September 8, 2004

   EXHIBIT 10.106

 

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Dear Mark:

 

This letter confirms our agreement around the changes in your employment with
Sun Microsystems, Inc. For ease of reference, this letter will be referred to as
the “Separation Agreement”.

 

1. May 31, 2004 through September 30, 2004 will be your notification period.
During this time, you will perform transition activities. You will remain at
your current salary, and you will remain eligible for the FY04 SMI bonus (bonus
payout depending upon the results of the plan). As a practical matter, your
liaison for administrative issues such as travel expense reports, etc., will be
Jonathan Schwartz.

 

2. For the period from May 31, 2004 through September 30, 2004 you will continue
to receive coverage under Sun’s flexible benefits policies.

 

3. On September 30, 2004, your employment with Sun will terminate. You will
receive your final paycheck and payment for any accrued and unused vacation. If
you have nonqualified stock options, you will have 90 days to exercise the
vested portion of your stock option after termination, as stated in your stock
option agreement, under Sun’s 1990 Long Term Equity Incentive Plan.

 

4. If you sign and do not revoke the enclosed Release & Waiver Agreement, upon
termination of employment, agreed as September 30, 2004, you will receive:

 

  • A lump sum payment equal to six and one-half (6.5) months of base salary,
and

 

  • A lump sum payment equal to six and one-half (6.5) months of COBRA premiums
you would have to pay to continue your current Sun medical and dental coverage,
grossed up to cover payroll taxes.

 

5. Sun will accelerate the remaining vesting for your restricted stock award
granted on April 12, 2000 and currently scheduled to vest on April 12, 2005. The
grant will now be fully vested as of August 31, 2004.

 

6. You are eligible for career assistance through an organization selected by
Sun for a total of 39 weeks. Should you decide to utilize these services, please
contact me to initiate the service.

 

7. You will be subject to the Employee Proprietary Information Agreement you
signed at hire, as well as the policies applicable to employees generally,
including Sun’s Standards of Business Conduct. Both the Employee Proprietary
Information Agreement and the

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  Standards of Business Conduct prohibit employees from engaging in other
employment which constitutes a conflict of interest with their employment at the
Company. To avoid such a conflict, in the event you desire to work elsewhere in
any capacity prior to your termination date, whether as an employee, contractor
or consultant, you must notify me and obtain my written consent in advance of
commencement of any such work. Any such outside work, if approved, can be for no
more than half-time status. Should you commence such outside work without
advance disclosure and my consent, or if you perform such outside work on more
than half-time status, you will be considered as having voluntarily terminated
your employment effective on the date such work commences. In such case this
agreement will be null and void as of such date and Sun will have no obligation
to provide or allow the things mentioned in this agreement. Upon termination you
will have 90 days to exercise any vested options.

 

8. Should Sun decide to terminate your employment prior to September 30, 2004,
you will still be entitled to the compensation and benefits stated herein.

 

9. Sun shall continue to honor its indemnification obligations under Article VI
of its bylaws in the event you are made a party or are threatened to be made a
party to any threatened, pending or completed action, suit or proceeding by
reason of the fact that you were an Agent (as defined in Section 6.1 of the
bylaws) of Sun. In the event we require your assistance in the future in
connection with any action, suit, proceeding or investigation brought against
Sun, we will reimburse your reasonable expenses.

 

10. The terms set forth in this letter constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.

 

11. To receive the benefits stated in this Separation Agreement, please confirm
your receipt of this document by signing below, and by signing and returning the
attached Release and Waiver within 45 days.

 

Do not hesitate to contact me with any questions.

 

Sincerely,

 

/s/ Crawford Beveridge

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Crawford Beveridge

Executive Vice President, People and Places, and Chief Human Resources Officer

 

I agree with the above terms:

 

/s/ Mark Tolliver

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Mark E. Tolliver

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RELEASE AND WAIVER AGREEMENT

 

This Release and Waiver Agreement (“Agreement”) is made by Mark E. Tolliver
(“Employee”) for the benefit of Sun Microsystems, Inc., and its former and
current subsidiaries, affiliates, employees, officers and directors, agents,
successors and assigns (collectively, “Sun”).

 

1. In exchange for the releases and waivers described below, Sun agrees to pay
and treat the Employee in the manner stated in the Separation Agreement letter
which is attached and incorporated in this agreement (together referred to as
“Agreement”). Payments made will be less deductions for and withholding of any
amounts required by federal, state and local laws to be withheld, whether as
taxes or otherwise. The Severance Payment and Severance COBRA Payment provided
under this Agreement are payments and benefits to which Employee would not
otherwise be entitled, now or in the future, and are valuable consideration for
the promises and undertakings set forth in this Agreement.

 

2. In consideration of the payment and benefits detailed above, Employee, and
Employee’s representatives, successors, and assigns willingly and voluntarily
release and forever discharge Sun of and from all claims, demands, and causes of
action, whether known or unknown, arising out of or in any way connected with
the employment or termination of the employment of Employee by Sun, including
but not limited to, all “wrongful discharge” claims, claims for commissions
owed, and any claims relating to any contracts of employment, express or
implied, any covenant of good faith and fair dealing, express or implied, any
tort of any nature, claims under the California Fair Employment and Housing Act,
the Age Discrimination in Employment Act of 1967, Title VII of the Civil Rights
Act of 1964, the Americans with Disabilities Act, the Employee Retirement Income
Security Act (“ERISA”), as those laws have been amended from time to time, and
any other state or federal law, rule, regulation, public policy or ordinance,
and any and all claims for attorneys fees and costs, based on any decision or
action by Sun which occurred on or before the date Employee signed this
Agreement.

 

3. Employee represents to Sun that he has been provided with at least forty-five
(45) days from the date he received this Agreement within which to consider
whether to enter into this Agreement and to consult with legal counsel with
respect to this Agreement. Employee further represents that he has knowingly and
voluntarily executed this Agreement on a date after the date of his termination
from Sun.

 

4. Employee has read and expressly waives the provisions of Section 1542 of the
California Civil Code, which states:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

or any analogous provisions under the laws of any other state. Employee
understands that section 1542, and any other analogous laws, give him the right
not to release existing claims of which he is not now aware, unless he
voluntarily chooses to waive this right. By signing this Agreement, Employee
voluntarily waives that right.

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5. This Agreement shall not affect any rights Employee may have with respect to
any applicable Worker’s Compensation or Unemployment Insurance claims or rights,
if any, and those Sun employee benefit plan benefits which have accrued and
vested as of the Effective Date and which, by their express terms, survive any
termination of employment.

 

6. Effective May 31, 2004, Employee will cease to have the title or to perform
the duties of Vice-President of Sun, and will have no authority to bind Sun in
any manner from now until termination of employment. Employee understands and
agrees that, as a condition of this Agreement, he shall not be entitled to any
employment with Sun, its subsidiaries, or any successor, and s/he hereby waives
any right, or alleged right, of employment or re-employment with Sun. If
Employee is transferred into a regular position at Sun prior to the termination
date set forth in the Separation Agreement, and hence, not terminated, this
Agreement is voided and no further payment or benefits, whether as notification
pay, Employment Transition Services, Severance Payment, or Severance COBRA
Payment will be made under this Agreement. Moreover, in the event Employee is
rehired by Sun prior to the expiration of the length of time upon which the
Severance Payment he has received was calculated he may, at Sun’s option, be
required to repay an amount of that Severance Payment proportional to the
unexpired period of time.

 

7. If after the Employee’s termination, it is determined by any governmental
agency or court that the termination was subject to state and/or federal WARN
(Worker Adjustment and Retraining Notification) Act requirements, Employee
agrees that the notification period he has received, including any lump sum
payment for the notification period, fulfill the 60 day notice requirement under
the WARN Act and any analogous state laws.

 

8. While on the payroll of Sun, Employee will continue to be bound by policies
applicable to employees generally, including Sun’s Standards of Business
Conduct. The Standards of Business Conduct prohibit employees from engaging in
other employment which constitutes a conflict of interest with their employment
at Sun. To avoid such a conflict, in the event Employee desires to enter into
employment elsewhere in any capacity while employed by Sun, whether as an
employee, contractor or consultant, Employee must notify the Company and receive
consent in advance of commencement of any such work. The process for
notification and consent is set forth in Sun’s Standards of Business Conduct. At
any time Employee may voluntarily terminate employment with Sun by giving
written notice of resignation to his or her manager, in which case the parties’
commitments and obligations under this agreement will immediately end, provided,
however, that Employee’s obligations under the Proprietary Information Agreement
will continue in accordance with its terms.

 

9. The fact of this Agreement and the payment set forth above are not an
admission and do not infer any wrongdoing or liability on the part of Sun.

 

10. Employee acknowledges that he is knowingly and voluntarily waiving and
releasing any rights he may have under the Age Discrimination in Employment Act,
as amended. Employee also acknowledges that the consideration given for this
Release

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and Waiver Agreement is in addition to anything of value to which Employee was
already entitled. Employee further acknowledges that he has been advised by this
writing that: (a) this Agreement does not apply to any rights or claims that may
arise after the date he executes this Agreement; (b) Employee has been advised
hereby that he has the right to, and has been advised to, consult with an
attorney prior to executing this Agreement; (c) he has forty-five (45) days to
consider this Agreement (although he may choose to voluntarily execute this
Agreement earlier); (d) Employee has seven (7) days following his execution of
this Agreement to revoke the Agreement (“Revocation Period”); and (e) this
Agreement will not be effective or enforceable until the date upon which the
Revocation Period has expired, which will be the eighth day after this Agreement
is executed by Employee ( the”Effective Date”), provided that it is executed
after the Employee’s last day of employment at Sun and no revocation of this
Agreement has occurred.

 

11. The offer of this Agreement, the Agreement itself and any payment made are
Sun Proprietary Information. Any disclosure of this information to anyone other
than the Employee’s spouse (including common law spouses and declared domestic
partners), attorneys or accountants, the Equal Employment Opportunity
Commission, state antidiscrimination agencies, other federal and state agencies,
or pursuant to valid subpoena, constitutes a breach of this Agreement. This
information should not be disclosed within Sun, except to those with a genuine
need to know the information.

 

12. Employee acknowledges and represents that in executing this Agreement he
does not rely and has not relied upon any representation or statement made by
Sun, its agents, employees, or representatives, with regard to the subject
matter of this Agreement, which is not expressly addressed in this Agreement.
The Agreement is the entire understanding of the parties on the subjects
covered.

 

14. If a party to this Agreement brings a legal or administrative action,
pursuant to a debt, claim or liability that is hereby released and discharged
and such party does not prevail in such action, then the party bringing such
action shall be liable for and shall reimburse the other party’s reasonable
attorneys fees and costs incurred in defending such action, unless a court of
competent jurisdiction orders otherwise. Nothing in this Agreement prevents or
precludes Employee from challenging or seeking a determination in good faith of
the validity of this Agreement under federal or state antidiscrimination laws,
nor does it impose any condition precedent, penalties, attorneys fees or costs
from doing so, unless specifically authorized by federal or state law.

 

15. Each of the terms of this Agreement apply independently. Should one or more
of them be declared invalid by a court of competent jurisdiction, the rest will
continue in force.

 

16. This Agreement, and any Revocation of this Agreement are not effective until
dated, signed and returned to Sun. They should be sent to:

 

SunDial at Mailstop SJC01-202

4150 Network Circle

Santa Clara, California 95054

 

or faxed to:

 

SunDial at (408) 953-1861

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17. The payment will be made to Employee, at Employee’s home address, after
receipt of the signed Agreement in SunDial, and after the expiration of the
revocation period, provided the Agreement has not been revoked, as soon as
administratively possible in the payroll cycle.

 

EMPLOYEE ACKNOWLEDGES THAT HE HAS BEEN NOTIFIED OF HIS RIGHT TO REVOKE THIS
RELEASE AND WAIVER AGREEMENT AT ANY TIME WITHIN SEVEN (7) DAYS OF THE DATE IT IS
SIGNED. Such revocation must be in writing on the attached Revocation form and
delivered to Sun prior to the expiration of the seven day period set out above.
If Employee revokes, he gives up his rights to the payments described in this
Agreement. Employee has freely and knowingly executed the Agreement on the date
set out below.

 

/s/ Mark Tolliver

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September 8, 2004

Date

Mark E. Tolliver

 

/s/ Crawford Beveridge

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September 8, 2004

Date

for SUN MICROSYSTEMS, INC.

 

 

REVOCATION

 

I hereby revoke my signature on the Agreement with full understanding that by
doing so, Sun will have no obligation to pay me anything or provide me any
benefits under this Agreement. I further understand that this revocation will
only be effective if signed and delivered to Sun within seven (7) calendar days
after I signed the Agreement.

 

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Employee

 

Date

 

If you are revoking this Agreement, please send this document to SunDial at
Mailstop SJC01-202, or to 4150 Network Circle, MS USJC01-202, Santa Clara, CA
95054. You may also fax it to (408) 953-1861.