Separation Agreement - Storage Technology Corp. and Victor M. Perez


January 22, 2000

Mr. Victor M. Perez
2066 Navajo Trail
Lafayette, CO 80026

RE:   Separation Agreement

Dear Victor:


You have  agreed  to  remain  an  employee  of  Storage  Technology  Corporation
('StorageTek'  or the 'Company')  through March 31, 2000 or such earlier date as
you may be terminated  for 'Cause' (the  'Termination  Date').  This letter will
confirm  our  agreement  concerning  the  termination  of your  employment  with
StorageTek on that date and will define the terms of your  severance  under this
Separation Agreement (the 'Separation  Agreement') and your Executive Employment
Agreement dated October 1, 1999 (the 'Employment  Agreement') at the Termination
Date.  This  Separation  Agreement  supersedes  all  previous  oral and  written
agreements  regarding your employment with StorageTek,  it being understood that
the terms and conditions of this 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 DUTIES: You will retain the title of Executive
      Vice President and Chief  Operating  Officer (COO) through the Termination
      Date.  However,  your current  duties as COO will end on January 31, 2000.
      For the period from January 31, 2000 through the  Termination  Date,  your
      duties and responsibilities will be significantly  altered,  including the
      understanding that you will no longer have operational  responsibility for
      any portion of the Company. During your period of continued employment and
      up until the  Termination  Date, you will continue to receive your current
      salary,  which  amounts  will be  Grossed Up (as  defined  below) and your
      current officer benefit package,  including, but not limited to, your auto
      allowance,  executive  life  insurance  and 1999  income  tax  preparation
      expenses  and 1999 income tax  equalization  with  respect to Puerto Rico.
      During your employment with the Company through the Termination  Date, you
      will report to the President and Chief Executive  Officer (CEO).  However,
      this  reporting  relationship  may be  changed  at  any  time  before  the
      Termination Date by the Company.


      GOALS AND OBJECTIVES:  During your period of continued employment with the
      Company  you  have  agreed  to  focus  on:  (i)   assisting  in  defining,
      implementing  and  achieving  the  on-going  corporate  restructuring  and
      corporate-wide  cost  reductions,  (ii)  assisting in the  disposition  of
      certain  Company  assets,  including its  facilities in Toulouse,  France,
      (iii)  assisting  in the  negotiation  of  and  entering  into  definitive
      agreements  regarding  strategic business  alliances,  and (iv) 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. On the
      Termination Date you will also execute such documents or letters as may be
      necessary  to resign  from any  positions  you may then hold as an officer
      and/or director of any subsidiaries or affiliates of the Company.

      SEPARATION  PAYMENT:   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. It is further agreed that
      you will submit a pro forma tax return for the year 2000 to the Company on
      the  Termination  Date  and  that the  Company  will  use  such pro  forma
      information to gross up your income tax payments  vis-a-vis Puerto Rico as
      has  been the  past  practice  in your  employment  relationship  with the
      Company  (hereafter  to be called the 'Gross Up' or to be 'Grossed  up' as
      the case may be),  said  amounts to be paid by  StorageTek  Puerto Rico as
      directed  by you and no later  than 30 days  after  the  Termination  Date
      subject to a  reconciliation  between you and the Company  based on actual
      tax  amounts  owed as  though  you  were  working  in  Puerto  Rico.  This
      reconciliation  is agreed to have been  completed  on or before  April 15,
      2001.

      CONSULTING  AGREEMENT:  Effective from the  Termination  Date, you will be
      offered  a  consulting  agreement  with  the  Company,   which  consulting
      agreement  will  end  on  September  30,  2000  (the  'Consulting   Period
      Termination Date'). Under the terms of this consulting agreement, you will
      be paid a consulting fee equal to $50,000 per quarter for the two quarters
      ending June 30, 2000 and September 30, 2000. During this consulting period
      one of your primary  objectives will be to resolve the matters  pertaining
      to the  Toulouse,  France  facility  project.  In regard  to the  Toulouse
      project, should you successfully conclude this project to the satisfaction
      of StorageTek via one or more  definitive  agreements  that will have been
      entered into on or before  September 30, 2000,  then you shall be entitled
      to receive an incentive bonus equal to $50,000. If during the term of your
      consulting  agreement,  the Company  determines,  for reasons that are not
      related to the lack of attractive transaction proposals, that the Toulouse
      project  should be  terminated,  then you will be  entitled to receive the
      $50,000  incentive  bonus as though  you had  successfully  completed  the
      project in  addition  to your full  consulting  fee for the  period  ended
      September 30, 2000. In all respects  regarding your consulting  agreement,
      you will be  reimbursed  for all  reasonable  out of  pocket  expenses  by
      StorageTek.  Additionally, all consulting fees shall be Grossed Up for the
      year 2000.

      STOCK OPTIONS AND RESTRICTED STOCK: Due to your 'Involuntary  Termination'
      on the Termination Date, in accordance with the terms of Section 5 of your
      Employment  Agreement all of your  outstanding  and unvested stock options
      will  immediately  vest  (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 on the Termination  Date.  Pursuant to the terms of StorageTek's
      Stock  Option  Plan,  you will  have 90 days  from the  Consulting  Period
      Termination  Date to exercise all of your vested options,  which 'exercise
      window' will therefore  remain open until December 31, 2000.  However,  if
      because of your consulting responsibilities to 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',
      the Company will extend its  consulting  agreement with you such that your
      eligible  'trading  window'  will be moved back to insure  that you have a
      90-day trading window, free from SEC trading 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.


      DEFERRED  COMPENSATION  ACCOUNT:  Per  elections  you have made  under the
      Storage Technology Corporation Deferred Compensation Plan (the 'Plan'), at
      the  Termination  Date  you  shall  be  entitled  to  receive  a lump  sum
      distribution of your Plan account balances, said payments to be subject to
      such federal,  state and local income tax withholdings and other requisite
      payments as may be required by the Plan and/or the relevant laws, it being
      understood  that no amendment to the Plan shall,  in and of itself,  cause
      you  to pay  any  penalties  for  receiving  such  lump  sum  distribution
      immediately  following  the  Termination  Date.  To the  degree  that your
      contributions  to your Plan  account  were  subject to a tax  equalization
      Gross Up at the time they were  made,  then upon  distribution  those same
      amounts, and all interest earned thereon, shall be Grossed Up for the year
      of distribution,  provided said  contributions were not previously Grossed
      Up.


      OUT PLACEMENT SERVICES,  ETC.: 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. You will also receive tax preparation assistance in an amount
      of up to 2% of your  annual  salary  for the  preparation  of you 2000 tax
      returns. You will also be authorized to purchase you office PC at its book
      value on your Termination Date.


      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.  All  amounts  received  by you on account of a
      'Change in Control' shall be Grossed Up in the year received.

      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, accountant and/or spouse)
      or entity any information  that concerns or related to the negotiations or
      circumstances  leading  to the  execution  of this  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
      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,
      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,  provided  however that if at any time
      during this eighteen month prohibitionary  period the Company shall have a
      'Change in Control' event as defined in your  Employment  Agreement,  then
      this  employment  prohibition  shall be  retroactively  reset so as to run
      chronologically  for a period of one year from the  Termination  Date. Per
      Section 8, those  companies  deemed to be  competitors  to StorageTek  are
      ATL/Quantum, Exabyte, Breece Hill, EMC, Hewlett-Packard,  Sun Microsystems
      and IBM. Provided however, you may at any time request permission from the
      Company,  in writing,  to accept  employment with any of these  designated
      competitor  companies.  If the product areas or business  units with which
      you seek to affiliate do not compete with  StorageTek,  and  StorageTek at
      its reasonable  discretion  determines that such  employment  would not be
      adverse to the interest of StorageTek, then the Company shall approve such
      employment,  such approval not to be unreasonably  withheld or delayed and
      such approval only to be effective if communicated in writing.

      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,  including but
      not limited to the vesting of your stock options and restricted  stock and
      the lump sum distribution of your Plan account balance,  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
      Separation Agreement.


      SETTELMENT AND RELEASE:  The payments recited in this 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  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 Separation  Agreement or the  circumstances of its execution with any
      person, other than your attorneys, accountants,  immediate family members,
      prospective employers,  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. As to matters related to an anticipated  announcement
      via news releases,  internal electronic postings and other  communications
      regarding  your new  reporting  relationships,  your new  duties  and your
      pending  departure  from the Company and any  subsequent  news releases or
      other   announcements  that  may  make  reference  to  the  fact  of  your
      termination  from the  Company,  the Company  will work with you to insure
      that suitable  communications  are drafted such that  announcements do not
      reflect  adversely  on your  professional  reputation  or tenure  with the
      Company.

      This  Separation  Agreement  shall be  deemed  for  purposes  of the Older
      Workers  Benefits  Protection  Act to have been  delivered to you for your
      consideration on the date set forth above. You have 21 days from that date
      to decide  whether or not to accept  this  agreement.  If you accept  this
      agreement,  you  will  then  have  seven  days  from the date you sign and
      deliver an executed  copy of this  agreement to the Company to revoke your
      acceptance by notifying the Company in writing of your desire to do so. No
      amounts otherwise due to you under this Separation  Agreement will be paid
      to you until the expiration of the seven day revocation  period.  When you
      are  ready  to do so,  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.


--------------------------                      ------------------------------
Victor M. Perez                           David E. Weiss
                                          Chairman, President and
                                          Chief Executive Officer