SEVERANCE AND RELEASE AGREEMENT

1.  

The Employee’s employment with the Company shall terminate by reason of redundancy on the 31 ^st May 2005 (hereinafter called “the Termination Date”) without further obligation on the Company except as set out in the Agreement.

2.  

Effective 1 ^st June, 2005, the Company and the Employee agree that the Employee shall be retained by the Company as a consultant pursuant to the terms and conditions of the Consulting Agreement attached as Schedule 2 to this Agreement (the “Consulting Agreement).

3.  

Subject to the provisions of this agreement, it is agreed that the Company shall pay to the Employee on the Termination Date, in full and final settlement:-

3.1  

A statutory redundancy payment of € 25,800;

3.2  

An ex-gratia severance payment of € 22,772.75, being one month’s salary;

3.3  

A payment in respect of holiday entitlements up to the Termination Date, being 10 days leave, unless the Employee at his absolute discretion elects to take such leave prior to the Termination Date;

3.4  

A severance payment of € 159,409.25, being the equivalent of seven month’s salary, to be paid on June 30, 2005;

3.5  

A payment of € 14,000 for auto expenses, being the equivalent of seven months auto expenses; and

3.6  

The Company shall pay to Employee the amount of Employee’s current medical, dental and vision benefit premiums through 31 ^st March 2006, premium € 3,848.26. MTI will also reimburse all out of pocket expenses that are not covered thought the premiums but that would be covered under MTI’s existent Executive Medical Plan.

The Employee agrees and acknowledges that he was given proper and sufficient notice of the termination of Employee’s employment and no further notice period payments are due to Employee.

The above payments are subject to such tax and other deductions as the Company is required to deduct from the gross amount and remit to the Revenue in accordance with applicable legislation and shall be made in the most tax efficient manner permitted by law, provided always that the Company will not be obliged to incur additional cost or expense in order to procure tax efficacy.

4.  

The Employee confirms that he resigns from his position as Director and Secretary of MTI Technology Ireland Limited and MTI Technology Limited and any other directorships held by him within the Company and/or Group with effect from 31 ^st May 2005 without claim to compensation for loss of office and acknowledges that the amount paid herein relates solely to his employment. The Employee agrees to sign and return to the Company the appropriate documentation necessary to effect such resignations.

5.  

The Company shall make a contribution for the 2005 year into the Employee’s pension scheme on 30 ^th June, 2005, the contribution for the period from termination date to December 31 ^st 2005 amounts to € 12,401.55.

6.  

It is agreed that the Employee’s employment contract with the Company, dated 21st July, 2000, together with any amendments or other agreements relating to his employment with the Company save the Proprietary Information Agreement shall terminate by mutual agreement on the Termination Date and without further obligation on the part of the Company or on the part of the Employee.

7.  

On request and in any event before the Termination Date, the Employee shall deliver up to the Company all Company property and Company documentation and data belonging to the Company in the Employee’s possession or under his control including but not limited to any Company issued Credit Cards, Toshiba laptop personal computer, Blackberry, mobile telephone and office keys, all Company files, business plans, training, product and pricing documents, financial data, memoranda, correspondence and all other documentation prepared or obtained by him in the course of his employment with the Company and/or relating to its business or affairs.

Subject to the approval of MTI’s Board of Director’s Compensation Committee, the Company confirms that all Options granted to the Employee as set out in Schedule 1, and pursuant to MTI Technology Corporation 1996 and 2001 Stock Incentive Plans as amended (the “Stock Incentive Plans”), shall continue and remain in full force and effect in accordance with their terms through the term of the Consulting Agreement. In addition, subject to the approval of MTI’s Board of Director’s Compensation Committee, on or before the Termination Date, all unvested options will be

accelerated to fully vest to the extent those options would have vested during the term of the Consulting Agreement.

8.  

The Employee hereby undertakes with the Company that he will not at any time hereafter directly or indirectly disclose to any person, firm or company or use for his own benefit or gain or for the benefit or gain of third parties any of the Company’s trade secrets, business plans, product and/or financial data, work in progress or commercial information other than information in the public domain through no fault on the part of the Employee.

9.  

The Employee hereby irrevocably and unconditionally agrees to and accepts the provisions of this agreement and acknowledges that same shall be in full and final settlement of all claims made and/or which may be made by him against the Company, its parent, subsidiaries and associated companies and/or each and all of their respective officers, directors, employees and agents. Without prejudice to the generality of the foregoing, the Employee hereby acknowledges and agrees that the provisions made in this agreement constitute a full and final settlement of all claims (if any) which the Employee has and/or may have against the Company arising out of his employment with the Company and/or the termination of such employment, whether such claims arise at common law, in equity or pursuant to statute (including but not limited to the Redundancy Payments Acts 1967 to 2003, Terms of Employment (Information) Act, 1994 and 2001, Minimum Notice and Terms of Employment Acts 1973 and 2001, Payment of Wages Act 1991, Organisation of Working Time Act 1997, Protection of Employment Act, 1977, Employment Equality Acts 1998 and 2004 and the Unfair Dismissals Acts 1977 to 2001) or pursuant to contract, in tort, or otherwise howsoever arising including for the avoidance of doubt, any claim for personal injury.

10.  

The Employee acknowledges and agrees that the provisions and obligations of the Proprietary Information Agreement signed by him on 9 ^th February 2001 (and attached at Schedule 3) will survive the termination of his employment on the Termination Date.

11.  

Subject to Clause 10 above, the provisions of this Agreement shall supercede all prior discussions, representations, understandings or agreements concerning the subject matter hereof and constitute a full and final settlement of the Company’s obligations (if any) to the Employee regarding his employment with the Company, the termination of his employment and the severance payments to be paid to him upon such termination.

12.  

It is agreed that the terms of this Settlement Agreement are to remain strictly confidential and neither party will make any disclosures regarding the said terms to any third party, save to their legal advisors and to immediate family, unless compelled to do so in the course of legal proceedings to enforce the terms of same or otherwise as required by law, provided that the Parties acknowledge and agree that a copy of the Agreement may be filed with the United States Securities and Exchange Commission.

13.  

The Company confirms that all outstanding vouched work related expenses incurred up to and including May 31, 2005, will be discharged within ten days of the Termination Date.

14.  

The Employee hereby acknowledges that he has taken legal advice on this agree