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EXHIBIT 10.30
SECOND WAIVER AND CONSENT
This
Second Waiver and Consent is entered into as of this 28th day
of
December, 2004, by and between The Canopy Group, Inc., a Utah
corporation
("Canopy"), and MTI Technology Corporation, a Delaware corporation
("MTI")
(hereinafter collectively referred to as the "Parties"), with
reference to the
following:
RECITALS
A. On June 27,
2002, the Parties entered into a Loan Agreement (the
"Canopy Loan Agreement") whereby Canopy granted credit and credit
accommodations
for a revolving line of credit loan of up to Seven Million Dollars
($7,000,000)
for its working capital and other corporation purposes.
B. On June
27, 2002, MTI executed a promissory note (the "Note") in the
amount of Seven Million Dollars ($7,000,000) in favor of Canopy
secured by the
collateral described in that certain Security Agreement between MTI
and Canopy
dated as of the date thereof (the "Security Agreement"), perfected
by the filing
of a UCC Financing Statement.
C. The
collateral transferred, conveyed, assigned and granted to
Canopy
pursuant to the terms of the Security Agreement includes a security
interest in
MTI of all "general intangibles," as such term is defined in the
UCC, including,
but not limited to, all patents and patent applications, and in all
"accounts,"
as such term is defined in the UCC, including, but not limited to
all of MTI's
accounts receivable.
D. On
November 13, 2002, Comerica Bank-California and MTI entered into
a
Loan and Security Agreement (the "Comerica Loan"). In connection
with the
Comerica Loan, Canopy secured the line of credit for MTI by
guaranteeing the
Comerica Loan and provided a Seven Million Dollar ($7,000,0000)
letter of credit
from Canopy's bank, Bank of America, for the purpose of creating a
security
interest under the Comerica Loan (the "Comerica Loan Security
Interest").
E. On
December 5, 2002, MTI paid off the outstanding balance of the
Note;
the Security Agreement and the underlying security interest were
continued for
the purpose of Canopy guaranteeing the Comerica Loan.
F. As of
June 14, 2004, MTI and Canopy entered into that certain First
Amendment to Loan Agreement, which documented the arrangement
described in
recital E above, terminating MTI's right to borrow cash under the
Canopy Loan
Agreement.
G. Also as
of June 14, 2004, Canopy and MTI entered into that certain
Waiver and Consent, pursuant to which Canopy consented to certain
financing
activities of MTI and agreed to release its lien on certain of
MTI's
intellectual property while retaining its lien on the remaining MTI
assets as
collateral security for the obligations of MTI to Canopy described
above.
H. MTI and
Canopy now desire to agree that Canopy will release its lien on
the Released Collateral (defined below) in return for MTI's
commitment to pay
down the Comerica Loan, with the understanding that the Comerica
Loan Security
Interest will continue in place and that MTI shall be allowed to
incur
indebtedness from third parties and pledge the Released Collateral
as collateral
security therefor. The "Released Collateral" shall mean the
property described
on Exhibit A hereto.
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I. Canopy
is MTI's major stockholder and beneficially holds approximately
42% of all outstanding common stock in MTI and agrees that it is in
the best
interest of MTI and its stockholders that it waive and release any
right, title
and interest it may have in and to the Released Collateral secured
by the
Security Agreement.
NOW,
THEREFORE, to that end and in consideration of the premises,
covenants and agreements set forth below, and the mutual benefits
to be derived
from the transactions described above and other good and valuable
consideration,
the parties hereby agree as follows.
1.
Canopy
hereby waives and releases any rights, title and interest
that it may have in and to the Released Collateral (the
"Security
Interest") and hereby authorizes MTI to cause partial UCC lien
releases for the Released Collateral in the forms attached hereto
as
Exhibit B. Canopy will cooperate with MTI to provide to MTI any
other documents, instruments and agreements reasonably required
to
confirm Canopy's release of the Released Collateral.
2.
Canopy
hereby approves and consents to MTI's incurrence of third
party indebtedness and the pledge of the Released Collateral as
collateral security therefor, and acknowledges that the
consummation
of any such transaction or transactions will not constitute a
breach
or default under any provision of the Canopy Loan Agreement or
the
Security Agreement (the "Canopy Agreements").
3.
MTI hereby
represents, warrants, covenants and agrees that:
(a) MTI has
$5,500,000.00 outstanding under the Comerica Loan as
of the date hereof;
(b) MTI shall
not incur any additional indebtedness under the
Comerica Loan, and shall pay all accrued interest on the
outstanding balance as the same becomes due; and
(c) on each of
February 15, 2005, May 15, 2005 and August 15,
2005, MTI shall make a principal repayment under the Comerica
Loan equal to $1,833,000.00.
4.
Canopy
hereby acknowledges that as of the date hereof, there has not
been any default by MTI under the Canopy Agreements, and that to
the
extent that any action undertaken by MTI as of the date hereof
may
be construed as a default under the Canopy Agreements because
such
action was not evidenced by a formal waiver ("Past Actions"),
Canopy
hereby waives any and all such Past Actions as a default under
the
Canopy Agreements.
5.
All other
terms of the Canopy Agreements shall remain in full force
and effect except as to provisions expressly modified herein.
This
Waiver and Consent (a) is not intended for and shall not be
construed for the benefit of any party not a signatory hereto;
(b)
shall be binding upon, and inure to the benefit of the parties
hereto and their respective successors and assigns; and (c)
constitutes the entire agreement (including all representations
and
promises made) among the parties with respect to the subject
matter
hereof.
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6.
This
Waiver and Consent may be executed in two or more counterparts,
each of which shall be deemed an original and all of which
together
shall constitute one instrument.
IN WITNESS
WHEREOF, the undersigned has executed this Waiver and Consent
as of the date first set forth above.
THE CANOPY GROUP, INC., a Utah corporation
By: /s/ W. Mustard
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Its: President and CEO
MTI TECHNOLOGY CORPORATION,
a Delaware corporation
By: /s/ Scott Poteracki
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Its: CFO
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Exhibit A
The term "Released Collateral" shall mean the following properties,
assets and
rights of the MTI, wherever located, whether now owned or hereafter
acquired or
arising:
(a) All of MTI's Accounts (defined below), and all of MTI's
money,
contract rights, chattel paper, documents, deposit accounts,
securities,
investment property and instruments with respect thereto, and all
of MTI's
rights, remedies, security, liens and supporting obligations, in,
to and in
respect of the foregoing, including, without limitation, rights of
stoppage in
transit, replevin, repossession and reclamation and other rights
and remedies of
an unpaid vendor, lienor or secured party, guaranties or other
contracts of
suretyship with respect to the Accounts, deposits or other security
for the
obligation of any account debtor, and credit and other
insurance;
(b) To the extent not listed above, all of MTI's now owned or
hereafter acquired deposit accounts into which Accounts or the
proceeds of
Accounts are deposited, including any lockbox account into which
Accounts are
deposited;
(c) All of MTI's existing and future customer lists, claims,
books,
records, ledger cards, contracts, licenses, formulae, and computer
programs,
information, software, records, and data, as the same relate to
the
documentation or enforcement of the Accounts;
(d) All of MTI's now owned and hereafter acquired inventory (as
defined in the UCC (defined below)) consisting of goods
manufactured or provided
by Secured Party (defined below), including without limitation all
finished
goods, goods in transit and all returned, reclaimed or repossessed
goods, in
each case which consist of goods manufactured or provided by
Secured Party, and
all warehouse receipts, documents of title and other documents
representing any
of the foregoing (collectively, "Inventory"); and
(f) To the extent not listed above as original collateral, the
proceeds (including, without limitation, insurance proceeds) and
products of all
of the foregoing, including all general intangibles relating to the
Inventory
and the Accounts (including but not limited to payment
intangibles,
letter-of-credit rights and commercial tort claims, and rights and
claims under
insurance policies, in each case relating to the Inventory and the
Accounts).
For
purposes hereof:
(1) the
term "Account" means any right to payment of a monetary
obligation, whether or not earned by performance, which relates to
or arises
from goods and services manufactured or provided by the Secured
Party, including
without limitation, goods sold or delivered to MTI, another MTI
Company (defined
below), or customers of an MTI Company, or the installation by MTI
or another
MTI Company of such goods. Without limiting the generality of the
foregoing, the
term "Account" shall further include any "account" (as that term is
defined in
the UCC now or hereafter in effect), any accounts receivable,
any
"health-care-insurance receivables" (as that term is defined in the
UCC now or
hereafter in effect), any "pay
