Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A INFORMATION
(RULE 14A-101)

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

	Filed by the Registrant   x
	Filed by a Party other than the Registrant   o
	Check the appropriate box:

	o   Preliminary Proxy Statement
	o   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
	x   Definitive Proxy Statement
	o   Definitive Additional Materials
	o   Soliciting Material Pursuant to §240.14a-12

      Payment of Filing Fee (Check the appropriate box):

	o   No fee required.
	o   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

	1) Title of each class of securities to which transaction applies:

---

	2) Aggregate number of securities to which transaction applies:

---

	3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

---

	4) Proposed maximum aggregate value of transaction:

---

	5) Total fee paid:

---

	x   Fee paid previously with preliminary materials.

---

	o   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

	1) Amount Previously Paid:

---

	2) Form, Schedule or Registration Statement No.:

---

	3) Filing Party:

---

	4) Date Filed:

---

---

Table of Contents

	Yours truly,
	STORAGE TECHNOLOGY CORPORATION
	Patrick J. Martin
	Chairman, President and Chief Executive Officer

---

Table of Contents

	By order of the Board of Directors,
	Patrick J. Martin
	Chairman, President and Chief Executive Officer

---

Table of Contents

			Page
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING				1
SUMMARY				4
	The Parties to the Merger Agreement			4
	Matters Relating to the Meeting			4
	Reasons for the Merger, Recommendation of Our Board of Directors			5
	Opinion of Our Financial Advisor			6
	Material United States Federal Income Tax Consequences			6
	Antitrust Matters			7
	Interests of Certain Persons in the Merger			7
	Appraisal Rights			7
	Conditions to the Merger			7
	Termination of the Merger Agreement			8
	Expenses and Termination Fee			8
	Non-Solicitation			8
	Additional Information			9
RISK FACTORS				10
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS				11
THE PARTIES TO THE MERGER AGREEMENT				12
	Storage Technology Corporation			12
	Sun Microsystems, Inc.			12
	Merger Sub			12
THE SPECIAL MEETING				13
	Date, Time and Place			13
	Matters to be Considered			13
	Record Date and Shares Entitled to Vote; Procedures for Voting; Quorum			13
	Vote Required			13
	Voting of Proxies			13
	Revocability of Proxies			14
	Proxy Solicitation			14
	StorageTek Stock Certificates			14
	Voting Agreements			14
THE MERGER				15
	Background of the Merger			15
	Reasons for the Merger; Recommendation of our Board of Directors			17
	Opinion of our Financial Advisor			20
	Material United States Federal Income Tax Consequences			29
	Interests of Certain Persons in the Merger			30
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT				34
	Equity Awards			35
	Directors’ and Officers’ Indemnification			36
	Appraisal Rights			37
	Voting Agreements			40
THE MERGER AGREEMENT				40
	Structure and Effective Time			40

---

Table of Contents

			Page
	Merger Consideration			40
	Stock Options and Common Stock Equivalents			41
	Restricted Stock and Restricted Stock Units			42
	Certificate of Incorporation and Bylaws			42
	Directors and Officers			42
	Representations and Warranties			42
	Covenants Relating to the Conduct of our Business			44
	Additional Agreements			46
	No Solicitation of Transactions			48
	Directors’ and Officers’ Indemnification			49
	Employee Benefit Matters			49
	Conditions to the Merger			49
	Material Adverse Effect			50
	Termination of the Merger Agreement			50
	Expenses			51
	Amendment; Waiver			51
	Accounting Treatment			51
	Antitrust Matters			51
BENEFICIAL OWNERSHIP OF STORAGETEK COMMON STOCK				52
PRICE RANGE OF COMMON STOCK AND DIVIDENDS				53
FUTURE STOCKHOLDER PROPOSALS				53
WHERE YOU CAN FIND MORE INFORMATION				53
ADDITIONAL INFORMATION				54

---

Table of Contents

	Q:	What is the proposed Merger?
	A:	Under the terms of the Agreement and Plan of Merger dated as of June 2, 2005 among Sun Microsystems, Inc. (“Sun”), Stanford Acquisition Corporation, a direct wholly-owned subsidiary of Sun (“Merger Sub”), and Storage Technology Corporation (“StorageTek”), referred to in this proxy statement as the merger agreement, Merger Sub will be merged with and into StorageTek with StorageTek emerging as the surviving corporation and a wholly-owned subsidiary of Sun. The merger agreement is attached to this proxy statement as Annex A. We encourage you to read it carefully.
	Q:	What will I receive in the merger?
	A:	Upon completion of the merger, you will be entitled to receive $37 in cash, without interest, in exchange for each share of StorageTek common stock, par value $0.10 per share, that you own.
	Q:	What are the United States federal income tax consequences of the merger?
	A:	The receipt of cash for shares pursuant to the merger will be a taxable transaction for United States federal income tax purposes. In general, a stockholder who receives cash in exchange for shares pursuant to the merger will recognize gain or loss for United States federal income tax purposes equal to the difference, if any, between the amount of cash received and the stockholder’s adjusted tax basis in the shares exchanged for cash pursuant to the merger. Because the tax consequences of the merger are complex and may vary depending on your particular circumstances, we recommend that you consult your tax advisor concerning the federal (and any state, local or foreign) tax consequences to you of the merger.
	Q:	What is the vote required to approve the merger agreement?
	A:	Approval of the merger agreement requires the affirmative vote of a majority of the outstanding shares of StorageTek common stock. This means that the affirmative vote of at least 54,178,269 shares of our common stock is required for adoption of the merger agreement.
	Q:	Is our board of directors recommending that I vote for the merger agreement?
	A:	Yes. After considering a number of factors, your board of directors unanimously believes that the terms of the merger agreement are fair to and in the best interests of StorageTek and our stockholders. Your board of directors unanimously recommends that you vote FOR approval of the merger and adoption and approval of the merger agreement.
	Q:	Why did the directors enter into the voting agreements?
	A:	In order to induce Sun to execute the merger agreement, the directors, each in their capacity as a stockholder of StorageTek common stock, agreed to vote the StorageTek common stock they own FOR the merger. The execution and delivery of the voting agreements was a material condition to Sun’s willingness to enter into the merger agreement. As of July 26, 2005, the directors beneficially owned an aggregate of 1.2% of the outstanding shares of StorageTek common stock.
	Q:	When do you expect to complete the merger?
	A:	We currently expect to complete the merger in late summer or early fall of 2005, and after all the conditions to the merger are satisfied or waived, including expiration or termination of the

---

Table of Contents

		waiting periods under the antitrust laws of the United States and the European Union and other applicable jurisdictions.
	Q:	What do I need to do now?
	A:	We urge you to read this proxy statement carefully, including its annexes, consider how the merger would affect you as a stockholder and then vote. After you read this proxy statement, you should provide voting instructions as described below.
	Q:	How do I vote?
	A:	If you hold a stock certificate in your name for StorageTek’s common stock, you are the owner of record. If you attend the meeting, you may vote in person. If you want to vote by proxy, there are three ways you may vote, each of which is valid under Delaware law, our state of incorporation:

	1.	Access the Internet address on the proxy card and follow the instructions at that site;
	2.	Call the toll-free telephone number listed in the voting instructions attached to the proxy card and follow the telephone prompts; OR
	3.	Complete, sign, date and return the enclosed proxy card.

	Q:	If my broker holds my shares in “street name,” will my broker vote my shares for me?
	A:	If your shares of StorageTek common stock are held in the name of a broker or financial institution, you are a beneficial owner and the broker or the financial institution holding your shares is the record holder. This is often referred to as being held in “street name.” You must follow the voting directions given by the broker or financial institution. If you hold shares in street name and you intend to vote at the special meeting, you must bring an executed Power of Attorney or proxy in your name that has been signed by the record holder. Contact your broker or financial institution for this information.
	Q:	What if I want to change my vote after I have voted?
	A:	You may revoke your proxy or change your vote at any time before the final vote at the meeting. If you are the owner of record, you may do this by:

	1.	Giving written notice of revocation to the Corporate Secretary, Storage Technology Corporation, One StorageTek Drive, Louisville, Colorado 80028-4309;
	2.	Signing another valid proxy bearing a later date;
	3.	Voting at a later date by telephone or by using the Internet; OR
	4.	Voting in person at the meeting.

	If you hold stock in street name, you must contact your broker or financial institution for information on how to revoke your proxy or change your vote.

	Q:	What happens if I do not send in my proxy, if I do not instruct my broker to vote my shares or if I abstain from voting?
	A:	If you do not send in your proxy, do not instruct your broker to vote your shares, or if you abstain from voting, it will have the same effect as a vote AGAINST approval of the merger, and adoption and approval of the merger agreement.

2

---

Table of Contents

	Q:	What if the merger is not completed?
	A:	If the merger is not completed, both companies will continue to operate as independent companies. As further described under “Expenses” on page 51, StorageTek may be required to pay Sun a termination fee if the merger is not completed for certain reasons.
	Q:	Am I entitled to appraisal rights?
	A:	Yes. Under the Delaware General Corporations Law (“DGCL”), record holders of StorageTek common stock who follow the procedures set forth in Section 262 of the DGCL will be entitled to have their shares appraised by the Court of Chancery of the State of Delaware and to receive payment of the fair value of such shares together with a fair rate of interest, if any, as determined by such court. The fair value as determined by the Delaware court is exclusive of any element of value arising from the accomplishment or expectation of the merger.
	Q:	Should I send in my StorageTek stock certificates now?
	A:	No. After the merger is completed, you will receive written instructions for exchanging your shares of StorageTek common stock for the merger consideration of $37 in cash, without interest, for each share of your StorageTek common stock.
	Q:	Where can I find more information about StorageTek and Sun?
	A:	Storage Technology Corporation and Sun Microsystems, Inc. file periodic reports and other information with the Securities and Exchange Commission (“SEC”). You may read and copy this information at the SEC’s public reference facilities. Please call the SEC at 1-800-SEC-0330 for information about these facilities. This information is also available on the Internet site maintained by the SEC at http://www.sec.gov. For a more detailed description of the information available about Storage Technology Corporation, see “Where You Can Find More Information.”
	Q:	Whom should I call if I have questions or want additional copies of documents?
	A:	If you have any questions about the merger or this proxy statement or, if you would like additional copies of this proxy statement or the proxy card you should call Georgeson Shareholder Communications, Inc., our proxy solicitor, at (866) 357-4033.

3

---

Table of Contents

4

---

Table of Contents

5

---

Table of Contents

6

---

Table of Contents

7

---

Table of Contents

8

---

Table of Contents

9

---

Table of Contents

10

---

Table of Contents

11

---

Table of Contents

12

---

Table of Contents

13

---

Table of Contents

	(1) giving written notice of revocation to the Corporate Secretary, Storage Technology Corporation, One StorageTek Drive, Louisville, Colorado 80028-4309;
	(2) signing another valid proxy bearing a later date;
	(3) voting at a later date by telephone or by using the Internet; OR
	(4) voting in person at the meeting.

14

---

Table of Contents

15

---

Table of Contents

16

---

Table of Contents

	Factors Relating to the Transaction Generally:

	•	StorageTek has experienced increased competition in recent years as a result of several factors including industry consolidation, trends toward disk-to-disk data back-up, data center consolidation and outsourcing, and competition in tape and open systems virtual tape storage.
	•	StorageTek’s sales force and distribution infrastructure is smaller than the sales forces and distribution infrastructures of most of our competitors. This results in StorageTek having a disproportionately lower share of influence in the storage market and specifically on the ability to

17

---

Table of Contents

		influence customers’ perceptions regarding the comparative benefits of tape products versus disk products.
	•	As a result of industry consolidation and increased competition, StorageTek has experienced increased pricing pressures and other competitive pressures in recent years which require that StorageTek offer better products and have a stronger product pipeline than our competitors and introduce new products to the market faster than our competitors.
	•	In recent years customers have tended to reduce the number of information technology vendors and reduce information technology spending and utility and outsourcing contracts are gaining greater importance in the industry.
	•	Our major competitors have increasingly used their size and portfolio breadth as leverage for competitive advantage in the market today.
	•	The environment for acquisitions in the data storage industry is very competitive such that StorageTek currently represents a valuable strategic opportunity for potential buyers such as Sun, given our distinctive, diversified portfolio of products and services, our long standing experience in the data center market, and our broad and diversified customer base. Accordingly, our board concluded that this was a favorable time to undertake a sale of the company.

	Factors Relating to the Specific Terms of our Merger Agreement with Sun:

	•	The merger consideration of $37 per share to be received by our stockholders represents a substantial premium to the historic trading prices of StorageTek common stock. The merger consideration represents a 14.6% premium over the closing price of StorageTek common stock on May 31, 2005 (the trading day immediately preceding the day prior to the date of execution of the merger agreement), a 17.3% premium over the closing price of StorageTek common stock on May 24, and a 30.7% premium over the closing price of StorageTek common stock on May 3.
	•	The merger consideration consists solely of cash, which provides certainty of value to our stockholders.
	•	Sun has, and has represented in the merger agreement that it has, adequate capital resources to pay the merger consideration.
	•	The merger agreement, subject to the limitations and requirements contained in the agreement, allows our board to furnish information to and conduct negotiations with a third party in certain circumstances and, upon the payment to Sun of a termination fee of $133 million, to terminate the merger agreement to accept a superior offer.
	•	The merger agreement provides reasonable certainty of consummation, because it includes limited conditions to Sun’s obligation to complete the merger, including:

	•	Sun is generally obligated to close the merger notwithstanding any breaches of StorageTek’s representations and warranties, unless those breaches would have a material adverse effect on StorageTek; and
	•	Although Sun has the right not to complete the merger if changes, among other things, occur that have a material adverse effect on StorageTek as a whole, the effects of changes in general financial market and industry conditions to the extent such changes do not disproportionately affect StorageTek, are excluded in determining whether any material adverse effect has occurred.

	•	The merger must be approved and the merger agreement must be adopted and approved by a vote of a majority of our outstanding shares of common stock.
	•	Our board considered the presentation of Evercore on June 1, 2005 and its oral opinion, which opinion was subsequently confirmed in writing on June 2, 2005, to the effect that as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the $37 in cash

18

---

Table of Contents

		per share of StorageTek common stock to be received by the holders of StorageTek common stock pursuant to the merger agreement was fair, from a financial point of view as of the date of such opinion, to such holders. The full text of Evercore’s written opinion is attached to this proxy statement as Annex B and is incorporated by reference into this proxy statement. We urge you to read this opinion carefully in its entirety for a description of the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion.
	•	Our board considered the general terms and conditions of the merger agreement, including the parties’ representations, warranties and covenants, the conditions to their respective obligations as well as the likelihood of the consummation of the merger, the proposed transaction structure, the termination provisions of the agreement and our board’s evaluation of the likely time period necessary to close the transaction.

	Potential Negative Factors Relating to the Transaction:

	•	The merger agreement precludes us from actively soliciting alternative proposals.
	•	We are obligated to pay to Sun a termination fee of $133 million plus reimbursement of Sun’s expenses if we terminate the merger agreement under certain circumstances. It is possible that these provisions could discourage a competing proposal to acquire us or reduce the price in an alternative transaction.
	•	The merger consideration consists solely of cash and will be taxable to our stockholders for U.S. federal income tax purposes. In addition, because our stockholders are receiving cash for their stock, they will not participate after the closing in any future growth or the benefits of synergies resulting from the merger.
	•	Certain of our directors and officers may have conflicts of interest in connection with the merger, as they may receive certain benefits that are different from, and in addition to, those of our other stockholders. See “—Interests of Certain Persons in the Merger.”
	•	We may incur significant risks and costs if the merger does not close, including the diversion of management and employee attention during the period after the signing of the merger agreement, potential employee attrition and the potential effect on our business and customer relations. In that regard, under the merger agreement, we must conduct our business in the ordinary course and we are subject to a variety of other restrictions on the conduct of our business prior to completion of the merger or termination of the merger agreement, which may delay or prevent us from undertaking business opportunities that may arise.

19

---

Table of Contents

	•	analyzed certain publicly available business and financial statements, including certain financial projections, and other information relating to StorageTek;
	•	analyzed certain internal financial statements and other financial and operating data concerning StorageTek prepared by and furnished to Evercore by the management of StorageTek;
	•	analyzed certain financial projections concerning StorageTek prepared by and furnished to Evercore by the management of StorageTek;
	•	discussed the past and current operations and financial condition and the prospects of StorageTek with the management of StorageTek;
	•	reviewed the reported prices and trading activity of StorageTek common stock;
	•	compared the financial performance of StorageTek and the prices and trading activity of StorageTek common stock with that of certain publicly-traded companies and their securities that Evercore deemed relevant;
	•	reviewed the financial terms, to the extent publicly available, of certain business combinations and other transactions that Evercore deemed relevant;
	•	analyzed the effects of StorageTek’s current cash position on various valuation metrics and implied offer premiums;
	•	compared previous management plans to the actual results ultimately achieved by StorageTek;
	•	participated in discussions and negotiations among representatives of StorageTek, Sun, and their advisers;
	•	reviewed certain information concerning combination cost savings and related expenses required to achieve the cost savings (referred to in this description as synergies) expected to result from the merger that was prepared by and furnished to Evercore by the management of StorageTek;
	•	reviewed the merger agreement; and
	•	performed such other analyses and examinations and considered such other factors as Evercore in its sole judgment deemed appropriate.

20

---

Table of Contents

21

---

Table of Contents

						Premium of Merger
						Consideration of
		Historical				$37.00 per Share to
		Share Price				Historical Share Price
Current (5/31/05)		$	32.28				14.6%
One Week Prior (5/24/05)			31.54				17.3%
Four Weeks Prior (5/3/05)			28.31				30.7%
One Month Average(a)			30.25				22.3%
Two Month Average(b)			29.43				25.7%
Three Month Average(c)			30.39				21.8%
Six Month Average(d)			30.93				19.6%
One Year Average(e)			28.54				29.6%
Three Year Average(f)			24.67				50.0%
Three Year High(g)			33.92				9.1%
Three Year Low(h)			10.13				265.3%

(a)		One Month Average includes trading days from May 2, 2005 through May 31, 2005.
(b)		Two Month Average includes trading days from April 1, 2005 through May 31, 2005.
(c)		Three Month Average includes trading days from March 1, 2005 through May 31, 2005.
(d)		Six Month Average includes trading days from December 1, 2004 through May 31, 2005.
(e)		One Year Average includes trading days from June 1, 2004 through May 31, 2005.
(f)		Three Year Average includes trading days from May 31, 2002 through May 31, 2005.
(g)		Three Year High on March 7, 2005.
(h)		Three Year Low on October 9, 2002.

22

---

Table of Contents

		Premium of
		Merger				Premiums in All Cash
		Consideration of				Transactions																Premiums in All Transactions
		$37.00 per Share				between $1.0B and $10.0B																between $1.0B and $10.0B
		to Historical
		Share Price				Avg.				Median				High				Low				Avg.				Median				High				Low
Premium Paid, 1 Day Prior			14.6%(a)(d)				26.6	%			23.2	%			129.5	%			(39.2	%)			23.4	%			21.3	%			129.5	%			(39.2	%)
Premium Paid, 1 Week Prior			17.3%(b)(d)				29.1	%			24.8	%			167.4	%			(30.8	%)			25.8	%			23.0	%			167.4	%			(30.8	%)
Premium Paid, 4 Weeks Prior			30.7%(c)(d)				32.6	%			26.6	%			156.5	%			(30.7	%)			27.0	%			24.9	%			156.5	%			(30.7	%)

(a)		Relative to StorageTek’s share price on May 31, 2005.
(b)		Relative to StorageTek’s share price on May 24, 2005.
(c)		Relative to StorageTek’s share price on May 3, 2005.
(d)		Evercore also noted, in light of the fact that StorageTek had approximately $1.15 billion in cash and cash equivalents on its balance sheet as of March 31, 2005, that these three percentages would be 21.7%, 26.0% and 48.9% respectively, if the premium was calculated net of StorageTek’s cash and cash equivalents.

Target		Acquirer
Compaq		Hewlett-Packard
Quantum HDD		Maxtor
Seagate Technology		Silver Lake/ Texas Pacific
Data General		EMC
Mylex		IBM
Sequent Computer		IBM
Stratus Computer		Ascend Communications
ATL Products		Quantum
Digital Equipment Corp.		Compaq
Amdahl		Fujitsu
Tandem		Compaq
Advanced Logic Research		Gateway 2000
AST Research		Samsung

23

---

Table of Contents

		Premium of
		Merger				Premiums in All Cash																Premiums in All
		Consideration of				Storage & Enterprise																Storage & Enterprise Hardware
		$37.00 per Share				Hardware Transactions																Transactions
		to Historical
		Share Price				Avg.				Median				High				Low				Avg.				Median				High				Low
Premium Paid, 1 Day Prior			14.6%(a)(d)				9.3	%			8.6	%			17.1	%			1.6	%			21.6	%			16.7	%			55.5	%			1.6	%
Premium Paid, 1 Week Prior			17.3%(b)(d)				14.7	%			12.9	%			30.5	%			2.0	%			28.5	%			23.1	%			60.7	%			2.0	%
Premium Paid, 4 Weeks Prior			30.7%(c)(d)				44.3	%			38.5	%			106.5	%			8.8	%			41.5	%			42.2	%			106.5	%			(2.0	%)

(a)		Relative to StorageTek’s share price on May 31, 2005.
(b)		Relative to StorageTek’s share price on May 24, 2005.
(c)		Relative to StorageTek’s share price on May 3, 2005.
(d)		Evercore also noted, in light of the fact that StorageTek had approximately $1.15 billion in cash and cash equivalents on its balance sheet as of March 31, 2005, that these three percentages would be 21.7%, 26.0% and 48.9% respectively, if the premium was calculated net of StorageTek’s cash and cash equivalents.

24

---

Table of Contents

		Storage and Enterprise Hardware Public Market Multiples
														Storage								Enterprise
		StorageTek @												Hardware(a)								Hardware(b)
						Merger
						Consideration of
		Closing Price				$37.00 per
		5/31/05				Share				Sun				Mean				Median				Mean				Median
Enterprise Value/ LTM Revenue			1.1	x			1.3	x			0.6	x			2.2	x			0.5	x			1.3	x			1.4x
Enterprise Value/ CY 2005E Revenue			1.1				1.3				0.6				1.8				0.4				1.2				1.4
Enterprise Value/ CY 2006E Revenue			1.0				1.2				0.6				1.5				0.4				1.1				1.3
Enterprise Value/ LTM EBIT			11.0				13.2				NM				23.7				22.0				15.4				13.5
Enterprise Value/ CY 2005E EBIT			10.9				13.2				64.4				17.6				15.6				13.6				11.6
Enterprise Value/ CY 2006E EBIT			10.4				12.6				17.9				13.9				12.6				12.2				11.0
Price/ LTM Earnings			18.4				21.0				NM				34.9				33.6				21.5				17.2
Price/ CY 2005E Earnings			17.9				20.5				138.5				27.3				24.3				18.6				15.6
Price/ CY 2006E Earnings			16.7				19.1				59.5				24.9				22.5				16.2				14.0
2005E PEG			2.3				2.6				7.6				1.5				1.5				1.4				1.4

(a)		Storage Hardware companies include: EMC, Network Appliance, Quantum, ADIC, and Overland Storage.
(b)		Enterprise Hardware companies include: IBM, Dell, and Hewlett-Packard.

25

---

Table of Contents

Target		Acquirer
Certance		Quantum
Compaq		Hewlett-Packard
Quantum HDD		Maxtor
Seagate Technology		Silver Lake/ Texas Pacific
Data General		EMC
Mylex		IBM
Sequent Computer		IBM
Stratus Computer		Ascend Communications
ATL Products		Quantum
Digital Equipment Corp.		Compaq
Amdahl		Fujitsu
Tandem		Compaq
Advanced Logic Research		Gateway 2000
AST Research		Samsung

Storage & Enterprise

Hardware

StorageTek @ Merger

Transaction Multiples

Consideration of

$37.00 per Share

Mean

Median

Enterprise Value/ LTM Revenue

1.3x

0.9x

0.7x

Enterprise Value/ LTM EBIT

13.2

20.9

12.4

Equity Value/ LTM Net Income

21.0

27.6

23.7

26

---

Table of Contents

27

---

Table of Contents

28

---

Table of Contents

29

---

Table of Contents

30

---

Table of Contents

31

---

Table of Contents

										Dollar Value of
										Accelerated Stock
						Shares of				Options and
		Unvested Options to				Restricted Stock to				Restricted Stock
		Vest (#)				Vest (#)				($)(2)
Patrick J. Martin			524,039				411,605				19,714,053
Eula L. Adams			93,065				24,549				1,657,727
Jon H. Benson			48,093				18,512				1,065,550
Pierre J. Cousin			128,875				34,106				2,678,671
Nigel Dessau			34,840				17,029				923,426
Angel P. Garcia			141,498				36,810				2,697,139
Roger C. Gaston			113,065				32,884				2,250,726
Robert S. Kocol			135,695				61,409				3,492,918
Michael R. McLay			125,121				32,784				2,627,901
Roy G. Perry			121,594				32,778				2,332,927
Brenda J. Zawatski			79,579				33,315				1,643,930

(1)	For executive officers other than Mr. Martin, this table assumes a change in control and a termination, for reasons other than for cause, on September 1, 2005. Mr. Martin’s awards will vest immediately prior to the merger.
(2)	The dollar value of accelerated stock options is calculated by subtracting the exercise price from $37.00 per share and multiplying this amount by the total number of option shares that may be accelerated. The dollar value of accelerated restricted stock is calculated by multiplying the number of shares held by $37.00 less, if applicable, any cash that the officer paid for the restricted stock. The actual value of stock options and restricted stock that are converted to Sun stock options and restricted stock is dependent upon the market value of Sun stock at the time the stock options are exercised or the restricted stock vests.

						Dollar Value of
		Unvested Options to Vest				Accelerated Stock
		(#)				Options($)
James R. Adams			11,499				107,672
Charles E. Foster			21,500				297,691
Mercedes Johnson			29,499				308,933
William T. Kerr			11,499				107,672
Robert E. Lee			12,500				118,817
Judy C. Odom			29,499				323,432

32

---

Table of Contents

33

---

Table of Contents

		Number of Shares				Right to Acquire								Percent of Shares
Name		Owned(1) (a)				(2)(b)				Total (a) + (b)				Outstanding %(3)
Non-employee Directors
James R. Adams			27,732				45,001				72,733				*
Charles E. Foster			9,449				23,000				32,449				*
Mercedes Johnson			2,641				11,001				13,642				*
William T. Kerr			17,203				74,001				91,204				*
Robert E. Lee			13,454				20,000				33,454				*
Judy C. Odom			4,399				11,001				15,400				*
Current Executive Officers
Eula Adams			26,347				0				26,347				*
Jon Benson			21,385				23,510				44,895				*
Pierre Cousin			53,506				122,750				176,256				*
Nigel Dessau			17,029				0				17,029				*
Angel P. Garcia			39,310				42,656				81,966				*
Roger C. Gaston			58,853				52,500				111,353				*
Robert S. Kocol			79,360				140,768				220,128				*
Patrick J. Martin**			434,398				622,041				1,056,439				1.0
Michael R. McLay			32,784				28,762				61,546				*
Roy G. Perry			57,437				87,554				144,991				*
Brenda Zawatski			33,315				0				33,315				*
Current Executive Officers and Directors as a Group (17 persons)			928,602				1,304,545				2,233,147				2.0

	*	Less than 1 percent

**	Also serves as a director

(1)	Unless otherwise noted, the persons named have sole voting and dispositive power over the shares shown as owned by them. Each director has entered into a Voting Agreement with StorageTek and Sun pursuant to which the director has agreed to vote all shares of capital stock of StorageTek such person beneficially owns in favor of the approval of the Merger Agreement and the merger. See “Description of the Transaction — Voting Agreement.” Includes common stock equivalents held by three directors that will be settled in cash of $37.00 per share upon the merger, as follows: Mr. Foster, 6,949 shares; Mr. Kerr, 16,003 shares; and Mr. Lee, 10,286 shares. Also includes 11,246 common stock equivalents held by Mr. McLay that will be converted to Sun common stock equivalents upon the merger.
(2)	Represents stock option shares that are exercisable for shares of common stock by September 24, 2005, excluding any option shares that would vest in connection with the merger.
(3)	The percentage is calculated using 108,356,536 shares of common stock outstanding and entitled to vote on July 26, 2005, plus for each person or group, the number of shares shown in column (b) that such person or group has a right to acquire on or before September 24, 2005.

34

---

Table of Contents

35

---

Table of Contents

										Weighted				Unvested				Common
										Average				Restricted				Stock
		Vested				Unvested				Exercise Price				Stock				Equivalents
Name		Options (#)				Options (#)				per share($)				(#)				(#)
Non-employee Directors
James R. Adams			45,001				11,499				21.43				0				0
Charles E. Foster			23,000				21,500				21.15				0				6,949
Mercedes Johnson			11,001				29,499				26.34				0				0
William T. Kerr			74,001				11,499				34.41				0				16,003
Robert E. Lee			20,000				12,500				21.51				0				10,286
Judy C. Odom			11,001				29,499				25.80				0				0
Current Executive Officers
Eula Adams			0				93,065				28.92				24,549				0
Jon Benson			23,510				48,093				26.69				18,512				0
Pierre Cousin			109,866				141,759				23.46				34,106				0
Nigel Dessau			0				34,840				28.58				17,029				0
Angel P. Garcia			25,156				158,998				26.36				39,310				0
Roger C. Gaston			52,500				113,065				26.01				32,884				0
Robert S. Kocol			117,678				158,785				28.26				61,409				0
Patrick J. Martin*			622,041				524,039				22.10				411,605				0
Michael R. McLay			28,762				125,121				26.53				21,538				11,246
Roy G. Perry			35,803				173,345				23.97				51,528				0
Brenda Zawatski			0				79,579				31.79				33,315				0

*	Mr. Martin also serves as a director.

36

---

Table of Contents

37

---

Table of Contents

38

---

Table of Contents

39

---

Table of Contents

40

---

Table of Contents

41

---

Table of Contents

	•	organization, corporate power, capital structure and similar corporate matters;
	•	authorization, execution, delivery, performance and enforceability of the merger agreement and related matters, and the stockholder vote required to approve the merger agreement;
	•	the absence of any violation of, or conflicts with, organizational documents, certain material contracts, judgments, orders, laws or regulations as a result of entering into the merger agreement or completing the merger;
	•	the consents we are required to obtain and the filings we are required to make in connection with the merger agreement and the transactions contemplated by the merger agreement;
	•	the accuracy and completeness of the information contained in the reports and financial statements that we file with the SEC, and the compliance of our SEC filings with applicable requirements of federal securities laws;
	•	the establishment and maintenance of a system of internal controls and the absence of any significant or material weakness identified in those internal controls;

42

---

Table of Contents

	•	the absence, since April 1, 2005 through June 2, 2005, of a material adverse effect, or specified types of distributions, amendments to material contracts, entry into joint ventures, strategic partnerships, or alliances, incurrence of debt, extension of credit, acquisition or disposition of material assets or equity securities, changes in capital structure, increases in benefits or compensation, changes in severance, termination or bonus policies and practices, entry into material non-standard customer contracts, granting of material allowances to customers, material restructuring activities, material purchases of fixed assets, spares or other long-term assets, accounting changes, changes in tax elections or any material revaluation of any assets;
	•	adequacy of the governmental authorizations and permits needed to conduct our business, compliance with applicable laws and governmental orders, including export control laws, the Foreign Corrupt Practice Act, the False Claims Act, the Procurement Integrity Act and the Truth in Negotiations Act, and the absence of material pending or threatened legal proceedings against us or any material claims by us against any insurance companies;
	•	the maintenance of ownership and leasehold interests of real property material to StorageTek;
	•	absence of default or breach under our material intellectual property contracts, absence of infringement on third parties’ intellectual property, absence of granting additional rights by Sun or the surviving corporation as a result of the merger, information regarding our open source policies, deposits of our source codes, our material license-in and license-out contracts, and our customer information;
	•	absence of contracts that materially limit our ability to engage in business or use our intellectual property, grant exclusive distribution rights, or otherwise are materially adverse to our right to sell, distribute or manufacture our products or material intellectual property or to purchase or otherwise obtain any material software, components, parts or subassemblies;
	•	tax, environmental, labor and employment, employee welfare and benefit plan matters;
	•	the absence of undisclosed broker’s or finders’ fees;
	•	absence of transactions with affiliates;
	•	validness and effectiveness of our material contracts, including contracts with certain governmental entities, and absence of our default or breach under our material contracts;
	•	the accuracy and completeness of this proxy statement at the time it is filed with the SEC, at the time it is mailed to our stockholders and at the time of the special meeting; and
	•	the receipt by us of an opinion from our financial advisor.

	•	their organization, standing, corporate power and similar corporate matters;
	•	the authorization, execution, delivery, performance and enforceability of the merger agreement and related matters;
	•	the absence of any violation of, or conflicts with, organizational documents, laws or contracts, judgments, orders, laws and regulations as a result of entering into the merger agreement or completing the merger;
	•	the consents Sun and Merger Sub are required to obtain and the filings Sun and Merger Sub are required to make in connection with the merger agreement and the transactions contemplated by the merger agreement;
	•	the accuracy and completeness of the information supplied by Sun and Merger Sub for inclusion in this proxy statement;

43

---

Table of Contents

	•	the sufficiency of capital resources available to Sun to pay the merger consideration and to consummate, on the terms contemplated by the merger agreement, the merger and the other transactions contemplated thereby; and
	•	the creation of Merger Sub solely for the purpose of engaging in the transactions contemplated by the merger agreement.

	•	enter into any material new line of business;
	•	declare, set aside or pay any dividends on, or make any other distributions in respect of, our or a subsidiary’s capital stock, split, combine, or reclassify any capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of capital stock, other than any such transaction by a wholly-owned subsidiary of it that remains a wholly-owned subsidiary after such transaction, in the ordinary course of business consistent with past practice;
	•	purchase, redeem or otherwise acquire any shares of capital stock, except for repurchases of our unvested common stock at cost in connection with the termination of the employment relationship with any employee pursuant to existing stock option or purchase agreements;
	•	issue, deliver, sell, pledge or otherwise encumber any shares of our capital stock, Voting Debt (as defined in the merger agreement) or any securities convertible into such securities, or subscriptions, rights, warrants or options to acquire any such securities, or enter into any other agreements or commitments obligating it to issue any such securities or rights, other than issuances of StorageTek common stock upon the exercise of existing options or options granted under existing arrangements; issuance of StorageTek common stock to participants in the company purchase plan; and grants of stock options or other awards to our non-executive employees to acquire up to 10,000 shares of StorageTek common stock individually or up to 200,000 shares in the aggregate in any 30-day period in the ordinary course of business consistent with past practices in connection with ordinary course promotions or to new hires and which options or awards have a vesting schedule no more favorable than ratable monthly installments that vest over not less than four years and do not accelerate, or become subject to acceleration, directly or indirectly, as a result of the merger;
	•	amend our or a subsidiary’s certificates of incorporation, bylaws or other charter documents;
	•	acquire or agree to acquire by merger or otherwise any business, business organization, or division thereof, or any person or material assets;
	•	enter into any agreement, commitment or understanding with regard to any material joint venture, partnership or alliance;

44

---

Table of Contents

	•	sell, lease, license, encumber or otherwise dispose of any material properties or assets, except for the sale, lease, license, encumbrance, or disposition of immaterial properties or assets in the ordinary course of business consistent with past practice;
	•	effect any material restructuring activities, including any material reductions in force, lease terminations, restructuring of contracts or similar actions;
	•	make any loans, advances or capital contributions to, or investments in, any other person or entity, other than loans or investments to or in StorageTek or any of our wholly-owned subsidiaries, or employee loans or advances for travel and entertainment expenses made in the ordinary course of business consistent with past practices;
	•	make any change in our methods or principles of accounting or revalue any of our assets, except as required by concurrent changes in GAAP or the SEC as concurred in by our independent auditors;
	•	make or change any material election or accounting method, enter into any agreement or settle any material claim or assessment, or consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of taxes that would adversely affect us or Sun or its subsidiaries after the closing of the merger;
	•	enter into certain types of contracts, agreements, or obligations, which either provide for payments by or to us of over $20 million in any one year and not cancelable with 30 day notice, or which involve any exclusive terms binding on us, except in the ordinary course of business consistent with past practice;
	•	cancel or terminate without reasonable substitute policy therefor, or materially amend or enter into any material insurance policy, other than the renewal of existing insurance policies on substantially the same terms;
	•	commence or settle any lawsuit or proceeding by or against us or relating to any of our businesses, properties or assets, other than settlements with prejudice entered into in the ordinary course of business and requiring payment by us of monetary damages less than $250,000, net of any insurance payments;
	•	increase compensation or benefits to any of our employees or directors, adopt or amend or make any contribution to any employee plan, waive any stock repurchase rights, accelerate, amend or change the period of exercisability of any company options, reprice any company options or authorize cash payments in exchange for company options, enter into any employee agreement or indemnification agreement with any employee (other than offer letters and letter agreements entered into in the ordinary course of business consistent with past practice with employees who are terminable “at will”) or enter into any collectively bargained agreement;
	•	enter into any contracts with any non-competition, exclusivity, “most favored nations” or other preferential pricing or other material restrictions on StorageTek as the surviving corporation or Sun after the merger, except for exclusivity or preferential pricing provisions which would not restrict Sun (other than StorageTek as the surviving corporation) and entered into in the ordinary course of business consistent with past practice;
	•	provide any material refund, credit, rebate or other allowance to any end user, customer, reseller or distributor, in each case, other than in the ordinary course of business consistent with past practice;
	•	hire any non-officer employees other than in the ordinary course of business consistent with past practice or hire, elect or appoint any officers or directors;
	•	incur any indebtedness for borrowed money or guarantee any indebtedness, issue or sell any debt securities or options, warranties, calls or other rights to acquire debt securities of StorageTek or any of our subsidiaries, enter into any guarantee or any agreement to maintain any financial statement condition of any person, other than any guarantee of obligations of our wholly-owned subsidiaries in

45

---

Table of Contents

		the ordinary course of business, or in connection with the financing of ordinary course trade payables consistent with past practice;
	•	enter into, modify, amend or terminate any material contract, or waive, release or assign any material rights or claims under any material contract, in each case in a manner materially adverse to StorageTek and the subsidiaries as a whole, other than any entry into, modification, amendment or termination of any such material contract in the ordinary course of business, consistent with past practice; or
	•	take or agree to take any of the actions described above, or any other action that would prevent us from performing our covenants or agreements under the merger agreement.

	•	PROXY STATEMENT. We have agreed to prepare and file preliminary and definitive proxy statements with the SEC. We have also agreed to amend or supplement the proxy statement to reflect material information discovered prior to the effective time of the merger. Any filing of, or amendment or supplement to, the proxy statement will be carried out in consultation with Sun and subject to a reasonable opportunity for Sun to review and comment. We have agreed to advise Sun of any comments, or requests for further information, made by the SEC. We will arrange for the proxy statement to be mailed to its stockholders at the earliest practicable time after the definitive proxy statement is filed with the SEC.
	•	STOCKHOLDER MEETING. We have agreed to make arrangements for and hold a stockholders’ meeting as promptly as reasonably practicable after the date of the merger agreement for the purpose of obtaining stockholder approval of the merger agreement. We have further agreed that we will, through our board of directors, recommend that our stockholders approve the merger agreement. In addition, our directors have entered into voting agreements under which they will vote the shares of StorageTek common stock they own FOR the merger. We may adjourn or postpone the stockholders’ meeting to the extent necessary to ensure that any necessary supplement or amendment to the proxy statement is provided to our stockholders in advance of a vote on the merger agreement or, if as of the time the meeting is originally scheduled, there are insufficient shares of our common stock represented at the meeting to constitute a quorum necessary to conduct business at the meeting.
	•	CONFIDENTIALITY; ACCESS TO INFORMATION; NO MODIFICATION OF REPRESENTATIONS, WARRANTIES OR COVENANTS. We have previously entered into a confidentiality agreement with Sun, and in the merger agreement, we and Sun each reaffirmed and acknowledged our respective obligations under that agreement. We have agreed to afford to Sun and its representatives reasonable access to our properties, books, records, personnel, and all other information concerning our business, properties and personnel that Sun reasonably requests, which access will in each case be subject to certain restrictions.
	•	PUBLIC DISCLOSURE. We, on the one hand, and Sun and Merger Sub, on the other hand, are generally required to give the other the opportunity to review and comment upon, prior to issuing (or permitting any affiliate to issue), any press release or other public announcement or statement with respect to the merger agreement, the transactions contemplated by the merger agreement, or any other acquisition proposal from a third person, except if the statement is required by law, or by any national securities exchange or the National Association of Securities Dealers, Inc.

46

---

Table of Contents

	•	REGULATORY FILINGS; REASONABLE EFFORTS; ADVICE OF CHANGES. We and Sun have agreed that each of us will (and will cause our subsidiaries to) use our reasonable efforts to complete the merger, including using reasonable efforts to accomplish the following:

	•	comply with and refrain from taking any action that would impede compliance with all applicable law;
	•	obtaining any necessary consent, authorization, waiver, order or approval of, any governmental entity or any other public or private third party which is required to be obtained in connection with the merger and the transactions contemplated by the merger agreement and the making or obtaining of all necessary filings and registrations, including, without limitation, filing the Notification and Report Form pursuant to the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended and the relevant filings pursuant to the antitrust laws of the European Union and other applicable jurisdictions;
	•	promptly supply the other party with any information that may be required in order to effectuate any filings or application discussed above; consult with the other party and permit the other party to review and discuss in advance before making or submitting any of the filings to any governmental entity; coordinate with the other party in preparing and exchanging such information and promptly provide the other parties with copies of all filings, presentations or submissions with any governmental entity in connection with the merger, provided that with respect to any such filing, presentation or submission, unless such exchange is prohibited by law.
	•	notify the other promptly upon receipt of any comments and requests from any officials of any governmental entity in connection with filings made pursuant to the merger agreement;
	•	defend any lawsuits or other legal proceedings challenging the merger agreement;
	•	take any other actions necessary to cause the satisfaction of the closing conditions; and
	•	the execution and delivery of any additional instruments necessary to consummate the transactions contemplated by, and to carry out the purposes of, the merger agreement.

We and Sun have agreed not to take any action that would result in the representations and warranties in the merger agreement that are qualified as to materiality or material adverse effect becoming untrue, any of such representations and warranties that are not so qualified becoming materially untrue or any of the conditions to the merger not being satisfied, and we and Sun will promptly advise each other of any change or event which would cause or constitute a material breach of any of the representations and warranties under the merger agreement.

	•	THIRD PARTY CONSENTS. We have agreed to use reasonable efforts to seek such material third party consents, waivers and approvals required to be obtained in connection with the consummation of the merger as may be reasonably requested by Sun, and will keep Sun informed of material developments and upon request include Sun in any discussions or communications with such third parties. If the merger does not close for any reason, Sun will not be liable for any costs, claims, liabilities or damages resulting from seeking to obtain such third party consents, waivers and approvals.
	•	FORM S-8. Sun has agreed to file a registration statement on Form S-8 for the shares of Sun’s common stock issuable with respect to assumed StorageTek options to the extent Form S-8 is available within 60 days after the effective time of the merger.
	•	SECTION 16 MATTERS. Prior to the effective time, we will take all necessary steps to cause any dispositions of StorageTek common stock (including derivative securities with respect to StorageTek common stock) resulting from the merger by each individual subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to StorageTek to be exempt under Exchange Act Rule 16b-3.

47

---

Table of Contents

	•	INSURANCE APPROVAL. At least 15 days prior to the effective time, we will deliver to Sun a letter which authorizes Sun’s insurance broker, effective as of the effective time, to act as our insurance broker of record with respect to all insurance policies held by StorageTek.
	•	IMMIGRATION-RELATED LIABILITIES. Following the effective time, Sun will assume all immigration-related liabilities of StorageTek with respect to persons who are our employees as of the effective time.

	•	we give Sun at least five days prior written notice advising them that we intend to change our recommendation for the merger, specifying in reasonable detail the material terms and conditions of the Superior Proposal;
	•	during this five day period, we and our advisors negotiate in good faith with Sun to make adjustments in the terms and conditions of the merger agreement, and our board fully considers these adjustments and still concludes in good faith, after consultation with and receipt of advice from our financial and legal counsel, that we must terminate the merger agreement; and

48

---

Table of Contents

	•	we have not breached our non-solicitation obligations or failed to handle acquisition proposals in accordance with the merger agreement.

	•	the merger shall have been duly approved and the merger agreement shall have been approved and adopted by the requisite vote under applicable law, by our stockholders;
	•	there are no statutes, rules, regulations, executive orders, decrees, injunctions or other orders enacted, issued, promulgated, or enforced or entered by any governmental entity which is in effect and has the effect of making the merger illegal or otherwise prohibiting or preventing consummation of the merger; and
	•	waiting periods under the HSR Act must have expired or been terminated, and any material consents or approvals required to consummate the merger under any foreign antitrust laws must have been obtained.

	•	as of closing, the representations and warranties made by us must be true and correct, and our representations and warranties relating to capitalization, authority, takeover statutes and rights plans must be true and correct in all material respects, except where the failure to be true and correct would not, individually or in aggregate, have a material adverse effect on us;
	•	we must have performed or complied in all material respects with all agreements and covenants required to be performed or complied with by us under the merger agreement;
	•	no material adverse effect on StorageTek has occurred; and

49

---

Table of Contents

	•	there must not be any pending or threatened suit, action or proceeding asserted by any governmental entity challenging or seeking to restrain or prohibit the merger and other transactions contemplated by the merger agreement, or seeking to require us, Sun or any of our or Sun’s affiliates to effect an action of divestiture.

	•	as of closing, the representations and warranties made by Sun and Merger Sub must be true and correct, except where the failure to be true and correct does not, individually or in aggregate, materially impede the authority of Sun and Merger Sub to consummate the transactions contemplated under the merger agreement; and
	•	Sun and Merger Sub must have performed or complied with, in all material respects, all agreements and covenants required to be performed or complied with by Sun and Merger Sub under the merger agreement.

	•	changes affecting the U.S. or world economy generally;
	•	changes affecting the industry in which such entity operates generally;
	•	changes in such entity’s stock price or the trading volume in such stock;
	•	any acts of terrorism or war;
	•	the announcement of this merger agreement and the transactions contemplated thereby; or
	•	failure to meet securities analysts’ published revenue or earnings predictions; or

	•	by mutual written consent duly authorized by the boards of director of each of Sun and us;
	•	by Sun or us if the merger is not consummated by December 2, 2005, which date shall be extended to March 2, 2006 if the merger shall not have been consummated as a result of a failure to obtain required antitrust approvals;
	•	by either party if a governmental entity has issued a permanent injunction or other order or decree preventing the merger that is in effect and has become final and nonappealable;
	•	by either party if the required approval of the merger agreement by our stockholders is not obtained at the special meeting or adjournment or postponement of the special meeting;
	•	by Sun if StorageTek materially breaches its non-solicitation obligations, changes, withdraws or fails to reaffirm its recommendations of the merger, approves, recommends or enters into any competing acquisition proposal, or fails to reject a competing tender offer or exchange offer;

50

---

Table of Contents

	•	by either party if the other party breaches any of its representations, warranties, covenants or agreements in the merger agreement, which breach is incurable or is not cured within 20 days of written notice of the breach, unless such breach, if committed by Sun or Merger Sub, separately or as a whole, does not materially impede their authority to consummate the merger, or, if committed by us, separately or as a whole will not result in a material adverse effect on us;
	•	by either party if the other party fails to perform all agreements and covenants in all material respects that are required to be performed before the effective time; or
	•	by us if our board of directors effects a change of recommendation pursuant to and in compliance with the provisions described in “No Solicitation of Transactions”, upon payment by us to Sun of the termination fee of $133 million and upon our public announcement of our intention to accept or enter into the superior offer which was the subject of such change of recommendation.

	•	by either us or Sun because our stockholders fail to approve the merger at a duly convened special meeting, but only if prior to such termination another acquisition proposal to us emerges and within 12 months we either consummate an acquisition proposal or enter into a definitive agreement regarding an acquisition of StorageTek;
	•	by Sun because we change, withdraw or fail to reaffirm our recommendations of the merger, approve, recommend or enter into any competing acquisition proposal, or fail to reject a competing tender offer or exchange offer; or
	•	by us in order to enter into an agreement with respect to a superior offer.

51

---

Table of Contents

			Number of Shares of
Name and Address of Beneficial Owner			Common Stock
Name of Executive Officer			(Percent of Class)
Dodge & Cox Inc.				14,697,733
	555 California Street, 40th Floor,			(13.7%	)
	San Francisco, California 94104
Fidelity Investments				8,861,520	(1)
	82 Devonshire Street,			(8.2%	)
	Boston, Massachusetts 02109
Iridian Asset Management				8,382,625
	276 Post Road West,			(7.8%	)
	Westport, Connecticut 06880
Putnam Investment Management				7,646,676
	One Post Office Square,			(7.1%	)
	Boston, Massachusetts 02109
Private Capital Management				6,442,235
	8889 Pelican Bay Blvd.,			(6.0%	)
	Naples, Florida 34108

(1)	On July 11, 2005, Fidelity Investments filed a Schedule 13G/ A with the SEC stating that its ownership of StorageTek common stock had decreased to less than 5%.

52

---

Table of Contents

			Market Prices
			High				Low
Fiscal Year 2003
	First Quarter		$	25.43			$	20.00
	Second Quarter		$	27.00			$	20.22
	Third Quarter		$	27.90			$	24.30
	Fourth Quarter		$	26.71			$	22.35
Fiscal Year 2004
	First Quarter		$	30.41			$	25.40
	Second Quarter		$	28.62			$	25.79
	Third Quarter		$	29.00			$	23.14
	Fourth Quarter		$	31.62			$	23.82
Fiscal Year 2005
	First Quarter		$	33.92			$	29.57
	Second Quarter		$	36.40			$	27.22
	Third Quarter through July 26, 2005		$	36.75			$	36.24

	•	Rule 14a-8 under the Exchange Act requires that a stockholder proposal intended to be included in the proxy statement for the 2006 annual meeting be received at our executive offices no later than November 21, 2005. The proposal may be omitted from the annual meeting proxy statement if the submitting stockholder does not meet the applicable requirements under Rule 14a-8; and
	•	stockholder proposals for new business or suggestions for nominees to the board of directors submitted outside of Rule 14a-8 must be delivered to our Secretary at our principal executive offices no earlier than December 21, 2005 and no later than January 20, 2006.

53

---

Table of Contents

	Storage Technology Corporation
	One StorageTek Drive
	Louisville, Colorado 80028-4309
	Attention: Secretary
	Telephone: (303) 673-5151

54

---

Table of Contents

---

Table of Contents

					Page
ARTICLE I THE MERGER						1
	1.1		The Merger			1
	1.2		Effective Time; Closing			1
	1.3		Effect of the Merger			2
	1.4		Certificate of Incorporation and Bylaws			2
	1.5		Directors and Officers			2
	1.6		Effect on Capital Stock			2
	1.7		Dissenting Shares			3
	1.8		Surrender of Certificates			4
	1.9		No Further Ownership Rights in Company Common Stock			5
	1.10		Lost, Stolen or Destroyed Certificates			5
	1.11		Further Action			5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY						5
	2.1		Organization; Standing and Power; Charter Documents; Subsidiaries			6
	2.2		Capital Structure			6
	2.3		Authority; No Conflict; Necessary Consents			8
	2.4		SEC Filings; Financial Statements; Internal Controls			9
	2.5		Absence of Certain Changes or Events			10
	2.6		Taxes			12
	2.7		Title to Properties			13
	2.8		Intellectual Property			14
	2.9		Restrictions on Business Activities			16
	2.10		Governmental Authorizations			17
	2.11		Litigation			17
	2.12		Compliance with Laws			17
	2.13		Environmental Matters			18
	2.14		Brokers’ and Finders’ Fees			18
	2.15		Transactions with Affiliates			19
	2.16		Employee Benefit Plans and Compensation			19
	2.17		Contracts			23
	2.18		Insurance			24
	2.19		Export Control Laws			24
	2.20		Foreign Corrupt Practices Act			24
	2.21		Government Contracts			24
	2.22		Information Supplied			25
	2.23		Fairness Opinion			25
	2.24		Takeover Statutes and Rights Plans			25
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB						26
	3.1		Organization			26
	3.2		Authority; No Conflict; Necessary Consents			26
	3.3		Capital Resources			27
	3.4		Information Supplied			27
	3.5		Operations of Merger Sub			27
ARTICLE IV CONDUCT BY THE COMPANY PRIOR TO THE EFFECTIVE TIME						27
	4.1		Conduct of Business by the Company			27
	4.2		Procedures for Requesting Parent Consent			30

Annex A-i

---

Table of Contents

					Page
ARTICLE V ADDITIONAL AGREEMENTS						30
	5.1		Proxy Statement			30
	5.2		Meeting of Company Stockholders; Board Recommendation			30
	5.3		Acquisition Proposals			31
	5.4		Confidentiality; Access to Information; No Modification of Representations, Warranties or Covenants			33
	5.5		Public Disclosure			34
	5.6		Regulatory Filings; Reasonable Efforts			34
	5.7		Notification of Certain Matters			36
	5.8		Third-Party Consents			36
	5.9		Equity Awards and Employee Matters			37
	5.10		Form S-8			38
	5.11		Indemnification			38
	5.12		Section 16 Matters			38
	5.13		Insurance Approval			39
	5.14		Immigration-Related Liabilities			39
ARTICLE VI CONDITIONS TO THE MERGER						39
	6.1		Conditions to the Obligations of Each Party to Effect the Merger			39
	6.2		Additional Conditions to the Obligations of Parent			39
	6.3		Additional Conditions to the Obligations of the Company			40
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER						40
	7.1		Termination			40
	7.2		Notice of Termination; Effect of Termination			42
	7.3		Fees and Expenses			42
	7.4		Amendment			43
	7.5		Extension; Waiver			43
ARTICLE VIII GENERAL PROVISIONS						43
	8.1		Non-Survival of Representations and Warranties			43
	8.2		Notices			44
	8.3		Interpretation; Knowledge			44
	8.4		Counterparts			45
	8.5		Entire Agreement; Third-Party Beneficiaries			45
	8.6		Severability			45
	8.7		Other Remedies			46
	8.8		Governing Law			46
	8.9		Rules of Construction			46
	8.10		Assignment			46
	8.11		Waiver of Jury Trial			46

Annex A-ii

---

Table of Contents

Acquisition Proposal			5.3(f)(i)
Acquisition			7.3(b)(iii)
Action of Divestiture			5.6(e)
Agreement			Preamble
Alternative Transaction Announcement			7.1
Bid			2.21
the business of			8.3(a)
Business Day			1.2
Cancellation Payment			1.6(c)
Certificate of Merger			1.2
Certificates			1.8(c)
Change of Recommendation Notice			5.3(d)(iii)
Change of Recommendation			5.3(d)
Closing			1.2
Closing Date			1.2
COBRA			2.16(a)
Code			1.8(d)
Company Balance Sheet			2.4(b)
Company Charter Documents			2.1(b)
Company Common Stock			1.6(a)
Company Disclosure Letter		Article II Preamble
Company Employee Plan			2.16(a)
Company Environmental Permits			2.13(c)
Company Financials			2.4(b)
Company Government Contract			2.21
Company Government Subcontract			2.21
Company Intellectual Property			2.8(a)
Company Material Contract			2.17(a)
Company Options			2.2(c)
Company Preferred Stock			2.2(a)
Company Products			2.8(a)
Company Purchase Plans			1.6(f)
Company Registered Intellectual Property			2.8(a)
Company Rights Agreement			2.2(a)
Company Rights			2.2(a)
Company SEC Reports			2.4(a)
Company Stock Option Plans			2.2(c)
Company Unvested Common Stock			1.6(b)
Company			Preamble
Confidentiality Agreement			5.4(a)
Contract			2.1(a)
Customer Information			2.8(l)
Delaware Law			Recitals
Dissenting Shares			1.7(a)
DOJ			2.3(c)
DOL			2.16(a)
Effect			8.3(c)
Effective Time			1.2
Employee Agreement			2.16(a)
Employee			2.16(a)
End Date			7.1(b)
ERISA Affiliate			2.16(a)
ERISA			2.16(a)
Exchange Act			2.3(c)

Annex A-iii

---

Table of Contents

Exchange Agent			1.8(a)
Exchange Fund			1.8(b)
Export Approvals			2.19(a)
FCPA			2.20
FTC			2.3(c)
GAAP			2.4(b)
Governmental Authorizations			2.10
Governmental Entity			2.3(c)
Hazardous Material			2.13(a)
Hazardous Materials Activities			2.13(b)
HSR Act			2.3(c)
Include, Includes, Including			8.3(a)
Indemnified Parties			5.11(a)
Intellectual Property Rights			2.8(a)
Intellectual Property			2.8(a)
International Employee Plan			2.16(a)
IRS			2.16(a)
Knowledge			8.3(b)
Lease Documents			2.7(b)
Leased Real Property			2.7(a)
Legal Requirements			2.2(e)
Liens			2.1(c)
Material Adverse Effect			8.3(c)
Merger Consideration			1.6(a)
Merger Sub Common Stock			1.6(e)
Merger Sub			Preamble
Merger			1.1
Necessary Consents			2.3(c)
Non-Employee Options			1.6(c)
Open Source			2.8(h)
Option Ratio			5.9(a)
Parent Common Stock			5.1
Parent			Preamble
Pension Plan			2.16(a)
Person			8.3(d)
Proxy Statement			2.22
Registered Intellectual Property			2.8(a)
Returns			2.6(b)(i)
SEC			2.3(c)
Second Request Responses			5.6(a)2.3(c)
Securities Acts			2.4(a)
Shrink-Wrapped Code			2.8(a)
Significant Subsidiary			2.1(b)
Source Code			2.8(a)
Stockholders’ Meeting			5.2(a)
Subsidiary Charter Documents			2.1(b)
Subsidiary			2.1(a)
Superior Offer			5.3(f)(ii)
Surviving Corporation			1.1
Tax			2.6(a)
Taxes			2.6(a)
Termination Fee			7.3(b)(i)
Trade Secrets			2.8(a)
Triggering Event			7.1
Voting Agreements			Recitals
Voting Debt			2.2(d)
WARN			2.16(a)

Annex A-iv

---

Table of Contents

---

Table of Contents

Annex A-2

---

Table of Contents

Annex A-3

---

Table of Contents

Annex A-4

---

Table of Contents

Annex A-5

---

Table of Contents

Annex A-6

---

Table of Contents

Annex A-7

---

Table of Contents

Annex A-8

---

Table of Contents

Annex A-9

---

Table of Contents

Annex A-10

---

Table of Contents

Annex A-11

---

Table of Contents

Annex A-12

---

Table of Contents

Annex A-13

---

Table of Contents

Annex A-14

---

Table of Contents

Annex A-15

---

Table of Contents

Annex A-16

---

Table of Contents

Annex A-17

---

Table of Contents

Annex A-18

---

Table of Contents

Annex A-19

---

Table of Contents

Annex A-20

---

Table of Contents

Annex A-21

---

Table of Contents

Annex A-22

---

Table of Contents

Annex A-23

---

Table of Contents

Annex A-24

---

Table of Contents

Annex A-25

---

Table of Contents

Annex A-26

---

Table of Contents

Annex A-27

---

Table of Contents

Annex A-28

---

Table of Contents

Annex A-29

---

Table of Contents

Annex A-30

---

Table of Contents

Annex A-31

---

Table of Contents

Annex A-32

---

Table of Contents

Annex A-33

---

Table of Contents

Annex A-34

---

Table of Contents

Annex A-35

---

Table of Contents

Annex A-36

---

Table of Contents

Annex A-37

---

Table of Contents

Annex A-38

---

Table of Contents

Annex A-39

---

Table of Contents

Annex A-40

---

Table of Contents

Annex A-41

---

Table of Contents

Annex A-42

---

Table of Contents

Annex A-43

---

Table of Contents

	Sun Microsystems, Inc.
	4120 Network Circle
	Santa Clara, CA 95054
	Attention: Brian Sutphin
	Telephone No.: 1-800-555-9786
	Telecopy No.: 1-408-276-4601
	with copies to:
	Sun Microsystems, Inc.
	4120 Network Circle
	Santa Clara, CA 95054
	Attention: Brian Martin
	Telephone No.: 1-800-555-9786
	Telecopy No.: 1-408-276-4601
	and
	Wilson Sonsini Goodrich & Rosati
	Professional Corporation
	650 Page Mill Road
	Palo Alto, California 94304-1050
	Attention: Martin W. Korman
	Telephone No.: (650) 493-9300
	Telecopy No.: (650) 493-6811
	if to the Company, to:
	Storage Technology Corporation
	One StorageTek Drive
	Louisville, Colorado 80028
	Attention: Patrick J. Martin
	Telephone No.: (303) 673-5151
	Telecopy No.: (303) 673-4150
	with copies to:
	Cadwalader, Wickersham & Taft LLP
	One World Financial Center
	New York, NY 10281
	Attention: Dennis J. Block
	Telephone No.: (212) 504-5555
	Telecopy No.: (212) 504-6666

Annex A-44

---

Table of Contents

Annex A-45

---

Table of Contents

Annex A-46

---

Table of Contents

	SUN MICROSYSTEMS, INC.

	By:	/s/ Mark Canepa

	Mark Canepa
	Executive Vice President,
	Network Storage Group
	STANFORD ACQUISITION CORPORATION

	By:	/s/ Brian Martin

	Brian Martin
	President
	STORAGE TECHNOLOGY CORPORATION

	By:	/s/ Patrick J. Martin

	Patrick J. Martin
	Chairman of the Board, President and
	Chief Executive Officer

Annex A-47

---

Table of Contents

	(i)	analyzed certain publicly available business and financial statements, including publicly available financial projections, and other information relating to StorageTek;
	(ii)	analyzed certain internal financial statements and other financial and operating data concerning StorageTek prepared by and furnished to us by the management of StorageTek;
	(iii)	analyzed certain financial projections concerning StorageTek prepared by and furnished to us by the management of StorageTek;
	(iv)	discussed the past and current operations and financial condition and the prospects of StorageTek with the management of StorageTek;
	(v)	reviewed the reported prices and trading activity of the Common Stock of StorageTek;
	(vi)	compared the financial performance of StorageTek and the prices and trading activity of the Common Stock of StorageTek with that of certain publicly-traded companies and their securities that we deemed relevant;
	(vii)	reviewed the financial terms, to the extent publicly available, of certain business combinations and other transactions that we deemed relevant;
	(viii)	analyzed the effects of StorageTek’s current cash position on various valuation metrics and implied offer premiums;
	(ix)	compared previous management plans to the actual results ultimately achieved by StorageTek;
	(x)	participated in discussions and negotiations among representatives of StorageTek, Sun Microsystems, and their advisers;

Annex B-1

---

Table of Contents

	(xi)	reviewed certain information concerning combination cost savings and related expenses required to achieve the cost savings (“Synergies”) expected to result from the Merger that was prepared by and furnished to us by the management of StorageTek;
	(xii)	reviewed the Merger Agreement; and
	(xiii)	performed such other analyses and examinations and considered such other factors as we have in our sole judgment deemed appropriate.

Annex B-2

---

Table of Contents

	Very truly yours,
	EVERCORE GROUP INC.

	By:	/s/ Timothy G. LaLonde

	Name: Timothy G. LaLonde

	Title:	Authorized Person

Annex B-3

---

Table of Contents

Annex C-1

---

Table of Contents

Annex C-2

---

Table of Contents

Annex C-3

---

Table of Contents

Annex C-4

---

Table of Contents

Company Number
Account Number
You may enter your voting instructions at 1-800-PROXIES or www.voteproxy.com up until 11:50 PM Eastern Time the day before the cut-off or meeting date.

---

Table of Contents

FOR

AGAINST

ABSTAIN

To approve the Agreement and Plan of Merger, dated as of June 2, 2005, among Storage Technology Corporation, Sun Microsystems, Inc. and Stanford Acquisition Corporation, a wholly owned subsidiary of Sun Microsystems, Inc., pursuant to which, upon the merger becoming effective, each share of common stock, par value $0.10 per share, of Storage Technology Corporation will be converted into the right to receive $37 in cash, without interest

o

o

o

To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be substituted via this method.

o

Signature:				Date:
Signature:				Date: