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                                                                     EXHIBIT 4.2

                         STORAGE TECHNOLOGY CORPORATION

                           DEFERRED COMPENSATION PLAN

                                 AMENDMENT NO. 1


Storage Technology Corporation sponsors the Storage Technology Corporation
Deferred Compensation Plan (the "Plan"). In section 9.4 of the Plan, Storage
Technology Corporation reserved the right to amend the Plan from time to time.
Storage Technology Corporation hereby amends the Plan as follows, effective May
15, 2001.

1. Section 1.9 shall be replaced in its entirety by the following.

        1.9     "Credited Earnings" means the increase or decrease in the
                Participant's Plan Account that is attributable to investment
                experience, as described in Article IV.

2. The following Section 1.16A shall be added to the Plan.

        1.16A   "StorageTek Stock" means the common stock of Storage Technology
                Corporation or any successor entity.

3. The text of Article IV shall be moved into new section 4.1, section 4.1 shall
be entitled "Accounts," and the following new section 4.2 shall be added to the
Plan.

        4.2     Credited Earnings.


                (a)     General. Credited Earnings shall be calculated
                        separately for each sub-account of each Participant's
                        Plan Account. Participants and beneficiaries of deceased
                        Participants shall be permitted to select from among the
                        methods made available by the Committee for calculating
                        Credited Earnings. Any change in the method of
                        calculating Credited Earnings shall be applied
                        prospectively only. The Committee shall establish from
                        time to time the procedures the Plan will follow in
                        calculating Credited Earnings and the procedures that
                        Participants and beneficiaries must follow when changing
                        from one method to another. Unless the Committee
                        determines otherwise, Credited Earnings shall be
                        accounted for and credited to a Participant's Plan
                        Account (i) for Company Deferrals, from the date on
                        which such amounts would have been contributed to the
                        Thrift Plan on behalf of the Participant, (ii) for
                        Participant Deferrals, from the date on which such
                        amounts would have otherwise been paid to the
                        Participant by the Company, and (iii) for amounts
                        transferred from plans merged with and into this Plan,
                        from the date of the plan mergers as set forth in the
                        Appendices to this Plan.

                (b)     Methods of Calculating Credited Earnings. The
                        "Guaranteed Method" described in paragraph (i) will be
                        used unless the Participant or beneficiary is able to,
                        and does affirmatively, elect the "Stock Method"
                        described in paragraph (ii). The Company (through action
                        of its Board of Directors or its delegate) shall select
                        the Participants and beneficiaries who are eligible to
                        elect the Stock Method, and the extent to which the
                        Stock Method is available to each Participant and
                        beneficiary. The Committee shall promulgate the rules
                        and procedures to carry out the Company's decisions. The
                        choice of the Stock Method is irrevocable with respect
                        to amounts subject to that method. See section 5.6 for
                        the special distribution rules that apply to a
                        distribution of amounts subject to the Stock Method.

                        (i)     Guaranteed Method. The rate of Credited Earnings
                                in one calendar year shall be the monthly
                                average of 10-year Treasury Notes for the prior
                                calendar year, plus 2-1/2%.

                        (ii)    Stock Method. Credited Earnings shall be
                                determined by treating the Participant's Plan
                                Account as if it were invested in shares of
                                StorageTek Stock with the following
                                modifications. If cash dividends are paid on
                                StorageTek Stock, the Plan Account subject to
                                the Stock Method will be treated as if it



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                                received cash and used it to purchase additional
                                whole or fractional shares of StorageTek Stock.
                                If there is any corporate transaction or
                                restructuring of Storage Technology Corporation,
                                such as a merger, stock split, recapitalization,
                                acquisition, or sale of the company, appropriate
                                adjustments shall be made to the Participants'
                                Accounts so that the economic effect on each
                                Participant's Plan Account shall be
                                substantially the same as the economic effect on
                                a shareholder of StorageTek Stock. The Company
                                (through action of its Board of Directors or its
                                delegate) shall determine the precise
                                adjustments to be made in each situation.

4. Every occurrence of the phrase "cash lump sum" in sections 5.1(b), 5.2(a),
5.2(b), 5.2(c)(iii), and 5.4 shall be replaced by the phrase "lump sum."

5. The following new section 5.1(e) shall be added to the Plan.

        (e)     Delay of Payment. The Plan shall delay any payment to the extent
                necessary to comply with the withholding requirements of section
                5.8.


6. Section 5.2(d) shall be replaced in its entirety with the following.

        (d)     Calculation of Installment Payments. The amount of each
                installment payment will be calculated when the Participant
                terminates service. The Committee may use any reasonable method
                to determine the amount of each installment payment. To the
                extent that Credited Earnings are calculated using the Stock
                Method described in section 4.2(b)(ii), the number of shares of
                StorageTek Stock to be distributed with each installment payment
                is equal to the total number of shares to be distributed divided
                by the number of remaining installment payments. To the extent
                that Credited Earnings are calculated using the Guaranteed
                Method described in section 4.2(b)(i), future Credited Earnings
                shall be determined by using the average of the interest rates
                used by the Plan for purposes of determining Credited Earnings
                under the Guaranteed Method in the four consecutive Plan Years
                ending with the Plan Year in which the Participant's service
                with the Company terminates.

7. Section 5.3 shall be replaced in its entirety by the following.

                5.3 Early Distribution With Penalty.

        (a)     Availability. Instead of receiving the distribution of a
                Participant's Plan Account at the time and in the manner
                otherwise specified in this Article V, a Participant may elect
                to receive all or any portion of his entire Plan Account in a
                lump sum payment at any time. If a Participant elects an early
                distribution under this section, his distribution shall be
                reduced by 10% as an early withdrawal penalty. Payment shall be
                made to the Participant within 30 days after receipt by the
                Company of the Participant's election. All elections under this
                section shall be made in writing, shall be effective when
                delivered to the Company and shall be irrevocable once made.

        (b)     Order of Withdrawal. The sub-accounts shall be used in the
                following order to fund the early withdrawal and the 10%
                penalty: first, the sub-accounts with the distribution date that
                occurs when the Participant terminates service with the Company,
                then the sub-accounts with specified distribution dates, the
                sub-account with the later distribution date being distributed
                before the sub-account with an earlier distribution date.

        (c)     Suspension of Participation. A Participant who takes an early
                distribution under this section shall generally not be eligible
                to participate in the Plan for one year. The one-year suspension
                period begins on the date of distribution and ends on the first
                payroll period that begins after the first anniversary of the
                date of distribution. The Participant may not make any
                Participant Deferrals during the suspension period. However,
                during the suspension period, the Participant may make deferral
                elections under section 3.1, and such elections shall apply only
                to amounts that become payable to the Participant after the
                suspension



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                period has ended. The Participant shall not receive any Company
                Deferrals that would normally occur during the suspension
                period, regardless of the circumstance that triggered the
                Company Deferral. The Participant's Company Deferral that would
                have been a Company Matching Contribution under the Thrift Plan
                shall be based only on amounts paid to the Participant before or
                after the suspension period. The Participant may make hardship
                withdrawals under section 5.5 during the suspension period.
                During the suspension period, the Participant may make those
                investment elections that he is eligible to make under the
                provisions of section 4.2.


8. The second sentence of section 5.5 shall be replaced in its entirety by the
following.


                The sub-accounts shall be used in the following order to fund
                the hardship withdrawal: first, the sub-accounts with the
                distribution date that occurs when the Participant terminates
                service with the Company, then the sub-accounts with specified
                distribution dates, the sub-account with the later distribution
                date being distributed before the sub-account with an earlier
                distribution date.

9. The text of section 5.6 shall be moved to new section 5.6(a), section 5.6(a)
shall be entitled "Cash Payments," and the following new section 5.6(b) shall be
added to the Plan.

        (b)     StorageTek Stock. To the extent that a distribution consists of
                amounts that are subject to the Stock Method of determining
                Credited Earnings, the distribution shall be in the form of
                StorageTek Stock, except that the Committee may choose to pay
                the cash equivalent of any fractional share. The StorageTek
                Stock may be paid, at the sole discretion of the Company, either
                from the Trust or by the Company.

10. Section 5.8 shall be replaced in its entirety by the following.

     5.8 Withholding.

        (a)     General. The Plan shall withhold any taxes or other amounts that
                it is required to withhold pursuant to any applicable law. The
                Committee may direct the Plan to withhold additional amounts
                from any payment at the Participant's request.

        (b)     Special Rules for StorageTek Stock. If a payment consists of
                both cash and shares of StorageTek Stock, the withholding will
                be calculated by treating the cash portion of the payment as one
                payment and the StorageTek Stock portion of the payment as a
                separate payment. The required withholding on a cash payment
                will be accomplished by reducing the cash paid to the
                distributee. The required withholding on a payment of StorageTek
                Stock will be accomplished by either (i) the distributee paying
                to the Company the required withholding, or (ii) any other
                method of payment that is approved by the Committee or the
                Company (through action of its Board of Directors or its
                delegate). No StorageTek Stock shall be distributed until the
                required withholding has been paid to the Company or provided
                for in a manner approved by the Company or Committee.

11. The first sentence of Section 10.4 shall be replaced in its entirety by the
following.

        Except as provided in this section and section 5.8(b), no Participant
        shall have the right to assign, transfer, hypothecate, encumber or
        anticipate his interest in any benefits under this Plan, nor shall the
        benefits under this Plan be subject to any legal process to levy upon or
        attach the benefits for payment for any claim against the Participant or
        his spouse.



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        IN WITNESS WHEREOF, Storage Technology Corporation has caused this
instrument to be executed on its behalf, by its duly authorized officer, as of
this 15th day of May, 2001.


                                       STORAGE TECHNOLOGY CORPORATION


                                       BY: /s/ JEFFREY M. DUMAS
                                           -------------------------------------


                                       ITS: Corporate Vice President and
                                            General Counsel
                                            ------------------------------------


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