8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 8, 2008

Sun Microsystems, Inc.

(Exact name of registrant as specified in its charter)

Delaware	0-15086	94-2805249
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4150 Network Circle Santa Clara, California	95054-1778
(Address of Principal Executive Offices)	(Zip Code)

(650) 960-1300

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

On December 8, 2008, Sun Microsystems, Inc. (the “Company”) entered into a letter agreement with Southeastern Asset Management, Inc. (“Southeastern”), which is attached hereto as Exhibit 10.1 (the “Southeastern Letter Agreement”). The agreement provides that the Company agrees to appoint two persons nominated by Southeastern to the Company’s Board of Directors as soon as reasonably practicable.

The foregoing description is qualified in its entirety by the complete Southeastern Letter Agreement, which is incorporated herein by reference.

A copy of the press release issued by the Company and Southeastern in connection with the Southeastern Letter Agreement is attached as Exhibit 99.1 hereto.

Southeastern is currently the Company’s largest stockholder and beneficially owns in excess of 20% of the Company’s outstanding stock.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are filed herewith:

Exhibit Number	Description
10.1	Letter Agreement, dated December 8, 2008, by and between Sun Microsystems, Inc. and Southeastern Asset Management, Inc.
99.1	Text of press release issued by Sun Microsystems, Inc., dated December 8, 2008, titled “Sun Microsystems and Southeastern Asset Management Agree to Appoint New Independent Members to Sun’s Board of Directors.”

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: December 8, 2008

SUN MICROSYSTEMS, INC.
By:	/s/ Craig Norris
	Craig Norris
	Vice President, Corporate Law, and Assistant Secretary

EXHIBIT INDEX

Exhibit No.	Description
10.1	Letter Agreement, dated December 8, 2008, by and between Sun Microsystems, Inc. and Southeastern Asset Management, Inc.
99.1	Text of press release issued by Sun Microsystems, Inc., dated December 8, 2008, titled “Sun Microsystems and Southeastern Asset Management Agree to Appoint New Independent Members to Sun’s Board of Directors.”

EX-10.1

Exhibit 10.1

Sun Microsystems, Inc.

4150 Network Circle

Santa Clara, CA 95054

December 8, 2008

Southeastern Asset Management, Inc.

6410 Poplar Avenue, Suite 900

Memphis, TN 38119

Re: Letter Agreement

Ladies and Gentlemen:

This letter agreement confirms the understanding and agreement between Sun Microsystems, Inc., a Delaware corporation (the “Company”), on the one hand, and Southeastern Asset Management, Inc. (“Southeastern”), on the other hand, as follows:

1. Board Matters. As soon as reasonably practicable, the Company agrees to appoint two persons nominated by Southeastern (the “Board Designees”) to the Board of Directors and agrees to, if necessary, expand its Board of Directors by up to two members to create vacancies for such purpose; provided, however, that no such appointments shall be required unless each such Board Designee shall (i) be qualified and suitable to serve as a member of the Board of Directors under all applicable corporate governance policies or guidelines of the Company and the Board of Directors and applicable legal, regulatory and stock market requirements, (ii) meet the independence requirements with respect to the Company of Section 4200(a)(15) of the Rules of The Nasdaq Global Select Market or any successor thereto, and (iii) be acceptable to the Board of Directors (including the Corporate Governance and Nominating Committee of the Board of Directors) in its good faith discretion. The Southeastern Parties will take all necessary action to cause any nominee for Board Designee to make himself or herself reasonably available for interviews, to consent to such reference and background checks or other investigations and to provide such information (including information necessary to determine the nominee’s independence status under various requirements and institutional investor guidelines as well as information necessary to determine any disclosure obligations of the Company) as the Board of Directors or its Corporate Governance and Nominating Committee may reasonably request. Each Board Designee shall be subject to the policies and requirements of the Company and its Board of Directors, including the Corporate Governance Guidelines of the Board of Directors and the Company’s Standards of Business Conduct, in a manner consistent with the application of such policies and requirements to other members of the Board of Directors. The Company shall indemnify the Board Designees and provide the Board Designees with director and officer insurance to the same extent it indemnifies and provides insurance for the members of the Board of Directors pursuant to its organizational documents, applicable law or otherwise.

2. Insider Trading. Southeastern hereby acknowledges that it is aware that the United States securities laws prohibit, among other things, any person who has obtained from the Company or any of its agents material, non-public information with respect to the Company from transacting in the securities of the Company or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to transact in such securities. Southeastern hereby agrees to comply with such laws.

3. Public Disclosure. Promptly after execution of this letter agreement, the Company and Southeastern shall issue a joint press release concerning the subject matter of this letter agreement in a form mutually agreeable to the parties. In addition, Southeastern agrees to participate in reasonable joint marketing efforts with the Company relating to the content of the press release. All statements attributable to Southeastern in any public disclosure must be approved by Southeastern prior to use.

4. Entire Agreement. This letter agreement contains the entire agreement between and among the parties concerning the subject matter of this letter agreement and supersedes all prior agreements and understandings with respect to such subject matter.

5. Governing Law. This letter agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware.

6. Assignment. This letter agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assignees. This letter agreement may not be assigned by the Company without the consent or other approval of Southeastern. This letter agreement may not be assigned by Southeastern without the prior written consent of the Company.

7. Amendment. Except as expressly provided herein, neither this letter agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought.

8. Termination. This letter agreement shall automatically terminate and be of no further force or effect, without any action on the part of any of the parties hereto, in the event of the sale of substantially all of the Company’s assets or a change of control of the Company, which shall be deemed to include, among other things, (i) any transaction or series of related transactions pursuant to which the stockholders of the Company prior to such transaction or series of transactions hold less than a majority of the voting power of the Company or any successor in interest thereto or less than a majority in interest of all or substantially all of the assets of the Company, and (ii) any transaction or series of related transactions pursuant to which the members of the Board prior to such transaction or series of transactions constitute less than a majority of the members of the Board or the board of directors of any successor in interest thereto.

2

9. Notices. All notices and other communications pursuant to this letter agreement shall be in writing and shall be delivered personally, sent by facsimile (with receipt confirmed), sent by nationally-recognized overnight courier or mailed by registered or certified mail (return receipt requested), postage prepaid, to the respective parties at the following address (or at such other address for a party as shall be specified by like notice):

If to the Company:

Sun Microsystems, Inc.

10 Network Circle

Mailstop MPK 10-141

Menlo Park, CA 94025

Attention: Michael A. Dillon

                  Executive Vice President, General Counsel

                  and Corporate Secretary

Telephone: (650) 786-3690

Facsimile: (650) 786-2368

If to Southeastern:

Southeastern Asset Management, Inc.

6410 Poplar Avenue, Suite 900

Memphis, TN 38119

Attention: Andrew R. McCarroll

                  Vice President & General Counsel

Telephone: (901) 761-2474

Facsimile: (901) 260-0885

Each such notice or other communication shall for all purposes of this letter agreement be treated as effective or having been given: (i) if delivered personally, when delivered, (ii) if sent by facsimile, upon confirmation of facsimile transfer, (iii) if sent by nationally-recognized overnight courier, on the first business day after the business day on which the same has been deposited with such overnight courier, or (iv) if sent by registered or certified mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid.

10. Further Assurances. The parties hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments or documents as any other party may reasonably request from time to time in order to carry out the intent and purposes of this letter agreement and the consummation of the transactions contemplated hereby. Neither the Company nor Southeastern shall voluntarily undertake any course of action inconsistent with satisfaction of the requirements applicable to them set forth in this letter agreement and each shall promptly do all such acts and take all such measures as may be

3

appropriate to enable them to perform as early as practicable the obligations herein and therein required to be performed by them.

11. Facsimile; Counterparts. This letter agreement may be executed by facsimile and in two or more counterparts, each of which may be executed by fewer than all of the parties hereto, each of which shall be fully enforceable against each of the other parties hereto actually executing such counterparts, and all of which together shall constitute one and the same instrument, enforceable against all of the parties hereto.

12. Severability. In the event that any term or provision of this letter agreement shall become, or is declared by a court of competent jurisdiction to be, illegal, unenforceable or void, this letter agreement shall continue in full force and effect without said term or provision as close as possible to the intent of the parties hereto.

[Remainder of page intentionally left blank. Signature page follows.]

4

IN WITNESS WHEREOF, each of the parties hereto has executed this letter agreement as of the date first written above.

SUN MICROSYSTEMS, INC.
By:	/s/ Craig Norris
Name:	Craig Norris
Title:	Vice President, Corporate Law, and Assistant Secretary
SOUTHEASTERN ASSET MANAGEMENT, INC.
By:	/s/ Andrew R. McCarroll
Title:	Andrew R. McCarroll
Name:	VP & General Counsel
By:	/s/ Jason E. Dunn
Name:	Jason E. Dunn
Title:	VP

5

EX-99.1

Exhibit 99.1

Sun Microsystems and Southeastern Asset Management Agree to Appoint

New Independent Members to Sun’s Board of Directors

SANTA CLARA, Calif.—December 8, 2008—Sun Microsystems, Inc. (NASDAQ: JAVA) and value investment firm, Southeastern Asset Management, Inc., today announced that they have entered into an agreement to add two new independent members to Sun’s Board of Directors. Southeastern is Sun’s largest shareholder and currently holds approximately 162 million shares, or 22 percent, of Sun’s common stock.

Under the terms of the agreement, Sun will add two new independent directors to its Board. The appointments, to be approved by both companies, will occur as soon as reasonably practicable.

“We fully support Sun’s CEO, Jonathan Schwartz, and his leadership team in their efforts to continue driving near-term efficiencies and long-term growth,” said Jason E. Dunn, Vice President and Principal, Southeastern Asset Management, Inc. “Sun product lines like Open Storage and SolarisTM-based Chip Multi-Threading (CMT) systems along with software infrastructure assets including JavaTM, OpenSolarisTM and MySQLTM, illustrate Sun’s enormous growth opportunity. With the appointment of two new directors, the recently announced restructuring, over $3 billion in cash and a long history of cash generation, we are confident Sun is well positioned for long-term success.”

“Southeastern is a knowledgeable partner and investor that has demonstrated great commitment to our long-term vision and success,” said Schwartz. “Bringing complementary world-class talent to our board community only helps Sun fuel new ideas, drive more innovation and accelerate business opportunities and focus. Sun is committed to do what’s necessary to deliver maximum value to its customers and shareholders.”

The majority of Sun’s board members are independent and represent a broad range of industries and expertise. For more information on Sun’s Board of Directors, please visit http://www.sun.com/company/cgov/board.jsp.

For more details on today’s announcement, please visit http://www.sun.com/news to hear a podcast featuring Southeastern’s Jason Dunn discussing his perspectives on this agreement.

About Southeastern Asset Management

Southeastern Asset Management, Inc. is an investment management firm with over $34 billion in client assets under management at September 30, 2008, including approximately $14 billion in the three Longleaf Partners Funds: Longleaf Partners Fund, Longleaf Partners Small-Cap Fund, and Longleaf Partners International Fund. Southeastern was established

in 1975, and the first of the Longleaf Partners Funds was launched in 1987.

About Sun Microsystems, Inc.

Sun Microsystems develops the technologies that power the global marketplace. Guided by a singular vision — “The Network is the Computer^TM” — Sun drives network participation through shared innovation, community development and open source leadership. Sun can be found in more than 100 countries and on the Web at http://sun.com.

# # #

Sun, Sun Microsystems, the Sun logo, Java, Solaris, OpenSolaris, MySQL and The Network Is The Computer are trademarks or registered trademarks of Sun Microsystems, Inc. or its subsidiaries in the United States and other countries.

This press release contains forward-looking statements regarding the future results and performance of Sun Microsystems, Inc., including statements regarding the addition of new members to Sun’s board of directors and the timing and effect of adding such directors, Sun’s growth opportunity and Sun’s commitment to deliver maximum value to its customers and shareholders. These forward-looking statements involve risks and uncertainties and actual results could differ materially from those predicted in any such forward-looking statements. Factors that could cause Sun’s actual results to differ materially from those contained in such forward-looking statements include: the ability to identify and appoint suitable board candidates; competition; pricing pressures; the complexity of Sun’s products and the importance of rapidly and successfully developing and introducing new products; Sun’s dependence on significant customers, specific industries and geographies; delays in product development or customer acceptance and implementation of new products and technologies; Sun’s ability to implement a new enterprise resource planning system; a material acquisition, restructuring or other event that results in significant charges; failure to successfully integrate acquired companies; reliance on single-source suppliers; risks associated with Sun’s ability to purchase a sufficient amount of components to meet demand; inventory risks; risks associated with the quality of Sun’s products; risks associated with international customers and operations; Sun’s dependence on channel partners; failure to retain key employees; and risks associated with Sun’s ability to achieve expected cost reductions within expected time frames. Please also refer to Sun’s periodic reports that are filed from time to time with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2008 and its Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2008. Sun assumes no obligation to, and does not currently intend to, update these forward-looking statements.

Investor Contact:

Ron Pasek

650-786-8008

ron.pasek@sun.com

Press Contact:

Kristi Rawlinson

650-786-6933

kristi.rawlinson@sun.com

Industry Analyst Contact:

Kathy Engle

415-294-4368

kathy.engle@sun.com