CEO Employment Agreement

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 further that 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, provided that such home is purchased within 24 months of the Effective Date;
vi) Realtor fees and closing costs on the sale of your current residence, provided that 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 s ...