Exhibit  10.35

# STORAGE TECHNOLOGY
CORPORATION

# CEO Employment
Agreement

# Revised

# February 12, 2003

---

# CEO EMPLOYMENT
AGREEMENT

---

This CEO Employment Agreement (the
Agreement) is entered into on June 28, 2000 (and revised February 12, 2003)
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 follows:

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
          thereto 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 furtherthat 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 (MBO 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           stretch 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
          ultra-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 Annual Bonus          includes
the 2000 Incentive Guarantee, the 2001 Incentive Guarantee (both as           defined in
Section 6) and the Target Bonus.

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 Board.

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
          Plan)), 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 2000 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 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 2001 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 $2,000,000.

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,
providedthat such home is purchased within 24 months of the           Effective
Date;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|vi) | Realtor
fees and closing costs on the sale of your current residence, providedthat such
sale occurs within 24 months of the Effective Date;           and
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|vii) | A
one-time relocation allowance equal to 8% of your Base Salary.
|---- | ----------------------------------------------------------------

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) to the
          extent your Termination Date is after year end, but before the determination of
          a LEAP (or replacement plan) payout, you shall at the same time as previously
          scheduled, receive your full LEAP (or replacement plan) award based up the prior
          years results. In addition, you shall receive a prorated LEAP award for
          the year of termination (if the LEAP program is in place) or prorated portion of
          an similar replacement plan the product of (x) the LEAP or other plan award at
          target and (y) a fraction, the numerator of which is the number of days in the
          fiscal year in which the Termination Date occurs through the Termination Date
          and the denominator of which is 365; (v) stock options or restricted stock
          pursuant to Section 9(d); (vi) any expense reimbursements or other unpaid
          amounts earned, accrued or owing to you; or (vii) 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 of 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 Company.

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.

a)    
          In the event that any payment benefit or other entitlement received or to be
          received by you in connection with a Change of Control of the Company or the
          termination of your employment (whether payable pursuant to the terms of this
          Agreement or any other plan, arrangement or agreement with the Company, any
          person whose actions result in a Change of Control of the Company or any person
          affiliated with the Company or such person (the Total Payments, and
          each a Payment)) would be subject to the excise tax imposed by
          Section 4999 of the Internal Revenue Code of 1986, as amended (the
          Code), or any corresponding provisions of state or local tax laws,
          or any interest or penalties are incurred by you with respect to such excise tax
          (such excise tax, together with any such interest and penalties, is hereinafter
          collectively referred to as the Excise Tax), then
          you shall be entitled to receive an additional payment (a Gross-Up
          Payment) in an amount such that after payment by you of all taxes
          (including, but not limited to, any income taxes, employment taxes, Excise Taxes
          and any interest or penalties imposed with respect to any such taxes) imposed
          upon the Gross-Up Payment, you will retain an amount of the Gross-Up Payment
          equal to the Excise Tax imposed upon the Payments. Those Payments that are
          subject to the Excise Tax shall be referred to herein as the Parachute
          Payments. Notwithstanding the foregoing provisions of this Section 11, if
          it shall be determined that you are entitled to a Gross-Up Payment, but that the
          portion of the Payments that would be treated as parachute payments
          under Section 280G of the Code does not exceed 105% of the greatest amount of
          Parachute Payments that could be paid or otherwise provided to you such that the
          receipt of Parachute Payments would not give rise to any Excise Tax (the
          Safe Harbor Amount) then no Gross-Up Payment shall be made to you
          and the amounts payable under this Agreement shall be reduced so that the total
          Parachute Payments are reduced to the Safe Harbor Amount. The reduction of the
          amounts payable or otherwise provided under this Agreement, if applicable, shall
          be made by first reducing the Parachute Payments under Section 9(a); unless an
          alternative method of reduction is elected by you. For purposes of reducing the
          total Parachute Payments to the Safe Harbor Amount, only Parachute Payments
          payable or otherwise provided under this Agreement (and no other Payments) shall
          be reduced. If the reduction of the amount payable or otherwise to be provided
          under this Agreement would not result in a reduction of the total Parachute
          Payments to the Safe Harbor Amount, no amounts payable or otherwise to be
          provided under this Agreement shall be reduced pursuant to this Section 11. The
          Companys obligation to make Gross-Up Payments under this Section 11 shall
          not be conditioned upon your termination of employment.

b)    
          All determinations required to be made under this Section, including whether and
          when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
          the assumptions to be utilized in arriving at such determination, shall be made
          by the Companys independent accountants (the Accountants) in
          consultation with you and your advisors. The Accountants shall provide detailed
          supporting calculations to you within fifteen (15) business days of the receipt
          of notice from you that there has been a Payment (or, if later, within fifteen
          (15) days of the date it is determined by the Accountants that the Payment is
          subject to the Excise Tax). In connection with any such calculations, the
          Accountants shall provide you with a written opinion explaining the basis for
          their conclusions with respect to the applicability or inapplicability of
          Section 4999 of the Code. Any Gross-Up Payment, as determined pursuant to this
          Section, shall be paid by the Company to you within five days of the receipt of
          the Accountants determination. As a result of the uncertainty in the
          application of Section 4999 of the Code, it is possible that Gross-Up Payments
          may not have been made by the Company that should have been made
          (Underpayment), consistent with the calculations required to be made
          hereunder. In the event that either (A) the Company does not dispute that you
          are required to make a payment of Excise Tax or (B) the Company exhausts its
          remedies pursuant to Section 11 and you thereafter are required to make a
          payment of any Excise Tax, any such Underpayment shall be promptly paid by the
          Company to or for your benefit of. If (x) it is established pursuant to (I) a
          final determination of a court or (II) an Internal Revenue Service proceeding
          from either of which no appeal can be taken or (y) a written opinion is provided
          by independent counsel agreed upon by the parties that the Excise Tax is less
          than the amount taken into account under Section 11 of this Agreement, you shall
          repay to the Company within thirty (30) days of your receipt of notice of such
          final determination or opinion the portion of the Gross-Up Payment attributable
          to such reduction plus any interest received by you on the amount of such
          repayment (after taxes applicable thereto.)

c)    
          You shall notify the Company in writing of any claim by the Internal Revenue
          Service that, if successful, would require the payment by the Company of the
          Gross-Up Payment. Such notification shall be given as soon as practicable but no
          later than ten business days after you are informed in writing of such claim and
          shall apprise the Company of the nature of such claim and the date on which such
          claim is requested to be paid. You shall not pay such claim prior to the
          expiration of the 30-day period following the date on which you give such notice
          to the Company (or such shorter period ending on the date that any payment of
          taxes with respect to such claim is due). If the Company notifies you in writing
          prior to the expiration of such period that it desires to contest such claim,
          you shall:

|i) | give the Company any information reasonably requested by the Company relating
                    to such claim,
|-- | ----------------------------------------------------------------------------------------------------------------

|ii) | take such action in connection with contesting such Claim as the Company shall
                    reasonably request in writing from time to time, including, without limitation,
                    accepting legal representation with respect to such claim by an attorney
                    reasonably selected by the Company,
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|iii) | cooperate with the Company in good faith in order effectively to contest such
                    claim, and
|---- | ------------------------------------------------------------------------------------------------------------

|iv) | permit the Company to participate in any proceedings relating to such claim;
|--- | ----------------------------------------------------------------------------

provided, however, that the Company
shall bear and pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify and hold you
harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing provisions of this Section 11, the
Company shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority in respect of such claim and may, at its sole
option, either direct you to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and you agree to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the Company
directs you to pay such claim and sue for a refund, the Company shall advance the amount
of such payment to you, on an interest-free basis, and shall indemnify and hold you
harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and further provided that any extension
of the statute of limitations relating to payment of taxes for your taxable year with
respect to which such contested amounts claimed to be due is limited solely to such
contested amount. Furthermore, the Companys control of the contest shall be limited
to issues with respect to which a Gross-Up Payment would be payable hereunder and you
shall be entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

d)    
          If, after the receipt by you of an amount advanced by the Company pursuant to
          Section 11, you become entitled to receive any refund with respect to such
          claim, you shall (subject to the Companys complying with the requirements
          of Section 11) promptly pay to the Company the amount of such refund (together
          with any interest paid or credited thereon after taxes applicable thereto). If,
          after the receipt by you of an amount advanced by the Company pursuant to
          Section 11, a determination is made that you shall not be entitled to any refund
          with respect to such claim and the Company does not notify you in writing of its
          intent to contest such denial of refund prior to the expiration of 30 days after
          such determination, then such advance shall be forgiven and shall not be
          required to be repaid and the amount of such advance shall offset, to the extent
          thereof, the amount of Gross-Up Payment required to be paid.

e)    
          Notwithstanding any other provision of this Section 11, the Company may, in its
          sole discretion, withhold and pay over to the Internal Revenue Service or any
          other applicable taxing authority, for your benefit of, all or any portion of
          any Gross-Up Payment, and you hereby consent to such withholding; provided, that
          such withholding shall in no event place you in a less favorable after-tax
          position.

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. Competitive           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
forte 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 jurisdiction.

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 Company.

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 officers.

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 counterparts

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.

STORAGE TECHNOLOGY
CORPORATION

By:
_____________________________Robert E. LeeChairman, Human Resources and
CompensationCommittee of the Board of Directors

Patrick J. Martin

________________________________