior Exercise Period
which ended during the current calendar year plus all payroll deductions
accumulated with respect to the Current Exercise Period equals $21,250.
Payroll deductions shall recommence at the rate provided in such participant's
subscription agreement at the beginning of the first Exercise Period which is
scheduled to end in a subsequent calendar year, unless terminated by the
participant as provided in Section 11.
(e) At the time the option is exercised, in whole or in part,
or at the time some or all of the Company's Common Stock issued under the Plan
is disposed of by the participant, the participant must make adequate provision
for the Company's federal, state, or other tax withholding obligations, if any,
which arise upon the exercise of the option or the disposition of the Common
Stock. At any time, the Company may, but will not be obligated to, withhold
from the participant's compensation the amount necessary for the Company to
meet applicable withholding obligations, including any withholding required to
make available to the Company any tax deductions or benefit attributable to
sale or early disposition by the participant of Common Stock under the Plan.
8. Grant of Option. On the Enrollment Date of each Offering Period,
each eligible participant in such Offering Period shall be granted an option to
purchase on each Exercise Date during such Offering Period (at the applicable
Purchase Price) up to the number of shares of the Company's Common Stock
determined by dividing such participant's payroll deductions accumulated prior
to or on such Exercise Date and retained in the participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
a participant be permitted to purchase during any Offering Period more than the
number of shares determined to be the maximum permissible number (the "Option
Cap") by the Committee with respect to the Offering Period prior to the
Enrollment Date. In the event that the Committee does not establish an Option
Cap prior to the Enrollment Date, the Option Cap shall be the number of shares
determined by dividing $100,000 by the Fair Market Value of a share of the
Company's Common Stock on the Enrollment Date, and provided further that such
purchase shall be subject to the limitations set forth in Sections 4(b), 7(d)
and 13 hereof. Exercise of the option shall occur as provided in Section 9,
unless the participant has withdrawn pursuant to Section 11, and such option
shall expire on the last day of the Offering Period.
9. Exercise of Option. Unless a participant withdraws from the Plan
as provided in Section 11 below, his or her option for the purchase of shares
will be exercised automatically on the Exercise
4
<PAGE> 5
Date, and the maximum number of full shares subject to option shall be
purchased for such participant at the applicable Purchase Price with the
accumulated payroll deductions in his or her account. No fractional shares
will be purchased. Any payroll deductions remaining in a participant's account
after an Exercise Date shall be retained in the participant's account until the
next Exercise Date within such Offering Period, unless an over-subscription
exists (as defined in Section 13(a)) or the Offering Period has terminated with
such Exercise Date, in which event such amount shall be returned to the
participant. During a participant's lifetime, a participant's option to
purchase shares hereunder is exercisable only by him or her.
10. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of either a certificate representing the
shares purchased upon exercise of his or her option or other evidence of
purchase.
11. Withdrawal; Termination of Employment.
(a) A participant may withdraw all (but not less than all)
the payroll deductions credited to his or her account and not yet used to
exercise his or her option under the Plan at any time prior to the close of an
Exercise Period by giving written notice to the Company in form and substance
satisfactory to the Committee. Such notice shall state whether the participant
is withdrawing only from the applicable Exercise Period or entirely from the
Offering Period. All of the participant's payroll deductions credited to his
or her account will be paid to such participant as promptly as practicable
after receipt of notice of withdrawal and such participant's option for the
current Offering Period or Exercise Period (as specified in the notice) will be
automatically terminated, and no further payroll deductions for the purchase of
shares will be made during the Offering Period or Exercise Period, as
applicable. If a participant withdraws from an Offering Period, payroll
deductions will not resume at the beginning of the succeeding Offering Period
unless the participant delivers to the Company a new subscription agreement
during the open enrollment period preceding the commencement of a subsequent
Offering Period. If a participant withdraws from an Exercise Period, payroll
deductions will not resume at the beginning of any succeeding Exercise Period
within the same Offering Period unless written notice is delivered to the
Company in form and substance satisfactory to the Committee within the open
enrollment period preceding the commencement of the Exercise Period directing
the Company to resume payroll deductions.
(b) Upon a participant's ceasing to be an Employee for any
reason or upon termination of a participant's employment relationship (as
described in Section 2(g)), the payroll deductions credited to such
participant's account during the Offering Period but not yet used to exercise
the option will be returned to such participant or, in the case of his or her
death, to the person or persons entitled thereto under Section 15, and such
participant's option will be automatically terminated.
(c) In the event a participant fails to remain an Employee of
the Company for at least 20 hours per week during an Offering Period in which
the Employee is a participant, he or she will be deemed to have elected to
withdraw from the Plan and the payroll deductions credited to his or her
account will be returned to such participant and such participant's option
terminated; provided that (i) if an Employee shall take an unpaid leave of
absence approved by the Company in accordance with Section 2(g) of this Plan of
more than 30 days during an Offering Period in which the Employee is a
participant, he or she will be deemed to have withdrawn from the applicable
Exercise Period on the 31st day of such leave, and (ii) if an Employee shall
take a paid leave of absence approved by the Company in accordance with Section
2(g) of this Plan of more than 90 days during an Offering Peri-
5
<PAGE> 6
od in which the Employee is a participant, he or she will be deemed to have
withdrawn from the applicable Exercise Period on the earlier of (aa) the 91st
day if the Employee is paid for the entire 90 day leave, or (bb) the last day
upon which the Employee is paid provided he or she is paid for at least 30
days. On the date upon which the Employee shall be deemed to have withdrawn
from the applicable Exercise Period, the payroll deductions credited to his or
her account will be returned to him or her, but he or she shall continue to be
a participant in the applicable Offering Period during such authorized leave of
absence until and unless such authorized leave of absence terminates without
his or her returning to his or her employment with the Company.
(d) A participant's withdrawal from an Exercise Period (but
not from the Offering Period) will not have any effect upon his or her ability
to participate in subsequent Exercise Periods during the same Offering Period.
However, a participant's withdrawal from an Offering Period makes him or her
ineligible for future participation in that Offering Period. Withdrawal from
an Exercise Period or from an Offering Period will not have any effect upon a
participant's eligibility to participate in a succeeding Offering Period of the
Plan or in any similar plan which may hereafter be adopted by the Company,
provided that a participant may elect to participate in a succeeding Offering
Period only during the open enrollment period for such Offering Period and may
not participate concurrently in more than one Offering Period.
(e) Notwithstanding the foregoing, unless otherwise
determined by the Committee, if the Fair Market Value on the Enrollment Date of
an Offering Period in which a participant is enrolled (the "Current Offering
Period") is greater than the Fair Market Value on the Enrollment Date of a
succeeding Offering Period (the "Succeeding Offering Period"), the
participant's enrollment in the Current Offering Period automatically will be
terminated immediately following the exercise of his or her option under the
Current Offering Period on the Exercise Date that occurs immediately prior to
the Enrollment Date of the Succeeding Offering Period, and the participant
automatically will be enrolled in the Succeeding Offering Period, unless the
participant elects to remain in the former Offering Period by delivery to the
Company of a written notice in form and substance satisfactory to the
Committee.
12. Interest. No interest shall accrue on the payroll deductions
of a participant in the Plan.
13. Stock.
(a) The maximum number of shares of the Company's Common
Stock which shall be made available for sale under the Plan, as set forth in
Section 3 hereof, is subject to adjustment upon changes in capitalization of
the Company as provided in Section 19. If, on a given Exercise Date, the
number of shares with respect to which options are to be exercised exceeds
the number of shares then available under the Plan (an "over-subscription"),
the Committee shall make a pro rata allocation of the shares remaining
available for purchase in as uniform a manner as shall be practicable and as
it shall determine to be equitable.
(b) The participant will have no interest or voting right
in shares covered by his or her option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan
will be registered in the name of the participant.
14. Administration. The Plan shall be administered by the Board
or a Committee of members of the Board appointed by the Board, as necessary
to comply with the applicable restrictions of
6
<PAGE> 7
Rule 16b-3, if any. The Board or its committee shall have full and exclusive
discretionary authority to construe, interpret and apply the terms of the Plan,
to determine eligibility and to adjudicate all disputed claims filed under the
Plan. Every finding, decision and determination made by the Board or its
Committee shall, to the full extent permitted by law, be final and binding upon
all parties.
15. Designation of Beneficiary.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a
participant may file a written designation of a beneficiary who is to receive
any cash from the participant's account under the Plan in the event of such
participant's death prior to exercise of the option.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known
to the Company, then to such other person as the Company may designate.
16. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option
or to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
from an Offering Period in accordance with Section 11.
17. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate funds from such payroll
deductions.
18. Reports. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Employees at least annually, which statements will set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
19. Adjustments Upon Changes in Capitalization. Subject to any
required action by the stockholders of the Company, the Reserves, as well as
the price per share of Common Stock covered by each outstanding option under
the Plan which has not yet been exercised, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or decrease in
the number of shares of Common Stock effected without receipt of consideration
by the Company; provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been "effected without
receipt of consideration". Such adjustment shall be made by the Committee,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company
7
<PAGE> 8
of shares of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an option.
In the event of the proposed dissolution or liquidation of the
Company, the Exercise Period and the Offering Period will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Committee. In the event of a proposed sale of all or substantially all of
the assets of the Company, or the merger of the Company with or into another
corporation, each option under the Plan shall be assumed or an equivalent
option shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation, unless the Committee determines, in
the exercise of its sole discretion and in lieu of such assumption or
substitution, to shorten the Offering Period (and, if applicable, the Exercise
Period) then in progress by setting a new Exercise Date (the "New Exercise
Date"). If the Committee shortens the Offering Period (and the Exercise
Period, if applicable) then in progress in lieu of assumption or substitution
in the event of a merger or sale of assets, the Committee shall notify each
participant in writing, at least 10 days prior to the New Exercise Date, that
the Exercise Date for his or her option has been changed to the New Exercise
Date and that his or her option will be exercised automatically on the New
Exercise Date, unless prior to such date he or she has withdrawn from the
Offering Period or the Exercise Period as provided in Section 11. For purposes
of this paragraph, an option granted under the Plan shall be deemed to be
assumed if, following the sale of assets or merger, the option confers the
right to purchase, for each share of stock subject to the option immediately
prior to the sale of assets or merger, the consideration (whether stock, cash
or other securities or property) received in the sale of assets or merger by
holders of Common Stock for each share of Common Stock held on the effective
date of the transaction (and if such holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares of Common Stock); provided, however, that if such
consideration received in the sale of assets or merger was not solely common
stock of the successor corporation or its parent (as defined in Section 424(e)
of the Code), the Committee may, with the consent of the successor corporation
and the participant, provide for the consideration to be received upon exercise
of the option to be solely common stock of the successor corporation or its
parent equal in fair market value to the per share consideration received by
holders of Common Stock in the sale of assets or merger.
The Committee may, if it so determines in the exercise of its
sole discretion, also make provision for adjusting the Reserves, as well as
the price per share of Common Stock covered by each outstanding option, in
the event the Company effects one or more reorganizations, recapitalizations,
rights offerings or other increases or reductions of shares of its outstanding
Common Stock, and in the event of the Company being consolidated with or merged
into any other corporation.
20. Amendment or Termination.
(a) The Board may at any time and for any reason amend or
terminate the Plan. Except as provided in Section 19, no such termination
can affect options previously granted, provided that the Plan (and any Offering
Period thereunder) may be terminated by the Board on any Exercise Date if the
Board determines that the termination of the Plan is in the best interests
of the Company and its stockholders. Except as provided in Section 19, no
amendment may make any change in any option theretofore granted which adversely
affects the rights of any participant. To the extent necessary and desirable
to comply with Rule 16b-3 under the Securities Exchange Act of 1934, as
amended, or Section 423 of the Code (or any successor rule or provision or
any other applicable law
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<PAGE> 9
or regulation), the Company shall obtain stockholder approval in such a
manner and to such a degree as is required thereby.
(b) Without stockholder consent and without regard to whether
any participant rights may be considered to have been "adversely affected," the
Committee shall be entitled to change the Offering Periods, establish the
exchange ratio applicable to amounts withheld in a currency other than United
States dollars, permit payroll withholding in excess of the amount designated
by a participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for each
participant properly correspond with amounts withheld from the participant's
Compensation, and establish such other limitations or procedures as the
Committee determines in its sole discretion advisable which are consistent with
the Plan.
21. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be issued
with respect to an option unless the exercise of such option and the issuance
and delivery of such shares pursuant thereto shall comply with all applicable
provisions of law of the United States or other country or jurisdiction,
including, without limitation, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange or quotation
system upon which the shares may then be listed or quoted, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment
and without any present intention to sell or distribute such shares if, in
the opinion of counsel for the Company, such a representation is required by
any of the aforementioned applicable provisions of law.
23. Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board or its approval by the stockholders of
the Company. It shall continue in effect for a term of 20 years unless sooner
terminated under Section 20.
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<PAGE> 1
EXHIBIT 4.2
SUN MICROSYSTEMS, INC.
1990 LONG-TERM EQUITY INCENTIVE PLAN
(Last amended on August 10, 1994)
1. Purpose of the Plan. The purpose of the Sun Microsystems, Inc.
1990 Long-Term Equity Incentive Plan is to enable Sun Microsystems, Inc. to
provide an incentive to eligible employees, consultants and Officers whose
present and potential contributions are important to the continued success
of the Company, to afford them an opportunity to acquire a proprietary interest
in the Company, and to enable the Company to enlist and retain in its employ
the best available talent for the successful conduct of its business. It is
intended that this purpose will be effected through the granting of (a) stock
options, (b) stock purchase rights, (c) stock appreciation rights, and (d)
long-term performance awards.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Committee" means the Committee or Committees referred
to in Section 5 of the Plan. If at any time no Committee shall be in office,
then the functions of the Committee specified in the Plan shall be exercised
by the Board.
(d) "Common Stock" means the Common Stock, $0.00067 par value
(as adjusted from time to time), of the Company.
(e) "Company" means Sun Microsystems, Inc., a corporation
organized under the laws of the state of Delaware, or any successor
corporation.
(f) "Director" means a member of the Board.
(g) "Disability" means a disability, whether temporary or
permanent, partial or total, as determined by the Committee.
(h) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(i) "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:
(i) the last reported sale price of the Common Stock
of the Company on the NASDAQ National Market System or, if no such reported
sale takes place on any such day, the average of the closing bid and asked
prices, or
(ii) if such Common Stock shall then be listed on
a national securities exchange, the last reported sale price or, if no such
reported sale takes place on any such day, the average of the closing bid and
asked prices on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or
(iii) if such Common Stock shall not be quoted
on such National Market System nor listed or admitted to trading on a national
securities exchange, then the average of the closing bid and asked prices,
as reported by The Wall Street Journal for the over-the-counter market, or
<PAGE> 2
(iv) if none of the foregoing is applicable, then the
Fair Market Value of a share of Common Stock shall be determined by the Board
in its discretion.
(j) "Incentive Stock Option" means an Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.
(k) "Long-Term Performance Award" means an award under Section 10
below. A Long-Term Performance Award shall permit the recipient to receive a
cash or stock bonus (as determined by the Committee) upon satisfaction of such
performance factors as are set out in the recipient's individual grant.
Long-Term Performance Awards will be based upon the achievement of Company,
Subsidiary and/or individual performance factors or upon such other criteria as
the Committee may deem appropriate.
(l) "Nonstatutory Stock Option" means any Option that is not an
Incentive Stock Option.
(m) "Officer" means an officer of the Company within the meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.
(n) "Option" means any option to purchase shares of Common Stock
granted pursuant to Section 7 below.
(o) "Outside Director" means a Director who is not an employee of
the Company.
(p) "Plan" means this 1990 Long-Term Equity Incentive Plan, as
hereinafter amended from time to time.
(q) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 9 below.
(r) "Right" means and includes Stock Appreciation Rights and Stock
Purchase Rights granted pursuant to the Plan.
(s) "Stock Appreciation Right" means an award made pursuant to
Section 8 below, which right permits the recipient to receive an amount of
Common Stock or cash equal in value to the difference between the Fair Market
Value of Common Stock on the date of grant of the Option and the Fair Market
Value of Common Stock on the date of exercise of the Stock Appreciation Right.
(t) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to a restricted stock purchase agreement entered into between the
Company and the purchaser under Section 9 below.
(u) "Subsidiary" means a corporation, domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or by a
Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or by a Subsidiary.
In addition, the term "Rule 16b-3", the term "Performance Period" and
the terms "Tax Date" and "Insiders" shall have meanings set forth in Section
5(a), Section 10 and Section 11, respectively.
3. Eligible Participants. Any Officer, consultant, or other employee
of the Company or of a Subsidiary whom the Committee deems to have the
potential to contribute to the future success of the Company shall be eligible
to receive awards under the Plan; provided, however, that any Options intended
to qualify as Incentive Stock Options shall be granted only to employees of the
Company or its Subsidiaries.
4. Stock Subject to the Plan. Subject to Sections 12 and 13, the
total number of shares of Common Stock reserved and available for distribution
pursuant to the Plan shall be 13,250,000
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<PAGE> 3
shares. Subject to Sections 12 and 13 below, if any shares of Common Stock
that have been optioned under an Option cease to be subject to such Option
(other than through exercise of the Option), or if any Right, Option or
Long-Term Performance Award granted hereunder is forfeited or any such award
otherwise terminates prior to the issuance to the participant of Common Stock,
the shares (if any) that were reserved for issuance pursuant to such Right,
Option or Long-Term Performance Award shall again be available for distribution
in connection with future awards or Option grants under the Plan; provided,
however, that shares of Common Stock that have actually been issued under the
Plan, whether upon exercise of an Option or Right or in satisfaction of a
Long-Term Performance Award, shall not in any event be returned to the Plan and
shall not become available for future distribution under the Plan.
5. Administration.
(a) Composition of Administrator.
(i) Multiple Administrative Bodies. If permitted by
Rule 16b-3 promulgated under the Exchange Act or any successor rule thereto, as
in effect at the time that discretion is being exercised with respect to the
Plan ("Rule 16b-3"), and by the legal requirements relating to the
administration of stock plans such as the Plan, if any, of applicable
securities laws, Delaware corporate law and the Code (collectively, the
"Applicable Laws"), the Plan may (but need not) be administered by different
administrative bodies with respect to (A) Directors who are not employees,
(B) Directors who are employees, (C) Officers who are not Directors and
(D) Employees who are neither Directors nor Officers.
(ii) Administration with respect to Directors and
Officers. With respect to grants of Options, Rights and Long-Term Performance
Awards to eligible participants who are Officers or Directors of the Company,
the Plan shall be administered by (A) the Board, if the Board may administer
the Plan in compliance with Rule 16b-3 as it applies to a plan intended to
qualify thereunder as a discretionary grant or award plan, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted (I) in such a manner as to permit the Plan to comply with Rule
16b-3 as it applies to a plan intended to qualify thereunder as a discretionary
grant or award plan and (II) in such a manner as to satisfy the Applicable
Laws.
(iii) Administration with respect to Other Persons.
With respect to grants of Options to eligible participants who are neither
Directors nor Officers of the Company, the Plan shall be administered by (A)
the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws.
(iv) General. Once a Committee has been appointed
pursuant to subsection (ii) or (iii) of this Section 5(a), such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of any Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies (however caused)
and remove all members of a Committee and thereafter directly administer the
Plan, all to the extent permitted by the Applicable Laws and, in the case of a
Committee appointed under subsection (ii), to the extent permitted by Rule
16b-3 as it applies to a plan intended to qualify thereunder as a discretionary
grant or award plan.
(b) Authority. A Committee, if there be one, shall have
full power to implement and carry out the Plan, subject to the general
purposes, terms, and conditions of the Plan and to the direction of the Board
(including the specific duties delegated by the Board to such Committee),
which power shall include, but not be limited to, the following:
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<PAGE> 4
(i) to select the Officers, consultants and other
employees of the Company and/or its Subsidiaries to whom Options, Rights and/or
Long-Term Performance Awards may from time to time be granted hereunder;
(ii) to determine whether and to what extent Options,
Rights and/or Long-Term Performance Awards, or any combination thereof, are
granted hereunder;
(iii) to determine the number of shares of Common
Stock to be covered by each such award granted hereunder;
(iv) to approve forms of agreement for use under
the Plan;
(v) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder
(including, but not limited to, the share price and any restriction or
limitation, or any vesting acceleration or waiver of forfeiture restrictions
regarding any Option or other award and/or the shares of Common Stock relating
thereto, based in each case on such factors as the Committee shall determine,
in its sole discretion);
(vi) to determine whether and under what
circumstances an Option may be settled in cash or Restricted Stock under
Section 7(j) instead of Common Stock;
(vii) to determine the form of payment that will be
acceptable consideration for exercise of an Option or Right granted under the
Plan;
(viii) to determine whether, to what extent and
under what circumstances Common Stock and other amounts payable with respect
to an award under this Plan shall be deferred either automatically or at the
election of the participant (including providing for and determining the amount
(if any) of any deemed earnings on any deferred amount during any deferral
period);
(ix) to reduce the exercise price of any Option
or Right;
(x) to determine the terms and restrictions
applicable to Stock Purchase Rights and the Restricted Stock purchased by
exercising such Rights.
The Committee shall have the authority to construe and interpret
the Plan, to prescribe, amend and rescind rules and regulations relating to
the Plan, and to make all other determinations necessary or advisable for the
administration of the Plan.
6. Duration of the Plan. The Plan shall remain in effect until
terminated by the Board under the terms of the Plan, provided that in no event
may Incentive Stock Options be granted under the Plan later than October 15,
2000, 10 years from the date the Plan was adopted by the Board.
7. Stock Options. The Committee, in its discretion, may grant Options
to eligible participants and shall determine whether such Options shall be
Incentive Stock Options or Nonstatutory Stock Options. Each Option shall be
evidenced by a written Option agreement which shall expressly identify the
Option as an Incentive Stock Option or as a Nonstatutory Stock Option, and
be in such form and contain such provisions as the Committee shall from time
to time deem appropriate. Without limiting the foregoing, the Committee may,
at any time, or from time to time, authorize the Company, with the consent
of the respective recipients, to issue new Options including Options in
exchange for the surrender and cancellation of any or all outstanding Options
or Rights. Option agreements shall contain the following terms and conditions:
(a) Exercise Price; Number of Shares. The exercise price of
the Option, which shall be approved by the Committee, may be less than the Fair
Market Value of the Common Stock at the time the Option is granted; provided,
however, that in the case of an Incentive Stock Option, the price
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<PAGE> 5
shall be no less than 100% of the Fair Market Value of the Common Stock
on the date the Option is granted, subject to any additional conditions set out
in Section 7(g) below, and further provided that, in the case of an Insider (as
defined in Section 11 hereof), the price shall be no less than 50% of the Fair
Market Value of the Common Stock on the date the Option is granted.
The Option agreement shall specify the exercise price and the
number of shares of Common Stock to which it pertains.
(b) Waiting Period; Exercise Dates; Term. At the time an
Option is granted, the Committee will determine the terms and conditions to be
satisfied before shares may be purchased, including the dates on which shares
subject to the Option may first be purchased. The Committee may specify that
an Option may not be exercised until the completion of the waiting period
specified at the time of grant. (Any such period is referred to herein as the
"waiting period.") At the time an Option is granted, the Committee shall fix
the period within which such Option may be exercised, which shall not be less
than the waiting period, if any, nor, in the case of an Incentive Stock Option,
more than 10 years from the date of grant.
(c) Form of Payment. The consideration to be paid for the
shares of Common Stock to be issued upon exercise of an Option, including the
method of payment, shall be determined by the Committee (and, in the case of an
Incentive Stock Option, shall be determined at the time of grant) and may
consist entirely of (i) cash, (ii) certified or cashier's check, (iii)
promissory note, (iv) other shares of Common Stock (including, in the
discretion of the Committee, Restricted Stock) which (x) either have been owned
by the optionee for more than six months on the date of surrender or were not
acquired, directly or indirectly, from the Company, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
shares as to which said Option shall be exercised, (v) delivery of a properly
executed exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds required to
pay the exercise price, (vi) delivery of an irrevocable subscription agreement
for the shares which obligates the option holder to take and pay for the shares
not more than 12 months after the date of delivery of the subscription
agreement or (vii) any combination of the foregoing methods of payment.
(d) Effect of Termination of Employment or Death of Employee
Participants. In the event that an optionee during his or her lifetime ceases
to be an employee of the Company or of any Subsidiary for any reason, including
retirement, any Option, including any unexercised portion thereof, which was
otherwise exercisable on the date of termination of employment, shall expire
within such time period as is determined by the Committee; provided, however,
that in the case of an Incentive Stock Option the Option shall expire unless
exercised within a period of 90 days from the date on which the optionee ceased
to be an employee, but in no event after the expiration of the term of such
Option as set forth in the Option agreement. If in any case the Committee
shall determine that an employee shall have been discharged for Just Cause (as
defined below) such employee shall not thereafter have any rights under the
Plan or any Option that shall have been granted to him or her under the Plan.
For purposes of this Section, "Just Cause" means the termination of employment
of an employee shall have taken place as a result of (i) willful breach or
neglect of duty; (ii) failure or refusal to work or to comply with the
Company's rules, policies, and practices; (iii) dishonesty; (iv)
insubordination; (v) being under the influence of drugs (except to the extent
medically prescribed) or alcohol while on duty or on Company premises; (vi)
conduct endangering, or likely to endanger, the health or safety of another
employee; or (vii) conviction of a felony. In the event of the death of an
employee optionee, that portion of the Option which had become exercisable on
the
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<PAGE> 6
date of death shall be exercisable by his or her personal representatives,
heirs, or legatees within six months or such time period as is
determined by the Committee (but in the case of an Incentive Stock Option, in
no event after the expiration of the term of such Option as set forth in the
Option agreement.) In the event of the death of an optionee within one month
after termination of employment or service, that portion of the Option which
had become exercisable on the date of termination shall be exercisable by his
or her personal representatives, heirs, or legatees within six months or such
time period as is determined by the Committee (but in the case of an Incentive
Stock Option, in no event after the expiration of the term of such Option as
set forth in the Option agreement.) In the event that an optionee ceases to be
an employee of the Company or of any Subsidiary for any reason, including death
or retirement, prior to the lapse of the waiting period, if any, his or her
Option shall terminate and be null and void.
(e) Leave of Absence. The employment relationship shall not
be considered interrupted in the case of: (i) sick leave; (ii) military leave;
(iii) any other leave of absence approved by the Committee, provided that such
leave is for a period of not more than 90 days (or not more than 30 days for
unpaid leave), unless reemployment upon the expiration of such leave is
guaranteed by contract or statute, or unless provided otherwise pursuant to
formal policy adopted from time to time by the Company and issued and
promulgated to employees in writing; or (iv) in the case of transfer between
locations of the Company or between the Company, its Subsidiaries or its
successor. In the case of any employee on an approved leave of absence, the
Committee may make such provisions respecting suspension of vesting of the
Option while on leave from the employ of the Company or a Subsidiary as it may
deem appropriate, except that in no event shall an Option be exercised after
the expiration of the term set forth in the Option agreement.
(f) Acceleration of Exercisability or Waiting Period. The
Committee may accelerate the earliest date on which outstanding Options (or
any installments thereof) are exercisable.
(g) Special Incentive Stock Option Provisions. In addition
to the foregoing, Options granted under the Plan which are intended to be
Incentive Stock Options under Section 422 of the Code shall be subject to the
following terms and conditions:
(i) Dollar Limitation. To the extent that the
aggregate Fair Market Value of the shares of Common Stock with respect to which
Options designated as Incentive Stock Options become exercisable for the first
time by any individual during any calendar year (under all plans of the
Company) exceeds $100,000, such Options shall be treated as Nonstatutory Stock
Options. For purposes of the preceding sentence, (i) Options shall be taken
into account in the order in which they were granted and (ii) the Fair Market
Value of the shares shall be determined as of the time the Option with respect
to such shares is granted.
(ii) 10% Stockholder. If any person to whom an
Incentive Stock Option is to be granted pursuant to the provisions of the Plan
is, on the date of grant, the owner of Common Stock (as determined under
Section 424(d) of the Code) possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any Subsidiary,
then the following special provisions shall be applicable to the Incentive
Stock Option granted to such individual:
(A) The exercise price per share of the Common
Stock subject to such Incentive Stock Option shall not be less than 110%
of the Fair Market Value of the Common Stock on the date of grant; and
(B) The Option shall not have a term in excess
of five years from the date of grant.
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Except as modified by the preceding provisions of this Subsection 7(g) and
except as otherwise required by Section 422 of the Code, all of the provisions
of the Plan shall be applicable to the Incentive Stock Options granted
hereunder.
(h) Other Provisions. Each Option granted under the Plan
may contain such other terms, provisions, and conditions not inconsistent with
the Plan as may be determined by the Committee.
(i) Options to Consultants. Options granted to consultants
shall not be subject to Sections 7(b) and 7(d) of the Plan, but shall have
such terms and conditions pertaining to waiting period (if any), exercise date,
and effect of termination of the consulting relationship as the Committee shall
determine in each case.
(j) Buyout Provisions. The Committee may at any time offer
to buy out, for a payment in cash or Common Stock (including Restricted Stock),
an Option previously granted, based on such terms and conditions as the
Committee shall establish and communicate to the optionee at the time that such
offer is made. Any such offer made to an Officer or Director shall comply with
the applicable provisions of Rule 16b-3. This provision is intended only to
clarify the powers of the Committee and shall not in any way be deemed to
create any rights on the part of optionees to receive buyout offers or
payments.
(k) Rule 16b-3. Options granted to persons subject to
Section 16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain
such additional conditions or restrictions, if any, as may be required by Rule
16b-3 to be in the written Option agreement in order to qualify for the maximum
exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
(l) Limitations on Grants to Employees. Notwithstanding
anything to the contrary herein, the following limitations shall apply to
grants
of Options:
(i) No eligible participant shall be granted, in
any fiscal year of the Company, Options to purchase more than 150,000 shares.
(ii) In connection with his or her initial
employment, an eligible participant may be granted Options to purchase up to an
additional 200,000 shares which shall not count against the limit set forth in
subsection (i) above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization
as described in Section 12.
(iv) If an Option is cancelled (other than in
connection with a transaction described in Section 13), the cancelled Option
will be counted against the limit set forth in this paragraph l. For this
purpose, if the exercise price of an Option is reduced, the transaction will be
treated as a cancellation of the Option and the grant of a new Option.
8. Stock Appreciation Rights. Stock Appreciation Rights may be granted
only in connection with an Option, either concurrently with the grant of the
Option or at any time thereafter during the term of the Option. The following
provisions apply to such Stock Appreciation Rights.
(a) Exercise of Right. The Stock Appreciation Right shall
entitle the optionee to exercise the Right by surrendering to the Company
unexercised a portion of the underlying Option as to which Optionee has a right
to exercise. The Optionee shall receive in exchange from the Company an amount
in cash or Common Stock equal in value to the excess of (x) the Fair Market
Value on the date of exercise of the Right of the Common Stock covered by the
surrendered portion of the underlying Option over (y) the exercise price of the
Common Stock covered by the surrendered por-
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tion of the underlying Option, as determined in accordance with Section 7(a)
above. Notwithstanding the foregoing, the Committee may place limits on the
amount that may be paid upon exercise of a Stock Appreciation Right; provided,
however, that such limit shall not restrict the exercisability of the
underlying Option.
(b) Option Cancelled. When a Stock Appreciation Right is
exercised, the underlying Option, to the extent surrendered, shall no longer
be exercisable.
(c) Exercisability Requirement. A Stock Appreciation Right shall
be exercisable only when and to the extent that the underlying Option is
exercisable and shall expire no later than the date on which the underlying
Option expires.
(d) In-the-Money Requirement. A Stock Appreciation Right may
only be exercised at a time when the Fair Market Value of the Common Stock
covered by the underlying Option exceeds the exercise price of the Common Stock
covered by the underlying Option.
(e) Incentive Stock Option Requirements. In the event that a
Stock Appreciation Right is granted that relates to an Incentive Stock Option,
such Right shall contain such additional or different terms as may be necessary
under applicable regulations to preserve treatment of the Incentive Stock Option
as such under Section 422 of the Code.
(f) Form of Payment. The Company's obligation arising upon
the exercise of a Stock Appreciation Right may be paid currently or on a
deferred basis (with such interest or earnings equivalent as may be determined
by the Committee), and may be paid in Common Stock or in cash, or in any
combination of Common Stock and cash, as the Committee in its sole discretion
may determine. Shares of Common Stock issued upon the exercise of a Stock
Appreciation Right shall be valued at the Fair Market Value of the Common Stock
as of the date of exercise.
(g) Rule 16b-3. Stock Appreciation Rights granted to persons
subject to Section 16(b) of the Exchange Act must comply with Rule 16b-3 and
shall contain such additional conditions or restrictions, if any, as may be
required by Rule 16b-3 to be in the written Right agreement in order to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect
to Plan transactions. Such a person may only make an election to receive cash
in full or partial settlement of the Stock Appreciation Right or exercise a
Stock Appreciation Right during such time or times as are permitted by
paragraph (e) of Rule 16b-3 or any successor provision.
9. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Committee
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing of the terms, conditions and restrictions related
to the offer, including the number of shares of Common Stock that such person
shall be entitled to purchase, the price to be paid, which price in the case of
Insiders (as defined in Section 11) shall not be more than $0.00067 per share
(the par value of the Company's Common Stock, as adjusted from time to time,
and the minimum price permitted by the Delaware General Corporation Law), and
the time within which such person must accept such offer, which shall in no
event exceed 60 days from the date the Stock Purchase Right was granted. The
offer shall be accepted by execution of a Restricted Stock purchase agreement
in the form determined by the Committee. Shares purchased pursuant to the
grant of a Stock Purchase Right shall be referred to herein as "Restricted
Stock."
(b) Repurchase Option. Unless the Committee determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the volun-
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<PAGE> 9
tary or involuntary termination of the purchaser's employment with the
Company for any reason (including death or Disability). The purchase price for
shares repurchased pursuant to the Restricted Stock purchase agreement shall be
the original price paid by the purchaser and may be paid by cancellation of any
indebtedness of the purchaser to the Company. The repurchase option shall lapse
at such rate as the Committee may determine.
(c) Other Provisions. The Restricted Stock purchase agreement
shall contain such other terms, provisions and conditions not inconsistent
with the Plan as may be determined by the Committee in its sole discretion.
In addition, the provisions of Restricted Stock purchase agreements need not
be the same with respect to each purchaser.
10. Long-Term Performance Awards.
(a) Awards. Long-Term Performance Awards are cash or stock
bonus awards that may be granted either alone, in addition to or in tandem with
other awards granted under the Plan and/or awards made outside of the Plan.
Long-Term Performance Awards shall not require payment by the recipient of any
consideration for the Long-Term Performance Award or for the shares of Common
Stock covered by such award. The Committee shall determine the nature, length
and starting date of any performance period (the "Performance Period") for each
Long-Term Performance Award and shall determine the performance and/or
employment factors to be used in the determination of the value of Long-Term
Performance Awards and the extent to which such Long-Term Performance Awards
have been earned. Shares issued pursuant to a Long-Term Performance Award may
be made subject to various conditions, including vesting or forfeiture
provisions. Long-Term Performance Awards may vary from participant to
participant and between groups of participants and shall be based upon the
achievement of Company, Subsidiary and/or individual performance factors or
upon such other criteria as the Committee may deem appropriate. Performance
Periods may overlap and participants may participate simultaneously with
respect to Long-Term Performance Awards that are subject to different
Performance Periods and different performance factors and criteria. Long-Term
Performance Awards shall be confirmed by, and be subject to the terms of, a
written Long-Term Performance Award agreement.
(b) Value of Awards. At the beginning of each Performance
Period, the Committee may determine for each Long-Term Performance Award
subject to such Performance Period the range of dollar values and/or numbers
of shares of Common Stock to be issued to the participant at the end of the
Performance Period if and to the extent that the relevant measures of
performance for such Long-Term Performance Award are met. Such dollar values
or numbers of shares of Common Stock may be fixed or may vary in accordance
with such performance or other criteria as may be determined by the Committee.
(c) Adjustment of Awards. Notwithstanding the provisions of
Section 20 hereof, the Committee may, after the grant of Long#Term Performance
Awards, adjust the performance factors applicable to such Long-Term
Performance Awards to take into account changes in the law or in accounting or
tax rules and to make such adjustments as the Committee deems necessary or
appropriate to reflect the inclusion or exclusion of the impact of
extraordinary or unusual items, events or circumstances in order to avoid
windfalls or hardships.
(d) Termination. Unless otherwise provided in the applicable
Long-Term Performance Award agreement, if a participant terminates his or her
employment or his or her consultancy during a Performance Period because of
death or Disability, the Committee may in its discretion provide for an earlier
payment in settlement of such award, which payment may be in such amount and
under such terms and conditions as the Committee deems appropriate.
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Unless otherwise provided in the applicable Long-Term
Performance Award agreement, if a participant terminates employment or his
or her consultancy during a Performance Period for any reason other than death
or Disability, then such a participant shall not be entitled to any payment
with respect to the Long-Term Performance Award subject to such Performance
Period, unless the Committee shall otherwise determine in its discretion.
(e) Form of Payment. The earned portion of a Long-Term
Performance Award may be paid currently or on a deferred basis (with such
interest or earnings equivalent as may be determined by the Committee).
Payment shall be made in the form of cash or whole shares of Common Stock,
including Restricted Stock, or a combination thereof, either in a lump sum
payment or in installments, all as the Committee shall determine.
(f) Reservation of Shares. In the event that the Committee
grants a Long-Term Performance Award that is payable in cash or Common Stock,
the Committee may (but need not) reserve an appropriate number of shares of
Common Stock under the Plan at the time of grant of the Long-Term Performance
Award. If and to the extent that the full amount reserved is not actually
paid in Common Stock, the shares of Common Stock representing the portion of
the reserve for that Long-Term Performance Award that is not actually issued
in satisfaction of such Long-Term Performance Award shall again become
available for award under the Plan. If shares of Common Stock are not
reserved by the Committee at the time of grant, then (i) no shares shall be
deducted from the number of shares available for grant under the Plan at that
time and (ii) at the time of payment of the Long-Term Performance Award, only
the number of shares actually issued to the participant shall be so deducted.
If there are not a sufficient number of shares available under the Plan for
issuance to a participant at the time of payment of a Long-Term Performance
Award, any shortfall shall be paid by the Company in cash.
(g) Rule 16b-3. Grants of Long-Term Performance Awards to
Directors and Officers must comply with the applicable provisions of Rule 16b-3
and such Long-Term Performance Awards shall contain such additional conditions
or restrictions, if any, as may be required by Rule 16b-3 to be in the written
agreement relating to such Long-Term Performance Awards in order to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect
to Plan transactions.
11. Stock Withholding to Satisfy Withholding Tax Obligations.
(a) Ability to Use Stock for Withholding. When a participant
incurs tax liability in connection with the exercise or vesting of any Option,
Right or Long-Term Performance Award, which tax liability is subject to tax
withholding under applicable tax laws, and the participant is obligated to
pay the Company an amount required to be withheld under applicable tax laws,
the participant may satisfy the withholding tax obligation by electing to have
the Company withhold from the shares to be issued that number of shares having
a Fair Market Value equal to the amount required to be withheld. The Fair
Market Value of the shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined (the "Tax Date").
(b) Elections to Have Stock Withheld. All elections by
participants to have shares withheld for this purpose shall be made in writing
in a form acceptable to the Committee and shall be subject to the following
restrictions:
(i) the election must be made on or prior to the
applicable Tax Date;
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(ii) once made, the election shall be irrevocable
as to the particular shares as to which the election is made (unless otherwise
permitted by applicable tax regulations under the Code);
(iii) all elections shall be subject to the consent
or disapproval of the Committee; and
(iv) if the participant is an Officer or Director
of the Company or other person whose transactions in Common Stock are subject
to Section 16(b) of the Exchange Act (collectively "Insiders"), the election
must comply with the applicable provisions of Rule 16b-3 and shall be subject
to such additional conditions or restrictions as may be required thereunder
to qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
(c) Section 83(b) Election. In the event the election to
have shares withheld is made by a participant, no election is filed under
Section 83(b) of the Code and the Tax Date is deferred under Section 83 of the
Code, the participant shall receive the full number of shares with respect to
which the exercise occurs, but such participant shall be unconditionally
obligated to tender back to the Company the proper number of shares on the Tax
Date.
12. Recapitalization. In the event that dividends are payable in
Common Stock or in the event there are splits, subdivisions, or combinations of
shares of Common Stock, the number of shares available under the Plan shall be
increased or decreased proportionately, as the case may be, and the number of
shares of Common Stock deliverable in connection with any Option, Right or
Long-Term Performance Award theretofore granted shall be increased or decreased
proportionately, as the case may be, without change in the aggregate purchase
price (where applicable).
13. Reorganization. In case the Company is merged or consolidated
with another corporation and the Company is not the surviving corporation, or
in case the property or stock of the Company is acquired by another
corporation, or in case of separation, reorganization, or liquidation of the
Company, the Committee, or the board of directors of any corporation assuming
the obligations of the Company hereunder, shall, as to outstanding Options,
Rights or Long-Term Performance Awards either (a) make appropriate provision
for the protection of any such outstanding Options, Rights or Long-Term
Performance Awards by the assumption or substitution on an equitable basis of
appropriate stock of the Company or of the merged, consolidated, or otherwise
reorganized corporation which will be issuable in respect to the shares of
Common Stock, provided that in the case of Incentive Stock Options, such
assumption or substitution comply with Section 424(a) of the Code, or (b) upon
written notice to the participant, provide that the Option or Right must be
exercised within 30 days of the date of such notice or it will be terminated.
In any such case, the Committee may, in its discretion, advance the lapse of
vesting periods, waiting periods, and exercise dates.
14. Employment or Consulting Relationship. Nothing in the Plan or
any award made hereunder shall interfere with or limit in any way the right
of the Company or of any Subsidiary to terminate any recipient's employment
or consulting relationship at any time, with or without cause, nor confer upon
any recipient any right to continue in the employ or service of the Company
or any Subsidiary.
15. General Restriction. Each award shall be subject to the
requirement that, if, at any time, the Committee shall determine, in its
discretion, that the listing, quotation, registration, or qualification of the
shares subject to such award upon any securities exchange or quotation system
or under any state or federal law, or the consent or approval of any government
regulatory body, is necessary or desirable as a condition of, or in connection
with, such award or the issue or purchase of shares
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thereunder, such award may not be exercised in whole or in part unless
such listing, quotation, registration, qualification, consent, or approval
shall have been effected or obtained free of any conditions not acceptable to
the Committee.
16. Rights as a Stockholder. The holder of an Option, Right or
Long-Term Performance Award shall have no rights as a stockholder with respect
to any shares covered by such Option, Right or Long-Term Performance Award
until the date of exercise. Once an Option, Right or Long-Term Performance
Award is exercised by the holder thereof, the participant shall have the rights
equivalent to those of a stockholder, and shall be a stockholder when his or
her holding is entered upon the records of the duly authorized transfer agent
of the Company. Except as otherwise expressly provided in the Plan, no
adjustment shall be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued.
17. Nonassignability of Awards. No awards made hereunder, including
Options, Rights and Long-Term Performance Awards, shall be assignable or
transferable by the recipient other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act, or the
rules thereunder, and in no event shall such awards be assigned or transferred
in a manner that is inconsistent with the specific Plan provisions relating
thereto. The designation of a beneficiary by a participant does not constitute
a transfer. During the life of the recipient, an Option, Right or Long-Term
Performance Award shall be exercisable only by him or her or by a transferee
permitted by this Section 17.
18. Withholding Taxes. Whenever, under the Plan, shares are to be
issued in satisfaction of Options, Rights or Long-Term Performance Awards
granted hereunder, the Company shall have the right to require the recipient to
remit to the Company an amount sufficient to satisfy federal, state, and local
withholding tax requirements prior to the delivery of any certificate or
certificates for such shares. Whenever, under the Plan, payments are to be
made to participants in cash, such payments shall be net of an amount
sufficient to satisfy federal, state, and local withholding tax requirements.
19. Nonexclusivity of the Plan. Neither the adoption or amendment of
the Plan by the Board, the submission of the Plan or any amendments thereto to
the stockholders of the Company for approval, nor any provision of the Plan
shall be construed as creating any limitations on the power of the Board or the
Committee to adopt and implement such additional compensation arrangements as
it may deem desirable, including, without limitation, the awarding of cash or
the granting of stock options, stock appreciation rights, stock purchase rights
or Long-Term performance awards outside of the Plan, and such arrangements may
be either generally applicable to a class of employees or consultants or
applicable only in specified cases.
20. Amendment, Suspension, or Termination of the Plan. The Board
may at any time amend, alter, suspend, or terminate the Plan, but no amendment,
alteration, suspension, or termination shall be made which would impair the
rights of any grantee under any grant theretofore made, without his or her
consent. In addition, to the extent necessary and desirable to comply with
Rule 16b-3 under the Exchange Act or under Section 422 of the Code (or any
other Applicable Law), the Company shall obtain stockholder approval of any
Plan amendment in such a manner and to such a degree as is required by such
Applicable Law.
21. Effective Date of the Plan. The Plan shall become effective
upon approval of the Board and shall be subject to stockholder approval within
12 months of adoption by the Board. Options, Rights and Long-Term Performance
Awards may be granted and exercised under the Plan only after there has been
compliance with all applicable federal and state securities laws.
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EXHIBIT 5.1
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
(415) 493-9300
November 22, 1994
Sun Microsystems, Inc.
2550 Garcia Avenue
Mountain View, CA 94043
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed
by you with the Securities and Exchange Commission on or about November 22,
1994, in connection with the registration under the Securities Act of 1933,
as amended, of 1,250,000 additional shares of your Common Stock reserved for
issuance under the 1990 Employee Stock Purchase Plan and 3,350,000 additional
shares of your Common Stock reserved for issuance under the 1990 Long-Term
Equity Incentive Plan (collectively, the "Plans").
As your legal counsel, we have examined the proceedings taken and are
familiar with the proceedings proposed to be taken by you in connection with
the sale and issuance of said shares under the Plans. It is our opinion that
the additional shares, when issued and sold in the manner referred to in the
Plans and pursuant to the agreements which accompany the Plans, will be legally
and validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to said Registration
Statement and further consent to the use of our name wherever appearing in said
Registration Statement and any amendments thereto.
Sincerely,
WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation
/s/ WILSON, SONSINI, GOODRICH & ROSATI
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration
Statement on Form S-8 pertaining to the 1990 Employee Stock Purchase Plan and
the 1990 Long-Term Equity Incentive Plan of Sun Microsystems, Inc., of our
reports dated July 20, 1994, with respect to the consolidated financial
statements of Sun Microsystems, Inc. incorporated by reference in its Annual
Report (Form 10-K) for the year ended June 30, 1994 and the related financial
statement schedules included therein, filed with the Securities and Exchange
Commission.
ERNST & YOUNG LLP
/s/ ERNST & YOUNG LLP
November 22, 1994
San Jose, California
