EXHIBIT 10.1
AMENDMENT NO. 2 TO
SECOND WAIVER AND CONSENT
This Amendment No. 2 to Second Waiver and Consent (this "AMENDMENT") is
entered into as of this 21st day of November, 2006, by and between The Canopy
Group, Inc., a Utah corporation ("CANOPY"), and MTI Technology Corporation, a
Delaware corporation ("MTI").
MTI is currently a party to that certain Loan and Security Agreement,
dated as of November 13, 2002, as amended, with Comerica Bank (as amended to
date and as may be further amended, the "COMERICA AGREEMENT"). On December 28,
2004, MTI and Canopy entered into that certain Second Waiver and Consent (as
amended, the "WAIVER") with respect to certain matters relating to the Comerica
Agreement. On June 30, 2006, MTI and Canopy entered into that certain Amendment
to Second Waiver and Consent to, among other things, provide that Canopy would
guarantee MTI's standby letter of credit under the Comerica Agreement through
November 30, 2006.
Canopy remains a major stockholder of MTI and agrees that it is in the
best interest of MTI and its stockholders that it further amend the Waiver as
set forth herein to, among other things, extend its guarantee of MTI's line of
credit under the Comerica Agreement through June 30, 2007. All terms not
otherwise defined shall have the meaning set forth in the Waiver.
Whereas, in order to induce Canopy to amend the Waiver as set forth
herein, MTI desires to grant a warrant to Canopy to purchase shares of MTI's
common stock on the terms set forth herein.
Now, therefore, in consideration of the promises, covenants and
agreements set forth below, the mutual benefits to be derived from the
transactions described above and other good and valuable consideration, and
intending to be legally bound, the parties hereby agree as follows:
1. MTI agrees to grant to Canopy, on the date hereof, a warrant
(the "WARRANT") to purchase 125,000 shares of MTI's common stock, at a
per share price equal to the closing price of the Company's common stock
on the Nasdaq Capital Market on the date the warrant is issued, and
subject to the additional terms and conditions set forth in the form of
warrant attached as Exhibit A.
2. Canopy consents to MTI's extending the line of credit
maturity date under the Comerica Agreement and agrees to guarantee MTI's
line of credit under the Comerica Agreement through June 30, 2007.
3. Canopy hereby represents, warrants and covenants to MTI as
follows:
3.1 Purchase for Own Account. Canopy represents that it is
acquiring the Warrant, and the common stock issuable upon exercise of
the Warrant (collectively, the "SECURITIES") solely for investment for
Canopy's own account not as a nominee or agent,
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and not with a view to the resale or distribution of any part thereof,
and that Canopy has no present intention of selling, granting any
participation in, or otherwise distributing the same. The acquisition by
Canopy of any of the Securities shall constitute confirmation of the
representation by Canopy that Canopy does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer
or grant participations to such person or to any third person, with
respect to any of the Securities, other than the potential assignment of
the Warrant to Canopy Ventures I, L.P. (a Utah limited partnership of
which Canopy is the sole limited partner).
3.2 Accredited Investor. Canopy represents that it is an
"accredited investor" within the meaning of Securities and Exchange
Commission Rule 501 of Regulation D, as presently in effect and, for the
purpose of Section 25102(f) of the California Corporations Code, it is
excluded from the count of "purchasers" pursuant to Rule 260.102.13
thereunder.
3.3 Restrictions on Transfer. Canopy understands that the
Securities are characterized as "restricted securities" under the
federal securities laws inasmuch as they are being acquired from MTI in
a transaction not involving a public offering and that under such laws
and applicable regulations such securities may be resold without
registration under the Securities Act of 1933, as amended (the "ACT"),
only in certain limited circumstances. In this connection Canopy
represents that it is familiar with Rule 144, promulgated under the Act
as presently in effect, and understands the resale limitations imposed
thereby and by the Act. CANOPY UNDERSTANDS AND ACKNOWLEDGES HEREIN THAT
AN INVESTMENT IN MTI'S SECURITIES INVOLVES AN EXTREMELY HIGH DEGREE OF
RISK AND MAY RESULT IN A COMPLETE LOSS OF ITS INVESTMENT. Canopy
understands that the Securities have not been and will not be registered
under the Act and have not been and will not be registered or qualified
in any state in which they are offered, and thus Canopy will not be able
to resell or otherwise transfer its Securities unless they are
registered under the Act and registered or qualified under applicable
state securities laws, or an exemption from such registration or
qualification is available. Canopy has no immediate need for liquidity
in connection with this investment and does not anticipate that it will
need to sell its Securities in the foreseeable future.
THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, AND THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY
PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL,
UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100,
25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO
THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.
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In witness whereof, the undersigned has executed this Amendment as of
the date first set forth above.
THE CANOPY GROUP, INC.,
a Utah corporation
By: /s/ E. Xxxx Xxxxxx
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Name: E. Xxxx Xxxxxx
Title: VP/Treasurer
MTI TECHNOLOGY CORPORATION,
a Delaware corporation
By: /s/ Xxxx Xxxxxxxx
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Name: Xxxx Xxxxxxxx
Title: Vice President and Corporate Controller
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EXHIBIT A
FORM OF WARRANT
