January 27, 2000

Mr. Robert Kocol
577 Manorwood Lane
Louisville, Colorado 80027


RE:   Retention and Separation Agreement

Dear Bobby:

You have  agreed  to  remain  an  employee  of  Storage  Technology  Corporation
("StorageTek" or the "Company") through at least July 31, 2000 (the "Termination
Date").  In consideration of your willingness to stay with the Company until the
Termination  Date,  this  letter  will  confirm  our  agreement  concerning  the
termination  of your  employment  with  StorageTek on that date. In that regard,
this letter will define the terms of your  severance  under this  Retention  and
Separation  Agreement  (the  "Retention  and  Separation  Agreement")  and  your
Executive   Employment   Agreement  dated  October  1,  1999  (the   "Employment
Agreement") at the  Termination  Date.  This Retention and Separation  Agreement
supersedes all previous oral and written  agreements  regarding your  employment
with  StorageTek,  it being  understood  that the terms and  conditions  of this
Retention and  Separation  Agreement,  to the degree that they may conflict with
the  terms  and  conditions  of your  Employment  Agreement,  shall in all cases
supersede the terms of the Employment  Agreement,  which  agreement shall unless
otherwise stated herein, remain in full force and effect.


      REPORTING  RELATIONSHIP  AND  DUITES:  During  your  period  of  continued
      employment  with the Company,  you will remain a Corporate Vice President.
      Although it is  envisioned  that in such  capacity  you will report to the
      Chief Executive Officer (CEO), this reporting  relationship may be changed
      at any time by the Company.  You further  understand that your present and
      future duties and responsibilities  could also be substantially changed by
      the Company,  particularly if a successor as Chief Financial Officer (CFO)
      is hired. If a new CFO is hired before the Termination Date, then you will
      remain an employee of the Company as a non-officer employee supporting the
      transition to the new CFO. During this transition  assistance  period as a
      non-officer employee,  you will continue with your then current salary and
      with your then current  officer  benefit  package  through the Termination
      Date.  It is further  understood  and agreed by you that such changes will
      not, in  combination  or in and of  themselves,  constitute an Involuntary
      Termination under the terms of the Employment Agreement.

      GOALS AND OBJECTIVES:  During your period of continued employment with the
      Company  you have  agreed to focus  on:  (i)  assisting  in  defining  and
      implementing the on-going corporate  restructuring,  (ii) assisting in the
      continued refinement and implementation of corporate-wide cost reductions,
      (iii) defining the Company's year 2000 business and operating  plan,  (iv)
      improving the processes and  performance of the Shared  Services Center in
      Atlanta,  (v) completing the transition of the financial reporting systems
      in Europe,  and (vi) such other tasks as may be  reasonably  requested  of
      you, from time-to-time,  by the Board of Directors, the CEO, or President,
      as the case may be.

      SEPARATION PAYMENT: After your successful  participation in the attainment
      of the objectives stated above, and your continued  employment through the
      Termination  Date, the Company will pay, within 30 days of the Termination
      Date,  a separation  payment to you equal to: (i) one and  one-half  times
      your then current annual salary, and (ii) one and one-half times your then
      current target annual MBO bonus.  In this regard,  it should be noted that
      if you were to  terminate  on the  Termination  Date,  then  you  would be
      entitled to receive your first half year MBO bonus  payment as if you were
      an officer of the Company  eligible  for such bonus in an amount  equal to
      that  which you would have  received  based on the  Company's  performance
      against  targeted  objectives,  as approved by the Board.  This first half
      year MBO bonus  payment  would be paid to you in  addition  to the one and
      one-half  times  annual  MBO  bonus  payment  included  in your  severance
      package.

      STOCK OPTIONS AND RESTRICTED STOCK: After your successful participation in
      the  attainment  of  the  objectives  stated  above,  and  your  continued
      employment  through the  Termination  Date,  all of your  outstanding  and
      unvested stock options will vest on the Termination Date (according to the
      terms of your Stock Option  Agreements and the Company's 1995 Stock Option
      Plan) and the Company's right to repurchase any of your previously granted
      restricted  stock will  terminate.  Pursuant to the terms of  StorageTek's
      Stock  Option  Plan,  you  will  have  normally  have  90  days  from  the
      Termination Date to exercise all of your vested options.  However, because
      of your  responsibilities at the Company,  your knowledge of the Company's
      activities may render you  ineligible to trade in the Company's  stock due
      to the possession of "material inside  information"  after the Termination
      Date,  therefore the Company will enter into a consulting  agreement  with
      you  starting on the  Termination  Date and ending on  September  30, 2000
      whereby  your  eligible 90 day  "trading  window" will end on December 31,
      2000.  Should your actual  termination be extended  beyond the Termination
      Date or should you still not be eligible to trade in the  Company's  stock
      at the start of the delayed 90-day  trading  window  starting on September
      30,  2000,  then by mutual  agreement  your  consulting  agreement  may be
      extended accordingly to insure that you have a 90-day trading window, free
      from SEC prohibitions.

      COBRA PAYMENTS:  Starting from the Termination  Date, you will be entitled
      to receive COBRA benefits for the equivalent  medical and dental  coverage
      for you and your family as may be in effect at the Termination  Date, such
      COBRA  benefits  will be paid for in full on your  behalf by the  Company.
      These COBRA  benefits will be paid for by the Company until the earlier to
      occur of either (i) a date 18 months from the  Termination  Date,  or (ii)
      such time as you shall have  entered  into  permanent  employment  with an
      employer with a medical and dental plan.

      OUT PLACEMENT  SERVICES:  Starting on the  Termination  Date, you shall be
      eligible to  participate in and receive the Company's  standard  executive
      job placement assistance, such assistance to be paid for on your behalf by
      the Company.

      NO ADVERSE COMMENT: You agree that during your employment with the Company
      through  the  Termination  Date and for at least two years  following  the
      Termination Date, you will not, except as specifically  required by law or
      court process or consented to in writing by the Company,  (a)  communicate
      to any  person  or  entity  any  adverse  information,  written  or  oral,
      concerning the Company,  its officers,  directors,  employees,  attorneys,
      agents or advisers  (including any  communication  concerning  information
      that  related to the  business,  operations,  prospects  or affairs of the
      Company or any of its subsidiaries or affiliates)  under the circumstances
      in which there is a reasonable  possibility that such information might be
      publicly  reported or  disclosed  or  otherwise  made  available  to third
      parties  (regardless of whether the  communication  of such information is
      intended  to have or cause that  result is within  your  control),  or (b)
      provide to any person (other than your attorney or  accountant)  or entity
      any  information   that  concerns  or  related  to  the   negotiations  or
      circumstances  leading to the execution of this  Retention and  Separation
      Agreement.  Likewise,  the Company shall refrain,  for a similar period of
      time, from  communicating any adverse comments relating to you and/or your
      tenure with the Company or the  circumstances  leading to the execution of
      this Retention and Separation Agreement.

      NON-SOLICITATION PROVISIONS: Per the terms of Section 8 of your Employment
      Agreement, you confirm that during the two-year period commencing with the
      Termination  Date,  you will not,  directly,  or indirectly,  solicit,  or
      encourage any then-current  Company employees to apply for employment with
      any person or entity  (a) with  which you are (or intend to be)  employed,
      (b) by whom you or an entity in which you are employed or have a financial
      interest is engaged as a consultant,  recruited, independent contractor or
      otherwise,  or (c) in which you further  covenant  and agree that you will
      not  provide to any other  person or entity the names of any person who is
      then employed by the Company.

      NON-COMPETE  PROVISIONS:  Per the terms of  Section  8 of your  Employment
      Agreement,  you  confirm  that for a period of  eighteen  months  from the
      Termination Date that you will not, either directly or indirectly,  engage
      in any activity in competition  with any product or service of the Company
      (said  competitive  activities  to be  determined  and  identified  at the
      reasonable  discretion of the Company), or harmful or contrary to the best
      interest of the Company, including accepting employment with or serving as
      a consultant to any entity that is in  competition  with the Company.  Per
      Section 8, and for the purposes of Section 8, those companies deemed to be
      competitors to StorageTek are EMC and IBM.

      EARLY TERMINATION: In the event of your Involuntary Termination,  prior to
      the  Termination  Date,  the Company will pay you the  separation  pay and
      benefits  identified above at the time of your termination,  provided that
      you sign the  Settlement  and Release  Agreement  attached as Exhibit A to
      your Employment  Agreement.  During the period of your employment with the
      Company,  all other terms of your  employment as stated in your Employment
      Agreement,  including  termination  for "Cause"  provisions will remain in
      effect through the  Termination  Date. If you  voluntarily  terminate your
      employment with the Company before the Termination Date, then you will not
      be entitled to receive any of the  separation  benefits  set forth in this
      Retention and Separation Agreement.

      CHANGE IN CONTROL: If during your employment with the Company, the Company
      should be acquired under a "Change in Control" event as that term has been
      defined  in your  Employment  Agreement,  then you will  receive  the full
      severance benefit as defined in the Employment Agreement.  If a "Change in
      Control"  event were to occur after your  employment  with the Company had
      been  terminated,  but prior to midnight  December 31, 2000, then you will
      receive an  additional  severance  payment  equal to  one-half  times your
      salary and one-half  times your on plan MBO bonus,  as they were in effect
      on the Termination Date.

      EMPLOYMENT EXTENSION:  Should you and the Company reach an agreement on or
      before the  Termination  Date  whereby you would remain an employee of the
      Company beyond the  Termination  Date, then you and the Company will enter
      into a new employment  agreement at that time. The terms and conditions of
      that new employment agreement will then supersede the terms and conditions
      of both  this  Retention  and  Separation  Agreement  and  the  Employment
      Agreement.

      SETTELMENT  AND  RELEASE:  The  payments  recited  in this  Retention  and
      Separation  Agreement are  contingent  upon your execution and delivery to
      the Company a Settlement and Release  Agreement  substantially in the form
      attached as Exhibit A to your Employment Agreement.

      COMPANY  RELEASE:  The  Company  hereby  irrevocably  and  unconditionally
      releases  and  discharges  you and your  heirs,  successors,  and  assigns
      (separately and collectively, "Releasees"), jointly and individually, from
      any and all  claims,  known or  unknown,  which it,  its past and  present
      subsidiaries,   divisions,   officers,   directors,   agents,   employees,
      successors, and assigns have or may have against Releasees and any and all
      liability  which  Releasees may have to it,  whether  denominated  claims,
      demands,  causes of action,  obligations,  damages or liabilities  arising
      from any and all bases, however denominated,  provided, however, that this
      release  does  not  affect  any  claims  which  are  based  on  Releasees'
      dishonesty in the performance of duties as an employee of the Company, nor
      any claims  which may arise  after the  execution  of this  Retention  and
      Separation Agreement.  The Company further agrees that it will not file or
      permit to be filed on its behalf any claim  against  you which is released
      hereby

      NONDISCLOSURE:  Unless  otherwise  required  to do so by law,  subpoena or
      court order,  you will not in any way  communicate or discuss the terms of
      this Retention  Agreement or the  circumstances  of its execution with any
      person,  other than your attorneys or authorized Company  personnel,  said
      personnel to be explicitly  designated by the Company's President and CEO.
      You understand that this nondisclosure  provision applies  particularly to
      current and former  employees of the Company and the Company's  customers,
      clients and vendors.

      Please sign both copies of this letter below,  indicating your acceptance,
      and return one copy for our files.


Accepted and Agreed:                            Very truly yours,
                                          STORAGE TECHNOLOGY CORP.


--------------------------                      ------------------------------
Robert S. Kocol                           David E. Weiss
                                          Chairman, President and
                                          Chief Executive Officer