-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ANZM0AYjkNn9Qa2zheBm7yBTFMQLSp9v+xDhfYIbmxe3mFu4xsg6+X3cD8eSC/Ju 13BPydpL54sDit/4NvlYyQ== 0000950005-97-000738.txt : 19970912 0000950005-97-000738.hdr.sgml : 19970912 ACCESSION NUMBER: 0000950005-97-000738 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19970829 EFFECTIVENESS DATE: 19970829 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUN MICROSYSTEMS INC CENTRAL INDEX KEY: 0000709519 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 942805249 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-34651 FILM NUMBER: 97672866 BUSINESS ADDRESS: STREET 1: 901 SAN ANTONIO ROAD CITY: PALO ALTO STATE: CA ZIP: 94303 BUSINESS PHONE: 4159601300 MAIL ADDRESS: STREET 1: 901 SAN ANTONIO ROAD CITY: PALO ALTO STATE: CA ZIP: 94303 S-8 1 FORM S-8 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 ================================================================================ CALCULATION OF REGISTRATION FEE
======================================================================================================= 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 - ------------------------------------------------------------------------------------------------------- Deferred Compensation $20,000,000 100% $ 20,000,000(2) $ 6,061.00 Obligations(1) - ------------------------------------------------------------------------------------------------------- - -------- (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.
1-A 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 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 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 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 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. 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.
SIGNATURE TITLE DATE - -------------------------------------------------------------------------------------------------- /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
6 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 - -------------------------------------------------------------------------------- EXHIBITS - -------------------------------------------------------------------------------- Registration Statement on Form S-8 Sun Microsystems, Inc. August 29, 1997 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). EX-4.1 2 U.S. NON-QUALIFIED DEFERRED COMPENSATION PLAN EXHIBIT 4.1 SUN MICROSYSTEMS, INC. U.S. NON-QUALIFIED DEFERRED COMPENSATION PLAN SUN MICROSYSTEMS, INC. U.S. NON-QUALIFIED DEFERRED COMPENSATION PLAN (As Amended and Restated Effective October 1, 1997) 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 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. 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 -2- (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. -3- (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: -4- (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. -5- (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 -6- 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. -7- (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 -8- 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 -9- 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. -10- (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 -11- EX-5.1 3 OPINION OF COUNSEL EXHIBIT 5.1 OPINION OF COUNSEL 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 EX-23.1 4 CONSENTS OF COUNSEL EXHIBIT 23.1 CONSENT OF COUNSEL (Contained in Exhibit 5.1) EX-23.2 5 CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23.2 CONSENT OF INDEPENDENT AUDITORS 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 EX-24.1 6 POWER OF ATTORNEY EXHIBIT 24.1 POWER OF ATTORNEY (See Page II-5) -----END PRIVACY-ENHANCED MESSAGE-----