Sample Business Contracts

Transition Agreement - Sun Microsystems Inc. and Michael Lehman

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April 30, 2002

Dear Mike:

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
here and in other documents as the "Transition Agreement."

1.  Beginning October 1, 2002, you will move to part time status with a
    corresponding reduction in your salary to fifty percent of your current base
    salary. You will continue to provide services to Sun such as participating
    in Sun's Leadership Institute, leading or participating in Sun customer
    visits, consulting to internal Sun organizations, and other assignments as
    deemed necessary and appropriate by Sun's Chairman and CEO. Your title will
    remain Executive Vice President and you will nominally report to Sun's
    Chairman and CEO. As a practical matter your liaison for administrative
    issues such as work balance and recording, travel expense reports, etc, will
    be Crawford Beveridge.

2.  Beginning October 1, 2002, all stock option vesting will cease and the
    unvested portion of your Sun options will be canceled. This is a change from
    your current stock option agreements. This will not have an impact on the
    unexercised portion of your vested options.

3.  You hereby waive participation in Sun's FY03 Officer and Director Bonus
    Plan, Executive Committee.

4.  For the period from October 1, 2002 through September 30, 2003 you will
    continue to receive coverage under Sun's flexible benefits policies.

5.  On September 30, 2003, you will retire from Sun and will be eligible for the
    benefits outlined in the attached document, "When you Retire from Sun."

6.  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 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.

7.  To receive the benefits stated in this Transition 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.


/s/ Crawford Beveridge
Crawford Beveridge
Executive Vice President and Chief Human Resources Officer

I agree with the above terms:

/s/ Michael Lehman                                 May 10, 2002
----------------------------------                 -----------------------------
Michael Lehman                                     Date

September 17, 2002

Michael Lehman

Dear Mike;

This letter confirms our conversation and agreement on your voluntary
termination of your employment with Sun Microsystems, effective today,
September 17, 2002.

In consideration for a lump sum gross bonus payment of $600,000, this letter
also supersedes all terms and conditions of the Transition Agreement between you
and Sun Microsystems, dated April 30, 2002, a copy of which is attached hereto.
Vesting on all options currently outstanding will cease effective today, and you
will have 90 days to exercise any such vested options, after which time they
will expire.

Please indicate your agreement with these terms by signing and dating below.


/s/ Scott G. McNealy
Scott G. McNealy
Chairman, President, and CEO,
Sun Microsystems, Inc.

I understand and agree with the above terms and conditions.

/s/ Michael Lehman                      9/17/02
    Michael Lehman                       Date