EXHIBIT 10.1 SEVERANCE AND RELEASE AGREEMENT

Exhibit 10.1

SEVERANCE AND RELEASE AGREEMENT

     This Severance and Release Agreement (the “Agreement”) by and between MTI Technology Corporation (“MTI” or “the Company”) and Richard Ruskin (“Ruskin”) documents the terms and conditions of Ruskin’s termination from the Company, and is effective September 30, 2006, (the “Effective Date”).

Recitals

     On or about September 22, 2003, Ruskin commenced employment with MTI. Ruskin was formerly the Company’s Executive Vice President of US Sales and Marketing.

     MTI terminated Ruskin’s employment effective on September 30, 2006 (the “Termination Date”). MTI does not have a uniform policy or practice of granting particular severance benefits to its employees or executives. However, in accordance with the terms set forth under the offer letter between MTI and Ruskin, MTI agrees to pay Ruskin those severance benefits described in the paragraphs that follow in exchange for Ruskin’s release of all claims against the Company and performance of his other obligations hereunder. Ruskin accepted this offer.

     NOW, THEREFORE, in consideration of the recitals listed above, and the mutual promises contained in this Agreement, Ruskin and the Company agree, covenant, and represent as follows:

Agreement

1. Termination of Employment and Severance Payment

     In consideration of the covenants and promises in this Agreement, and for the good and valuable consideration, the sufficiency of which are hereby acknowledged, the Parties agree as follows:

          a. Within a reasonable period after the Effective Date of the Agreement, and subject to the condition that seven days have passed and Ruskin has not revoked this Agreement pursuant to Paragraph 3(b), MTI shall pay Ruskin’s in the total gross amount of $154,500.00 (six months base salary, six months draw, and six months auto allowance) minus all applicable taxes, social security, and other government required deductions (the “Severance Payment”). The Severance Payment shall be paid in eleven equal payments in the gross amount of $14,045.46, beginning on MTI’s first scheduled payroll date following October 1, 2006 and concluding with the payment on March 2, 2007. Notwithstanding any provision herein to the contrary, in no event will the Severance Payment be paid to Ruskin later than two and one-half (2 ¹ / 2 ) months following January 1, 2007.

          b. Ruskin acknowledges that, as of Employment Termination Date, he may be eligible to obtain continuing coverage under MTI’s group medical, vision and dental plans pursuant to the provisions of the Consolidated Omnibus Reconciliation Act and its implementing regulations (“COBRA”). MTI agrees that for a six month period beginning on October 1, 2006, MTI will pay the monthly premium for any COBRA continuation coverage that Ruskin elects to obtain. In no event shall MTI be liable for, or be required to pay premiums for any COBRA continuation coverage Ruskin may elect or be eligible to obtain thereafter. Beginning April 1, 2007, Ruskin shall be solely responsible for paying any and all premiums and administrative fees necessary to continue such COBRA benefits.

          c. Subject to the approval of the Compensation Committee of MTI’s Board of Directors, the parties agree that 50,000 shares of the 250,000 unvested shares of Restricted Stock awarded to Ruskin on June 21, 2006, under the Company’s 2001 Stock Incentive Plan, as amended (the “2001 Plan”), shall vest and released on June 21, 2007 and the remaining 200,000 unvested shares shall be forfeited, cancelled and become null and void on the Termination Date.

               All vested Stock Options granted to Ruskin under the 2001 Plan are fully exercisable until the date 90 days after the Termination Date and all unvested Stock Options shall be cancelled on the date of Termination.

          d. Ruskin agrees that from the Termination Date to and including June 30, 2007, he will be available to consult with MTI as needed by MTI (the “Consulting Period) in accordance with the Consulting Agreement attached to this Agreement as Exhibit “A.” Ruskin further agrees, covenants and represents that during the Consulting Period and thereafter he shall cooperate in good faith with MTI in the defense of any action that has been or will be brought against MTI that arises out of, or relates in any way to his employment with MTI. MTI agrees covenants and represents that it shall indemnify and hold Ruskin harmless to the extent required by law for all that Ruskin necessarily expends or loses in direct consequence of the discharge of his duties under this paragraph.

          e. Ruskin and MTI agree, covenant and represent that Ruskin shall not be eligible for, or entitled to, any benefits of employment other than those specifically identified in this Agreement.

2. General Release And Covenant Not To Sue

          a. Ruskin, for himself and his heirs, assigns, executors, administrators, and agents, past and present (collectively, the “Ruskin Affiliates”), hereby fully and without limitation releases, covenants not to sue, and forever discharges MTI and its respective subsidiaries, divisions, affiliated corporations, affiliated partnerships, parents, trustees, directors, officers, shareholders, partners, agents, employees, representatives, consultants, attorneys, heirs, assigns, executors and administrators, predecessors and successors, past and present (collectively, the “MTI Releasees”), both

individually and collectively, from any and all rights, claims, demands, liabilities, actions and causes of action whether in law or in equity, suits, damages, losses, attorneys’ fees, costs, and expenses, of whatever nature whatsoever, known or unknown, fixed or contingent, suspected or unsuspected (“Claims”), that Ruskin or the Ruskin Affiliates now have, or may ever have, against any of the MTI Releasees that arise out of, or are in any way related to: (i) Ruskin’s employment by MTI or any of the other MTI Releasees; (ii) the termination of Ruskin’s employment by MTI or any of the other MTI Releasees; and (iii) any transactions, occurrences, acts or omissions by MTI or any of the other MTI Releasees occurring prior to the Effective Date of this Agreement.

          b. Without limiting the generality of the foregoing, Ruskin specifically and expressly releases any Claims occurring prior to the Effective Date of this Agreement arising out of or related to violations of any federal or state employment discrimination law, including the California Fair Employment and Housing Act; Title VII of the Civil Rights Act of 1964; the Americans with Disabilities Act; the Age Discrimination In Employment Act; the National Labor Relations Act; the Equal Pay Act; the Employee Retirement Income Security Act of 1974; as well as Claims arising out of or related to violations of the provisions of the California Labor Code; state and federal wage and hour laws; breach of contract; fraud; misrepresentation; common counts; unfair competition; unfair business practices; negligence; defamation; infliction of emotional distress; invasion of privacy; assault; battery; false imprisonment; wrongful termination; and any other state or federal law, rule, or regulation.

3. Older Workers Benefit Protection Act

          a. This Agreement is subject to the terms of the Older Workers Benefit Protection Act of 1990 (the “OWBPA”). The OWBPA provides that an individual cannot waive a right or claim under the Age Discrimination in Employment Act (“ADEA”) unless the waiver is knowing and voluntary. Pursuant to the terms of the OWBPA, Ruskin acknowledges and agrees that he has executed this Agreement voluntarily, and with full knowledge of its consequences.

          b. In addition, Ruskin hereby acknowledges and agrees that: (a) this Agreement has been written in a manner that is calculated to be understood, and is understood, by him; (b) the release provisions of this Agreement apply to rights and claims that Ruskin may have under the ADEA, including the right to file a lawsuit against the Company for age discrimination; (c) the release provisions of this Agreement do not apply to any rights or claims that Ruskin may have under the ADEA that arise after the date he executes this Agreement; (d) Ruskin has been advised in writing to consult with an attorney prior to executing this Agreement; (e) Ruskin shall have a period of 21 days in which to consider the terms of this Agreement prior to its execution; and (f) Ruskin shall have a period of seven days after execution of this Agreement in which to revoke this Agreement.

     4.  Release Of Unknown Claims

          Ruskin acknowledges that he is aware of and familiar with the provisions of Section 1542 of the California Civil Code, which provides as follows:

      “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him or her, must have materially affected his or her settlement with the debtor.”

Ruskin hereby waives and relinquishes all rights and benefits which he may have under Section 1542 of the California Civil Code, or the law of any other state or jurisdiction, or common law principle, to the same or similar effect.

     5.  Representations And Warranties

          a. Ruskin represents and warrants that he has the capacity and the authority to enter into this Agreement on his own behalf, to bind all persons and entities claiming through him, and to release all Claims on behalf of the Ruskin Affiliates.

          b. Ruskin represents and warrants that he has not assigned or transferred any Claims or any interest in any Claims that he or the Ruskin Affiliates have or may have against any of the MTI Releasees. Ruskin agrees to defend, indemnify and hold the MTI Releasees harmless from any liability, claims, demands, damages, expenses, and attorneys’ fees incurred as a result of any person or entity who successfully asserts such assignment or transfer.

          c. Ruskin represents and warrants that no person, firm, or other entity has asserted, currently asserts, or to his knowledge will assert a lien or claim of lien with respect to the Severance Payment provided for in this Agreement. Ruskin represents and warrants that he has the authority to enter into this Agreement and to bind all persons and entities claiming through him.

          d. Ruskin represents that he has not suffered any work-related injuries while employed by the Company and accordingly, he has not filed and does not intend to file any claim for workers’ compensation benefits of any type against the Company. Ruskin acknowledges that the Company has relied upon these representations, and that the Company would not have entered into this Agreement but for these representations. As a result, Ruskin agrees, covenants, and represents that the Company may, but is not obligated to, submit this Agreement to the Workers’ Compensation Appeals Board for approval as a full compromise and release as to any workers’ compensation claims in the event that Ruskin files such a claim.

     6.  Confidentiality and Non-Disparagement

          a. As of the Effective Date, Ruskin agrees, covenants and represents that the facts relating to the existence of this Agreement, the negotiations leading to the execution of this Agreement, the terms of this Agreement, and the amounts of the Severance Payment shall be held in confidence, and shall not be disclosed, communicated

or divulged to any person other than those who must perform tasks to effectuate this Agreement, without first obtaining the MTI’s written consent to each disclosure. Notwithstanding the foregoing, Ruskin may disclose the terms of this Agreement to those persons to whom disclosure is necessary for the preparation of tax returns and other financial reports, the obtaining of legal advice, and to whom disclosure is ordered by a court of competent jurisdiction or otherwise required by law.

          b. Ruskin further agrees, covenants and represents that he shall not take any action or make any comments that actually or potentially disparage, disrupt, damage, impair, or otherwise interfere with MTI’s business interests or reputation.

     7.  Trade Secrets

          Ruskin acknowledges that he executed a Proprietary Information Agreement and that he shall continue to be bound by this Proprietary Information Agreement following the termination of his employment with MTI. A copy of the Proprietary Information Agreement is attached to this Agreement as Exhibit “B.”

     8.  Non-Admission of Liability

          Ruskin agrees, covenants and represents that this Agreement shall not be treated as an admission of liability by MTI, at any time, for any purpose, and that this Agreement shall not be admissible in any proceeding between the parties except a proceeding relating to a breach of its provisions after execution, or a proceeding to obtain approval of the Agreement as a compromise and release as provided in Paragraph 2(b) of this Agreement

     9.  Non-Solicitation

          Ruskin acknowledges that, because of his responsibilities at the Company, he helped to develop, learned of, and was exposed to the Company’s business strategies, information on customers and clients, and other valuable proprietary information, and that use or disclosure of such proprietary information in breach of the Employee’s obligations to the Company would be extremely difficult to detect or prove. Employee also acknowledges that the Company’s relationships with its employees are valuable business assets. In light of these facts, Ruskin agrees that he shall not, for a period of one year following the Termination Date directly or indirectly, solicit, or induce any executive, administrative, or other employee of the Company, or any of its affiliates, divisions, or subsidiaries, to leave the Company’s employment.

     10.  Arbitration of Disputes

          All disputes between Ruskin (and his attorneys, successors, and assigns) and MTI (and its affiliates, shareholders, directors, officers, employees, agents, successors, attorneys, and assigns) relating in any manner whatsoever to Ruskin’s employment with, or the termination of his employment from, MTI (“Arbitr