SUN MICROSYSTEMS, INC.
SECTION 162(M) EXECUTIVE OFFICER
PERFORMANCE-BASED BONUS PLAN
BACKGROUND, PURPOSE AND DURATION
1.1 Effective Date.
Sun Microsystems, Inc., having established the Plan effective as of August 9, 1995 and amended and restated the Plan
effective as of July 1, 2001, hereby amends and restates the Plan, effective as of July 1, 2006, subject to ratification by an
affirmative vote of the holders of a majority of the Shares that are present in person or by proxy and entitled to vote at the 2006
Annual Meeting of Stockholders of the Company.
1.2 Purpose of the Plan.
The Plan is intended to increase shareholder value and the success of the Company by motivating key executives (1) to
perform to the best of their abilities, and (2) to achieve the Company’s objectives. The Plan’s goals are to be achieved by
providing such executives with incentive awards based on the achievement of goals relating to the performance of the
Company. The Plan is intended to permit the grant of awards that qualify as performance-based compensation under section
162(m) of the Code.
The following words and phrases shall have the following meanings unless a different meaning is plainly required by the
2.1 “1934 Act”
means the Securities Exchange Act of 1934, as amended. Reference to a specific section of the 1934 Act or regulation
thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable
provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
2.2 “Actual Award”
means as to any Performance Period, the actual award (if any) payable to a Participant for the Performance Period. Each
Actual Award is determined by the Payout Formula for the Performance Period, subject to the Committee’s authority under
Section 3.7 to eliminate or reduce the award otherwise determined by the Payout Formula.