CEO Employment Agreement

                                 Effective from

                                  July 11, 2000

This CEO Employment Agreement (the "Agreement") is entered into on June 28, 2000
with an effective  date for the start of  employment  and the  assumption of the
offices  specified herein of July 11, 2000 (the "Effective Date") by and between
Storage  Technology  Corporation (the "Company"),  a Delaware  corporation,  and
Patrick J.  Martin  (hereinafter,  "you" or "your") and sets forth the terms and
conditions  of your  employment  with  the  Company.  In  consideration  of your
employment by the Company on the terms and conditions  set forth below,  and the
mutual covenants and agreements  contained herein,  you and the Company agree as

1.    Position.  During the Term (as  defined in Section 2,  below),  you will
            be employed  full-time  by the Company in the position of Chairman
            of the Board of Directors,  President and Chief Executive  Officer
            of the Company,  and shall report  directly to the Company's Board
            of  Directors  (the  "Board").  At a  meeting  of the  Board or an
            appropriate  committee  thereof,  scheduled  to take  place on the
            Effective  Date,  (i) you  will be  elected  by the  Board to be a
            Director and  Chairman of the Board;  (ii) you will be appointed a
            corporate  officer,  in your new capacity as  President  and Chief
            Executive  Officer;  and (iii) your  appointment will be announced
            publicly.  In such  capacity,  you will  perform  such  duties and
            have such  responsibilities  as may be  assigned by the Board from
            time to time that are  normally  inherent  in such  capacities  in
            corporations  of similar size and character.  During the Term, you
            shall devote  substantially  all of your working  time,  attention
            and  energies to the  business of the Company and shall be subject
            to the Company's  Corporate  Policies and  Practices  from time to
            time in effect  during the Term.  Nothing  herein  shall  preclude
            you from (i) serving on the boards of  directors  of a  reasonable
            number of other  corporations  with the  concurrence  of the Board
            (which approval shall not be unreasonably withheld),  (ii) serving
            on the boards of a reasonable number of trade associations  and/or
            charitable organizations,  (iii) engaging in charitable activities
            and   community   affairs,   and  (iv)   managing   your  personal
            investments  and affairs,  provided  that such  activities  do not
            conflict or interfere with the effective  discharge of your duties
            and responsibilities under this Section 1.

2.    Employment.  The  provisions  of this  Agreement  shall  terminate  four
            years after the Effective Date ("Term");  provided,  however, that
            until such time as notice of  non-renewal  or  termination  of the
            Agreement  is given by  either  you or the  Company  to the  other
            party,  ninety days or more prior to  expiration  of the  existing
            Term, of either party=s  decision not to renew,  the Term and this
            Agreement shall  automatically be renewed for subsequent  one-year
            terms;  provided  further that in no event shall the Term and this
            Agreement  be so  extended  to a date more than six years from the
            Effective Date.

3.    Base  Compensation.  For your services during the Term, the Company will
            pay you a base salary at the  annualized  rate equal to  $800,000.
            Such salary  shall be paid  periodically  in  accordance  with the
            normal  payroll  practices  of the  Company in effect from time to
            time during the Term, less any  withholding  taxes as set forth in
            Section  16(a),  below.  The  amount  of your base  salary  may be
            increased  by the Board  from time to time  during  the Term (such
            annualized  base salary as may be  increased  from time to time by
            the Board is referred to in this Agreement as "Base Salary").

4.    Incentive Plans.

      a)    Annual  Incentive  Bonuses.  With  respect  to the years  2000 and
            2001,  you will instead of a bonus under this section  receive the
            payments  described  in Section 6. During the Term,  with  respect
            to years  following 2001, you shall be eligible to receive bonuses
            under the terms and  conditions  of the  Management  by Objectives
            Program,  as modified from time to time (AMBO  Program@)  approved
            by the Board or the Human Resources and Compensation  Committee of
            the  Board,   based  upon  the   achievement  of   pre-established
            financial  and other  corporate  or  personal  performance  goals.
            Under the MBO  Program  you shall be  eligible  to receive a bonus
            equal  to  100%  of  your  Base  Salary  at the  target  level  of
            performance.  (Such annualized  target bonus under the MBO Program
            as may be increased  from time to time by the Board is referred to
            in this  Agreement  as "Target  Bonus").  Additionally,  under the
            MBO Program you will be eligible to receive a bonus  payment equal
            to 200%  of your  Base  Salary  if  certain  Astretch@  goals  are
            achieved  (as  that  term  is  defined  in the MBO  Program)  or a
            payment  of  up  to  350%  of  your  Base  Salary  should  certain
            Aultra-stretch@  goals be achieved (as that term is defined in the
            MBO Program).  Any payments under the MBO Program shall be made in
            accordance  with the  provisions  of,  and  under  the  conditions
            contained  in, the MBO Program,  except as  otherwise  provided in
            this Agreement,  including the payment of a certain  percentage of
            that bonus in stock or common  stock  equivalents,  at the Board=s
            discretion,  which  amount  is  currently  set at  40% of the  MBO
            Program  bonus  payout.  As  used  in  this  Agreement,  the  term
            AAnnual  Bonus@  includes the 2000 Incentive  Guarantee,  the 2001
            Incentive  Guarantee (both as defined in Section 6) and the Target

      b)    Additional  Long-Term  Incentive  Awards.  You shall be  eligible to
            participate  on an ongoing  basis in all long-term  incentive  plans
            made available to senior executives, including stock option or other
            equity-based  awards,  commencing with awards for 2001, or sooner at
            the discretion of the Board,  in accordance  with Company  practices
            applicable to its senior-level executives,  at the discretion of the

5.    Sign-on Equity Arrangements.
 a)    Stock  Option/Restricted  Share  Grant.  The Company will grant to
            you on the Effective Date options to purchase  1,000,000 shares of
            the Company=s common stock plus, if necessary,  additional options
            and/or shares of its restricted  stock,  or a combination  thereof
            (such  options  and any shares of  restricted  stock to be granted
            under the Company=s 1995 Equity  Participation Plan (the APlan@)),
            such that the  aggregate  amount  realizable by you as of any date
            after the  Effective  Date upon  exercise of such options and sale
            of any such  restricted  stock would be $5,000,000 if the price of
            the Company=s  common stock were $16, all such options were vested
            and  exercisable,  and all such shares were free of  restrictions.
            The  exercise  price of all such  options  will be set at the Fair
            Market  Value as  defined in the Plan for  options  granted on the
            Effective  Date (which Fair Market Value will be the closing price
            of the  Company=s  common  stock  as  quoted  at the  close of the
            market on the preceding  trading  day).  Such options and any such
            restricted  stock  will  vest in  equal  increments  of 25% of the
            total  number of options or shares of  restricted  stock  granted.
            The first 25%  tranche of such  options and any  restricted  stock
            shall vest on the  Effective  Date and the  remaining  75% of such
            options  and  any  restricted  stock  shall  vest in  three  equal
            increments  of  25%  of  the  total  number  of  options  and  any
            restricted  stock  granted on each of January 1, 2001;  January 1,
            2002 and January 1, 2003.  Under the terms of the Plan,  except as
            otherwise  provided herein,  such options when vested shall remain
            exercisable for a period of ten years.

            Attached  as Exhibit C hereto is the form of Employee  Stock  Option
            Agreement to be used with respect to such options,  and as Exhibit D
            hereto is the form of  Restricted  Stock  Agreement  to be used with
            respect to any restricted stock granted pursuant to this Agreement.

      b)    Share  Grant.  On the  Effective  Date the Company will grant to you
            100,000  registered and freely tradeable shares of its common stock,
            which shall be vested immediately.

6.    Sign-on Incentive Guarantees.
   a)    2000  Incentive  Guarantee.  You will be granted on the  Effective
            Date  a   guaranteed   incentive   award  (the   A2000   Incentive
            Guarantee@),  in lieu of an award  under the  second  half  fiscal
            year 2000 MBO  Program,  equal to the  greater  of either  (i) the
            amount that you would have been paid under  Section 4,  above,  if
            the MBO Program applied,  were an award to be made to participants
            in the MBO Program;  or (ii) $400,000,  said payment to be made to
            you no later than the first  business day in January  2001; if the
            amount due is greater than $400,000,  then the  additional  amount
            shall be paid no later  than the date at which  payments  are made
            to participants in the MBO Program.

      b)    2001  Incentive  Guarantee.  You will be granted on the  Effective
            Date  a   guaranteed   incentive   award  (the   A2001   Incentive
            Guarantee@),  in lieu of an award  under the full fiscal year 2001
            MBO  Program,  equal to the  greater of either (i) the amount that
            you would  have been  paid  under  Section  4,  above,  if the MBO
            Program  applied,  were an award to be made to participants in the
            MBO Program;  or (ii) $800,000,  said payment to be made to you no
            later than the first  business day in January  2002; if the amount
            due is greater than $800,000,  then the additional amount shall be
            paid  no  later  than  the  date at  which  payments  are  made to
            participants in the MBO Program.

7.          Sign-on Bonus. You will be paid, on the Effective Date or as soon as
            reasonably  practicable   thereafter,   a  sign-on  bonus  equal  to

8. Reimbursement of Business and Other Expenses; Relocation.

      a)    Expenses.  You are  authorized  to incur  reasonable  expenses  in
            carrying   out  your  duties  and   responsibilities   under  this
            Agreement  and the Company  shall  promptly  reimburse you for all
            reasonable  business expenses incurred in connection with carrying
            out the  business  of the  Company,  subject to  documentation  in
            accordance  with the Company=s  policy.  The Company shall pay all
            reasonable  financial  and  tax  consultant  and  legal  fees  and
            expenses  incurred by you in connection  with the  negotiation  of
            your employment arrangements with the Company.
     b)    Relocation  Expense  Reimbursement.   It  is  agreed  that  within
            twelve  months  of the  Effective  Date  you  will  relocate  your
            primary   residence  to  the   Louisville,   Colorado   area.   In
            completing  such  relocation,  you will be eligible to participate
            in  the  Company=s  executive  relocation  reimbursement  program.
            Specifically,  the Company  will either pay or  reimburse  you for
            the following  expenses which payments or reimbursements  shall be
            grossed-up to the extent they are taxable to you.

            i)    Shipment of  household  goods and  automobiles  to Colorado,
                  plus storage of  household  goods while you are in temporary
                  living accommodations;
            ii)   Temporary living in Colorado for you and your family for up to
                  120 days;
            iii)  Travel,  meals and  lodging en route to  Colorado  for you and
                  your family;
            iv)   Two  house-hunting  trips to Colorado  for you and your spouse
                  for up to a total of ten days;
            v)    Reasonable  and standard  closing  costs  associated  with the
                  purchase  of a home in  Colorado,  provided  that such home is
                  purchased within 24 months of the Effective Date;
            vi)   Realtor  fees and  closing  costs on the sale of your  current
                  residence,  provided that such sale occurs within 24 months of
                  the Effective Date; and
            vii)  A  one-time  relocation  allowance  equal  to 8% of your  Base

            Should your  employment  with the Company be terminated  per Section
            9(b) below within two years of the Effective Date, then an aggregate
            amount equal to the sum of all amounts in respect of relocation paid
            to you  pursuant to this  Section,  adjusted  for any  negative  tax
            effect on you but  without  requiring  you to amend  any tax  return
            already  filed  and  reduced  by 1/24 per  month  over a  period  of
            twenty-four  months  starting  from  the  Effective  Date,  shall be
            repayable  by  you  to  the  Company   within  thirty  days  of  the
            Termination Date.

      c)    Post-Termination  Relocation.  Following  Involuntary  Termination
            of your  employment  with the Company under Section 9(a) below, or
            upon  retirement or death,  the Company will relocate you and your
            family  to the  location  of your  choice  in the  United  States,
            covering  the  same  expenses  listed  above on a  tax-grossed  up
            basis.  In  addition,  in the event that you suffer a loss on sale
            of  your  principal  residence  in  Colorado,   the  Company  will
            reimburse you for the loss.

9.    Termination of Employment; Severance Benefits.

      a)    Involuntary  Termination.  If  your  employment  terminates  as  a
            result  of an  Involuntary  Termination  other  than for Cause (as
            defined in Section 10(a) below),  you shall be entitled to receive
            a severance  payment  equal to the sum of (i) two  times your Base
            Salary  for the  fiscal  year  then in  effect  or the  cumulative
            amount  of Base  Salary  remaining  to be paid  during  the  Term,
            whichever  amount is  greater,  plus  (ii) two  times your  Annual
            Bonus for the  fiscal  year then in  effect,  whether  or not such
            bonus would  otherwise be payable,  or the  pro-rata  Target Bonus
            amounts  that  would  have been  paid  over the Term  based on the
            Target Bonus for the fiscal year then in effect,  whichever amount
            is  greater  (or,  if no Target  Bonus is in effect for such year,
            the highest  Target Bonus in the three  preceding  fiscal  years);
            provided,  that in the event of an Involuntary  Termination upon a
            Change of Control (as defined in Section 10(b),  below), you shall
            be  entitled to receive a  severance  payment  equal to the sum of
            (i) three  times  your Base  Salary  for the  fiscal  year then in
            effect,  plus (ii) three times your Annual  Bonus,  whether or not
            such bonus would  otherwise  be payable (or, if no Target Bonus is
            in effect for such year,  the  highest  Target  Bonus in the three
            preceding  fiscal  years).  You  shall  also  be  entitled  to the
            following  payments:  (i)  Base  Salary  through  the  Termination
            Date;  (ii) if  termination  occurs prior to 2002, the full amount
            of the 2000 Incentive Guarantee and the 2001 Incentive  Guarantee,
            to the  extent  not  previously  paid,  or if  termination  occurs
            following   2001,  a  pro  rata  Target  Bonus  for  the  year  of
            termination  (to the  extent  such a bonus  is  payable  to  other
            participants  in  the  MBO  Program);  (iii)  the  balance  of any
            incentive  awards  due for  performance  periods  which  have been
            completed,  but which have not yet been paid;  (iv) stock  options
            or  restricted  stock  pursuant to Section  9(d);  (v) any expense
            reimbursements  or other unpaid amounts  earned,  accrued or owing
            to you;  or  (vi)  other  benefits,  if any,  in  accordance  with
            applicable  plans  and  programs  of the  Company.  Any  severance
            payments to which you become  entitled  pursuant  to this  Section
            9(a)  shall  be paid to you in a lump sum  within  thirty calendar
            days of your  Termination  Date and shall be paid  contingent upon
            your  execution  and delivery to the Company of a  Settlement  and
            Release  Agreement  substantially  in the form attached  hereto as
            Exhibit A.   The   Company   will   execute  and  deliver  to  you
            simultaneously  therewith a  Settlement  and Release  Agreement in
            the form  attached  hereto as  Exhibit  B. In case of  Disability,
            you shall,  in  addition,  be entitled to any  benefits  available
            under the  Company=s  employee or executive  disability  policies.
            For  purposes of this  Section  9(a),  any  reference to your Base
            Salary or Target Bonus shall be  understood to refer to the amount
            thereof  disregarding any reduction that  constitutes  grounds for
            Involuntary Termination as contemplated by Section 10(d).

     b)    Voluntary   Resignation;   Termination   For  Cause.   1)  If  you
            voluntarily  resign from the Company (other than as an Involuntary
            Termination),  or if the Company  terminates  your  employment for
            Cause,  then you shall not be entitled to receive any severance or
            other   benefits   other  than  (i)  Base  Salary   through   your
            Termination  Date; (ii) stock options or restricted stock pursuant
            to Section 9(d); (iii) any expense  reimbursements or other unpaid
            amounts earned,  accrued or owing to you; (iv) other benefits,  if
            any,  in  accordance  with  applicable  plans or  programs  of the
            Company;  and (v) except in case of  termination  for  Cause,  any
            remaining  unpaid  amounts  pursuant  to Section 6.  Further,  you
            hereby  authorize the Company to offset any amounts owed by you to
            the Company  against any amounts the Company  might  otherwise owe
            to you on the Termination Date.

            2) There will be no termination  for Cause without your first having
            been given written notice  thereof in accordance  with Section 9(g),
            and then having been given a reasonable  opportunity  to be heard by
            the Board.

      c)    Death:  In the  event of your  death,  your  legal  representative
            shall  receive (i) your Base  Salary  through the end of the month
            in which death  occurs;  (ii) if death occurs  prior to 2002,  the
            full  amount  of  the  2000  Incentive   Guarantee  and  the  2001
            Incentive  Guarantee,  to the extent not  previously  paid,  or if
            death occurs  following  2001,  your pro-rata  Target Bonus amount
            for the fiscal year in which  death  occurs,  at the Target  Bonus
            for the  fiscal  year then in  effect,  whether  or not such Bonus
            would  otherwise have been payable;  (iii) any  incentives,  other
            than  stock  options or  restricted  stock,  on a pro-rata  basis,
            payable  when  scheduled  to  be  paid;   (iv)  stock  options  or
            restricted  stock  pursuant  to  Section  9(d);  (v)  any  expense
            reimbursements  or other earned,  accrued or unpaid  amounts owing
            to you;  and (vi)  other  benefits,  if any,  in  accordance  with
            applicable plans or programs of the Company.

      d)    Restricted  Stock  and  Stock  Options.   1)  In  the  event  your
            employment  terminates  for any reason  other  than a  termination
            pursuant to Section 9(b),  then, in addition to such  severance as
            you may otherwise  receive,  all unvested stock options granted to
            you  under  the  Company's   stock  option  plans  (or  under  any
            successor  company's  stock  option  plans)  shall vest and become
            exercisable  in full,  and the Company's  right to repurchase  any
            shares of restricted  stock  purchased  under any of the Company's
            stock plans on or after the  Effective  Date shall  terminate  and
            all such stock shall become fully vested.  In addition,  any stock
            options  granted  to  you  shall  remain   exercisable  for  their
            originally  scheduled  terms,  subject to the other original terms
            and conditions of such options.

         2) In the event your employment is terminated pursuant to Section 9(b),
            you shall be entitled to exercise  your vested  options for a period
            of 180 days (plus any number of days during which  exercise would be
            restricted for any reason)  following your  termination and unvested
            options shall be forfeited.

      e)    Medical  Benefits.  In the  event  you  are  entitled  to  receive
            severance  payments pursuant to Section 9(a), then, in addition to
            such  severance  payments,  the  Company  shall pay you a lump sum
            payment in an amount that the  Company  reasonably  determines  to
            represent  the  estimated  cost that you may incur to extend for a
            twenty-four  month  period under the COBRA  continuation  laws the
            medical  coverage  for you and your  dependents  in  effect on the
            Termination  Date or, in the event of an  Involuntary  Termination
            upon a Change in Control,  for a  thirty-six  month  period.  Such
            payment  may be used for  such  continuation  coverage  or for any
            other purpose.

    f)    Other  Benefits.  In the  event  you  are  entitled  to  severance
            payments  pursuant  to Section  9(a),  then,  in  addition to such
            severance  payments,  (i) for a period of twenty-four months after
            the  Termination  Date (for a period of  thirty-six  months in the
            event of an  Involuntary  Termination  upon a Change of  Control),
            the  Company  shall  continue  to provide  you with (A)  long-term
            disability  insurance  benefits as in effect as of the Termination
            Date, or such comparable  benefits as the Company may determine to
            be  sufficient  to  satisfy  its  obligations  to you  under  this
            Agreement;  and (B) the allowance for financial and tax and estate
            planning  services in effect on the  Termination  Date (as defined
            in  Section  10(e),  below)  and (ii) for a period of  twenty-four
            months  after the  Termination  Date  (for a period of  thirty-six
            months in the event of an  Involuntary  Termination  upon a Change
            of Control),  the Company shall  continue to provide you with life
            insurance benefits.  Notwithstanding the foregoing,  if you become
            covered under any life or disability  insurance plan provided by a
            subsequent  employer,  then the amount of coverage  required to be
            provided by the Company  hereunder  shall be reduced by the amount
            of coverage provided by the subsequent employer's insurance plans.

      g)    Notice of  Termination.  Any  termination (of your employment with
            the  Company  other  than  by  reason  of  your  death)  shall  be
            communicated by a notice of termination  given by one party to the
            other in  accordance  with Section 16(d) of this  Agreement.  Such
            notice shall indicate the specific  termination  provision in this
            Agreement  relied upon,  shall set forth in reasonable  detail the
            facts  and   circumstances   claimed   to   provide  a  basis  for
            termination  under the provision so  indicated,  and shall specify
            the Termination Date (as defined in Section 10(e), below).

      h)    No  Mitigation;  No  Offset.  In the  event  of any  termination  of
            employment under this Section 9, you shall be under no obligation to
            seek other  employment  and, except as otherwise  stated  explicitly
            herein,  there shall be no offset against amounts due you under this
            Agreement  on  account  of  any   remuneration   received  from  any
            subsequent employer.

      i)    Nature of Payments.  Any amounts due under this Section 9 are in the
            nature of severance  payments  considered  to be  reasonable  by the
            Company and are not in the nature of a penalty.

10.   Certain Defined Terms.

      a)    Cause.  "Cause" means (i)      you  are   convicted  of  a  felony
            involving  moral turpitude or involving fraud against the Company,
            or (ii) you are guilty of willful  gross  neglect or willful gross
            misconduct  in  carrying  out your  duties  under this  Agreement,
            resulting,  in  either  case,  in  material  economic  harm to the
            Company,  unless you  believed  in good faith that your  action or
            non-action  was in or not  opposed  to the best  interests  of the

  b)        Change of Control.  "Change of Control"  means the occurrence of any
            of the following events:

            i)    The  acquisition  by any  "person"  (as such term is used in
                  Sections 13(d) and 14(d) of the  Securities  Exchange Act of
                  1934, as amended),  other than the Company or a person that,
                  on  the  Effective  Date  and  immediately   prior  to  such
                  acquisition,  directly or indirectly controls, is controlled
                  by, or is under common  control  with,  the Company,  of the
                  "beneficial  ownership" (as defined in Rule 13d-3 under said
                  Act),  directly or indirectly,  of securities of the Company
                  representing  thirty-five percent (35%) or more of the total
                  voting power  represented by the Company's then  outstanding
                  voting securities; or

            ii)   the majority of the Board consists of  individuals  other than
                  Incumbent Directors, which term means the members of the Board
                  on the Effective  Date;  provided  that any person  becoming a
                  director  subsequent to such date whose election or nomination
                  for election was supported by  three-quarters of the directors
                  who then comprised the Incumbent Directors shall be considered
                  to be an Incumbent Director;

            iii)  merger  or  consolidation  of the  Company  with  any  other
                  corporation,  other  than a merger  or  consolidation  which
                  would  result  in  the  voting  securities  of  the  Company
                  outstanding   immediately   prior   thereto   continuing  to
                  represent  (either  by  remaining  outstanding  or by  being
                  converted  into voting  securities of the  surviving  entity
                  (including   the  parent   corporation   of  such  surviving
                  entity))  at least  fifty-one  percent  (51%)  of the  total
                  voting power  represented  by the voting  securities  of the
                  Company or such  surviving  entity  outstanding  immediately
                  after such merger or consolidation; or

            iv)   the approval by the  stockholders  of the Company of a plan of
                  complete   liquidation   of  the  Company,   or  the  sale  or
                  disposition  by the  Company of all or  substantially  all the
                  Company's assets.

       c)   Disability.  "Disability"  means  that you  have  been  unable  to
            substantially  perform  your duties  under this  Agreement  as the
            result of your  incapacity due to physical or mental illness for a
            period of twenty-six consecutive weeks after its commencement,  as
            determined  by a medical  doctor  selected by the Company and you.
            If the parties cannot agree on a medical doctor,  each party shall
            select  a  medical  doctor  and the two  doctors  shall  select  a
            third, who shall be the approved medical doctor for this purpose.

      d)    Involuntary  Termination.  "Involuntary  Termination" means any of
            the following:  (i)  termination of your employment by the Company
            which  is  not  effected  for  Cause;  (ii)  termination  of  your
            employment  with the Company by reason of your  Disability;  (iii)
            during  the  twenty-four   month  period  following  a  Change  of
            Control,  termination of your employment for any reason other than
            for  Cause;  (iv)  the  failure  of  the  Company  to  obtain  the
            assumption of this  Agreement by any  successors  contemplated  in
            Section  14(a) below;  (v) without your express  written  consent,
            your  relocation  to a facility  or a location  more than 50 miles
            from  the  Company's   principal   business   offices  located  in
            Louisville,  Colorado;  (vi) without your express written consent,
            a  reduction  in your Base  Salary  or  Target  Bonus as in effect
            immediately  prior to such  reduction;  (vii) the failure to elect
            or  reelect  you to any of the  positions  described  in Section 1
            above;  (viii) a change  in the  reporting  structure  so that you
            report to someone other than the Board;  (ix) without your express
            written   consent,   a  significant   reduction  of  your  duties,
            authority  (including  reporting lines to you) or responsibilities
            relative to your  duties,  authority  and  responsibilities  as in
            effect  immediately  prior to such reduction  (except with respect
            to sale or other  disposition  of a division or  subsidiary of the
            Company);  (x) the taking of any action by the Company,  including
            eliminating  a plan  without  providing a  substitute  or reducing
            your awards under a plan, the result of which would  substantially
            diminish the  aggregate  projected  value of your awards under the
            Company=s  bonus  and  benefit  plans;  or (xi) the  taking of any
            action  by the  Company  that  could  substantially  diminish  the
            aggregate  value  of  the  benefits  provided  to  you  under  the
            Company=s medical, health, accident,  disability,  life insurance,
            thrift and retirement plans.

      e)    Termination Date.  "Termination  Date" means any of the following:
            (i) the  date on  which  the  Company  delivers  to you a  written
            notice of  termination  or such later date,  not to exceed  ninety
            days,  specified in the notice of  termination;  (ii) in the event
            the Term ends by reason of your death or  Disability,  the date of
            death or determination of Disability;  and (iii) in the event this
            Agreement  is  terminated  by you, the date on which you deliver a
            written  notice  of   termination  to  the  Company,   or  a  date
            determined  in  accordance  with  Section 2, above.  Any notice of
            termination  shall  specify  the  provision(s)  in this  Agreement
            claimed to provide a basis for termination.

11.   Excise  Tax.  In  the  event  that  the  severance  and  other  benefits
      provided for in this  Agreement  or  otherwise  payable to you (i) would
      constitute  Aparachute  payments@  within the meaning of Section 280G of
      the Internal  Revenue Code of 1986, as amended (the ACode@) and (ii) but
      for this Section,  would be subject to the excise tax imposed by Section
      4999 of the  Code,  then such  severance  and  other  benefits  shall be
      either  (i)  delivered  in full,  or (ii)  delivered  as to such  lesser
      extent  which  would  result in no portion of such  severance  and other
      benefits  being  subject to excise tax under  section  4999 of the Code,
      whichever of the foregoing  amounts,  taking into account the applicable
      federal,  state and local  income  taxes and the excise  tax  imposed by
      Section 4999,  results in the receipt by you on an after-tax  basis,  of
      the  greater  amount  of  benefits,  notwithstanding  that  all or  some
      portion  of such  benefits  may be  taxable  under  Section  4999 of the
      Code.  Unless  you and the  Company  agree  otherwise  in  writing,  any
      determination  required  under this Section  shall be made in writing by
      the Company=s  independent public accountants (the AAccountants@).  Such
      determination  shall be conclusive  and binding upon you and the Company
      for all purposes.  For purposes of making the  calculations  required by
      this  Section,  the  Accountants  may make  reasonable  assumptions  and
      approximations  concerning  applicable taxes and may rely on reasonable,
      good faith  interpretations  concerning the application of Sections 280G
      and  4999  of the  Code.  You  and  the  Company  shall  furnish  to the
      Accountants  such  information  and  documents  as the  Accountants  may
      reasonably  request  in  order  to  make  a  determination   under  this
      Section.   If  a  determination  is  made  by  the  Accountants  that  a
      reduction  in the  aggregate of all payments due to you upon a Change of
      Control  is  required  by this  Section  11, you shall have the right to
      specify the portion of such  reduction,  if any, that will be made under
      this  Agreement  and each plan or program of the Company.  If you do not
      so specify within 60 days following the date of a  determination  by the
      Accountants pursuant to the preceding sentence, the
      Company shall  determine,  in its sole  discretion,  the portion of such
      reduction,  if any,  to be made  under this  Agreement  and each plan or
      program  of  the  Company.   The  Company   shall  bear  all  costs  the
      Accountants  may reasonably  incur in connection  with any  calculations
      contemplated by this Section.

12.   Non-Compete; Non-Solicit.

      a)    Each of the  parties  hereto  recognizes  that your  services  are
            special  and  unique  and that the level of  compensation  and the
            other  provisions  herein for compensation and benefits are partly
            in  consideration  of and  conditioned  upon your agreement not to
            compete  with the Company,  and that your  covenant not to compete
            or solicit as set forth in this Section  during and after the Term
            is  essential  to  protect  the  business  and  good  will  of the
            Company.  This  Section 12 shall  supersede  any  provision of the
            Plan or any other plan or  agreement  covering  substantially  the
            same matters.

      b)    You  agree  that   during  the  Term  and  for  a  period   ending
            twenty-four  months  following the  Termination  Date during which
            you shall have received  severance  due under this  Agreement as a
            result of Involuntary  Termination  (the "Covenant  Period"),  you
            will not either  directly  or  indirectly,  engage in  Competitive
            Business  (as  defined  below)  including,  but  not  limited  to:
            accepting  employment  with or serving as a consultant  or advisor
            or  director  to any  Competitive  Business;  acting  against  the
            interests of the Company;  disclosing or misusing any  proprietary
            or material confidential  information concerning the Company (such
            information  includes,  without limitation,  information regarding
            the  Company's  operations,  its  products and  services,  product
            designs,   business   plans,   strategic   plans,   marketing  and
            distribution  plans and  arrangements,  customers,  and  financial
            statements,  budgets and forecasts,  and employee  names,  titles,
            compensation,  skills and  performance);  or  participating in any
            hostile  takeover attempt of the Company.  ACompetitive  Business@
            means a business  which produces data storage  systems,  including
            disk and tape drives,  cartridge  libraries  or corporate  network
            backup and  recovery  software  and such new products and services
            in such new  businesses or markets as the Company shall have prior
            to the  Termination  Date  committed  to produce or  provide.  The
            foregoing  restrictions  shall not apply  (x) in  connection  with
            performance of your duties  hereunder,  (y) if you are required to
            make  any  disclosure  or take  any  action  by law or by a court,
            agency,  or  other  governmental  order,  or  (z)  in  making  any
            disclosure  in  confidence  to  a  lawyer  or  other  professional
            advisor  for the  purpose of  securing  professional  advice.  The
            restrictions  set for this in this Section  shall not apply to any
            document,  record or other  information,  that (i) has  previously
            been  disclosed  to the  public or is in the public  domain  other
            than as a result of your breach of this Section,  or (ii) is known
            or generally  available  within any trade or industry in which the
            Company or any of its affiliates is active.

      c)    You agree that during the  Covenant  Period,  you will not,  other
            than in the performance of your duties hereunder,  either directly
            or   indirectly:   (i)  induce  or  attempt   to   influence   any
            then-current  employee of the Company to leave his/her employ with
            the Company; or (ii) solicit or encourage  then-current  employees
            of the Company to apply for  employment  with any person or entity
            with  which you are  employed  or with  which you intend to become
            employed,  or in which  you  have or  intend  to have a  financial
            interest, as a consultant,  recruiter,  independent  contractor or
            otherwise,  or in which you have a substantial financial or equity
            interest.  For purposes of this Section,  the term "Company" shall
            mean and include the Company,  any  subsidiary or affiliate of the
            Company,  any successor to the business of the Company (by merger,
            consolidation,  sale of  assets  or  stock or  otherwise)  and any
            other  corporation  or  entity  for  which  you  may  serve  as  a
            director,  officer or  employee  at the  request of the Company or
            any successor of the Company.

      d)    You agree that the Company would suffer an irreparable injury if you
            were to breach the  covenants  contained in Sections  12(b) or 12(c)
            and that the Company  would by reason of such  breach or  threatened
            breach be entitled to  injunctive  relief in a court of  appropriate

      e)    If any of the  restrictions  contained  in this  Section 12 shall be
            deemed to be  unenforceable  by reason of the  extent,  duration  or
            geographical  scope or other  provisions  thereof,  then the parties
            hereto   contemplate  that  the  court  shall  reduce  such  extent,
            duration,  geographical  scope or other provision hereof and enforce
            this  Section 12 in its reduced  form for all purposes in the manner
            contemplated hereby.

13.   Employee Benefit Programs.

      a)    You  shall  be  eligible  to   participate  in  the  employee  and
            executive  benefit programs  maintained by the Company,  including
            (without  limitation)  any qualified or  non-qualified  retirement
            plans or  programs,  savings and  profit-sharing  plans,  deferred
            compensation  plans,  life,  short-term and long-term  disability,
            medical,  accident and other insurance programs, paid vacations in
            accordance  with the policy for  executive  officers  as may be in
            effect from time to time,  and similar plans or programs,  subject
            in each case to the generally  applicable  terms and conditions of
            any such  plan or  program  and to the sole  determination  of the
            Board,   or  any  committee  of  the  Board,  or  other  committee
            administering  such  plan  or  program.  In  particular,  you  may
            participate  in the Company=s  Profit Sharing and Thrift Plan (the
            Company=s  401 (k) Plan) and the Company=s  Deferred  Compensation
            Plan.  Upon your request,  the Company  shall  implement a special
            deferred  compensation  arrangement  for you  under  which you may
            elect to defer  receipt of your Base Salary and bonus amounts into
            a secular  trust or a rabbi trust  which is secured by  insurance,
            provided  such  arrangement  is  possible  to  implement   without
            additional  tax  liability  to the  Company.  The Company will pay
            the  expenses  associated  with  any  such  trust  (including  any
            associated insurance) in an amount not to exceed $20,000 per year.

      b)    During the Term of this  Agreement  (and  thereafter  pursuant  to
            Section 9(f),  above), the Company shall provide you with (i) life
            insurance  coverage  in an  amount  equal to  $5,000,000.00  and a
            medical benefits  program with a supplemental  payment coverage of
            $15,000.00  per year,  which  benefits  will be provided to you in
            addition to the programs  maintained for other employees;  (ii) an
            annual  reimbursement  for financial  and tax and estate  planning
            expenses  incurred  by you in an amount not to exceed 2.5% of your
            Base Salary;  (iii)  reasonable and customary car allowance for an
            executive of your position,  (iv)  membership in a country club of
            your  choosing with the  Company=s  approval,  and (v) the various
            executive officer  perquisites to the extent the Company continues
            to offer them from time to time,  including first class air travel
            and a Company-paid annual physical.

      c)    The  Company  agrees  to take any steps  necessary  so that any life
            insurance  required  to be provided to you by it may be owned by any
            trust,  estate,  or other  entity  designated  by you,  and that any
            trust,  estate  or  other  entity  designated  by  you  may  be  the
            beneficiary  of any such life  insurance,  provided  such  steps are
            possible  to  implement  without  additional  tax  liability  to the

14.   Successors.

      a)    Company's  Successors.  Any  successor  to  the  Company  (whether
            direct  or  indirect  and  whether  by  purchase,  lease,  merger,
            consolidation,  liquidation or otherwise) to all or  substantially
            all  of  the  Company's  business  and  assets  shall  assume  the
            obligations  under this  Agreement and agree  expressly to perform
            the  obligations  under this  Agreement  in the same manner and to
            the same extent as the Company  would be required to perform  such
            obligations  in the  absence  of a  succession.  For all  purposes
            under  this  Agreement,  the  term  "Company"  shall  include  any
            successor to the Company's  business and assets which executes and
            delivers  the  assumption  agreement  described in this Section or
            which  becomes  bound by the terms of this  Agreement by operation
            of law.

      b)    Employee's  Successors.  The  terms of this  Agreement  and all your
            rights  hereunder  shall inure to the benefit of, and be enforceable
            by,   your   personal   or   legal    representatives,    executors,
            administrators, successors, heirs, devisees and legatees.

15.   Indemnification; Liability Insurance.

      a)    The  Company  agrees  that  if  you  are  made  a  party,  or  are
            threatened to be made a party, to any action,  suit or proceeding,
            whether  civil,  criminal,   administrative  or  investigative  (a
            "Proceeding"),  by  reason  of the  fact  that  you  are or were a
            director,  officer  or  employee  of the  Company  or are or  were
            serving at the  request of the  Company  as a  director,  officer,
            member,  employee  or agent of another  corporation,  partnership,
            joint venture,  trust or other enterprise,  including service with
            respect to  employee  benefit  plans,  whether or not the basis of
            such  Proceeding  is your alleged  action in an official  capacity
            while serving as a director,  officer,  member, employee or agent,
            you shall be  indemnified  and held harmless by the Company to the
            fullest  extent  legally  permitted or authorized by the Company's
            certificate  of  incorporation  or  bylaws or  resolutions  of the
            Company's  Board of Directors  or, if greater,  by the laws of the
            State of Delaware,  against all cost, expense,  liability and loss
            (including,   without  limitation,   attorney's  fees,  judgments,
            fines,  ERISA excise taxes or other  liabilities  or penalties and
            amounts paid or to be paid in settlement)  reasonably  incurred or
            suffered by you in connection therewith,  and such indemnification
            shall  continue  as  to  you  even  if  you  have  ceased  to be a
            director,  member,  employee  or  agent  of the  Company  or other
            entity and shall  inure to the  benefit of your  heirs,  executors
            and   administrators.   The  Company  shall  advance  to  you  all
            reasonable  costs and expenses  incurred by you in connection with
            a Proceeding  within 20 calendar days after receipt by the Company
            of  a  written  request  for  such  advance.  Such  request  shall
            include an  undertaking by you to repay the amount of such advance
            if it shall  ultimately be determined that you are not entitled to
            be indemnified against such costs and expenses.

      b)    Neither  the  failure  of the  Company  (including  its  board  of
            directors,  independent  legal  counsel or  stockholders)  to have
            made a determination  prior to the  commencement of any proceeding
            concerning  payment of amounts  claimed by you under Section 15(a)
            above that  indemnification  of you is proper because you have met
            the applicable  standard of conduct,  nor a  determination  by the
            Company  (including  its  board of  directors,  independent  legal
            counsel  or  stockholders)  that you have not met such  applicable
            standard of conduct,  shall create a presumption that you have not
            met the applicable standard of conduct.

      c)    The  Company  agrees to  continue  and  maintain  a  directors'  and
            officers'  liability  insurance  policy covering you at least to the
            extent the Company  provides such  coverage for its other  executive

16.   Miscellaneous Provisions.

      a)    Withholding. All payments to you pursuant to this Agreement shall be
            subject to  withholding  of all  amounts  required to be withheld by
            applicable Internal Revenue Service and State tax authorities by the
            Company  and  shall  be  conditioned  upon  your  submission  of all
            information or execution of all instruments  necessary to enable the
            Company to comply with such withholding requirements.

      b)    Confidentiality  Agreement.  As a condition of your employment,  you
            will have  executed  the  Company's  standard  form of  confidential
            inventions  and trade secrets  agreement.  You hereby  reaffirm that
            during the Term and  thereafter  you will comply with all provisions
            of  such   agreement  and  agree  that  you  will  enter  into  such
            modifications  or amendments  thereof as the Company may  reasonably
            request from time to time.

      c)    Stock  Ownership  Guidelines.  During the Term,  you agree to comply
            with the corporate  officer stock ownership  guidelines  approved by
            the Board or any committee of the Board, as they may be amended from
            time to time, and which  ownership  guidelines are now set at 20,000
            shares of the  Company's  Common Stock for the  President  and Chief
            Executive Officer,  said shares to be accumulated within three years
            of the Effective Date.

      d)    Notice.  Any notice  required to be given under this Agreement shall
            be given in writing,  either by personal delivery or by causing such
            written  notice to be mailed,  first class postage  prepaid,  in the
            United States mail, to the parties at the addresses set forth below,
            or at such other  address for a party as shall be  specified by like
            notice,  provided  that  notices  of  change  of  address  shall  be
            effective only upon receipt thereof.


            Company:    Storage Technology Corporation
                        One StorageTek Drive
                           Louisville, Colorado 80028
                           Attention: General Counsel

            Executive:  Patrick J. Martin
                         Storage Technology Corporation
                        One StorageTek Drive
                           Louisville, Colorado 80028

                        with a copy  to his  personal  address  most  recently
                        notified to the Company.

      e)    Amendment  or  Modification.  This  Agreement  may not be amended or
            modified  and no  provision  shall be  waived  unless  agreed  to in
            writing and signed by you and the Company. No waiver by either party
            of any  breach  of this  Agreement  shall be  deemed a waiver of any
            other provision or condition at another time.

      f)    Assignment.  Except as otherwise  provided herein, the rights of any
            person to  payments or benefits  under this  Agreement  shall not be
            made  subject  to  option or  assignment,  either  by  voluntary  or
            involuntary  assignment or by operation of law,  including  (without
            limitation) bankruptcy,  garnishment, attachment or other creditor's
            process, and any action in violation of this Section shall be void.

      g)    Governing  Law.  This  Agreement  is  entered  into in  accordance
            with, and shall be interpreted  pursuant to the provisions of, the
            laws of the State of Colorado.

      h)    Arbitration.  Any  controversy  or claim  arising  between you and
            the Company including,  without limitation, any claims, demands or
            causes   of   action   alleging   wrongful   discharge;   unlawful
            discrimination   based  on  sex,  age,  race,   national   origin,
            disability,  religion or other unlawful basis; breach of contract;
            or any claims  seeking  damages under any federal,  state or local
            law,  rule,  regulation  or common law theory;  but  excluding any
            claims  by  you  for   worker's   compensation   or   unemployment
            compensation,   and  excluding  any  claims  by  the  Company  for
            injunctive  relief (for instance,  for breach of  confidentiality,
            breach of a covenant not to compete,  violation of trade  secrets,
            or unfair  competition),  shall be  resolved  by final and binding
            arbitration.  By signing below,  you  voluntarily  waive any right
            to submit  claims to a judge or jury in  either  state or  federal
            court.  The  arbitration  shall be held in  Denver,  Colorado,  or
            elsewhere by mutual  agreement.  The  selection of the  arbitrator
            and  procedure  shall be  governed by the  Employment  Arbitration
            Rules of the American  Arbitration  Association,  as amended.  The
            arbitrator  shall  be  someone  with  a  minimum  seven  years  of
            employment law background and from the AAA Commercial  Arbitration
            Panel or, if both  parties  agree,  the Judicial  Arbiters  Group.
            The arbitrator  shall apply the applicable  substantive law to any
            claim;  for any  state  law claim or  damages  issues,  the law of
            Colorado   shall   govern,   including  but  not  limited  to  the
            provisions  of  C.R.S.  Sections  13-21-102(5).  Judgment  upon an
            award  rendered  by an  arbitration  may be  entered  by any court
            having  jurisdiction.  The  Company  will  pay the  cost  normally
            associated with the  arbitration,  including the  arbitrator's fee
            and any fee for a hearing  facility.  Following  resolution of all
            claims  between the parties in an arbitration  proceeding,  if the
            arbitrator so determines,  the Company shall reimburse you for all
            reasonable   legal  fees  and   expenses   that  you  incurred  in
            connection  with a  successful  claim to enforce your rights under
            this Agreement.

      i)    Severability. If any provision of this Agreement shall be held to be
            invalid or unenforceable,  such invalidity or unenforceability shall
            not affect or impair the validity or enforceability of the remaining
            provisions of this  Agreement,  which shall remain in full force and
            effect in accordance with their terms.

      j)    Entire  Agreement.   This  Agreement,   together  with  the  other
            agreements  referenced herein, embody the entire agreement between
            the parties  relating to the subject matter hereof,  and supersede
            all  previous  agreements  or  understandings,   whether  oral  or
            written.  In the event of any inconsistency  between any provision
            of  this  Agreement  and  any  provision  of  any  plan,  employee
            handbook,   personnel  manual,  program,  policy,  arrangement  or
            agreement of the Company or any of its Affiliates,  the provisions
            of this Agreement  shall control  unless you otherwise  agree in a
            writing that  expressly  refers to the provision of this Agreement
            you are waiving.

      k)    Knowledge and Representations.  1) By signing below, you acknowledge
            that the terms of this Agreement  have been fully  explained to you,
            that  you  understand  the  nature  and  extent  of the  rights  and
            obligations  provided  under this  Agreement,  and the you have been
            encouraged to and have had an  opportunity  to consult legal counsel
            prior to signing this Agreement.

            2)  The  Company  represents  and  warrants  that  (i)  it is  fully
            authorized  by  action of its Board  (and of any  other  body  whose
            action is required) to enter into this  Agreement and to perform its
            obligations  under it; (ii) the execution,  delivery and performance
            of this  Agreement,  by it does  not  violate  any  applicable  law,
            regulation,  order,  judgment  or decree or any  agreement,  plan or
            corporate  governance document to which it is a party or by which it
            is  bound;  and  (iii)  upon  the  execution  and  delivery  of this
            Agreement  by the  parties,  this  Agreement  shall  be a valid  and
            binding  obligation  of  the  Company,  enforceable  against  it  in
            accordance with its terms,  except to the extent that enforceability
            may be limited by applicable bankruptcy,  insolvency or similar laws
            affecting the enforcement of creditors= rights generally.

      l)    Counterparts.  This  Agreement  may  be  executed  in  two  or  more

            IN WITNESS WHEREOF, each of the parties has executed this Agreement,
in the case of the Company by its duly authorized officer or representative,  as
of the day and year first above written.


     /S/ Robert E. Lee
      Chairman, Human Resources & Compensation Committee
      of the Board of Directors

/S/ Patrick J. Martin