Exhibit 10.1

 

NONSTATUTORY STOCK OPTION AGREEMENT

 

SUN MICROSYSTEMS, INC. (the “Company”), a Delaware corporation, hereby grants
to                            (the “Optionee”) an option to purchase a total of
                    shares of Common Stock (the “Shares”) at the Option Price as
specified on this agreement, and in all respects subject to the terms,
definitions and provisions of the 1990 Long-Term Equity Incentive Plan (the
“Plan”) adopted by the Company, which is incorporated herein by reference. The
terms defined in the Plan shall have the same defined meanings herein.

 

1) NATURE OF THE OPTION

 

This option is intended by the Company and the Optionee to be a nonstatutory
stock option, and does not qualify for any special tax benefits to the Optionee.
This option is not an Incentive Stock Option and is not subject to Section 7(g)
of the Plan.

 

2) OPTION PRICE

 

The Option Price is                     for each share of Common Stock.

 

3) EXERCISE OF OPTION

 

This option shall be exercisable during its term in accordance with the
provisions of Section 7 of the Plan as follows:

 

(i) RIGHT TO EXERCISE

 

(a) Subject to subsections 3(i)(b), (c) and (d), below, this option shall be
exercisable cumulatively, to the extent of 20% of the Shares subject to the
option on or after             (one year after date of grant or if this option
was granted in connection with Optionee becoming an employee of the Company,
then one year after the date of hire or rehire, as the case may be) and to the
extent of an additional 20% of the Shares on each yearly anniversary of such
date thereafter.

 

(b) Notwithstanding subsection 3(i)(a), above, and subject to subsections
3(i)(c), 7 and 8, below, in the event of Optionee’s death or disability, this
option shall be exercisable cumulatively, to the extent of 1.6667% of the Shares
subject to the option on or after one month following the date of grant or date
of hire or rehire, as the case may be and to the extent of an additional 1.6667%
of the Shares on each monthly anniversary of such date thereafter.

 

(c) This option may not be exercised for a fraction of a share.

 

(d) In the event of Optionee’s termination of employment, the exercisability of
the option is governed by Section 6, below.

 

(ii) METHOD OF EXERCISE

 

This option shall be exercisable by written notice which shall state the
election to exercise the option, the number of Shares in respect of which the
option is being exercised, and such other representations and agreements as to
the holder’s investment intent with respect to such shares of Common Stock as
may be required by the Company pursuant to the provisions of the Plan. Such
written notice shall be signed by the Optionee, shall be delivered in person or
by certified mail to the Treasury Department of the Company, and shall be
accompanied by payment of the purchase price.

 

4) METHOD OF PAYMENT

 

Payment of the purchase price shall be by any of the following, or a combination
thereof, at the election of the Optionee: cash, check, or surrender of other
shares of Common Stock of the Company of a value equal to the purchase price of
the shares as to which the option is exercised; or the Optionee may elect to
transact a “same-day sale” - thereby executing a “cashless” option exercise,
provided such a sale does not violate any applicable federal or state laws or
regulations.

 

5) RESTRICTIONS ON EXERCISE

 

This option may not be exercised if the issuance of such shares upon such
exercise would constitute a violation of any applicable federal or state
securities or other law or regulation, including any rule under Regulation G as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
option, the Company may require the Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.

 

6) TERMINATION OF STATUS AS AN EMPLOYEE

 

(i) GENERAL RULE

 

Subject to Sections 6(ii) and 10 below, if Optionee ceases to serve as an
Employee, Optionee may, but only within 90 days after the date Optionee ceases
to be an Employee of the Company, exercise his/her option to the extent that
Optionee was entitled to exercise it at the date of such termination. To the
extent that Optionee was not entitled to exercise the option at the date of such
termination and to the extent Optionee does not exercise the exerciseable
portion of option within the time specified herein, the option shall terminate.

 

(ii) RETIREMENT

 

(a) For purposes of this Agreement the term “retirement” shall mean the
Optionee’s voluntary resignation from the Company: (1) at or after attaining age
55 and

 

(2) with a number of full years of service with the Company that when added to
Optionee’s age (in full years), the sum equals or exceeds 65.

 

(b) Notwithstanding subsection 6(i) above, in the case of an Optionee who is not
in a job classification of director-level or above and who ceases to serve as an
Employee by reason of retirement (as defined above), then for purposes of this
Agreement, the option shall remain outstanding and shall be exercisable as
though the Optionee had remained in Continuous Status as an Employee for twelve
(12) months after the date of retirement. Subject to earlier termination under
Section 10 below, such Optionee may, but only within ninety (90) days after the
end of such twelve (12)-month period, exercise his/her option to the extent that
Optionee was entitled to exercise it at the end of such twelve (12)-month
period. To the extent that Optionee was not entitled to exercise the option at
the end of such twelve (12)-month period and to the extent Optionee does not
exercise the exercisable portion of the option within the time specified herein,
the option shall terminate.

 

(c) Notwithstanding Section 6(i) above, in the case of an Optionee (1) who is in
a job classification of director-level or above, (2) who ceases to serve as an
Employee by reason of retirement (as defined above) and (3) who during the
period beginning on the date of retirement and ending fifteen (15) months
thereafter, does not directly or indirectly solicit, encourage or take any other
action which is intended to induce or encourage, or has the effect of inducing
or encouraging any employee of the Company to terminate his or her employment
with the Company, then, subject to earlier termination under Section 10 below,
for purposes of this Agreement, the option shall remain outstanding and
exerciseable for fifteen (15) months after the date of retirement, to the extent
that Optionee was entitled to exercise it at the date of retirement. To the
extent the Optionee was not entitled to exercise the option on the date of
retirement and to the extent the Optionee does not exercise the exerciseable
portion of the option within the time specified herein, the option shall
terminate. Notwithstanding the foregoing, in the event Optionee breaches the
terms set forth in Section 6(ii)(c)(3), the option shall immediately terminate
and no longer be exerciseable.

 

7) DISABILITY OF OPTIONEE

 

Notwithstanding the provisions of Section 6 above and subject to earlier
termination under Section 10 below, if Optionee is unable to continue his/her
employment relationship with the Company as a result of his/her total and
permanent disability (as defined in Section 22(e)(3) of the Code), Optionee may
exercise his/her option, but only within six (6) months after the date Optionee
ceases to be an Employee of the Company and only to the extent of the right to
exercise that would have accrued in accordance with Section 3(i)(b) hereof had
Optionee remained in Continuous Status as an employee for 12 months after the
date of such termination. To the extent that Optionee was not entitled to
exercise the option at the date of such termination and to the extent that
Optionee does not exercise the exerciseable portion of the option within the
time specified herein, the option shall terminate.

 

8) DEATH OF OPTIONEE

 

Notwithstanding the provisions of Section 6 above and subject to earlier
termination under Section 10 below, in the event of the death of Optionee:

 

(i) during the option period while an Employee of the Company and having been in
Continuous Status as an Employee since the date of grant of the option, the
option may be exercised, at any time within six (6) months following the date of
death, by the Optionee’s estate or by a person who acquired the right to
exercise the option by bequest or inheritance, but only to the extent of the
right to exercise that would have accrued in accordance with Section 3(i)(b)
hereof had the Optionee continued living and remained in Continuous Status as an
Employee for twelve (12) months after the date of death; or (ii) within one (1)
month after the termination of the Optionee’s Continuous Status as an Employee,
the option may be exercised, at any time within six (6) months following the
date of death, by the Optionee’s estate or by a person who acquired the right to
exercise the option by bequest or inheritance, but only to the extent of the
right to exercise that had accrued in accordance with Section 3(i)(b) hereof at
the date of termination. To the extent that Optionee was not entitled to
exercise the option at the date of death (in accordance with the above) and to
the extent that Optionee does not exercise the exerciseable portion of the
option within the time specified herein, the option will terminate.

 

9) NON-TRANSFERABILITY OF OPTION

 

Revised June 2004 – Michael Dillon

Revised April 28, 2005 – Solicitation Language Paul Briones

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This option may not be transferred in any manner otherwise than by will or by
the laws of descent or distribution and may be exercised during the lifetime of
the Optionee only by him. The terms of this option shall be binding upon the
executors, administrators, heirs, successors and assignees of the Optionee.

 

10) TERM OF OPTION

 

This option may not be exercised more than eight (8) years from from the date of
grant of this option, and may be exercised during such term only in accordance
with the Plan and the terms of this option.

 

11) SOLICITATION OF EMPLOYEES

 

Optionee agrees that both while employed by Company and for a period of twelve
(12) months immediately following the termination of his/her employment with
Company, Optionee shall not either directly or indirectly solicit, induce,
recruit or encourage any of the Company’s employees to leave their employment,
either for him/herself or for any other person or entity.

 

12) ADDITIONAL TERMS FOR OPTIONS GRANTED TO EMPLOYEES OUTSIDE THE UNITED STATES

 

If this option is granted to an Employee outside of the United States, then the
option is subject to the following terms in addition to those set forth above:

 

(i) DATA PRIVACY

 

Optionee hereby explicitly and unambiguously consents to the collection, use and
transfer, in electronic or other form, of personal data as described in this
document by and among, as applicable, employer (“Employer”), and Company,
including its subsidiaries and affiliates, for the exclusive purpose of
implementing, administering and managing Optionee’s participation in the Plan.
Optionee understands that the Company and Optionee’s Employer hold certain
personal information, including, but not limited to, Optionee’s name, home
address and telephone number, date of birth, social insurance number or other
identification number, salary, nationality, job title, any shares of stock or
directorships held in the Company, details of all options or any other
entitlement to shares of stock awarded, canceled, exercised, vested, unvested or
outstanding in Optionee’s favor, for the purpose of implementing, administering
and managing the Plan (“Data”). Optionee understands that Data may be
transferred to any third parties assisting in the implementation, administration
and management of the Plan, that these recipients may be located in Optionee’s
country, or elsewhere, and that the recipient’s country may have different data
privacy laws and protections than Optionee’s country. Optionee authorizes the
recipients to receive, possess, use, retain and transfer the Data, in electronic
or other form, for the purposes of implementing, administering and managing
Optionee’s participation in the Plan, including any requisite transfer of such
Data as may be required to a broker or other third party with whom Optionee may
elect to deposit any shares of stock acquired upon exercise of the option.
Optionee understands that Data will be held only as long as is necessary to
implement, administer and manage Optionee’s participation in the Plan. Optionee
understands that he or she may, at any time, view Data, request additional
information about the storage and processing of Data, require any necessary
amendments to Data or withdraw the consents herein by contacting in writing
Optionee’s local human resources representative. Optionee understands that
withdrawal of consent may affect his or her ability to exercise or realize
benefits from the option.

 

(ii) NATURE OF GRANT

 

In accepting the grant, Optionee acknowledges that: (i) the Plan is
discretionary in nature and may be suspended or terminated by the Company at any
time; (ii) the grant of the options is voluntary and occasional and does not
create any contractual or other right to receive future grants of options, or
benefits in lieu of options even if options have been granted repeatedly in the
past; (iii) all decisions with respect to any such future grants will be at the
sole discretion of the Company; (iv) Optionee’s participation in the Plan shall
not create a right to further employment with Optionee’s Employer and shall not
interfere with the ability of Optionee’s Employer to terminate Optionee’s
employment relationship at any time with or without cause; (v) Optionee’s
participation in the Plan is voluntary; (vi) the value of the option is an
extraordinary item of compensation which is outside the scope of Optionee’s
employment contract, if any; (vii) the options are not part of normal or
expected compensation or salary for any purposes, including, but not limited to,
calculating any severance, resignation, redundancy, end of service payments,
bonuses, long-service awards, pension or retirement benefits or similar
payments; (viii) in the event of involuntary termination of Optionee’s
employment, Optionee’s right to receive the options and vest in the options
under the Plan, if any, will terminate effective as of the date that Optionee is
no longer actively employed regardless of any reasonable notice period mandated
under local law; furthermore, in the event of involuntary termination of
employment, Optionee’s right to exercise the options after termination of
employment, if any, will be measured by the date of termination of Optionee’s
active employment and will not be extended by any reasonable notice period
mandated under local law; (ix) the options have been granted to Optionee in his
or her status as an employee of Optionee’s Employer, and, in the event that
Optionee’s Employer is not the Company the option grant can in no event be
understood or interpreted to mean that the Company is the Optionee’s employer or
that Optionee has an employment relationship with the Company; (x) the future
value of the underlying shares is unknown and cannot be predicted with
certainty; (xi) if the underlying shares do not increase in value, the options
will have no value; and (xii) no claim or entitlement to compensation or damages
arises from termination of the options or diminution in value of the options or
Shares purchased through exercise of the options and Optionee irrevocably
releases the Company and Employer from any such claim that may arise.

 

(iii) RESPONSIBILITY FOR TAXES

 

Optionee hereby acknowledges and agrees that the ultimate liability for any and
all tax, social insurance and payroll tax withholding (“Tax-Related Items”) is
and remains Optionee’s responsibility and liability and that the Company and/or
Optionee’s Employer (a) make no representations or undertakings regarding the
treatment of any Tax-Related Items in connection with any aspect of the option
grant, including the grant, vesting or exercise of the option and the subsequent
sale of Shares acquired pursuant to such exercise; and (b) do not commit to
structure the terms of the grant or any aspect of the option to reduce or
eliminate Optionee’s liability for Tax-Related Items. Prior to exercise of the
option, Optionee shall pay or make adequate arrangements satisfactory to the
Company and/or Optionee’s Employer to satisfy all withholding obligations of the
Company and/or Optionee’s Employer. In this regard, Optionee authorizes the
Company and/or the Optionee’s Employer to withhold all applicable Tax-Related
Items legally payable by Optionee from Optionee’s wages or other cash
compensation paid to Optionee by the Company and/or Optionee’s Employer or from
proceeds of sale. Alternatively, or in addition, if permissible under local law,
the Company may sell or arrange for the sale of Shares that Optionee is due to
acquire to meet the minimum withholding obligation for Tax Related Items. Any
estimated withholding which is not required in satisfaction of any Tax Related
Items will be repaid to Optionee by the Company or Optionee’s Employer. Finally,
Optionee shall pay to the Company or Optionee’s Employer any amount of any Tax
Related Items that the Company or Optionee’s Employer may be required to
withhold as a result of Optionee’s participation in the Plan or Optionee’s
purchase of Shares that cannot be satisfied by the means previously described.

 

DATE OF GRANT: <GRANT_DATE>      APPROVED BY: SUN MICROSYSTEMS, INC.,     

 

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              Michael Dillon               Sr. Vice President, General Counsel &
Secretary

 

The Optionee acknowledges receipt of a copy of the Plan Summary, a copy of which
is annexed hereto, and represents that Optionee is familiar with the terms and
provisions thereof, and hereby accepts this option subject to all of the terms
and provisions thereof. The Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board or of the
Committee upon any questions arising under the Plan. The Optionee further
acknowledges that nothing in this agreement constitutes a contract of employment
and that the Optionee and the Company, including its subsidiaries and
affiliates, each reserves the right to terminate the employment relationship at
any time and for any reason where allowed by local laws.

 

OPTIONEE SIGNATURE

  

 

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   DATE SIGNED (DD/MM/YY)   

 

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Revised June 2004 – Michael Dillon

Revised April 28, 2005 – Solicitation Language Paul Briones