Exhibit 10.5

STORAGE TECHNOLOGY CORPORATION
2004 PERFORMANCE-BASED INCENTIVE BONUS PLAN

1.PURPOSE

The purpose of the Storage Technology Corporation Performance-Based Incentive
Plan is to provide certain employees of the Company and its affiliates with
incentive compensation based upon the level of achievement to financial,
business and other performance criteria.

2.DEFINITIONS

As used in the Plan, the following terms shall have the meanings set forth
below:

(a)"Affiliate" shall mean (i) any entity that, directly or indirectly, is
controlled by the Company and (ii) any entity in which the Company has a
significant equity interest, in either case as determined by the Committee.
(b)"Board" shall mean the Board of Directors of the Company. (c)"Bonus" shall
mean a payment in cash or shares pursuant to Section 7, which is made pursuant
to the Plan with respect to a particular Performance Period. The maximum amount
of a Bonus for a Participant is four hundred percent (400%) of the Participant's
Target Bonus and is limited in dollar amount pursuant to Section 6(c) below.
(d)"Code" shall mean the Internal Revenue Code of 1986 and regulations
promulgated thereunder, all as amended from time to time, and any successors
thereto. (e)"Committee" means the Human Resources and Compensation Committee of
the Board, or such other committee designated by the Board to administer the
Plan, provided that the Committee shall consist of three or more persons each of
whom is an "outside director" within the meaning of Code Section 162(m) and a
"disinterested person" within the meaning of Rule 16b-3 under the Exchange Act.
(f)"Common Stock Equivalent" means a right to receive Common Stock in the future
in lieu of a current issuance of Common Stock, subject to certain conditions and
limitations. (g)"Company" shall mean Storage Technology Corporation. (h)"Covered
Officer" shall mean at any date (i) any individual who with respect to the
previous taxable year of the Company, was a "covered employee" of the Company
within the meaning of Code Section 162(m); provided, however that the term
"Covered Officer" shall not include any such individual who is designated by the
Committee, in its sole discretion, at the time of any Bonus or at any subsequent
time, as reasonably expected not to be such a "covered employee" with respect to
the then current taxable year of the Company, and (ii) any individual who is
designated by the Committee, in its sole discretion, at the time of any Bonus or
at any subsequent time, as reasonably expected to be such a "covered employee"
with respect to the then current taxable year of the Company or with respect to
the taxable year of the Company in which any applicable Bonus will be paid.
(i)"Employee" means an employee on the payroll of the Company or any Affiliate.
(j)"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time. (k)"Participant" shall mean any employee of the Company or any
Affiliate who has been designated by the Committee as eligible for participation
in the Plan; provided, however, that Participants who are Covered Officers must
be selected Prior to the Predetermination Date. (l)"Performance Measure" shall
mean any measurable criteria using an approach, such as balanced score card,
which is tied to the Company's success, whether absolute or relative, that the
Committee may determine, including but not limited to, Net Order Dollars, Net
Profit Dollars, Net Profit Growth, Net Revenue Dollars, Revenue Growth, Total
Shareholder Return, cash flow, earnings or earnings per share, growth in
earnings or earnings per share, return on equity, stock price, return on equity
or average stockholders' equity, total stockholder return, return on capital,
return on assets or net assets, return on investment, revenue, income or net

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income, operating income or net operating income, operating profit or net
operating profit, operating margin, return on operating revenue, market share,
overhead or other expense reduction, credit rating, strategic plan development
and implementation, succession plan development and implementation, customer
satisfaction indicators, and/or employee metrics.

(m)"Performance Period" means the period for which performance is measured as
designated by the Committee pursuant to Section 5 below. (n)"Plan" shall mean
the Storage Technology Corporation Performance-Based Incentive Bonus Plan, as
amended from time to time. (o)"Predetermination Date" shall mean (i) the earlier
of: a date 90 days after commencement of the fiscal year, or a date not later
than the expiration of 25% of the Performance Period; provided in each case that
the satisfaction of selected Performance Measures is substantially uncertain at
such time, or (ii) such other date at which a performance goal is considered to
be pre-established pursuant to Code Section 162(m). (p)"Target Bonus" shall mean
a Bonus amount that may be paid if 100% of all applicable Performance Measures
are achieved at target in the Performance Period including a peer/performance
factor as determined in Section 5 below. The Target Bonus shall be equal to a
fixed percentage of the Participant's base pay on the last day for such
Performance Period. Such percentage shall be determined by the Committee prior
to the Predetermination Date.

3.ELIGIBILITY

Persons employed by the Company or any of its Affiliates during the Performance
Period and in active service are eligible to be Participants under the Plan for
such Performance Period (whether or not so employed or living at the date a
Bonus is paid) and may be considered by the Committee for a Bonus. An individual
is not rendered ineligible to be a Participant by reason of being a member of
the Board. Notwithstanding anything herein to the contrary, the Committee shall
have sole discretion to designate or approve the Participants for any given
Performance Period.

4.ADMINISTRATION (a)A director may serve as a member or an alternate member of
the Committee only during periods in which the director is an "outside director"
as described in Code Section 162(m). The Committee shall have full power and
authority to construe, interpret and administer the Plan. It may issue rules and
regulations for administration of the Plan and shall meet at such times and
places as it may determine. A majority of the members of the Committee shall
constitute a quorum and all decisions of the Committee shall be final,
conclusive and binding upon all parties, including the Company, its
stockholders, employees and Participants. In the case of Participants who are
not Covered Officers, the Committee may empower certain person(s) or a committee
to administer the Plan, to the extent specified by the Committee at the time of
delegation, and subject to modification at any time thereafter, whose decisions
shall similarly be final, conclusive and binding upon all parties.

(b)The expenses of the administration of the Plan shall be borne by the Company.

5.BONUSES

Prior to the Predetermination Date, the Committee shall designate or approve
(a) the positions or employees who will be Participants for a Performance
Period, (b) the minimum and maximum Bonuses and the Target Bonuses for the
position or employee, (c) the applicable Performance Measures and combination of
Performance Measures and percentages allocated to applicable Performance
Measures, and (d) the Performance Period. All Performance Measures pertaining to
a Covered Officer shall be of such a nature that an objective third party having
knowledge of all the relevant facts could determine whether performance results
with respect to such Performance Measures have been achieved. With respect to
the Covered Officers, the determination of the

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minimum and maximum Bonuses and the Target Bonus will include a peer/performance
factor to be determined by the Committee at this same time.

6.DETERMINATION OF AMOUNT OF BONUS (a)Calculation. As soon as administratively
practicable after the end of the relevant Performance Period, the Committee, or,
if appropriate, in the case of a Bonus to a Participant who is not a Covered
Officer, the person(s) or committee empowered by the Committee, shall determine
the amount of the Bonus for each Participant by: i.Determining the actual
performance results for each Performance Measure; ii.Determining the amount to
which each Participant is entitled based on the percentage allocated by the
Committee to each Performance Measure against the Target Bonus for each
Participant; iii.Determining whether the peer/performance factor will be allowed
in its entirety or at a reduced level; and iv.Certifying by resolution duly
adopted by the Committee the amount of the bonus for each Covered Officer so
determined. (b)Adjustments to Bonuses. i.In General. In its sole discretion, the
Committee or, if appropriate for other than Covered Officers, its designee, may
approve any other adjustments to a Participant's Bonus with respect to a
Performance Period. The Committee and its designee may, in the exercise of its
sole discretion and based on any factors the Committee deems appropriate,
increase, reduce or eliminate the amount of a Bonus to a Participant prior to
payment thereof. The Committee and its designee shall make determination of
whether and to what extent to increase, reduce or eliminate Bonuses under the
Plan for each Performance Period at such time or times following the close of
the Performance Period as they shall deem appropriate. The increase, reduction
or elimination in the amount of a Bonus to a Participant for a Performance
Period shall have no effect on the amount of the Bonus to any other Participant
for such period. In particular, the Committee and its designee are authorized to
make adjustments in the method of calculating attainment of Performance Goals in
recognition of: (i) extraordinary or non-recurring items, (ii) changes in tax
laws, (iii) changes in generally accepted accounting principles or changes in
accounting policies, (iv) charges related to restructured or discontinued
operations, (v) restatement of prior period financial results, and (vi) any
other unusual, non-recurring gain or loss that is separately identified and
quantified in the Company's financial statements. Notwithstanding the foregoing,
the Committee and its designee may, at their sole discretion, modify the
performance results upon which Bonuses are based under the Plan, to offset any
unintended result(s) arising from events not anticipated when the Performance
Goals were established, provided that such adjustment is permitted by
Section 162(m). ii.No Adjustment Increase for Covered Officers. Notwithstanding
paragraph (i) above, and for purposes of tax deductibility under Code
Section 162(m), any adjustments made in accordance with or for the purposes of
paragraph (i) shall be disregarded for purposes of calculating the Bonus to any
Covered Officer to the extent that such adjustments would have the effect of
increasing such Bonus. (c)Maximum. Notwithstanding any other provision of the
Plan, the maximum Bonus that may be paid to any Covered Officer under the Plan
with respect to any Performance period is $7 million.

7.PAYMENT OF BONUSES (a)Bonuses under the Plan shall be paid in cash, Common
Stock Equivalents or shares of Common Stock of the Company, or a combination of
these items, as provided in Sections (b) and (c) below.

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(b)A Participant may request to have all or a portion of the Bonus, when earned,
paid other than in cash. Such request shall be made by delivering to the Company
at the office of its Secretary a notice setting forth that portion (expressed as
a percentage) of the Bonus for which the Participant desires to receive Common
Stock Equivalents or Common Stock. The Committee shall consider the request and
have absolute discretion to determine the extent to which the request shall be
approved. (c)The Committee, in its sole discretion, may determine that the
Bonuses for any Performance Period will be paid in any of the forms identified
in (a) above and may determine the percentage of each type of payment to be
issued, such that the total of the percentages equals 100% of the Bonus to be
paid. This provision notwithstanding, to the extent that a Participant has
timely and effectively elected to defer any or all of the Bonus payment, that
portion so deferred can only be paid in cash. (d)With respect to any Bonuses
paid in Common Stock Equivalents or Common Stock, the number of shares to be
paid shall be determined by dividing the amount of the Bonus to be paid in
shares by the fair market value of a share on the date the Committee approves
the Bonus pursuant to Section 6(a). Only whole shares will be distributed;
fractional shares will be paid in cash. (e) Shares will be issued to the
Participant as soon as practicable after the Committee makes its determination
under Section 6. (f)Payment of a Bonus to a Participant shall be made as soon as
practicable after determination of the amount of the Bonus under Section 6
above, and after the Committee has certified in writing the amount to be paid to
Covered Officers, except to the extent a Participant has made a timely election
to defer the payment of all or any portion of such Bonus under the Deferred
Compensation Plan or any other similar plan as the Committee determines in its
discretion. (g)To be eligible for the payment of a Bonus with respect to a
specific Performance Period the Participant must be an Employee as of the end of
such Performance Period, subject to the following: i.If a Participant dies prior
to the end of a Performance Period, the Committee or its designee may determine
that the Participant is be eligible for a Bonus. In such case, the Committee or
its designee may determine, in its sole discretion, the amount to be paid to the
estate or beneficiaries of the decedent. (h)Payments of Bonuses to Participants
who are on the payroll of an Affiliate will be paid directly by such entities.

8.MISCELLANEOUS (a)No Assignment. No Portion of any Bonus under the Plan may be
assigned or transferred prior to the payment thereof other than by will or the
laws of descent and distribution. (b)Tax Requirements. All Bonuses which are the
subject of this Plan, whether paid currently or deferred pursuant to a timely
and effective deferral election, shall be subject to all applicable taxes or
contributions required by federal, state or local law to be withheld, in
accordance with procedures established by the Company and its Affiliates. (c)No
Additional Participant Rights. The selection of an individual for participation
in the Plan shall not give such Participant any right to be retained in the
employ of the Company or any of its Affiliates, and the right of the Company and
any such Affiliate to dismiss such Participant or to terminate any arrangement
pursuant to which any such Participant provides services to the Company, with or
without cause, is specifically reserved. No person shall have claim to a Bonus
under the Plan or to continued participation under the Plan, except as otherwise
provided for herein,. There is no obligation for uniformity of treatment of
Participants under the Plan. The benefits provided for Participants under the
Plan shall be in addition to and shall in no way preclude other forms of
compensation to or in respect of such

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Participants. It is expressly agreed and understood that employment is
terminable at the will of either party and, if such Participant is a party to an
employment contract with the Company or one of its Affiliates, in accordance
with the terms and conditions of the Participant's employment contract.

(d)Liability. The Board and the Committee shall be entitled to rely on the
advice of counsel and other experts, including the independent auditors for the
Company. No member of the Board or of the Committee, any officers of the Company
or its Affiliates or any of their designees shall be liable for any act or
failure to act under the Plan, except in circumstances involving bad faith on
the part of such member, officer or designee. (e)Amendment; Suspension;
Termination. The Board or Committee may, at any time and from time to time,
amend, suspend or terminate the Plan or any part of the Plan as it may deem
proper and in the best interests of the Company, provided, however, that any
amendment that may affect the continued eligibility of Bonus payments under Code
Section 162(m) will be subject to approval by a vote of the shareholders of the
Company if the Company desires to maintain such eligibility. In the case of
Participants employed outside the United States, the Board, the Committee or
their designees may vary the provisions of the Plan as deemed appropriate to
conform to local laws, practices and procedures. In addition, the General
Counsel, Secretary or Assistant Secretary of the Company is authorized to make
certain minor or administrative changes required by or made desirable by
government regulation. Any modification of the Plan may affect present and
future Participants and the amount of any Bonus hereunder. (f)Other Compensation
Arrangements. Nothing contained in the Plan shall prevent the Company or any
Affiliate of the Company from adopting or continuing in effect other
compensation arrangements, which arrangements may be either generally applicable
or applicable only in specific cases. (g)Governing Law. The validity,
construction and effect of the Plan and any rules and regulations relating to
the Plan shall be determined in accordance with the laws of the State of
Colorado and applicable federal law. (h)No Trust. Neither the Plan nor any Bonus
shall create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Participant. To the extent
that the Participant acquires a right to receive payments from the Company in
respect of any Bonus, such right shall be no greater than the right of any
unsecured general creditor of the Company. (i)Section 162(m). All payments under
this Plan are designed to satisfy the special requirements for performance-based
compensation set forth in Code Section 162(m)(4)(C), and the Plan shall be so
construed. Furthermore, if a provision of the Plan causes a payment to fail to
satisfy these special requirements, it shall be deemed amended to satisfy the
requirements to the extent permitted by law and subject to Committee approval.
(j)Designation of Beneficiaries. A Participant may, if the Committee permits,
designate a beneficiary or beneficiaries to receive all or part to the Bonuses
which may be paid to the Participant, or may be payable, after such
Participant's death. A designation of beneficiary shall be made in accordance
with procedures specified by the Company and may be replaced by a new
designation or may be revoked by the Participant at any time. In case of the
Participant's death, a Bonus with respect to which a designation of beneficiary
has been made (to the extent it is valid and enforceable under applicable law)
shall be paid to the designated beneficiary or beneficiaries. Any Bonus granted
or payable to a Participant who is deceased and not subject to such a
designation shall be distributed to the Participant's estate. If there shall be
any question as to the legal right of any beneficiary to receive a Bonus under
the Plan, the amount in question may be paid to the estate of the Participant,
in which event the Company or its Affiliates shall have no further liability to
anyone with respect to such amount.

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(k)Stockholder Approval. Plan amendments shall require stockholder approval only
if and to the extent required by applicable law or the rules of any applicable
stock exchange. (l)Severability. If any portion of this Plan is deemed to be in
conflict with local law, that portion of the Plan, and that portion only, will
be deemed void under local law. All other provisions of the Plan will remain in
effect. (m)Savings Clause. If any portion of the Plan as it relates to a Covered
Officer is construed as failing to satisfy the provisions of Code
Section 162(m), then the Plan will be deemed amended to satisfy the requirements
to the extent permitted by law and subject to Committee approval.

IN WITNESS WHEREOF, the Company has caused this Plan to become effective as of
the date it is approved by the Stockholders of the Company.

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