SUN MICROSYSTEMS, INC. 2005 U.S. NON-QUALIFIED DEFERRED COMPENSATION PLAN

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.

The Plan is the successor plan to the Sun Microsystems, Inc. U.S. Non-Qualified Deferred Compensation Plan (the “Prior Plan”). Effective December 31, 2004, the Prior Plan was frozen and no new contributions were made to it; provided, however, that effective December 31, 2008 the Prior Plan shall be merged into the Plan.

3.

Any deferrals made under the Prior Plan shall be deemed to have been made under the Plan and all such deferrals shall be governed by the terms and conditions of the Plan as it may be amended from time to time.

4.

Under the Plan, the Company is obligated to pay vested accrued benefits to Plan Participants and their Beneficiary or Beneficiaries from the Company’s general assets.

5.

The Company has entered into an agreement (the “Trust Agreement”) with Wells Fargo Bank, N.A. pursuant to which Wells Fargo Bank, N.A., serves as the trustee (the “Trustee”) under an irrevocable trust, to be used in connection with the Plan (the “Trust”).

6.

The Company intends to make contributions to the Trust so that such contributions will be held by the Trust and invested, reinvested and distributed, all in accordance with this Plan and the Trust Agreement.

7.

The Company intends that amounts contributed 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 (as defined below) has been established and such utilization shall be in accordance with the procedures set forth herein.

8.

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.

9.

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.

10.

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.

11.

The Company intends that the Plan comply with the requirements of Section 409A of the Code and the regulations promulgated thereunder, and shall be operated and interpreted consistent with that intent.

1.

Purpose . The Plan provides Participants an opportunity to defer payment of a portion of Employee salary, Employee annual and quarterly bonus awards, retention awards, and Board of Directors’ Director Fees.

2.

Definitions .

(a)

Account means a bookkeeping account established pursuant to Subsection 5(a) of the Plan for Compensation that is subject to a Participant’s Deferred Compensation Election.

(b)

Administrator means the Compensation Committee or such other person, company or entity as may be designated from time to time by the Compensation Committee except as otherwise provided herein.

(c)

Beneficiary means the person or persons designated by the Participant or by the Plan under Subsection 10(b) of the Plan to receive payment of the Participant’s Account in the event of the Participant’s death.

(d)

Board means the Board of Directors of the Company, as constituted from time to time.

(e)

Change of Control . A “Change of Control” shall be deemed, consistent with Section 409A of the Code and the proposed regulations promulgated thereunder, to occur on the date that:

(i)

Any one person, or more than one person acting as a group (as defined in Regulation Section 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company. However, if any one person, or more than one person acting as a group, is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered a Change of Control. This Paragraph 2(e)(i) applies only when there is a transfer of stock of the Company (or the issuance of stock of the Company) and stock in the Company remains outstanding after the transaction; or

(ii)

Any one person, or more than one person acting as a group (as defined in Regulation Section 1.409A-3(i)(5)(v)(B)), acquires (or has acquired during the twelve (12)-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total “Gross Fair Market Value” (as defined in Regulation Section 1.409A-3(i)(5)(vii)(A)) equal to or more than forty percent (40%) of the total Gross Fair Market Value of all of the assets of the Company immediately prior to such acquisition or acquisitions; or

(iii)

Any one person, or more than one person acting as a group (as defined in Regulation Section 1.409A-3(i)(5)(v)(B)), acquires (or has acquired during the twelve (12)-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing thirty percent (30%) or more of the total voting power of the stock of the Company; or

(iv)

A majority of the members of the Board is replaced during any twelve (12)-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; provided, however, that no Change of Control shall be deemed to have occurred if any other corporation is a majority shareholder of the Company.

(f)

Code means the Internal Revenue Code of 1986, as amended.

(g)

Company means Sun Microsystems, Inc. and its U.S. subsidiaries, and any successor organization thereto.

(h)

Compensation means:

(i)

The amount paid by the Company to an Eligible Employee as base salary; and

(ii)

The amount paid by the Company to an Eligible Employee as an annual or quarterly corporate bonus award, retention award, and any other bonus/incentive award that is approved by the Administrator as earnings that can be deferred under the Plan (some incentive/bonus awards will not be eligible for deferral); and

(iii)

In the case of an Eligible Board Member, the amount of his or her Director Fees from the Company.

(i)

Compensation Committee means the Leadership Development and Compensation Committee of the Board, as appointed by the Board from time to time.

(j)

Deferred Compensation Election means an election by an Eligible Employee or Eligible Board Member to participate in the Plan in accordance with Section 4 of the Plan.

(k)

Director Fees means any compensation payable with respect to an Eligible Board Member’s service as a member of the Board, including, but not limited to, meeting fees and annual retainer fees. Director Fees do not include directors’ expense reimbursements, stock options, or other stock-based compensation.

(l)

Disabled means that a Participant is determined to be totally disabled by the Social Security Administration.

(m)

Election Period means November/December of each Plan Year.

(n)

Eligible Board Member means a member of the Board (other than a member who is also an Eligible Employee) who meets the requirements set forth in Section 3 of the Plan.

(o)

Eligible Employee means an officer of the Company or other common-law employee of the Company whose position is approved as a director level or higher and who otherwise meets the requirements set forth in Section 3 of the Plan. Eligible Employee does not include any individual who performs services for the Company as (i) an employee of a third party pursuant to a written agreement between the Company and such third party, (ii) an independent contractor, or (iii) a consultant, and is classified as such by the Company (whether or not such classification is upheld upon governmental or judicial review or such individual is reclassified by the Company).

(p)

ERISA means the Employee Retirement Income Security Act of 1974, as amended.

(q)

Investment Committee means the Investment/Administrative Committee of the Sun Microsystems, Inc. Tax Deferred Retirement Savings Plan.

(r)

Key Employee means an Eligible Employee who is determined by the Company to be a Key Employee in accordance with Section 409A of the Code and the regulations promulgated thereunder.

(s)

Participant means an Eligible Board Member or an Eligible Employee who has elected to defer Compensation.

(t)

Plan means this Sun Microsystems, Inc. 2005 U.S. Non-Qualified Deferred Compensation Plan, as amended from time to time.

(u)

Plan Year means the calendar year.

(v)

Prior Plan means the Sun Microsystems, Inc. U.S. Non-Qualified Deferred Compensation Plan, which was frozen effective December 31, 2004 and was subsequently merged into the Plan effective December 31, 2008.

(w)

Retirement Date means the earlier of the Participant’s:

(i)

55th birthday, if the Participant’s full Years of Service added to the Participant’s age (in full years) equals or exceeds 65; or

(ii)

20 Years of Service.

(x)

Separation from Service or Separates from Service means a termination of employment with the Company and all of its non-U.S. subsidiaries that the Company determines is a Separation from Service in accordance with Section 409A of the Code and the regulations promulgated thereunder.

(y)

Unforeseeable Emergency means a severe financial hardship to the Participant resulting from:

(i)

An illness or accident of the Participant, a Beneficiary, the Participant’s spouse, or the Participant’s dependent (as defined in Section 152(a) of the Code); or

(ii)

Loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or

(iii)

Other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

(iv)

Reimbursement or compensation, from insurance or otherwise;

(v)

Liquidation of the Participant’s assets to the extent that the liquidation of such assets would not itself cause severe financial hardship. Such assets shall include but not be limited to stock options, Company stock, and 401(k) plan balances; or

(vi)

Cessation of deferrals under the Plan.

(vii)

Sending a child to college; or

(viii)

Purchasing a home.

(z)

Year of Service means a full year of service with the Company and its non-U.S. subsidiaries prior to Separation from Service. If a Participant is a rehired employee, prior service at the Company will be counted as Year of Service provided that the prior service period exceeded the period when the Participant was not employed by the Company. Years of Service includes up to seven (7) years of service credit for service with a predecessor employer that was acquired by the Company if the Participant was an employee of the predecessor employer at the time of the acquisition.

3.

Eligibility . Participation in the Plan is limited to Eligible Board Members, and Eligible Employees who are members of a select group of management or highly compensated employees. Such Eligible Board Member or Eligible Employee is eligible to participate in the Plan if he or she is paid through the Company’s U.S. payroll (or accounts payable in the case of Eligible Board Members) and not covered under a non-U.S. retirement plan.

4.

Election to Participate in Plan .

(a)

Deferral Election . An Eligible Employee or an Eligible Board Member may elect to participate in the Plan by submitting a Deferred Compensation Election in such form as the Company may specify during any Election Period. Subject to the provisions of Subsection 4(b) below, a Deferral Election must be made and become irrevocable not later than last day of the Plan Year preceding the Plan Year in which the Compensation being deferred is earned. A Deferred Compensation Election will remain in force until it is amended or revoked. Any such amendment or revocation will take affect on the first day of the Plan Year following the Plan Year in which the Participant elects to amend or revoke the outstanding Deferred Compensation Election. In the event an Eligible Employee is downgraded below the director level during a Plan Year, his or her Deferred Compensation Election will remain in effect through the end of such Plan Year. In addition to the foregoing, a Participant’s Deferred Compensation Election shall be cancelled as soon as administratively practical if such Participant applies for and receives a distribution on account of an Unforeseeable Emergency. In such case, the Participant must submit a new Deferred Compensation Election during an Election Period to resume participation in the Plan.

(b)

Deferral Election for Newly Eligible Employees and Newly Eligible Board Members . In the Administrator’s discretion, a newly Eligible Employee whose position is approved at a vice president level or higher or a newly Eligible Board Member may elect to participate in the Plan by submitting a Deferred Compensation Election in such form as the Company may specify; provided that such Deferred Compensation Election is made and becomes irrevocable not later than thirty (30) days following the date such newly Eligible Employee or Board Member first becomes eligible to participate in the Plan and provided further that such Deferred Compensation Election applies only to Compensation earned after the date of the election. In compliance with this Subsection 4(b), if the Participant’s initial Deferred Compensation Election is made after the performance period applicable to the bonus has begun, only the amount equal to the total amount of the bonus for the performance period multiplied by the ratio of the number of days remaining in the performance period after the Deferred Compensation Election over the total number of days in the performance period may be deferred.

(c)

Initial Deferral Election . Any Deferred Compensation Election under this Section 4 that is an initial Deferred Compensation Election also will include an election as to the time and form of payment of the deferred Compensation.

(d)

Election Form . All Deferred Compensation Elections under this Section 4 shall be made in a manner prescribed for these purposes by the Administrator.

(e)

Retention Awards Following Acquisition . The Company may, in its discretion, provide retention awards subject to vesting to selected employees in connection with an acquisition of a business. Such award may, by its terms, provide for the deferral of payment to a later year. Alternatively, an Eligible Employee who receives a retention award may submit a Deferred Compensation Election with respect to part or all of such award in accordance with Regulation Section 1.409A-2(a)(5). The award or Deferred Compensation Election, as applicable, shall specify the payment year and payment schedule and shall otherwise be subject to the terms and conditions of the Plan.

5.

Accounts .

(a)

Establishment of Account . The Company shall establish an Account for the terms of the Deferred Compensation Election.

(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. Deferred Compensation for Participants shall be credited to the Participant’s Account as soon as administratively possible after the date such deferred amount 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 or losses allocable thereto.

6.

Deferral Increments .

(a)

Maximum Deferral – Eligible Employees . The Participant who is an Eligible Employee may elect to defer (less any withholding requirements):

(i)

Up to 75% of any eligible annual or quarterly bonus award;

(ii)

Up to 60% of base salary; and

(iii)

Up to 100% of any retention award.

(b)

Maximum Deferral – Eligible Board Members . A Participant who is an Eligible Board Member may elect to defer (less any withholding requirements), up to 100% of his or her Director Fees (to be credited to the account quarterly).

7.

Earnings or Losses on Accounts .

(a)

General Rule . Except as otherwise provided in the Plan, the amount in a Participant’s Account shall be adjusted for gain or loss based on the performance of the investment options selected by the Participant (or Beneficiary following a Participant’s death) in accordance with Subsection 7(b) below. Gain or loss shall be computed daily. All distributions from the Account will be valued as of the end of the last business day of the month preceding the payment date.

(b)

Investment of Accounts . The Investment Committee shall select two or more investment options to be made available to Participants for investment under the Plan. The Investment Committee may change, discontinue, or add to the investment options made available under the Plan at any time as determined by the Investment Committee in its sole discretion. A Participant (or Beneficiary following a Participant’s death) may select his or her investment options for new deferrals or for amounts already credited to his or her Account, once per month effective as of the first business day of the following month in accordance with procedures established by the Investment Committee. If a Participant fails to make an investment allocation with respect to his/her Account, such Account shall be deemed invested in an investment