As filed with the Securities and Exchange Commission on August 29, 1997
Registration No.____________
================================================================================
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 or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
901 San Antonio Road
Palo Alto, CA 94303
(Address, including zip code, of
Registrant's Principal Executive Offices)
SUN MICROSYSTEMS, INC. U.S. NON-QUALIFIED DEFERRED COMPENSATION PLAN
(Full Title of the Plan)
Scott G. McNealy
President
SUN MICROSYSTEMS, INC.
901 San Antonio Road
Palo Alto, CA 94303
(650) 960-1300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPY TO:
David J. Segre, Esq.
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
(650) 493-9300
================================================================================
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
=======================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Securities Amount to be Offering Price Per Aggregate Offering Registration
to be Registered Registered Share Price Fee
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Deferred Compensation $20,000,000 100% $ 20,000,000(2) $ 6,061.00
Obligations(1)
- -------------------------------------------------------------------------------------------------------
<FN>
- --------
(1) The Deferred Compensation Obligations are unsecured obligations of Sun Microsystems, Inc. to
pay deferred compensation in the future in accordance with the terms of the Sun Microsystems, Inc. U.S.
Non-Qualified Deferred Compensation Plan, as amended effective October 1, 1997, for a select group of
Eligible Employees and Board Members.
(2) Estimated solely for the purpose of determining the registration fee.
</FN>
</TABLE>
1-A
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Information Incorporated by Reference.
There are hereby incorporated by reference into this Registration Statement
the following documents and information heretofore filed with the Securities and
Exchange Commission (the "Commission") by Sun Microsystems, Inc. (the
"Registrant"):
1. The Registrant's Annual Report on Form 10-K for the year ended June 30,
1996, filed pursuant to Section 13(a) of the Exchange Act.
2. The Registrant's Reports on Form 10-Q filed May 12, 1997, February 12,
1997 and November 13, 1996 pursuant to Section 13 of 15(d) of the
Exchange Act.
3. All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this
Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or
which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to
be part hereof from the date of filing of such documents.
Item 4. Description of Securities.
Under the Sun Microsystems, Inc. U.S. Non-Qualified Deferred Compensation
Plan, as amended and restated effective October 1, 1997 (the "Plan"), the
Registrant will provide Eligible Employees and Board Members, as defined
therein, the opportunity to enter into agreements for the deferral of a
specified amount or percentage of their cash compensation derived from base
salary and incentive bonus awards or, in the case of Eligible Board Members,
from retainer payments. The Registrant will enter into a trust agreement with a
trustee under an irrevocable trust (the "Trust"), the amounts allocated to which
and the earnings thereon shall be used to satisfy the obligations of the Company
under such agreements (the "Obligations"). The Trust will be a "grantor trust"
for state and federal income tax purposes, and the assets of the Trust shall at
all times be subject to the claims of the general creditors of the Company.
The amount of compensation to be deferred by each participating Eligible
Employee or Board Member (individually, a "Participant" and collectively, the
"Participants") will be determined in accordance with the Plan based on
elections by each Participant. Each Obligation will be payable on a date or
dates selected by each Participant at the time of enrollment. The Obligations
will be indexed to two or more investment funds selected by the Benefits Plan
Committee (the "Committee") appointed by the Board of Directors to administer
the Plan, and such selected investment funds may vary from time to time, but in
no event more frequently than quarterly. A Participant may select his or her
investment options for new deferrals or contributions once per calendar quarter
to become effective as of the first day of the following quarter. Each
Participant's Obligation will be adjusted to reflect the positive or negative
investment result of the selected investment option. Additionally, any balance
in a deferred compensation account that existed prior to the effective date of
the amended and restated Plan shall be credited quarterly to reflect interest
earned on the deferral in an amount determined by
2
<PAGE>
the Committee; provided, however, that Participants may elect to have earnings
and losses on such accounts credited as a new deferral or contribution.
A Participant's right or the right of any other person to the Obligations
is not subject to option nor assignable by voluntary or involuntary assignment
or by operation, including without limitation to bankruptcy, garnishment,
attachment or other creditor's process.
The Obligations are not subject to redemption, in whole or in part, prior
to the distribution dates specified by each Participant without application to
the Committee, and any adjustment thereto shall be determined at the sole
discretion of the Committee. A ten percent (10%) penalty will be assessed for
any such adjustment, other than adjustments made in the event of a Participant's
Total Disability or Unforeseeable Emergency, as defined in the Plan. The
Registrant reserves the right to amend or terminate the Plan at any time;
provided, however, that no such action shall reduce a Participant's account
under the Plan without the Participant's written consent.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware, as
amended, provides that under certain circumstances a corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was a director, officer, employee or agent of the Company or is or was
serving at its request in such capacity in another corporation or business
association, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Section 11 of the Restated Certificate of Incorporation of the Registrant
provides in effect that, subject to certain limited exceptions, the Registrant
shall indemnify its directors and officers to the extent authorized or permitted
by the General Corporation Law of the State of Delaware. The directors and
officers of the Registrant are insured under policies of insurance maintained by
the Company, subject to the limits of the policies, against certain losses
arising from any claims made against them by reason of being or having been such
directors or officers. Like indemnification and insurance is also provided to
those employees of the Registrant who serve as administrators of the Plan. In
addition, the Company has entered into contracts with all of its directors
providing for indemnification of such persons by the Registrant to the full
extent authorized or permitted by law, subject to certain limited exceptions.
3
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Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Number Document
------ --------
4.1 Sun Microsystems, Inc. U.S. Non-Qualified Deferred
Compensation Plan, as amended and restated effective October
1, 1997.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, with respect to the legality of the 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 6).
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
4
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securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Sun Microsystems, Inc., 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 Palo Alto, State of California, on August 28,
1997.
Sun Microsystems, Inc.
By: /s/ Michael E. Lehman
--------------------------------
Michael E. Lehman
Vice President and Chief
Financial Officer
5
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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 or her attorneys-in-fact, each with the power of
substitution, for him or her 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 con nection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitute or substitutes, may do or cause to
be done by virtue hereof.
<TABLE>
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.
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
/s/ Scott G. McNealy Chairman of the Board of Directors, August 28, 1997
- ------------------------------- President and Chief Executive
Scott G. McNealy Officer (Principal Executive Officer)
/s/Michael E. Lehman Vice President and Chief Financial August 28, 1997
- ------------------------------- Officer (Principal Financial Officer)
Michael E. Lehman
/s/ George Reyes Vice President and Controller August 28, 1997
- ------------------------------- (Principal Accounting Officer)
George Reyes
/s/ L. John Doerr Director August 28, 1997
- -------------------------------
L. John Doerr
/s/ Judith L. Estrin Director August 28, 1997
- -------------------------------
Judith L. Estrin
/s/ Robert J. Fisher Director August 28, 1997
- -------------------------------
Robert J. Fisher
/s/ Robert L. Long Director August 28, 1997
- -------------------------------
Robert L. Long
/s/ M. Kenneth Oshman Director August 28, 1997
- -------------------------------
M. Kenneth Oshman
/s/ A. Michael Spence Director August 28, 1997
- -------------------------------
A. Michael Spence
</TABLE>
6
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
EXHIBITS
- --------------------------------------------------------------------------------
Registration Statement on Form S-8
Sun Microsystems, Inc.
August 29, 1997
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
------ -----------
4.1 Sun Microsystems, Inc. U.S. Non-Qualified Deferred
Compensation Plan, as amended and restated effective October
1, 1997.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, with respect to 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 6).
EXHIBIT 4.1
SUN MICROSYSTEMS, INC.
U.S. NON-QUALIFIED DEFERRED COMPENSATION PLAN
<PAGE>
SUN MICROSYSTEMS, INC.
U.S.
NON-QUALIFIED DEFERRED
COMPENSATION PLAN
(As Amended and Restated Effective October 1, 1997)
<PAGE>
TABLE OF CONTENTS
Page
----
1. Purpose.................................................................2
2. Definitions.............................................................2
3. Eligibility.............................................................4
4. Election to Participate in Plan.........................................5
5. Accounts................................................................5
6. Deferral Increments and Growth..........................................5
7. Earnings or Losses on Accounts..........................................6
8. Certain Account Distributions After Completion of
Two Years of Plan Participation.........................................6
9. Statements..............................................................6
10. Form and Time of Payment of Accounts....................................7
11. Effect of Death of Participant..........................................7
12. General Duties of Trustee...............................................8
13. Withholding Taxes:......................................................9
14. Participant's Unsecured Rights..........................................9
15. Non-assignability of Interests..........................................9
16. Limitation of Rights....................................................9
17. Administration of the Plan..............................................9
18. Amendment or Termination of the Plan....................................9
19. Choice of Law and Claims Procedure.....................................10
20. Execution and Signature................................................11
<PAGE>
SUN MICROSYSTEMS, INC.
U.S. NON-QUALIFIED DEFERRED COMPENSATION PLAN
The Sun Microsystems, Inc. U.S. Non-Qualified Deferred Compensation Plan
(the "Plan"), effective July 1, 1995, is hereby amended and restated in its
entirety effective as of October 1, 1997 by Sun Microsystems, Inc. (the
"Company"), acting on behalf of itself and its designated subsidiaries.
Throughout, the term "Company" shall include wherever relevant any entity that
is directly or indirectly controlled by the Company or any entity in which the
Company has a significant equity or investment interest, as determined by the
Company.
RECITALS
1. The Company maintains the Plan, a deferred compensation plan for the
benefit of a select group of management or highly compensated employees of the
Company as well as members of the Company's Board of Directors.
2. Under the Plan, the Company is obligated to pay vested accrued benefits
to Plan participants and their beneficiary or beneficiaries ("Plan
Beneficiaries") from the Company's general assets.
3. The Company intends to enter into an agreement (the "Trust Agreement")
with a person or persons, including an entity, who shall serve as trustee (the
"Trustee") under an irrevocable trust, to be used in connection with the Plan.
4. The Company intends to make contributions to the Trust so that such
contributions will be held by the Trust and invested, reinvested and
distribution, all in accordance with this Plan and the Trust Agreement.
5. The Company intends that amounts allocated to the Trust and the earnings
thereon shall be used by the Trustee to satisfy the liabilities of the Company
under the Plan with respect to each Plan participant for whom an Account has
been established and such utilization shall be in accordance with the procedures
set forth herein.
6. The Company intends that the Trust be a "grantor trust" with the
principal and income of the Trust treated as assets and income of the Company
for federal and state income tax purposes.
7. The Company intends that the assets of the Trust shall at all times be
subject to the claims of the general creditors of the Company as provided in the
Trust Agreement.
<PAGE>
8. The Company intends that the existence of the Trust shall not alter the
characterization of the Plan as "unfunded" for purposes of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and shall not be
construed to provide income to Plan participants under the Plan prior to actual
payment of the vested accrued benefits hereunder.
NOW THEREFORE, the Company does hereby adopt this amended and restated Plan
as follows and does also hereby agree that the Plan shall be structured, held
and disposed of as follows:
1. Purpose: The Plan provides Participants an opportunity to defer payment of
a portion of:
o Employee salary and incentive bonus/commissions (for Sales Vice
Presidents and Directors);
o Employee annual bonus awards; and
o Board of Directors fees.
2. Definitions:
(a) Account means a bookkeeping account established pursuant to Section
5(a) for Compensation that is subject to a Participant's deferral election.
(b) Beneficiary means the person or persons designated by the Participant
or by the Plan under Section 11(b) to receive payment of the Participant's
Account in the event of the Participant's death.
(c) Board means the Board of Directors of the Company, as constituted from
time to time.
(d) Committee means the Benefits Plan Committee, appointed by the Board
from time to time.
(e) Company means Sun Microsystems, Inc.
(f) Compensation means:
(i) The amount of the Eligible Employee's base salary paid by the
Company or one of its subsidiaries; and
(ii) The amount paid by the Company or one of its subsidiaries to an
Eligible Employee as an annual corporate bonus award and any other
bonus/incentive award that is approved by the Committee as earnings that can be
deferred under the Plan (some incentive/bonus awards will not be eligible for
deferral); and
(iii) for Sales Vice Presidents and Directors, commissions; and
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(iv) In the case of an Eligible Board Member, the amount of his or her
director's fees from the Company, which includes only retainer payments.
Compensation does not include directors' expense reimbursements or meeting fees.
(g) Election Period means:
(i) Generally June of each year; and
(ii) For newly hired vice presidents, at the sole discretion of the
Benefits Plan Committee, may be eligible to enroll within thirty (30) days of
hire.
(iii) With respect to the Plan Restatement, September, 1997.
(h) Eligible Board Member means a member of the Board (other than a member
who is also an Eligible Employee).
(i) Eligible Employee means an officer of the Company or other common-law
employee of the Company or one of its subsidiaries who is designated under
Section 3.
(j) Participant means an Eligible Board Member or an Eligible Employee who
has elected to defer Compensation.
(k) Plan means this Sun Microsystems, Inc. U.S. Non-Qualified Deferred
Compensation Plan, as amended from time to time.
(l) Plan Restatement means the amendment and restatement of the Plan as
approved by the Board on August 13, 1997.
(m) Plan Restatement Effective Date means October 1, 1997.
(n) Retirement Date means the first day of the month coinciding with or
next day following the Participant's termination of employment following the
earlier of his or her:
(i) 65th birthday,
(ii) 60th birthday if the Participant has 5 years of Service,
(iii) 55th birthday it the Participant has 10 years of Service; or
(iv) 20th year anniversary of Service.
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(o) Service means:
(i) Employment as a common-law employee of the Company or one of its
subsidiaries; or
(ii) Period serving as an elected Board Member.
A Participant's Service shall be determined by the Committee in its sole
discretion.
(p) Total Disability means that the Participant is unable to engage in any
substantial gainful activity by reason of a medically determinable physical or
mental impairment which may result in Participant's death, or condition which
lasts, or may last, a continuous period of not less than twelve consecutive
months. Total Disability shall be determined by the Committee in its sole
discretion.
(q) Unforeseeable Emergency means a severe financial hardship to the
Participant resulting from:
(i) Sudden or unexpected illness or accident of either the Participant
or dependent of same, or
(ii) Loss of the Participant's property due to casualty or other
extraordinary and unforeseeable circumstances beyond the control of the
Participant.
Hardship shall not constitute an unforeseeable Emergency under the Plan to
the extent that it is, or may be, relieved by:
(i) Reimbursement or compensation, by insurance or otherwise;
(ii) Liquidation of the Participant's assets to the extent that the
liquidation of such assets would not itself cause severe financial hardship.
An Unforeseeable Emergency under the Plan does not include:
(i) Sending a child to college; or
(ii) Purchasing a home, per Rev. Proc. 95-64.
(r) Year means a calendar year unless otherwise noted.
3. Eligibility: Participation in the Plan is limited to Eligible Board
Members, and Eligible Employees, who are eligible to participate in the Plan if:
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(a) He or she is subject only to U.S. income taxes for the year in which
the deferral is effective; and
(b) He or she is an officer, or his or her position is approved as a
director level, or higher; or
(c) He or she has been designated expressly as an Eligible Employee by the
Committee.
If a Participant receives a distribution described in Section 10(c), the
Participant shall be ineligible to participate in the Plan for the balance of
the Plan Year in which the distribution occurs and the following Plan Year.
4. Election to Participate in Plan:
(a) Deferral Election. A Participant may elect to participate in the Plan
by filing a written "Deferred Compensation Election Form" with the Company
during any Election Period. Such election applies to applicable Compensation
paid in payroll periods commencing after the close of the Election Period. A new
election must be made for each Election Period. The Participant shall specify
any amount greater than or equal to the minimum deferral as described in Section
6(a). This can be expressed as a fixed dollar amount or as a percentage.
(b) Election Form. All deferral elections under this Section 4 shall be
made in a manner prescribed for this purpose by the Committee.
5. Accounts:
(a) Establishment of Account. The Company shall establish an Account for
each Participant who duly files a Deferred Compensation Election Form.
(b) Credits to Account. A Participant's Account shall be credited with an
amount equal to the percentage of each Compensation payment which would have
been payable currently to the Participant but for the terms of the Deferred
Compensation Election Form. Deferred Compensation for Participants shall be
credited to the Participant's Account as of the first day of the month in which
such deferred amounts would otherwise be paid to the Participant.
(c) Vesting. Participants shall at all times be 100% vested in their
deferrals under the Plan and all earnings allocable thereto.
6. Deferral Increments and Growth:
(a) The minimum deferral per year will be determined by the Committee.
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(b) The Participant who is an Eligible Employee may elect to defer (less
any withholding requirements)
(i) Up to 100% of any eligible annual bonus award
(ii) Up to 80% of base salary and incentive awards/commissions
(c) The Participant who is an Eligible Board Member may elect to defer
(less any withholding requirements), up to 100% of their retainer payments (to
be credited to the account quarterly).
7. Earnings or Losses on Accounts:
(a) General Rule. Subject to Section 7(c) below, the amount in a
Participant's Account shall be adjusted for gain or loss on the last day of each
month based on the performance of the investment options selected by the
Participant in accordance with Section 7(b). Gain or loss shall be computed as
if all amounts credited to the Account pursuant to Section 5(b) were credited as
of the first day of the month, and all amounts withdrawn from the Account were
withdrawn on the first day of the month.
(b) Designation of Investment Indices by the Committee. The Committee shall
specify two or more investment funds that shall serve as indices for the
investment performance of amounts credited to the Accounts. Accounts shall be
adjusted to reflect the gain or loss, net of any allocable costs or expenses,
such accounts would experience had they actually been invested in the specified
funds at the relevant times. The Committee may vary the available investment
funds from time to time, but not more frequently than quarterly. Subject to
Section 7(c), a participant may select his or her investment options for new
deferrals and contributions, or for amounts already credited to his or her
Account, once per calendar quarter effective as of the first day of the
following quarter using such form or forms as the Committee may specify.
(c) Pre-Plan Restatement Accounts. Notwithstanding anything in this Section
7 to the contrary, the balance in each Account as of the Plan Restatement Date
shall be credited quarterly to reflect interest earned on the deferral in an
amount determined by the Committee; provided, however, that Participants may
elect to have earnings and losses on such Accounts credited instead in
accordance with Section 7(a) and (b) after the Plan Restatement Date. Any such
election shall be made prior to the Plan Restatement Date in such form and
subject to such other terms and conditions as the Committee shall specify.
8. Certain In-Service Account Distributions.
(a) After Completion of Two Years of Plan Participation. Each Participant
may elect in his or her Deferred Compensation Election Form to have one or more
distributions of a specified percentage or dollar amount of his or her Account,
not more frequently than once in a Plan Year, commencing in his or her third
year of participation, provided that the Participant has not terminated his or
her Service
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<PAGE>
with the Company. A Participant may delay once or cancel such distribution at
any time prior to the date which is one year prior to the calendar year in which
the originally scheduled distribution would take place, but such election is
otherwise irrevocable.
(b) Previously Scheduled In-Service Distributions. Elections in effect
prior to the Plan Restatement Date for in-service distributions prior to January
1, 2000 shall remain in full force and effect.
9. Statements: Quarterly, and/or at intervals determined by the Committee, the
Company shall prepare and deliver to each Participant a statement listing the
amount credited to such Account as of the applicable date.
10. Form and Time of Payment of Accounts:
(a) Timing and Method of Distribution of Accounts. In the event of a
Participant's termination of Service on or after his or her Retirement Date,
distribution of the value of the Participant's Account balance shall be made as
soon as practicable after such termination consistent with the form of
distribution specified on the Participant's Deferred Compensation Election Form.
Available forms shall include either a lump sum payment or a series of
installments. Accounts subject to installment payouts shall continue to be
adjusted for gains or losses in the same manner as active Accounts.
Notwithstanding the foregoing, the Participant who is receiving an installment
payout on or after his or her Retirement Date may request a lump sum
distribution of such Participant's Account. Any such lump sum distribution shall
be at the sole discretion of the Committee, and shall be reduced by a penalty
equal to ten percent (10%) of the amount otherwise distributable, which penalty
shall be forfeited to the Company. A Participant may modify his or her elected
form of distribution (i.e., lump sum or installments) at any time prior to the
date that is three years before his or her first post-employment distribution.
If a Participant modifies his or her elected form of distribution but his or her
first post- employment distribution is less than three years following the date
of the modification election, his or her prior elected form of distribution
shall apply.
If the Participant terminates his or her service with the Company prior to
his or her Retirement Date, (other than on account of death), he or she shall
receive the value of his or her Account in one lump sum payment as soon as
practicable after such termination.
If a Participant elects a distribution date prior to termination of
Service, the distribution will be paid as soon as reasonably practicable in a
lump sum after such distribution date.
(b) Disability or Emergency. In the event of Participant's Total Disability
or Unforeseeable Emergency, and upon application by such Participant, the
Committee may determine at its sole discretion that payment of all, or part, of
such participant's Account shall be made in a different manner, or on an earlier
date than the time or times specified in Subsection (a) above. Payments due to
Participant's Total Disability or Unforeseeable Emergency shall be permitted
only to the extent reasonably required to satisfy the Participant's need.
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<PAGE>
(c) Early Distribution Penalty. Upon application by a Participant, the
Committee may determine at its sole discretion that payments from such
Participant's Account shall be made in a different manner, or on an earlier date
than the time or times specified in Subsection (a) above. All distributions
under this Subsection (c) shall be reduced by a penalty equal to 10 percent
(10%) of the amount otherwise distributable. The penalty is forfeited to the
Company. A Participant who receives a distribution under this Subsection (c) is
ineligible to participate in the Plan for the balance of the Plan Year in which
the distribution occurs and the following Plan Year.
11. Effect of Death of Participant:
(a) Distributions. In the event of a Participant's death while an Eligible
Employee or Eligible Board Member (except in the case of a Participant's suicide
during the first two years of their participation in the Plan), the
Participant's Account balance, together with an amount equal to two times the
sum of (i) the Participant's actual deferrals under the Plan after the Plan
Restatement Effective Date (exclusive of earnings), plus (ii) the Participant's
actual deferrals under the Plan before the Plan Restatement Effective Date
(exclusive of earnings) to the extent such deferrals are scheduled to be
distributed on or after January 1, 2000, shall be distributed to the
Participant's Beneficiary. In the event of (i) a Participant's death while no
longer an Eligible Employee or Eligible Board Member (as applicable), or (ii) a
Participant's suicide during the first two years of their participation in the
Plan, the Account balance, if any, shall be distributed to the Participant's
Beneficiary. Any distributions pursuant to this paragraph shall be made to the
Beneficiary in three annual installments or, at the request of the Beneficiary
and subject to the Committee's approval, in a single lump sum, commencing in
either case as soon as reasonably practicable after the Participant's death. If
installment payments are made, the remaining account balance (during the period
of the installment payouts) shall cease to be credited with earnings on the
investment chosen by the deceased Participant, and instead shall be credited
with earnings based on a fixed rate of interest.
(b) Beneficiary Designation. Upon enrollment in the Plan, each Participant
shall file a prescribed form with the Company naming a person or persons as the
Beneficiary who will receive distributions payable under the Plan in the event
of the Participant's death. If the Participant does not name a Beneficiary, or
if none of the named Beneficiaries is living at the time payment is due, then
the Beneficiary shall be:
(i) The spouse of the deceased Participant; or
(ii) The living children of the deceased participant, in equal shares,
if no spouse of the Participant is living; or
(iii) The estate of the Participant if neither spouse nor children of
Participant are living.
The Participant may change the designation of a Beneficiary at any time in
accordance with procedures established by the Committee. Designations of a
Beneficiary, or an amendment or revocation
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<PAGE>
thereof, shall be effective only if made in the prescribed manner and received
by the Company prior to the Participant's death.
12. General Duties of Trustee:
(a) Trustee Duties. The Trustee shall manage, invest and reinvest the Trust
Fund as provided in the Trust Agreement. The Trustee shall collect the income on
the Trust Fund, and make distributions therefrom, all as provided in this Plan
and in the Trust Agreement.
(b) Company Contributions. While the Plan remains in effect, the Company
shall make contributions to the Trust Fund at least once each year. As soon as
practicable after the close of each calendar year, the Company shall make an
additional contribution to the Trust Fund to the extent that previous
contributions to the Trust Fund for the current calendar year are less than
total future liabilities (other than death benefits) created with respect to
Participants' Accounts as of the close of the current calendar year; provided
that, for 1997, contributions to the Trust Fund need only be sufficient based on
future liabilities created with respect to Participants' Accounts on and after
the Plan Restatement Effective Date. The Trustee shall not be liable for any
failure by the Company to provide contributions sufficient to pay all accrued
benefits under the Plan in accordance with the terms of this Plan.
13. Withholding Taxes: All distributions under the Plan shall be subject to
reduction in order to reflect withholding tax obligations imposed by law.
14. Participant's Unsecured Rights: The Account of any Participant, and such
Participant's right to receive distributions from his or her Account, shall be
considered an unsecured claim against the general assists of the Company; such
Accounts are unfunded bookkeeping entries. The Company considers the Plan to be
unfunded for tax purposes and for purposes of Title I of ERISA. No Participant
shall have an interest in, or make claim against, any specified asset of the
Company pursuant to the Plan.
15. Non-assignability of Interests: The interest of a Participant under the
Plan is not subject to option nor assignable by either voluntary or involuntary
assignment or by operation of law, including without limitation to: bankruptcy,
garnishment, attachment or other creditor's process. Any act in violation of
this Section 15 shall make the Plan void.
16. Limitation of Rights:
(a) Bonuses. Nothing in this Plan shall be construed to give any Eligible
Employee any right to be granted a bonus award.
(b) Employment Rights. Neither the Plan nor deferral of any Compensation,
nor any other action taken pursuant to the Plan, shall constitute, or be
evidence of, any agreement or understanding, express or implied, that the
Company or any of its subsidiaries will employ an Eligible Employee for any
period of time, in any position at any particular rate of compensation. The
Company and its
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<PAGE>
subsidiaries reserve the right to terminate an Eligible Employee's Service at
any time for any reason, except as otherwise expressly provided in a written
employment agreement.
17. Administration of the Plan: The Plan shall be administered by the
Committee. The Committee shall have full power and authority to administer,
interpret, establish procedures for administering the Plan, prescribe forms, and
take any and all necessary actions in connection with the Plan. The Committee's
interpretation and construction of the Plan shall be conclusive and binding on
all persons. The Committee may appoint a plan administrator or any other agent
and delegate to them such powers and duties in connection with the
administration of the Plan as the Committee may from time to time prescribe. In
the event that any Participants are found to be ineligible, that is, not members
of a select group of management or highly compensated employees, according to a
determination made by the U.S. Department of Labor, the Committee shall take
whatever steps it deems necessary, in its sole discretion, to equitably protect
the interests of the affected Participants.
18. Amendment or Termination of the Plan: The Board may amend, suspend, or
terminate the Plan at any time; provided, however, that no such action shall
reduce a Participant's Account under the Plan without the Participant's written
consent. In the event of termination of the Plan, the Accounts of Participants
shall continue to be credited with earnings until distributed pursuant to
Section 10, unless the Board prescribes an earlier time or different manner for
the payment of such Accounts. Without limiting the generality of the foregoing,
termination of the Plan following Change in Control shall constitute an event
giving rise to distribution of Accounts. In such event, the Company shall pay
all Account balances in a lump sum or in annual installments over three years
(with earnings), in its discretion, to Participants and Beneficiaries of
deceased Participants; and all deferrals and payment of benefits except as
provided above shall cease. For purposes of this Plan, the term "Change in
Control" shall mean the purchase or acquisition by any person, entity or group
of persons, within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "Act"), or any comparable successor
provisions, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Act) of 30% or more of either the outstanding shares of
common stock or the combined voting power of the Company's then outstanding
voting securities entitled to vote generally, where the approval by the
stockholders of the Company or a reorganization, merger or consolidation, in
each case with respect to which persons who are stockholders of the Company
immediately prior to such reorganization, merger or consolidation do not,
immediately thereafter, own more than 50% of the combined voting power entitled
to vote generally in the election of directors of the reorganized, merged or
consolidated Company's then outstanding securities, or a liquidation or
dissolution of the Company or of the sale of all or substantially all of the
Company's assets.
19. Choice of Law and Claims Procedure:
(a) Choice of Law. The validity, interpretation, construction and
performance of the Plan shall be governed by ERISA, and, to the extent that they
are not preempted, by the laws of the State of California, excluding
California's choice-of-law provisions.
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<PAGE>
(b) Claims and Review Procedure. In accordance with the regulations of the
U.S. Secretary of Labor, the Committee shall:
(i) Provide adequate notice in writing to any Participant or
Beneficiary whose claim for benefits under the Plan has been denied. Specific
reasons for such denial must be presented in a clear and precise manner intended
to be easily understood by such Participant or Beneficiary, and
(ii) Afford a reasonable opportunity for a full and fair
review before the Board to any Participant or Beneficiary whose claim for
benefits has been denied.
20. Execution and Signature: To record the adoption of the Plan by the Board,
the Company has caused its duly authorized officer to affix the corporate name
hereto:
SUN MICROSYSTEMS, INC.
By:__________________________________
Authorized Company Officer
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EXHIBIT 5.1
OPINION OF COUNSEL
<PAGE>
August 28, 1997
Sun Microsystems, Inc.
901 San Antonio Road
Palo Alto, CA 94303
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to Sun Microsystems, Inc., a Delaware corporation
(the "Company" or "you") and have examined the Registration Statement on Form
S-8 (the "Registration Statement") to be filed by the Company with the
Securities and Exchange Commission on or about August 29, 1997 in connection
with the registration under the Securities Act of 1933, as amended (the "1933
Act") of the Sun Microsystems, Inc. U.S. Non-Qualified Deferred Compensation
Plan ( the "Plan") valued at $20,000,000. The Plan represents unsecured
obligations of the Company to pay deferred compensation in the future in
accordance with the terms of the Plan (the "Deferred Compensation Obligations").
As your legal counsel, we have examined the Restated Certificate of
Incorporation and Bylaws of the Company, the Plan and such other documents of
the Company as we have deemed necessary or appropriate for the purposes of the
opinion expressed herein, and are familiar with the proceedings proposed to be
taken by you in connection with the operation and administration of the Plan and
the obligations of the Company under the terms of the Plan.
Based upon the foregoing, it is our opinion that, upon completion of the
actions being taken, or contemplated by us as your counsel to be taken by you in
administering the Plan, the Deferred Compensation Obligations will be valid and
binding obligations of the Company, enforceable in accordance with their terms,
except as enforcement thereof may be limited by bankruptcy, garnishment or other
creditor's process.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement and any subsequent amendment thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ Wilson Sonsini Goodrich & Rosati
EXHIBIT 23.1
CONSENT OF COUNSEL
(Contained in Exhibit 5.1)
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
<PAGE>
Exhibit 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the Sun Microsystems, Inc. U.S. Non-Qualified Deferred
Compensation Plan of our reports dated July 16, 1996, 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, 1996 and
the related financial statement schedule included therein, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
August 26, 1997
Palo Alto, California
EXHIBIT 24.1
POWER OF ATTORNEY
(See Page II-5)
