EXHIBIT 99.2
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.
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.
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/ Xxxxx Xxxxxxxxx
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Its: CFO
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 "payment intangibles" (as that term is defined in the
UCC now or hereafter in effect) and all other rights to payment of every kind
and description, whether or not earned by performance, in each case which
relates to or arises from goods and services manufactured or provided by Secured
Party, including without limitation, goods sold or delivered to MTI, another MTI
Company, or customers of an MTI Company, or the installation by an MTI Company
of such goods.
(2) The term "Secured Party" means XXX Xxxxxxxxxxx, a
Massachusetts corporation having its principal place of business at 000 Xxxxx
Xxxxxx Xxxxxxxxx, XX 00000-0000, as agent for itself, for VMWare, Inc. and for
all of XXX Xxxxxxxxxxx'x subsidiaries, divisions and affiliates.
(3) The term "MTI Company" means each of MTI and each subsidiary
of MTI, including without limitation the following MTI subsidiaries: MTI
Technology GMBH (Germany), MTI Technology Limited (Ireland), MTI France SA
(France), MTI Technology Ireland Ltd. (Ireland), MTI Technology BV (Holland),
MTI Technology Limited (Scotland), and MTI Technology BV - Irish Branch
(Ireland).
