<PAGE>

                                                                   EXHIBIT 10.56

                                                                       SIGNED
                                                                      ORIGINAL

<Table>
<S>                                    <C>
COMPANY Name:                                 MTI TECHNOLOGY CORPORATION

MS Agreement Number:                                  5127220032

Effective Date:                                     AUGUST 1, 2O01

Expiration Date:                                   AUGUST 31, 2003

Embedded Systems Website URL:           https://embedded.one.microsoft.com/oem
</Table>

          MICROSOFT OEM LICENSE AGREEMENT FOR EMBEDDED SERVER PRODUCTS

This MICROSOFT OEM LICENSE AGREEMENT FOR EMBEDDED SERVER PRODUCTS ("Agreement")
is entered into between Microsoft Licensing, Inc. ("MS") and the company
identified below ("COMPANY") as of the Effective Date.

This Agreement consists of the following:

o    this Signature Page

o    Product and Royalty Schedule

o    Minimum Commitment Schedule

o    Third Party Installer Schedule

o    Addresses Schedule

o    General Terms and Conditions

By signing below, COMPANY represents and warrants that the information COMPANY
provides below and on each of the attached forms is accurate, and that COMPANY
has read and understood, and will act in accordance with, all of the terms set
forth in the attached documents.

MICROSOFT LICENSING, INC.                 MTI TECHNOLOGY CORPORATION

A company organized under the laws of:    A company organized under the laws of:
The State of Nevada, U.S.A.               The State of Delaware, U.S.A.


By:  /s/ MARK GUNTER                      By:  /s/ PAUL L. EMERY II
   -----------------------------------       -----------------------------------
     (signature)                               (signature)

Name:  Mark Gunter                        Name:  Paul L. Emery II
     ---------------------------------         ---------------------------------
      (printed)                                 (printed)

Title:  Senior OEM Accounting Manager     Title:  COO
      --------------------------------          --------------------------------
      (printed)                                 (printed)

Date:    27 Aug 01                        Date:    8/16/01
     ------------------                        ------------------






<PAGE>
                          PRODUCT AND ROYALTY SCHEDULE

         WINDOWS SERVER OPERATING SYSTEM PRODUCTS FOR EMBEDDED SYSTEMS

<Table>
<Caption>
----------------------------------------------------------------------------------------------------------------
                                                 Language
Product                                         Version(s)                                            Royalty
   #            Product Name and Version            *           Applicable Additional Provisions        **
----------------------------------------------------------------------------------------------------------------
<S>             <C>                             <C>             <C>                                  <C>
15957           Microsoft(R) Windows(R)                         (449), (478), (497), (528), (576),   US$________
                2000 for Web Server                             (577), (578), (579), (582), (583),
                Appliances (1-2 Proc                            (583), (585), (617), (619), (628)
                Version)
----------------------------------------------------------------------------------------------------------------
15955           Microsoft(R) Windows(R)           English       (449), (478), (497), (528), (576),   US  $450.00
                2000 for Network Attached                       (577), (579), (582), (583), (584),
                Storage Server Appliances,                      (585), (617), (620), (628), (1000),
                Non-Cluster Version (1-4                        (1001)
                Proc Version)
----------------------------------------------------------------------------------------------------------------
15956           Microsoft(R) Windows(R)           English       (449), (478), (497), (528), (576),   US$  550.00
                2000 for Network Attached                       (577), (579), (582), (583), (584),
                Storage Server Appliances,                      (585), (617), (620), (628), (1000),
                Non-Cluster Version and                         (1001)
                Persistent Storage Manager
                (1-4 Proc Version)
----------------------------------------------------------------------------------------------------------------
15953           Microsoft(R) Windows(R)           English       (449), (478), (497), (528), (576),   US$2,100.00
                2000 for Network Attached                       (577), (579), (582), (583), (584),
                Storage Server Appliances,                      (585), (617), (620), (628), (1000),
                Cluster Version (1-8 Proc                       (1001)
                Version)
----------------------------------------------------------------------------------------------------------------
15954           Microsoft(R) Windows(R)           English       (449), (478), (497), (528), (576),   US$2,220.00
                2000 for Network Attached                       (577), (579), (582), (583), (584),
                Storage Server Appliances,                      (585), (617), (620), (628), (1000),
                Cluster Version, and                            (1001)
                Persistent Storage Manager
                (1-8 Proc Version)
----------------------------------------------------------------------------------------------------------------
15958           Microsoft(R) Windows(R)                         (449), (478), (497), (528), (576),   US$________
                2000 Server for Embedded                        (577), (578), (579), (582), (583),
                Systems with the Server                         (584), (585), (617), (621), (628)
                Appliance Software
                Version 2.0 (1-4 Proc
                Version)
----------------------------------------------------------------------------------------------------------------
15952           Microsoft(R) Windows(R)                         (449), (478), (497), (528), (576),   US$________
                2000 Advanced Server for                        (577), (578), (579), (582), (583),
                Embedded Systems with                           (584), (585), (617), (621), (628)
                the Server Appliance
                Software Version 2.0 (1-8
                Proc Version)
----------------------------------------------------------------------------------------------------------------
14623           Microsoft(R) Windows(R)           English       (478), (577), (582), (618), (1000),  US$   20.00
                Services for Netware                            (1001)
                Version 5.0

----------------------------------------------------------------------------------------------------------------
13424           Microsoft(R) Windows(R)           English       (478), (577), (582), (618), (1000),  US$   20.00
                Services for UNIX Version                       (1001)
                2.0 Add-On Pack
----------------------------------------------------------------------------------------------------------------
</Table>


                                       2

<PAGE>
*  Language versions other than English are based on an if and as available
   basis.

** Only those products for which language version(s) and royalty rate(s) are
   listed in the table above are Licensed Product(s).


                           ADDITIONAL PROVISIONS KEY
   (NOTE: ONLY THOSE ADDITIONAL PROVISIONS APPLICABLE TO LICENSED PRODUCT(S)
               APPEAR. SECTION LETTERING MAY NOT BE CONSECUTIVE.)


(449) The following definitions are used in these Additional Provisions:

     (i) "Embedded Application" means an industry- or task-specific software
program and/or functionality that (A) provides the primary functionality of the
Embedded System, (B) is designed to meet the functionality requirements of the
specific industry into which the Embedded System is being marketed, and (C)
offers significant functionality in addition to the Licensed Product software.

     (ii) "General Purpose Device" is a computer or computing device that
provides, in place of or in addition to, task-specific functionality,
general-purpose server functionality that can be easily modified by the end user
to add hardware, applications, or enable services that add significant
functionalities to, or in place of, the task-specific functionality that was
implemented at the time of manufacture by COMPANY.

     (iii) "Office Automation and/or Personal Computing Functions" means
consumer or business tasks or processes performed by a computer or computing
device, including, word processing, spreadsheets, network browsing, and personal
finance.

(478) COMPANY may install and distribute the Licensed Product on Embedded
Systems that are rented or leased to end users ("Lessee"), providing the
conditions listed below are and remain satisfied.

     (i) COMPANY shall enter into a written lease agreement with a Lessee for
Embedded Systems distributed with the Licensed Product ("Lease"). The term of
each Lease shall be no less than twelve (12) and not longer than sixty (60)
consecutive months. COMPANY shall have the right to re-lese each Embedded
System.

     (ii) The Lease shall provide that at the expiration or termination of the
Lease the Lessee shall purchase or return the Embedded System (together with all
copies of the Licensed Product (installed and on external media), COA, APM, and
related materials for the Licensed Product) to COMPANY.

     (iii) If COMPANY wishes to re-lease or sell a previously leased Embedded
System or transfer ownership of leased Embedded System to a Lessee, COMPANY may
re-lease, sell or transfer such Embedded System with copies of the Licensed
Product, COA, and related materials originally included with such Embedded
System for no additional royalty to MS. Alternatively, COMPANY may reinstall the
Embedded System with a later release of the Licensed Product or alternative
Licensed Product, subject to the royalty obligations and terms set forth in this
Agreement. If COMPANY elects to install a later release or alternative Licensed
Product, COMPANY shall destroy and keep records of the destruction of the
external media, COA, APM and related materials for the Licensed Product
originally included with such Embedded System.

     (iv) Upon termination of this Agreement, COMPANY shall have the right to
allow each Lessee to continue to use the Licensed Product for the remaining
period of its then current Lease. Section (iii) of this subsection shall survive
termination or expiration of this Agreement.

(497) COMPANY may not distribute both this Licensed Product and any other
Microsoft operating system product with the same Embedded System.

(528) In order to support end users of this Licensed Product, COMPANY agrees to
employ at all times at least one support technician who has successfully
completed, at COMPANY's expense, the Microsoft Certified Professional program
for the licensed version of the Licensed Product (or if applicable, for the
Windows server operating system component on which it is based), or if not
available, then the Microsoft Certified Professional program for the predecessor
version of the Licensed Product. For purposes of this Additional Provision, the
predecessor version of Windows 2000 is Windows NT version 4.0.

(576) Notwithstanding Section 2(a)(ii) of the Agreement, COMPANY may install (i)
one (1) primary operating copy and (ii) one (1) secondary boot copy of the
Licensed Product Binaries as apart of the Image on the hard disk drive of the
Embedded System pursuant to the Licensed Product Deliverables documentation.
COMPANY shall configure the Embedded System to access, boot from and use the
secondary boot copy of the Licensed Product only in the event of failure or
malfunction of the primary operating copy of the Licensed Product.

(577) COMPANY shall maintain no more than six (6) weeks of inventory of this
Licensed Product or any component of this Licensed Product.

(578) For this Licensed Product the additional royalty as described in Section
3(h) of the Agreement shall be three hundred percent (300%) of the highest
royalty rate for the Licensed Product stated in the table above.

(579) (a) Although the Licensed Product Deliverables for this Licensed Product
may include files, modules, and/or materials for other functionality, COMPANY's
license rights shall apply only to those files, modules and/or materials that
constitute the Licensed Product as described in this Agreement. COMPANY shall
disable unlicensed Licensed Product functionality, and shall not provide
instructions or other means to assist end users to re-enable such functionality.

(b) COMPANY's license for this Licensed Product excludes the functionality
listed below, as well as functionality as denoted in documentation in the
Licensed Product Deliverables:

     (i) Authentication Services (i.e., single sign-on authentication service),
including without limitation, use of the Licensed Product as a domain controller
or otherwise making use of DCPromo.exe;

     (ii) Network Infrastructure Services (i.e., functionalities of the Licensed
Product necessary to support a server network infrastructure), including without
limitation, Dynamic Host Configuration Protocol (DHCP) services, provided
however, that DHCP services may be used to

                                       3
<PAGE>
add secondary functionality to an Embedded System and such Embedded System is
not used primarily as a DHCP Server), Domain Name System (DNS) service, Routing
and Remote Access Service (RRAS) or Windows Internet Name Service (WINS);

     (iii) Printing Services (i.e., print spoolers, drivers, and related files
in the server software that enable operation of a printer); and

     (iv)  Terminal Services (i.e., the terminal services feature of the
Licensed Product to enable client devices to use software residing on the
Embedded System, or other software used in conjunction with the Licensed
Product to provide similar services), except to the limited extent necessary to
administer the Licensed Product in Remote Administration Mode.

NOTE: ADDITIONAL FUNCTIONALITY MAY BE EXCLUDED FOR CERTAIN LICENSED PRODUCTS
(SEE BELOW).

(582) (a) "Hardware Partitioning" is the physical allocation of at least the
central processing units, input/outputs, and memory resources of an Embedded
System into independent units, such that each unit (a "Partition") is capable
of running a copy of the Licensed Product.

(b) An Embedded System that contains Partitions ("Partitioned Embedded System")
may be installed with not more than one (1) primary operating copy of the
Licensed Product and one (1) secondary boot copy of the Licensed Product on the
same Partition in the same manner as described in Additional Provision (576).
COMPANY shall report and pay MS royalties for each Partition installed with a
copy of this Licensed Product.

(c) COMPANY is not licensed to distribute a processor version of this Licensed
Product on a Partitioned Embedded System where the number of processors
supporting a Partition running the Licensed Product is greater than the highest
number of processors listed for such processor version in the Licensed Product
table above. COMPANY's royalty reports shall indicate for each Partitioned
Embedded System distributed with the Licensed Product the processor version of
the Licensed Product distributed with the Partitioned Embedded System.

(d) COMPANY shall include not more than one (1) copy of APM and software on
external media for each Partition installed with a copy of this Licensed
Product.

(583) Except as otherwise provided in Additional Provision (584), COMPANY may
use the information, tools and materials contained in the Licensed Product
Deliverables solely to install the Licensed Product software in accordance with
the Licensed Product Deliverables documentation and for no other purpose,
provided, however:

(a) If an end user of the Embedded System has access to the command line (for
example, the C:\ prompt) of the Licensed Product, then COMPANY shall cause to
appear on the display screen as part of the sign-on message for each Licensed
Product the copyright notices specified in the Licensed Product Deliverables.

(b) Notwithstanding anything to the contrary in the Agreement or the Licensed
Product Deliverables documentation, COMPANY shall ensure that no Microsoft
online end user registration screen for the Licensed Product is displayed to
the end user of the Embedded System.

(c) Notwithstanding anything to the contrary in the Licensed Product
Deliverables documentation regarding end user boot processes, COMPANY may
preinstall Embedded Applications to that they load and run automatically in
normal operation of the Embedded System.

(d) Notwithstanding anything to the contrary in the Licensed Product
Deliverables documentation, MS authorizes COMPANY to use the Licensed Product
Deliverables as follows for the sole purpose of configuring the Licensed
Product software on its Embedded Systems and/or optimizing the performance of
the Embedded Systems:

     (i) COMPANY is not required to install all Licensed Product software
files, but may elect to install only those files required by the Embedded System
or Embedded Application;

     (ii) COMPANY may hide or disable the display or function of Licensed
Product software features;

     (iii) COMPANY shall configure the Licensed Product software to comply with
the terms set forth in this Additional Provision.

(584) (a) The Licensed Product Deliverables for this Licensed Product include
the version of the SAK as defined below. COMPANY shall use the SAK strictly in
accordance with the terms of the end user license agreement that accompanies
the SAK and only for the purpose of incorporating the Windows-based Server
Appliance Software and Sample Code (as defined below) with the Windows
component of the Licensed Product for distribution with Embedded Systems under
this Agreement.

(b)(i) MS grants to COMPANY a non-exclusive, personal, nontransferable,
non-assignable, limited license during the term of the Agreement to distribute
the licensed version of the Windows-based Server Appliance Software and Sample
Code solely in object code form and solely in connection with Embedded Systems
distributed with Licensed Product software. By way of clarification, the
foregoing license grant does not allow COMPANY to subject in any way the
Licensed Product (or any portion thereof) to the GPL, LGPL or other license for
Publicly Available Software (as such terms are defined below), and COMPANY
shall take no action which may subject in any way the Licensed Product (or any
portion thereof) to the GPL, LGPL or other license for Publicly Available
Software.

     (ii) Unless otherwise authorized by MS in writing, COMPANY's license to
distribute this Licensed Product with Windows-based Server Appliance Software
or Sample Code is conditioned upon the following:

          (A) Any Embedded Applications and Device Drivers to be distributed by
COMPANY with Embedded Systems with the Licensed Product either (1) were
developed by COMPANY without the use of the SAK, or (2) were developed by
COMPANY using the SAK strictly in accordance with the end user license agreement
for the SAK; and

          (B) COMPANY does not include any Publicly Available Software in any
Embedded Application or Device Driver that contains Windows-based Server
Appliance Software or Sample Code.

                                       4
<PAGE>
(c)(i) COMPANY shall install in accordance with the SAK end user license
agreement and documentation the user interface screens or displays generated by
the SAK for administration of the Embedded System ("Administration UI
Screens"), whether such screens or displays are Web-based for viewing from a
separate computer system or appear on an LCD mounted on the Embedded System.
Except as otherwise provided in the SAK end user license agreement and
documentation or otherwise permitted in this Agreement or authorized by MS in
writing, COMPANY shall not delete, modify or obscure the appearance of any
Administration UI Screens (or components or sub-pages thereof).

     (ii) Notwithstanding subsection (i) above, COMPANY may make the
modifications and additions to the Administration UI Screens as listed below,
provided that such modifications and additions are made in a manner fully
consistent with the appearance of the Administration UI Screens generated by
the SAK and in accordance with the SAK documentation, e.g., additional icons or
tabs are substantially the same size, shape and appearance as icons and tabs
included in the Administration UI Screens as generated by the SAK:

     (A) COMPANY may add COMPANY's brand name, logo, and/or Embedded System name
     to the Administration UI Screens, provided that COMPANY's brand name, logo,
     or Embedded System name is (A) displayed less prominently than the Windows
     Powered logo, (B) not combined with or connected to the Windows Powered
     Logo, and (C) not used in a manner which might create confusion regarding
     the source or ownership of the Licensed Product or the Windows Powered
     Logo.

     (B) COMPANY may add end user help files under the "Help" tab on the
     Administration UI Screens, or any sub-pages thereof.

     (C) COMPANY may add within the page frame of the Administration UI Screens,
     links to or separate tabs, icons or folders for, administration pages for
     any Embedded Application or other software installed on the Embedded
     System.

(d) COMPANY shall distribute the Windows component of the Licensed Product only
as part of the Licensed Product software that includes the Windows-based Server
Appliance Software in object code.

(e)(i) COMPANY hereby conveys to MS all right, title and interest to any
modifications, extensions or revisions made by or for COMPANY to any source
code provided to COMPANY in the Sample Code, including any copyrights and other
intellectual property rights arising from such modifications, extensions or
revisions. COMPANY shall deliver to MS, in source and object code form, any
such modifications, extensions and revisions.

     (ii) COMPANY further agrees to deliver to MS, in source and object code
form, any relevant portions of additional code, drivers or programs, and any
updates thereto, that are included in the Image originally installed on each
Embedded System and enable the Licensed Product to execute on Embedded Systems,
provided, however, if COMPANY does not own such portions or does not have
license rights to deliver such portions in source code form, COMPANY shall
deliver such portions in object code form only. COMPANY hereby grants to MS and
MSCORP a non-exclusive, perpetual, royalty-free license to use such additional
code, drivers or programs to support COMPANY or end users of Embedded Systems.
Notwithstanding the foregoing, COMPANY shall not deliver to MS any code,
drivers and programs which is subject in any way to the GPL, LGPL or other
license for Publicly Available Software.

(f) COMPANY hereby indemnifies, holds harmless, and defends MS and MSCORP from
and against any claims or lawsuits, including attorney's fees, that arise or
result from the use or distribution of any Embedded Application or Device
Drivers developed with the SAK. COMPANY also indemnifies MS and MSCORP from any
damages they may suffer as a result of the failure of COMPANY to abide by the
terms of this Additional Provision.

(g) For purposes of this Additional Provision,

     (i) "Device Driver" means a device driver designed to interoperate with
Licensed Product software distributed with an Embedded System.

     (ii) "Publicly Available Software" means any software that is derived in
any manner (in whole or in part) from any software that is distributed under at
least all of the following conditions: (A) licensees of such software are
authorized to access, modify and make derivative works of the source code for
the software, (B) licensees of source code of such software are not obligated to
maintain the confidentiality of such source code; and (C) at least some
licensees of such software are required, if they desire to distribute derivative
works of such software, to license the source code for such derivative works to
their sublicensees under the conditions of (A), (B), and (C) hereof. Publicly
Available Software includes, without limitation, software licensed or
distributed under any of the following licenses or distribution models, or
licenses or distribution models similar to any of the following: (i) GNU's
General Public License ("GPL") or Lesser/Library GPL ("LGPL"), (ii) The Artistic
License (e.g., PERL), (iii) the Mozilla Public License, (iv) the Netscape Public
License, (v) the Berkeley software design ("BSD") license including Free BSD or
BSD-style license, (vi) the Sun Community Source License ("SCSL"), (vii) an Open
Source Foundation License (e.g., CDE and Motif UNIX user interfaces), and (viii)
the Apache Server license.

     (iii) "SAK" means the Microsoft(R) Server Appliance Kit Version 2.0 for
Windows(R) 2000.

     (iv) "Sample Code" means those portions of the SAK located the directories
and subdirectories of "\\SDK" and "\\DDK".

     (v) "Windows-based Server Appliance Software" means (A) the components of
the Licensed Product which are installed by the SAK by running SaSetup.exe under
the folder %systemroot%\system32\serverappliance, and (B) the files that are
installed by the SAK by running SaPrep.exe (drvprep.dll; srvprep.dll;
nullvga.sys; nullvgad.dll).

(585) The individual software components that constitute the Licensed Product
may not be distributed separately. Information on licensing any of the
components separately may be obtained from the Account Manager assigned to
COMPANY.
(617)(a) Notwithstanding the definition of Embedded System in Section 1(f) of
the Agreement, for purposes of this Licensed Product only, "Embedded System"
means COMPANY's computer or computing device listed in the Embedded System
table below and that:

     (i) is based on the Licensed Product;


                                       5
<PAGE>
     (ii) is designed to be used without (and not distributed with) a monitor,
keyboard or mouse except if and to the extent necessary to perform maintenance
or repairs of the Licensed Product or other software installed on the Embedded
System which maintenance or repairs cannot be made feasibly through use of
Web-based interface screens;

     (iii) is not designed to support the Licensed Product with more than the
number of microprocessors indicated in the table above;

     (iv) is installed and configures to provide task-specific functionality
that meets requirements of the specific industry segment into which the device
is marketed;

     (v) may not be used to support directory services (such as Microsoft Active
Directory), database software (such as Microsoft SQL Server), enterprise
resource planning (ERP) software, or messaging and/or collaboration software
(such as Microsoft Exchange);

     (vi) is not useable as a commercially viable substitute for a General
Purpose Device.

     NOTE: ADDITIONAL EMBEDDED SYSTEM REQUIREMENTS MAY APPLY TO CERTAIN
LICENSED PRODUCTS (SEE BELOW).

(b)(i) COMPANY may sublicense this Licensed Product to end users for use only
with computer software installed with Licensed Product on an Embedded System
prior to distribution of such Embedded System by COMPANY, except that end users
may install system utilities, server resource management, or similar software
that is useable solely for administration, performance enhancement, and/or
preventive maintenance of the Embedded System.

(ii) COMPANY shall configure the Licensed Product so that end users may access
and use only such Licensed Product functionality as reasonably necessary to
support the requirements of the Embedded Systems as distributed by COMPANY.

(618) THIS ADDITIONAL PROVISION ONLY APPLIES TO WINDOWS SERVICES FOR NETWARE
VERSION 5.0 AND WINDOWS SERVICES FOR UNIX VERSION 2.0 ADD-ON PACK:

This Licensed Product is designed for use with the Windows 2000-based operating
system products listed in this Product and Royalty Schedule. The Licensed
Product may not function properly with other operating system products.

(619) THIS ADDITIONAL PROVISION ONLY APPLIES TO WINDOWS 2000 FOR WEB SERVER
APPLIANCES:

(i) In addition to the functionality excluded in Additional Provision 579(b),
COMPANY'S license for this Licensed Product also excludes Microsoft Cluster
Service.

(ii) In addition to the Embedded System requirements listed in Additional
Provision 617(a), for purposes of this Licensed Product only, the Embedded
System shall (1) provide direct access to and use of only those Licensed Product
functionalities necessary to deliver web pages over the Internet or an intranet
and/or to host an Internet location or web site(s), (2) not include an Embedded
Application (provided, however, system utilities, server resource management, or
similar software that is useable solely for administration, performance
enhancement, and/or preventive maintenance of the Embedded System may be
included), and (3) be designed to support not more than two (2) gigabytes of
random access memory.

(620) THIS ADDITIONAL PROVISION ONLY APPLIES TO WINDOWS 2000 FOR NETWORK
ATTACHED STORAGE SERVER APPLIANCES:

(i) In addition to the functionality excluded in Additional Provision 579(b),
COMPANY's license for this Licensed Product also excludes Network Load
Balancing Services. Furthermore, for the non-cluster versions of this Licensed
Product only, COMPANY's license for this Licensed Product also excludes
Microsoft Cluster Service.

(ii) In addition to the Embedded System requirements listed in Additional
Provision 617(a), for purposes of this Licensed Product only, the Embedded
System shall (1) provide direct access to and use of only those Licensed
Product functionalities necessary to deliver file services over a network, (2)
not include an Embedded Application (provided, however, system utilities,
server resource management, or similar software that is useable solely for
administration, performance enhancement, and/or preventive maintenance of the
Embedded System may be included), and (3) be designed to support not more than
eight (8) gigabytes of random access memory.

(621) THIS ADDITIONAL PROVISION ONLY APPLIES TO WINDOWS 2000 SERVER/ADVANCED
SERVER FOR EMBEDDED SYSTEMS WITH THE SERVER APPLIANCE SOFTWARE VERSION 2.0:

In addition to the Embedded System requirements listed in Additional Provision
617(a), for purposes of this Licensed Product only, the Embedded System shall
either (1) include an Embedded Application that addresses not more than one
(1) Office Automation and/or Personal Computing Function, or (2) provide direct
access to and use of Licensed Product functionalities and does not include an
Embedded Application (provided, however, system utilities, server resource
management, or similar software that is useable solely for administration,
performance enhancement, and/or preventive maintenance of the Embedded System
may be included). Furthermore, the Embedded System shall not be useable to
deliver (1) web pages over the Internet or an intranet and/or host an Internet
location or web site (i.e., a web server), or (2) file services over a network
(i.e., a network attached storage server).

(628) MS will provide to COMPANY OEM Sales-Out Report Guidelines, which may be
revised from time to time during the term of this Agreement. COMPANY shall
provide, on a monthly basis, customer sales reports for the Licensed Product
("Sales-Out Reports"), which shall include all information required by the then
current OEM Sales-Out Report Guidelines. COMPANY shall take all steps necessary
to ensure that COMPANY's collection and provision of information contained in
the Sales-Out Reports will comply with all applicable national data protection
laws. In addition, if an end user customer is an individual, COMPANY shall
notify and obtain permission from the end user for transfer and use of
information by MS. If permission is not obtained, COMPANY shall report the name
and address for the business organization with which the individual is
affiliated (if any), and shall not report such information for the individual.

(1000) COMPANY may install one (1) royalty free copy of Licensed Product on
Embedded Systems only for COMPANY's use as demonstration units for prospective
customers. Each demonstration unit must be clearly marked "For Demonstration
Purposes Only".

(1001) For this Licensed Product the additional royalty as described in Section
3(h) of the Agreement shall be two hundred percent (200%) of the highest
royalty rate for the Licensed Product stated in the table above.


                                       6




<PAGE>


                                EMBEDDED SYSTEMS

"Embedded System" means COMPANY's computer or computing device listed in the
Embedded System table below that meet the requirements set forth in the
Additional Provisions above.

At COMPANY's option, for purposes of administrative convenience, COMPANY may
designate models by model line or series (e.g., "Jaguar model line", "Jaguar Pro
series", "Jaguar Pro 750 model line", "Jaguar Pro 950 series", etc.). Embedded
Systems defined by model line or series shall include all present models which
include the designated model line or series name, (e.g., "Jaguar Pro model line"
includes Jaguar Pro, Jaguar Pro 950, Jaguar Pro S, etc.; "Jaguar series"
includes Jaguar, Jaguar Pro, Jaguar Pro 950, Jaguar S400, etc.; "Jaguar Pro 950
series" includes Jaguar Pro 950, Jaguar Pro 955, etc.).

PRODUCT NUMBER KEY: Please refer to the Product Number in the Licensed Product
table above.

A PRODUCT IS NOT LICENSED FOR DISTRIBUTION WITH A LISTED EMBEDDED SYSTEMS,
UNLESS THE PRODUCT BOX FOR SUCH PRODUCT IN THE EMBEDDED SYSTEMS TABLE BELOW IS
MARKED WITH AN "X".

                             EMBEDDED SYSTEMS TABLE

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
 EMBEDDED SYSTEM    EMBEDDED SYSTEM          PROCESSOR      15955     15956      15953     15954
MODEL NAME/MODEL      DESCRIPTION
  NUMBER/SERIES
--------------------------------------------------------------------------------------------------
<S>                 <C>                 <C>                 <C>       <C>        <C>       <C>
VTxxx-NAS-xxx         Dual and Quad     PIII or Comparable,             X                    X
 Model Line         Processor Network   Xeon or Comparable
                     Attached Storage
                        Appliance
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
 EMBEDDED SYSTEM    EMBEDDED SYSTEM          PROCESSOR      14623     13424
MODEL NAME/MODEL      DESCRIPTION
  NUMBER/SERIES
--------------------------------------------------------------------------------------------------
<S>                 <C>                 <C>                 <C>       <C>        <C>       <C>
VTxxx-NAS-xxx         Dual and Quad     PIII or Comparable,   X         X
 Model Line         Processor Network   Xeon or Comparable
                     Attached Storage
                        Appliance
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
</TABLE>

COMPANY HEREBY REPRESENTS AND WARRANTS THAT THE NAMES AND NUMBERS INDICATED IN
THE MODEL NAME/MODEL NUMBER COLUMN IN THE TABLE ABOVE ACCURATELY DENOTE THE
ACTUAL DESIGNATION USED BY COMPANY TO IDENTIFY THE LISTED MODELS (ON THE
EMBEDDED SYSTEM AND IN COMPANY'S INTERNAL BOOKS AND RECORDS).


                                       7


<PAGE>

                                  ATTACHMENT 1

        TO THE PRODUCT AND ROYALTY SCHEDULE FOR SERVER OPERATING SYSTEM
                         PRODUCTS FOR EMBEDDED SYSTEMS

                              REQUIRED EULA TERMS

COMPANY shall sublicense the Licensed Product to end users by means of a EULA.
COMPANY shall provide clear notice to Embedded System customers before or at the
time of purchase that the Embedded System contains software that is subject to a
license and that customer must agree to that license before it may use the
Embedded System. COMPANY shall distribute the EULA in a manner and language
version(s) necessary to form a contract binding the end user to the EULA terms
under applicable law. COMPANY may include terms in the EULA in addition to those
set forth below, so long as they are not less protective of MS. COMPANY shall
substitute its name for the bracketed text [COMPANY] in the EULA text. If
permitted by COMPANY's other software suppliers for a particular Embedded
System, COMPANY may substitute for the word "MS" the term [COMPANY's] software
suppliers". The EULA shall contain the following terms:

o    You have acquired a system ("SYSTEM") that includes software licensed by
     [COMPANY] from Microsoft Licensing Inc. or its affiliates ("MS"). Those
     installed software products of MS origin, as well as associated media,
     printed materials, and "online" or electronic documentation ("SOFTWARE")
     are protected by international intellectual property laws and treaties.
     The SOFTWARE is licensed, not sold. All rights reserved.

     -    [APPROVED ALTERNATIVE TEXT IF COMPANY DOES NOT MENTION MS IN THE EULA
          TEXT: "You have acquired a system ("SYSTEM") which includes software
          licensed by [COMPANY] from one or more software licensors
          ("[COMPANY's] Software Suppliers"). Such software products, as well
          as associated media, printed materials, and "online" or electronic
          documentation ("SOFTWARE") are protected by international
          intellectual property laws and treaties. The SOFTWARE is licensed,
          not sold. All rights reserved."]

o    IF YOU DO NOT AGREE TO THIS END USER LICENSE AGREEMENT ("EULA"), DO NOT
     USE THE SYSTEM OR COPY THE SOFTWARE. INSTEAD, PROMPTLY CONTACT [COMPANY]
     FOR INSTRUCTIONS ON RETURN OF THE UNUSED SYSTEM IN ACCORDANCE WITH
     [COMPANY]'S RETURN POLICIES. ANY USE OF THE SOFTWARE, INCLUDING BUT NOT
     LIMITED TO USE ON THE SYSTEM, WILL CONSTITUTE YOUR AGREEMENT TO THIS EULA
     (OR RATIFICATION OF ANY PREVIOUS CONSENT).

o    GRANT OF SOFTWARE LICENSE.

     -    The SOFTWARE may contain the following:

          o    "Server Software" that provides services or functionality on the
               SYSTEM ("Server");

          o    "Client Software" that allows an electronic device ("Device") to
               access or utilize the Server Software.

     -    LICENSE GRANT. Subject to the terms and conditions set forth below,
          this EULA grants you the following rights:

SERVER SOFTWARE. You may access, boot from, display and run the primary
operating copy of the Server Software only on the Server. Your license rights
to use secondary boot and/or backup copies of the Server Software installed on
or distributed with the Server (if any) are as described below in this EULA.
You may reinstall the Server Software on the Server as originally installed on
the Server by or on behalf of [COMPANY]. You may not use the Server Software,
or separate component parts thereof, for use on another server. CLIENT
SOFTWARE. You may install and use the Client Software on any number of Devices.

          o    PROCESSOR LIMITS. You may use the Server Software with not more
               than two (2) processors at any one time, unless a higher number
               of allowed processors is indicated on the Certificate of
               Authenticity for the SOFTWARE.

     -    SOFTWARE FUNCTIONALITY LIMITATIONS. Even if software files for such
          functionality are installed on or provided with the Server, you are
          not licensed to use the following functionality of the Server
          Software:

          o    Authentication Service functionality (i.e., single sign-on
               authentication service, including without limitation, use of the
               Server Software as a domain controller or otherwise making use
               of DCPromo.exe);

          o    Network Infrastructure Services (i.e., functionalities of the
               Server Software necessary to support a server network
               infrastructure), including without limitation, Dynamic Host
               Configuration Protocol (DHCP) services, Domain Name System (DNS)
               service, Routing and Remote Access Service (RRAS) or Windows
               Internet Name Service (WINS);

          o    Printing Services (i.e., print spoolers, drivers, and related
               files in the Server Software that enable operation of a
               printer);

          o    Terminal Services functionality (i.e., the terminal services
               feature of the Server Software to enable Devices to use software
               residing on the Server, or other software used in conjunction
               with the Server Software to provide similar services), except to
               the limited extent necessary to administer the Server Software
               in Remote Administration Mode.

          o    Microsoft Cluster Service. [NOTE: DELETE THIS TEXT IF SOFTWARE
               IS OTHER THAN WINDOWS 2000 FOR WEB SERVERS OR WINDOWS 2000 FOR
               NETWORK ATTACHED STORAGE SERVER APPLIANCES, NON-CLUSTER VERSIONS
               ONLY]

          o    Network Load Balancing Services. (NOTE: DELETE THIS TEXT IF
               SOFTWARE IS OTHER THAN WINDOWS 2000 FOR NETWORK ATTACHED STORAGE
               SERVERS, ANY VERSION]



                                       8
<PAGE>
-       LIMITATION ON FUNCTIONALITY SUPPORTED BY THE SOFTWARE. You are licensed
        to use the Server Software to support only the base functionality as
        provided and installed on the Server by [COMPANY], provided, however, in
        any event you are not licensed to use the Server Software to support
        directory services (such as Microsoft Active Directory), database
        software (such as Microsoft SQL Server), enterprise resource planning
        (ERP) software, messaging and/or collaboration software (such as
        Microsoft Exchange) or any office automation or personal computing
        function (such as word processing, spreadsheets, network browsing or
        personal finance). Except as specifically authorized by [COMPANY], you
        may not use the Server Software to support additional applications or
        significant functionality other than system utilities or server resource
        management or similar software which you may install and use solely for
        system administration, system performance enhancement, and/or preventive
        maintenance of the Server.

[NOTE: IF THE EMBEDDED SYSTEM INCLUDES AN EMBEDDED APPLICATION, REPLACE THE
PREVIOUS SECTION WITH THE FOLLOWING:

-       LIMITATION ON FUNCTIONALITY SUPPORTED BY THE SOFTWARE. You are licensed
        to use the Server Software to support only the base functionality as
        provided and installed on the Server by [COMPANY], if applicable,
        provided, however, in any event you are not licensed to use the Server
        Software to support directory services (such as Microsoft Active
        Directory), database software (such as Microsoft SQL Server), enterprise
        resource planning (ERP) software, messaging and/or collaboration
        software (such as Microsoft Exchange) or more than one (1) office
        automation or personal computing function (such as word processing,
        spreadsheets, network browsing or personal finance), regardless of
        whether installed by [COMPANY], you or another person. Except as
        specifically authorized by [COMPANY], you may not use the Server
        Software to support additional applications or significant functionality
        other than system utilities or server resource management or similar
        software which you may install and use solely for system administration,
        system performance enhancement, and/or preventive maintenance of the
        Server.]

-       NO CALS REQUIRED. Devices that access or utilize functionality of Server
        Software licensed under this EULA do not require a client access license
        ("CAL"). Obtaining a CAL for any Microsoft product does not grant you
        rights to use functionality of the Server Software not licensed under
        this EULA.

-       NOTE ON ACCESSING SOFTWARE ON SEPARATE SYSTEMS. If you use the Server to
        access or utilize software services or functionality on a separate
        computer system, or permit Devices to access or utilize software
        services or functionality on such separate computer system, you may be
        required to obtain client access or other licenses for the Server and/or
        Devices. Please refer to the software license agreement(s) accompanying
        such separate computer system for information.

-       NOT FAULT TOLERANT. THE SOFTWARE IS NOT FAULT TOLERANT. [COMPANY] HAS
        INDEPENDENTLY DETERMINED HOW TO USE THE SOFTWARE IN THE SYSTEM, AND MS
        HAS RELIED UPON [COMPANY] TO CONDUCT SUFFICIENT TESTING TO DETERMINE
        THAT THE SOFTWARE IS SUITABLE FOR SUCH USE.

-       NO WARRANTIES FOR THE SOFTWARE. THE SOFTWARE IS PROVIDED "AS IS" AND
        WITH ALL FAULTS. THE ENTIRE RISK AS TO SATISFACTORY QUALITY,
        PERFORMANCE, ACCURACY, AND EFFORT (INCLUDING LACK OF NEGLIGENCE) IS WITH
        YOU. ALSO, THERE IS NO WARRANTY AGAINST INTERFERENCE WITH YOUR ENJOYMENT
        OF THE SOFTWARE OR AGAINST INFRINGEMENT. IF YOU HAVE RECEIVED ANY
        WARRANTIES REGARDING THE SYSTEM OR THE SOFTWARE, THOSE WARRANTIES DO NOT
        ORIGINATE FROM, AND ARE NOT BINDING ON, MS.

-       NOTE ON JAVA SUPPORT. The SOFTWARE may contain support for programs
        written in Java. Java technology is not fault tolerant and is not
        designed, manufactured, or intended for use or resale as online control
        equipment in hazardous environments requiring fail-safe performance,
        such as in the operation of nuclear facilities, aircraft navigation or
        communication systems, air traffic control, direct life support
        machines, or weapons systems, in which the failure of Java technology
        could lead directly to death, personal injury, or severe physical or
        environmental damage. Sun Microsystems, Inc. has contractually obligated
        Microsoft Corporation to make this disclaimer.

-       NO LIABILITY FOR CERTAIN DAMAGES. EXCEPT AS PROHIBITED BY LAW, MS SHALL
        HAVE NO LIABILITY FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL OR INCIDENTAL
        DAMAGES ARISING FROM OR IN CONNECTION WITH THE USE OR PERFORMANCE OF THE
        SOFTWARE. THIS LIMITATION SHALL APPLY EVEN IF ANY REMEDY FAILS OF ITS
        ESSENTIAL PURPOSE. IN NO EVENT SHALL MS BE LIABLE FOR ANY AMOUNT IN
        EXCESS OF U.S. TWO HUNDRED FIFTY DOLLARS (U.S.$250.00).

-       LIMITATIONS ON REVERSE ENGINEERING, DECOMPILATION, AND DISASSEMBLY. You
        may not reverse engineer, decompile, or disassemble the SOFTWARE, except
        and only to the extent that such activity is expressly permitted by
        applicable law notwithstanding this limitation.

-       ADDITIONAL SOFTWARE. Any additional software provided to you by
        [COMPANY], MS and/or Microsoft Corporation which updates or supplements
        the original SOFTWARE is governed by this EULA unless alternative terms
        are provided with such updates or supplements.

-       SECONDARY BOOT AND BACKUP COPIES OF THE SOFTWARE.

        -       SECONDARY BOOT COPY. If a secondary boot copy of the Server
                Software is installed on the Server, you may access, boot from,
                display and run it solely in the event of a failure,
                malfunction, or corruption of the primary operating copy of the
                Server Software, and only until the primary operating copy has
                been repaired or reinstalled. You are not licensed to boot from
                and use both the primary operating copy and the secondary boot
                copy of the Server Software at the same time.

        -       BACKUP COPY.

                -       If a backup copy of the Server Software is installed on
                        the Server or provided on separate media, you may use it
                        solely to repair or reinstall the Server Software on the
                        Server.



                                       9
<PAGE>
          - You may also make a backup of the Server Software in connection
            with a general backup of all or substantially all the program
            software on the Server. You may use the backup of the Server
            Software solely for archival or reinstallation purposes.

-  NO OTHER COPIES. Except as expressly provided in this EULA or other
   documentation for the Server, you may not make copies of the SOFTWARE or any
   materials accompanying the SOFTWARE.

-  SOFTWARE TRANSFER ALLOWED BUT WITH RESTRICTIONS. You may permanently transfer
   rights under this EULA only as part of a permanent sale or transfer of the
   SYSTEM with all copies of the SOFTWARE originally provided with the SYSTEM,
   and only if the recipient agrees to this EULA. If the SOFTWARE is an upgrade,
   any transfer must also include all prior versions of the SOFTWARE.

-  TERMINATION. Without prejudice to any other rights, [COMPANY] may terminate
   this license if you fail to comply with the licensing terms. In such event,
   you must destroy all copies  of the SOFTWARE and all of its component parts.

-  NO RENTAL. Except if specifically authorized by [COMPANY] for leased
   hardware, you may not rent, lease, lend, or provide commercial hosting
   services with the SOFTWARE.

[NOTE: IF THE EMBEDDED SYSTEM IS A INSTALLED WITH WINDOWS 2000 FOR WEB SERVER
APPLIANCES, REPLACE PREVIOUS SECTION WITH THE FOLLOWING:

-  NO RENTAL. Except if specifically authorized by [COMPANY] for leased
   hardware, you may not rent, lease, lend, or provide commercial hosting
   services with the SOFTWARE, except to deliver web pages and/or content for a
   customer, over either the Internet or a private network].

   -  [APPROVED ADDITIONAL TEXT IF THE EMBEDDED SYSTEM IS LEASED: LEASED
      HARDWARE. In the event that you receive the Server under the terms of a
      lease from [COMPANY] or [COMPANY's] third-party representative, the
      following additional terms shall apply: (i) you may not transfer the
      SOFTWARE to another user as part of the transfer of the Server, whether or
      not a permanent transfer of the SOFTWARE with the Server is otherwise
      allowed in this EULA; (ii) your rights with respect to any SOFTWARE
      upgrades shall be as determined by the lease you signed for the Server;
      and (iii) you may not use the SOFTWARE after your lease terminates, unless
      you purchase the Server from [COMPANY].]

-  EXPORT RESTRICTIONS. You acknowledge that the SOFTWARE is of US origin. You
   agree to comply with all applicable international and national laws that
   apply to the SOFTWARE, including the U.S. Export Administration Regulations,
   as well as end-user, end-use and country destination restrictions issued by
   U.S. and other governments. For additional information on exporting the
   SOFTWARE, see http://www.microsoft.com/exporting/.


                                       10
<PAGE>


                          MINIMUM COMMITMENT SCHEDULE

FIRST PERIOD OF THE AGREEMENT

<TABLE>
<CAPTION>
                                                          Cumulative Amount
                                        Payment Amount     of Payments for
Date                                        (US$)           Period (US$)
--------------------------              --------------    -----------------
<S>                                     <C>               <C>
(payment due upon signing)                  $55,500.00           $55,500.00
1 month after the Effective Date                 $0.00           $55,500.00
2 months after the Effective Date                $0.00           $55,500.00
3 months after the Effective Date                $0.00           $55,500.00
4 months after the Effective Date           $18,500.00           $74,000.00
5 months after the Effective Date           $18,500.00           $92,500.00
6 months after the Effective Date           $18,500.00          $111,000.00
7 months after the Effective Date           $18,500.00          $129,500.00
8 months after the Effective Date           $18,500.00          $148,000.00
9 months after the Effective Date           $18,500.00          $166,500.00
10 months after the Effective Date          $18,500.00          $185,000.00
11 months after the Effective Date          $18,500.00          $203,500.00
12 months after the Effective Date          $18,500.00          $222,000.00

Total First Period Minimum Commitment      $222,000.00          $222,000.00
                                           ===========          ===========
</Table>

SECOND PERIOD OF THE AGREEMENT

<TABLE>
<CAPTION>
                                                           Cumulative Amount
                                         Payment Amount     of Payments for
Date                                         (US$)           Period (US$)
--------------------------               --------------    -----------------
<S>                                      <C>               <C>
13 months after the Effective Date           $18,500.00           $18,500.00
14 months after the Effective Date           $18,500.00           $37,000.00
15 months after the Effective Date           $18,500.00           $55,500.00
16 months after the Effective Date           $18,500.00           $74,000.00
17 months after the Effective Date           $18,500.00           $92,500.00
18 months after the Effective Date           $18,500.00          $111,000.00
19 months after the Effective Date           $18,500.00          $129,500.00
20 months after the Effective Date           $18,500.00          $148,000.00
21 months after the Effective Date           $18,500.00          $166,500.00
22 months after the Effective Date           $18,500.00          $185,000.00
23 months after the Effective Date           $18,500.00          $203,500.00
24 months after the Effective Date           $18,500.00          $222,000.00

Total Second Period Minimum Commitment      $222,000.00          $222,000.00
                                            ===========          ===========
</Table>


                                       11






<PAGE>
                         THIRD PARTY INSTALLER SCHEDULE

This Schedule sets forth the terms under which COMPANY may engage a third party
installer specifically approved in writing by MS ("Third Party Installer") to
install the Licensed Product as part of the Image (i) on the hard disk driver
or in non-volatile solid-state memory of the Embedded System(s), and/or (ii)
place the Image, as installed on non-volatile solid-state memory, into the
Embedded System(s) pursuant to Section 2(a)(ii) of the General Terms and
Conditions provided that all of the conditions listed below are and remain
satisfied.

     (a) COMPANY shall provide MS with the name, address, and business profile
in the English language (including years in business, ownership profile,
tradenames used, principle business activities, and summary of any prior
experience with installation or replication of MS products of any Third Party
Installer COMPANY intends to engage at least sixty (60) days before COMPANY
intends to have the Third Party Installer begin work for COMPANY. The Third
Party Installer must be approved in writing by MS prior to beginning work.

     (b) COMPANY shall enter into a written agreement with the Third Party
Installer ("Installation Agreement") that expressly provides that MS is a third
party intended beneficiary of the Installation Agreement with rights to enforce
such agreement, and that requires the Third Party Installer:

          (1) to comply with obligations identical to those imposed on COMPANY
by Sections 2(a), 2(b), 2(d), 2(k), 9, 11, and 17(a);

          (2) to consent to venue and jurisdiction in the state and federal
courts sitting in the State of Washington with respect to any action brought by
MS to enforce its rights under the Installation Agreement;

          (3) to provide access to Third Party Installer premises to audit or
inspection team(s) sent on behalf of MS or COMPANY, with or without notice, in
order that such team may perform an audit of the Third Party Installer's
Records and/or an inspection of the Third Party Installer's premises or
procedures to determine compliance with the terms of the Installation Agreement;

          (4) to halt installation or placement of the Image upon notice from
COMPANY or MS;

          (5) to distribute the Embedded System(s) with the Image only to
COMPANY; and

          (6) to pay MS' or COMPANY's attorneys' fees if COMPANY or MS employs
attorneys to enforce any rights arising out of the Installation Agreement.

     (c) COMPANY shall report to MS within fifteen (15) days of the end of each
calendar month, the number of units of each Embedded System(s) which the Third
Party Installer shipped to COMPANY during the month.

     (d) COMPANY shall cease use of any Third Party Installer upon receipt of
written notice from MS.

     (e) COMPANY hereby unconditionally and irrevocably guarantees the Third
Party Installer's fulfillment of the applicable obligations imposed by the
Agreement and/or the Installation Agreement.

     (f) COMPANY hereby indemnifies MS and its Suppliers for all damages
(including attorneys' fees) of any kind in connection with the Third Party
Installer's use of the Licensed Product, including, without limitation, damages
resulting from: (1) a breach of the terms of the Agreement and/or the
Installation Agreement, or (2) any and all unauthorized reproduction and/or
distribution of any portion of the Licensed Product Binaries by the Third Party
Installer.

     (g) Within thirty (30) days of COMPANY's execution of the Installation
Agreement with each Third Party Installer, COMPANY shall provide a copy of such
Installation Agreement to MS at the address in the Notices section of the
Addresses Schedule in the Agreement.

     (h) COMPANY shall promptly notify MS of the termination, expiration or
significant modification of the terms of the Installation Agreement.

     (i) Sections (e), (f), and (g) of this Third Party Installer Schedule
shall survive any termination or expiration of the Agreement and/or this Third
Party Installer Schedule.


                                       12
<PAGE>
                               ADDRESSES SCHEDULE

                              SHIPPING AND BILLING


COMPANY "SHIP TO" ADDRESS               COMPANY BILLING ADDRESS
--------------------------------------------------------------------------------
4905 E. La Palma Avenue                 4905 E. La Palma Avenue
--------------------------------------------------------------------------------
Anaheim, CA 92807                       Anaheim, CA 92807
--------------------------------------------------------------------------------
USA                                     USA
--------------------------------------------------------------------------------
Contact Name: Bill Sabatine             VAT Number
--------------------------------------------------------------------------------
Contact Phone Number: (714) 693-2360    Contact Name: Ron Umagat
--------------------------------------------------------------------------------
Contact Email: bsabatine@mti.com        Contact Phone Number: (714) 693-2366
--------------------------------------------------------------------------------
                                        Contact Email: rumagat@mti.com
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
COMPANY'S TECHNICAL SUPPORT PHONE NUMBER for Embedded Systems customers and end
users: 1-800-366-4684
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------


                             PAYMENT AND REPORTING

SEND REPORTS VIA EMAIL TO:              SEND PAYMENTS VIA WIRE TRANSFER ONLY TO:
--------------------------------------------------------------------------------
Microsoft Licensing, Inc.               Microsoft Licensing, Inc. c/o
--------------------------------------------------------------------------------
OEM Accounting Services                 Bank of America
                                        1401 Elm Street
--------------------------------------------------------------------------------
Email: MSLIESG@MICROSOFT.COM            Dallas, TX
--------------------------------------------------------------------------------
Fax: (1) 775-826-0531                   USA
--------------------------------------------------------------------------------
Fax (Alt): (1) 775-826-0506             ABA# 11100001-2
                                        SWIFT Code: BOFAUS3N
                                        Account # 3750891058
--------------------------------------------------------------------------------
                                        COMPANY SHALL INCLUDE APPLICABLE MS
                                        INVOICE NUMBER(S) ON ALL PAYMENTS
--------------------------------------------------------------------------------

Or to such other address or account as MS may specify from time to time.

                                    NOTICES

Any written notices related to this Agreement must be addressed to the contact
and locations outlined below, or such other addresses as either party may
hereafter specify in writing.

COMPANY INFORMATION                     MS INFORMATION
--------------------------------------------------------------------------------
MTI Technology Corporation              Microsoft Licensing, Inc.
--------------------------------------------------------------------------------
4905 E. La Palma Avenue                 6100 Neil Road
--------------------------------------------------------------------------------
Anaheim, CA 92807                       Reno, NV 89511-1132
--------------------------------------------------------------------------------
USA                                     USA
--------------------------------------------------------------------------------
Contact Name: Marc Nussbaum             Attention: General Manager
--------------------------------------------------------------------------------
Phone Number: (714) 693-2601            Phone Number: (1) 775-823-5600
--------------------------------------------------------------------------------
Fax Number: (714) 970-5924              Fax Number: (1) 775-826-0531
--------------------------------------------------------------------------------
Email Address: mnussbaum@mti.com
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Copies of all COMPANY NOTICES shall     With an additional copy to:
be sent to:
Microsoft Corporation                   Microsoft Corporation
One Microsoft Way                       One Microsoft Way
Redmond, Washington USA 98052           Redmond, Washington USA 98052
Attention: Law and Corporate Affairs    Attention: Regional Vice President --
Re: Microsoft Licensing, Inc. -- OEM    OEM ESG Sales
    ESG Sales
--------------------------------------------------------------------------------

                                       13


<PAGE>

                          GENERAL TERMS AND CONDITIONS

THIS IS A LICENSE TO USE CERTAIN MS GENERAL-PURPOSE SOFTWARE. THE SOFTWARE IS
NOT FAULT-TOLERANT, AND MAY CONTAIN SOFTWARE BUGS RELEVANT TO PERFORMANCE OF
COMPANY'S DEVICE(S). COMPANY IS SOLELY RESPONSIBLE FOR DETERMINING THAT THE
SOFTWARE IS SUITABLE FOR USE IN COMPANY'S DEVICE(S) AND FOR CONFIGURING AND
TESTING THE SOFTWARE FOR SUCH USE. SEE SECTIONS 4 AND 5.

1. DEFINITIONS.

(a) "Associated Product Materials" or "APM" means the Certificate of
Authenticity and such other materials as MS may designate from time to time.
COMPANY shall acquire APM from an Authorized Replicator.

(b) "Authorized Replicator" or "AR" means an MS-authorized supplier of APM. MS
may amend the list of ARs from time to time.

(c) "Certificate of Authenticity" or "COA" means a non-removable sticker
designated by MS. COMPANY shall permanently affix a COA to an accessible
location on each Embedded System.

(d) "COMPANY Binaries" means the non-MS software owned or licensed by COMPANY
and contained in the Image (including without limitation, the Embedded
Application).

(e) "Embedded Application" means industry- or task-specific software programs
and/or functionality, not generally available to consumers, that (i) provide
the primary functionality of the Embedded System, (ii) are designed to meet the
functionality requirements of the specific industry into which the Embedded
System is being marketed, and (iii) offer significant functionality in addition
to the Licensed Product software.

(f) "Embedded Systems" means COMPANY's computer systems or computing devices
which (i) are based on the Licensed Product, (ii) utilize a single central
processor unit, (iii) are designed for use with an Embedded Application, (iv)
are marketed to one or more specific industries (and not to general consumer or
mass markets), and (v) are not useable as a commercially viable substitute for
computers or devices which address more than two (2) Office Automation and
Personal Computing Functions.

(g) "Embedded Systems Website" means the web site located at the URL indicated
on the Signature Page of this Agreement or such other URL as MS may designate
from time to time. COMPANY's user name and initial password for the Embedded
Systems Website will be sent to the email address provided by COMPANY in the
Notices section of the Addresses Schedule.

(h) "EULA" means an end user license agreement that meets the requirements and
incorporates the terms set forth in Attachment 1 to the Product and Royalty
Schedule.

(i) "Foundry Product" means an Image or Embedded System which is either (i)
designed by or for a third party without substantial input from COMPANY, and
manufactured, reproduced, sold, leased, licensed or otherwise transferred from
COMPANY to that third party (or to customers of, or as directed by, that third
party) on essentially an exclusive basis; or (ii) designed, manufactured,
reproduced, sold, leased, licensed or otherwise transferred through or by
COMPANY to a third party (or to customers of, or as directed by, that third
party) for the primary purpose of attempting to circumvent the non-assertion of
patents provisions set forth in Section 12 that otherwise would apply to such
Image or Embedded System if manufactured and licensed directly by such third
party.

(j) "Image" means the Licensed Product Binaries and the COMPANY Binaries which
are installed on the Embedded System.

(k) "Licensed Product" means the Microsoft product(s) identified as licensed
in the Product & Royalty Schedule of the Agreement, including software and
related documentation identified by MS as components of the Licensed Product.

(l) "Licensed Product Binarties" means Licensed Product, in object code form,
included in the Image.

(m) "Licensed Product Deliverables" means the software, media containing
software, documentation and Supplemental Code or related items identified by MS
as Licensed Product Deliverables.

(n) "MSCORP" means Microsoft Corporation, a corporation organized under the
laws of the State of Washington, U.S.A. MSCORP is the parent company of MS.

(o) "Office Automation and Personal Computing Functions" means consumer or
business tasks or processes performed by a computer or computing device,
including, for example but not limited to, email, word processing,
spreadsheets, database, network browsing, scheduling, and personal finance.

(p) "Period" means those twelve calendar months, or such other time period, set
forth in the Minimum Commitment Schedule.

(q) "Recovery Image" shall mean a copy of the Image as originally installed on
the Embedded System, on separate media.

(r) "Royalty Reporting Guidelines" means the format and instructions for
electronic submission of royalty reports to MS posted on the Embedded Systems
Website. MS reserves the right to modify the Royalty Reporting Guidelines with
thirty (30) days notice.

(s) "Supplemental Code" means software that MS may provide to COMPANY as a
supplement to, or replacement of, any portion of Licensed Product. Supplemental
Code is subject to all terms and conditions of this Agreement.

(t) "Suppliers" means MSCORP and other licensors or suppliers of Licensed
Product.

2. LICENSE GRANT AND LIMITATIONS.

(a) Subject to all terms and conditions of this Agreement, MS grants to COMPANY
the following non-exclusive, limited, world-wide license rights:

     (i) reproduce Licensed Product Binaries as part of an Image, only on
COMPANY premises by COMPANY employees, for installation on an Embedded System;

     (ii) install one (1) copy of the Licensed Product Binaries as part of an
Image on the hard disk drive or in non-volatile solid-state memory of an
Embedded System, only on COMPANY premises by COMPANY employees;

     (iii) distribute one (1) copy of the Licensed Product Binaries as part of
an Image on an Embedded System;

     (iv) distribute one (1) copy of the APM with each Embedded System;

     (v) reproduce the Recovery Image only on COMPANY premises by COMPANY
employees and distribute one (1) copy of the Recovery Image with each Embedded
System, provided that COMPANY complies with the following:

          (A) The Recovery Image shall be an exact duplicate of the Image that
          COMPANY distributes installed on the


                                       14
<PAGE>
     Embedded System, and shall be distributed on external media with the
     applicable Embedded System;

     (B) The Recovery Image shall be maintained by the licensed end user on its
     original external media solely as an archival copy, and shall be licensed
     for use solely to reinstall the Image originally installed on the
     applicable Embedded System;

     (C) Reinstallation of the Image shall be performed by the licensed end
     user, by COMPANY, or by an authorized service representative of either
     COMPANY or the licensed end user;

     (D) A single unit of the Recovery Image may be used by the licensed end
     user, COMPANY, or the authorized service representative(s) to reinstall the
     Image on the licensed end user's additional units of the same Embedded
     System which contain the same Image;

     (E) COMPANY shall configure the Recovery Image to ensure that it executes
     solely on the applicable Embedded System, and that it will not download or
     install onto the Embedded System until a commercially reasonable
     authentication process of the Embedded System is performed;

     (F) Upon Installation, the Recovery Image shall completely replace the
     existing Image;

     (G) No Microsoft or third party product names and/or logos may be listed on
     the media label or packaging artwork;

     (H) The following statement must be displayed either on a break-the-seal
     label or printed prominently on the Recovery Image packaging:

               Use of the software on the enclosed media or installed
               on the system is subject to the terms of the end user
               license agreement. You should not use the software
               program until you have read the end user license
               agreement. By using the software, you signify that you
               have read the end user license agreement and accept its
               terms.

     (I) Recovery Media Packaging Specifics:

          (i) TITLE: The title should clearly identify the software contained on
          the media and name of the COMPANY providing it.

          (ii) PRODUCT USAGE TEXT: This text must 1) identify the purpose of the
          media as recovery of pre-installed software only, 2) identify the
          COMPANY, and 3) underscore that the COMPANY is solely responsible for
          performance of the software.

          (iii) COPYRIGHT TEXT: The following Microsoft copyright text must be
          included on the media label: Portions (C) 1983-2000, Microsoft
          Corporation. All Rights Reserved.

          (iv) MEDIA LABEL TEXT: the Recovery Image media shall be clearly
          labeled "Recovery Media - for Backup or Archival purposes only with
          (Name and Model of the Embedded System)".

(b) COMPANY shall not make the APM available through any other means or channel.

(c) COMPANY shall comply with the Additional Provisions set forth in the Product
and Royalty Schedule(s).

(d) COMPANY agrees to display a copyright notice sufficient to protect MSCORP's
copyright in the Licensed Product. COMPANY shall not remove or obscure any
copyright, trademark or patent notices that appear on the Licensed Product as
delivered to COMPANY.

(e) COMPANY shall not use any name or trademark confusingly similar to or
undertake any other action that will interfere with or diminish MS or MSCORP
right, title or interest in, any Licensed Product trademark(s) or trade name(s),
and will comply with reasonable guidelines provided by MSCORP from time to time
for reference to, and use of, such Licensed Product mark(s) or name(s).

(f) COMPANY shall not use or display any logo of MS or its Suppliers (including
without limitation any stylized representation of the Microsoft name used by MS
or MSCORP) in COMPANY's materials or packaging. Logo licenses may be available
by separate written agreement(s) with MS or its Suppliers.

(g) COMPANY shall not advertise, provide a separate price for, or otherwise
market the Licensed Product(s) or Image(s) as separate items from the Embedded
System.

(h) (i) Embedded Systems shall be marketed, licensed, and distributed only under
COMPANY's brand names and trademarks, unless otherwise provided for in a Third
Party Brand Names and Trademarks Schedule.

    (ii) COMPANY represents and warrants to MS that COMPANY will not list on
the Third Party Brand Names and Trademarks Schedule any third party brand names,
trademarks and model names that infringe any rights of any third party, and
shall defend, indemnify and hold MS harmless from any claim or damages arising
out of COMPANY use of such third party brand names, trademarks or model names.
COMPANY's distribution rights under this License Agreement shall not extend to
any Foundry Product(s).

(i) COMPANY shall contractually obligate (e.g., by contract, invoice or other
written instrument) its distributors, dealers and others in its distribution
channels ("Channel") to deliver the APM together with each Embedded System.
COMPANY shall contractually prohibit the Channel from marketing or quoting a
price for the Image separate from the Embedded System. COMPANY shall promptly
discontinue distribution of Licensed Product to any member of the Channel which
does not comply with this Section 2, and shall cooperate with MS in
investigating instances of distribution of Licensed Product in violation of
this Section 2.

(j) COMPANY shall not reverse engineer, decompile or disassemble any Licensed
Product except as permitted by applicable law which cannot be waived by this
subsection 2(j). COMPANY acknowledges that information on interoperability of
the Licensed Product with other products is readily available.

(k) MS reserves all rights not expressly granted in this Agreement.

(l) THIS AGREEMENT EXPRESSLY PROHIBITS COMPANY FROM USING LICENSED PRODUCT IN
OPERATION OF NUCLEAR FACILITIES, IN AIRCRAFT NAVIGATION, IN AIRCRAFT
COMMUNICATION, IN AIRCRAFT FLIGHT CONTROL, IN AIRCRAFT AIR TRAFFIC CONTROL
SYSTEMS, OR IN OTHER DEVICES OR SYSTEMS IN WHICH A MALFUNCTION (INCLUDING,
WITHOUT LIMITATION, SOFTWARE RELATED DELAY OR FAILURE) WOULD RESULT IN
FORESEEABLE RISK OF INJURY OR DEATH TO THE OPERATOR OF THE DEVICE OR SYSTEM, OR
TO OTHERS.

(m) COMPANY shall make no representation, nor any express or implied warranty to
third parties (including, without limitation, to any end users), on behalf of
MS.


                                       15
<PAGE>


3.  REPORTS AND PAYMENTS.

(a) Within fifteen (15) days after the end of each calendar month, and fifteen
(15) days after the termination, cancellation or expiration date of this
Agreement for the final full or partial month, COMPANY shall complete and
electronically submit a royalty report, in accordance with the then current
Royalty Reporting Guidelines.

(b) For each calendar month, COMPANY shall remit payment(s) to MS as specified
in the Payment and Reporting section of the Addresses Schedule. Within
forty-five (45) days after the end of each calendar month, COMPANY shall have
made total payments to MS equal to the greater of (i) actual cumulative Licensed
Product royalties or (ii) cumulative minimum commitments which have accrued
through such calendar month. Subject to applicable law, a one and one half
percent (1.5%) monthly charge will be assessed on all amounts that are past due.

(c)(i) If cumulative royalties paid during a Period exceed minimum commitment
obligations payable for the same Period, MS shall apply the excess royalty
amount to future minimum commitment obligations payable during that Period.

   (ii) Minimum commitment and royalty payments made in one Period may not be
applied to minimum commitment payment obligations in another Period.

(d) If, during the initial two (2) Periods of this Agreement, cumulative minimum
commitment obligations paid by COMPANY exceed cumulative royalties payable, the
excess amount shall be applied only to royalties payable during such initial two
(2) Periods.

(e) COMPANY agrees to pay MS the royalty rate set forth in the Product and
Royalty Schedule(s) for each unit of Licensed Product licensed, distributed or
put in use by COMPANY. No royalty shall accrue to MS for Licensed Product
shipped to replace units defective in media or reproduction, provided that
COMPANY distributes such replacement copies directly to end users (without use
of dealers or other intermediaries) at no charge, except for COMPANY's
reasonable cost of materials and shipping and handling costs.

(f) MS may require ARs to refuse or limit orders placed by COMPANY which, in MS'
sole opinion, are in quantities greater than COMPANY will be able to distribute
or make timely payment for in compliance with this Agreement.

(g) Royalties are separate from, and in addition to, any charges by the AR for
APM ordered by COMPANY. Royalties also exclude any taxes, duties, fees, excises
or tariffs imposed on any of COMPANY's activities in connection with this
Agreement. Such charges, taxes, duties, fees, excises or tariffs, if any, shall
be paid by COMPANY.

(h) If COMPANY distributes any Licensed Product in violation of this Agreement,
then MS, without limiting its remedies, may demand and COMPANY agrees to pay MS
an additional royalty equal to thirty percent (30%) of the highest royalty for
the Licensed Product(s). COMPANY shall pay such additional royalty within thirty
(30) days of receipt of MS' invoice.

(i) If COMPANY is required by any non-U.S.A. government to withhold income taxes
on payments to MS, then COMPANY may deduct such taxes from the amount owed MS
and shall pay them to the appropriate tax authority, provided that within thirty
(30) days of payment to MS, COMPANY delivers to MS an official receipt for any
such taxes withheld or other documents necessary to enable MS to claim a U.S.A.
Foreign Tax Credit. COMPANY shall make certain that any taxes withheld are
minimized to the extent permitted by applicable law. COMPANY agrees to pay MS a
two percent (2%) monthly charge on tax amounts in receipts or documents that are
not delivered to MS within the thirty (30) days identified above.

(j) If COMPANY contracts business in the U.S.A. and qualifies for a state resale
tax exempt certificate, then COMPANY shall provide MS with a copy of its U.S.A.
state resale tax exempt certificate, if applicable, with this Agreement when it
is returned for signature by MS.

(k) Upon request by MS, COMPANY shall provide MS with COMPANY's current audited
financial statements.

4. NATURE OF LICENSED PRODUCT; NO WARRANTIES.

(a) NOTICE REGARDING LICENSED PRODUCT. The Licensed Product is complex computer
software. Performance of the Licensed Product will vary depending upon hardware
platform, software interactions, and Licensed Product configuration. COMPANY
acknowledges that software bugs may be identified when the Licensed Product is
used in COMPANY's particular Embedded System. COMPANY therefore accepts the
responsibility of satisfying itself that each Licensed Product is suitable for
use in COMPANY's Embedded System. This includes conducting exhaustive testing of
COMPANY's Image on the Embedded System. COMPANY agrees that it will implement
for its use of the Licensed Product such measures as may be required by Section
5 below.

(b) NO WARRANTIES. LICENSED PRODUCT IS PROVIDED "AS IS" AND WITH ALL FAULTS. THE
ENTIRE RISK AS TO SATISFACTORY QUALITY, PERFORMANCE, ACCURACY, AND EFFORT IS
WITH COMPANY. MS AND ITS SUPPLIERS DISCLAIM ALL REPRESENTATIONS AND WARRANTIES,
WHETHER EXPRESS, IMPLIED, OR STATUTORY, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE AND ANY IMPLIED WARRANTY
ARISING FROM COURSE OF DEALING OR USAGE OF TRADE. MS AND ITS SUPPLIERS ALSO
DISCLAIM ANY COMMON-LAW DUTIES RELATING TO ACCURACY OR LACK OF NEGLIGENCE. THERE
IS NO WARRANTY AGAINST INTERFERENCE WITH COMPANY'S ENJOYMENT OF THE LICENSED
PRODUCT OR AGAINST INFRINGEMENT.

5. COMPANY'S DUTIES.

COMPANY SHALL BE SOLELY RESPONSIBLE FOR DETERMINING THAT LICENSED PRODUCT IS
SUITABLE IN QUALITY AND PERFORMANCE FOR USE IN COMPANY'S EMBEDDED SYSTEM(S).
BECAUSE LICENSED PRODUCT IS NEITHER FAULT TOLERANT NOR FREE FROM ERRORS,
CONFLICTS, INTERRUPTS, ETC., COMPANY AGREES THAT ITS TESTING WILL INCLUDE
FAILURE MODE AND EFFECTS ANALYSIS. COMPANY SHALL IMPLEMENT SUCH MEASURES OR
PROTECTIONS AS ARE NECESSARY TO PREVENT INJURY OR LOSS ARISING FROM FAILURE OF
LICENSED PRODUCT IN CONNECTION WITH FORESEEABLE USES OF COMPANY'S EMBEDDED
SYSTEM(S). COMPANY SHALL ALSO BE SOLELY RESPONSIBLE FOR DETERMINING THE
SUITABILITY OF AND FOR PROVIDING ANY NOTICES OR WARNINGS TO TRANSFEREES OR USERS
OF COMPANY'S EMBEDDED SYSTEM(S) OR OTHERS WHO MAY BE AFFECTED BY SUCH USE.

6. DAMAGE EXCLUSIONS/LIMITATION OF LIABILITY/EXCLUSIVE REMEDY.

(a) LIMITATION OF AMOUNTS OF LIABILITY; EXCLUSIVE REMEDY. COMPANY agrees that
total, cumulative liability of MS, Suppliers, and/or their respective officers,
employees, and agents (collectively, "MS Representatives") to COMPANY, whether
in contract, (including any provision of this Agreement), tort, or


                                       16


<PAGE>
otherwise, for each Licensed Product, shall not exceed one hundred percent
(100%) of the amount paid ?? COMPANY to for that Licensed Product during the one
(1) Period in which such liability or liabilities first accrue. COMPANY's
exclusive remedy for any breach of this Agreement by MS or by MS Representatives
will be the recovery of COMPANY's direct damages incurred in reasonable
reliance, limited to the foregoing amount.

(b) EXCLUSION OF CERTAIN DAMAGES AND LIMITATION OF TYPES OF LIABILITY. EXCEPT AS
PROHIBITED BY LAW, IN NO EVENT WILL MS OR ANY MS REPRESENTATIVES BE LIABLE TO
COMPANY OR TO ANY THIRD PARTY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL,
INDIRECT, OR ECONOMIC DAMAGES, REGARDLESS OF THE THEORY OF LIABILITY (INCLUDING
WITHOUT LIMITATION PRODUCT LIABILITY OR NEGLIGENCE), OR FOR ANY LOST REVENUE,
PROFIT, DATA, PRIVACY OR SECURITY, OR FOR ANY PUNITIVE DAMAGES, ARISING OUT OF
OR RELATED TO THE USE OF OR INABILITY TO USE LICENSED PRODUCT, EVEN IF MS OR MS
REPRESENTATIVES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS
EXCLUSION AND LIMITATION SHALL APPLY EVEN IF ANY REMEDY FAILS OF ITS ESSENTIAL
PURPOSE.

(c) RELEASE. COMPANY releases MS and MS Representatives from all liability in
excess of the limitations set forth above.

7. LICENSED PRODUCT SUPPORT.

(a) This Agreement does not include technical support by MS to COMPANY, its
Channel or end users. Technical support for COMPANY may be available from MS,
MSCORP, or any MSCORP subsidiary, pursuant to a separate agreement.

(b) COMPANY is solely responsible for end user support, and shall advise end
users accordingly.


8. INTELLECTUAL PROPERTY INFRINGEMENT.

(a) MS agrees to defend COMPANY in a lawsuit or other judicial action, and pay
the amount of any adverse final judgment (or settlement to which MS consents)
from such lawsuit or judicial action, for any third party claim(s) that the
Licensed Product(s) infringe (i) any copyright or trademark rights enforceable
in any Included Jurisdictions (defined in Section 8(e) below), or (ii) any
patent(s) issued and enforceable in the United States as of the Effective Date
of this Agreement (separately and collectively, "Claim"). With regard to any
Claim, MS' obligations are subject to the following conditions:

        (A) COMPANY must promptly notify MS in writing of the Claim;

        (B) MS shall have sole control over defense and/or settlement of the
        Claim; and

        (C) COMPANY shall provide MS with reasonable assistance in the defense
        of the Claim.

        (D) MS' obligations to defend and pay a patent Claim shall be limited to
        patent Claims wherein the Licensed Product alone, without combination or
        modification, constitutes infringement (including direct or contributory
        infringement) of such patent claim.

        (E) MS liability for any adverse final judgment resulting from a patent
        claim shall be limited to payment of an amount not to exceed a
        reasonable royalty (based on the per copy price paid by COMPANY) for
        copies of the Licensed Product subject to the lawsuit or judicial
        action.

(b) In the even that MS is required to defend a lawsuit or other judicial action
pursuant to Section 8(a) above and such lawsuit or other judicial action
includes allegations (other than a Claim) with respect to non-MS products, then
COMPANY shall retain, at its sole expense, separate counsel to defend against
such allegations, and agrees to reimburse MS for any and all attorney's fees and
costs incurred by MS with respect to defending against such allegations.
Moreover, MS and its Suppliers shall have no liability for any intellectual
property infringement claim (including a Claim) based on COMPANY's manufacture,
use, sale, offer for sale, importation or other disposition or promotion of the
Licensed Product or trademark after MS' notice that COMPANY should cease
manufacture, use, sale, offer for sale, importation or other disposition or
promotion of such Licensed Product or trademark due to such claim. COMPANY shall
indemnify and defend MS and its Suppliers from and against all damages, costs
and expenses, including reasonable attorney's fees incurred due to COMPANY's
continued distribution of the allegedly infringing Licensed Product after MS
provides such notice.

(c) In addition to the obligations set forth in Section 8(a) above, if MS
receives information concerning a Claim, MS may, at its expense, but without
obligation to do so, undertake further actions such as:

(i) procuring for COMPANY such copyright, trademark or patent right(s) or
license(s) as may be necessary to address the Claim or

(ii) replacing or modifying the Licensed Product or trademark to make it
non-infringing (in which case COMPANY shall immediately cease distribution of
the allegedly infringing Licensed Product or use of the allegedly infringing
trademark).

(d) With regard to any claim (other than a Claim) that the Licensed Product
infringes any third party intellectual property rights, COMPANY shall promptly
notify MS in writing of such claim. MS shall have no obligation to defend
COMPANY or pay damages arising out of such claim. Notwithstanding the absence of
any such obligation(s), MS reserves the option, in its sole discretion and at
its expense, to assume at any time the defense of any such claim. In the event
that MS assumes the defense of any such claim, (i) MS shall notify COMPANY in
writing of that election; (ii) MS shall have sole control over defense and/or
settlement of the claim; (iii) COMPANY shall provide MS with reasonable
assistance in the defense of the claim; (iv) MS shall thereafter defend COMPANY
against that claim; and (v) MS shall pay any adverse final judgment (or
settlement to which MS consents) resulting from such claim (or in the case of a
claim based on an allegation of patent infringement, MS shall pay up to an
amount not to exceed a reasonable royalty based on the per copy price paid by
COMPANY for copies of the Licensed Product subject to the claim).

(e) Neither MS nor its Suppliers shall have any obligation to COMPANY for any
copyright or trademark Claims that arise outside the geographical boundaries of
the Included Jurisdictions or any patent Claims that arise outside of the United
States. "Included Jurisdictions" means Australia, Canada, the European Union,
Japan, Norway, and the United States.

9. AUDIT.

(a) During the term of this Agreement and for three (3) years thereafter,
COMPANY shall keep at a single, readily accessible location all accounting,
purchase, inventory, sales and other records relating to the acquisition,
installation and distribution, or destruction of each Licensed Product
("Records").

(b) In order to verify COMPANY's compliance with this Agreement, MS may cause
(i) an audit to be made of COMPANY's Records and/or (ii) an inspection to be
made of COMPANY's facilities and procedures, either with or without prior notice
to COMPANY, where such prior notice will not be unreasonably withheld. Audits
shall be conducted by an independent certified



                                       17
<PAGE>
public accountant selected by MS (other than on a contingent fee basis).

(c) COMPANY agrees to provide any audit or inspection team designated by MS
access to all relevant COMPANY Records and facilities.

(d) MS shall pay the costs of any audit or inspection unless the review
discovers discrepancies that exceed the lesser of Ten Thousand US Dollars
(US$10,000.00) or two percent (2%) of royalties originally reported by COMPANY
during the time frame that was audited, or an intentional and material breach of
any COMPANY obligations under this Agreement ("Material Discrepancy"). In the
event of a Material Discrepancy, COMPANY shall pay MS, in addition to unpaid
amounts due, the costs of the audit, plus an additional royalty of twenty-five
percent (25%) of the applicable product royalty for each underreported copy of
Licensed Product.

10. NONDISCLOSURE.

COMPANY shall keep confidential non-public information disclosed to COMPANY by
MS or MSCORP (for example, pricing information, the terms and conditions of
this Agreement, MS or MSCORP licensing negotiations or terms and conditions, MS
and MSCORP business policies or practices or know-how), and MS shall keep
confidential non-public information disclosed to MS by COMPANY (for example,
pricing information, the terms and conditions of this Agreement, COMPANY
licensing negotiations or terms and conditions, COMPANY business policies or
practices or know-how); however, disclosure to state or federal tax authorities
of the payment terms of this Agreement (including royalties charged or paid)
shall not require prior notice, provided that COMPANY will provide MS with
notice of such disclosure promptly thereafter. The parties (a) may disclose the
terms and conditions of this Agreement in confidence to their immediate legal
and financial consultants as required in the ordinary course of business, and
(b) may disclose the terms of this Agreement in accordance with judicial,
administrative or other governmental order, provided that the disclosing party
shall give reasonable prior written notice to the other party and an
opportunity to contest such order and shall comply with any applicable
protective order or equivalent imposed as a condition of such disclosure.

11. ASSIGNMENT.

This Agreement shall not be assigned or sublicensed by COMPANY in whole or in
part (by contract, merger, operation of law, or otherwise). Any assignment or
sublicense in violation of this provision shall be void and of no effect.

12. NON-ASSERTION OF PATENTS.

(a) As partial consideration for the rights granted to COMPANY under the
Agreement, COMPANY agrees not to (i) sue, or (ii) bring, prosecute, assist or
participate in any judicial, administrative or other proceedings of any kind
against MS, its Suppliers, their subsidiaries, or their licensees (including
without limitation OEM customers and end users) for infringement of COMPANY
Patents (as defined below) which occurs during the Immunity Period (as defined
below) on account of the manufacture, use, sale or distribution of:

     (A) Any releases of the Licensed Product(s), except as otherwise provided
     in subsection (c), below; or

     (B) Future releases of the Licensed Product(s), or replacement or
     successor product(s) to the Licensed Product, to the extent such future
     releases or replacement or successor product(s) use or embody inventions
     used or embodied in a version of such Licensed Product(s).

     (b) "COMPANY Patents" as used in this Section 12 means all patents
throughout the world, other than design patents or the equivalent, owned or
acquired by COMPANY for inventions made prior to termination or expiration of
the Agreement, or for which COMPANY has or acquires rights prior to the
termination or expiration of the Agreement. The "Immunity Period" shall
commence upon the first to issue and shall terminate upon the last to expire,
of any of the COMPANY Patents (in any jurisdiction).

     (c) In the event that MS provides COMPANY a new release of a Licensed
Product, and COMPANY determines that such new release uses or embodies
inventions not used or embodied in a prior release of the Licensed Product,
COMPANY may elect to not license such new release by so notifying MS in writing
within sixty (60) days after its receipt and prior to COMPANY's shipment of
such new release. COMPANY's election under this paragraph shall not affect
COMPANY's obligations above with respect to any prior release(s) of the
Licensed Product.

     (d) IN the event COMPANY assigns COMPANY Patents or rights to enforce
COMPANY Patents, COMPANY shall require as a condition of any such assignment
that the assignee agree to be bound by the provisions of this Section 12.

13. TERM.

The duration of this Agreement shall run from the Effective Date until the
Expiration Date as set forth on the Signature Page ("Term").

14. NONCOMPLIANCE AND CANCELLATION.

(a) MS may suspend any rights granted to COMPANY under this Agreement and/or
required ARs to refuse to fulfill or to limit orders placed by COMPANY, and/or
cancel this Agreement, in its entirety or as to any individual Licensed
Product(s), upon any of the following events:

     (i) if COMPANY materially breaches any provision of this Agreement or any
other agreement between COMPANY and MS or MSCORP;

     (ii) if COMPANY manufactures or distributes any MS or MSCORP product which,
as manufactured or distributed by COMPANY, is not properly licensed under a
valid agreement with MS, MSCORP or a licensee or MS or MSCORP;

     (iii) if, subject to applicable law, COMPANY becomes insolvent, enters
bankruptcy, reorganization, composition or other similar proceedings under
applicable laws, whether voluntary or involuntary, or admits in writing its
inability to pay its debts, or makes or attempts to make an assignment for the
benefit of creditors;

(b) In the event of COMPANY breach of Sections 2, 9, 10, or 11, any suspension,
instruction to ARs cancellation shall be effective upon notice to COMPANY;

(c) (i) If any of the events in Section 14(a)(iii) occurs, any cancellation
shall be effective upon notice to COMPANY or as soon thereafter as is permitted
by applicable law;

    (ii) To the extent allowed by applicable law, COMPANY's license rights
herein shall be suspended as of the date COMPANY becomes insolvent, enters
reorganization, composition or other similar proceedings under applicable laws,
whether voluntary or involuntary, or admits in writing its inability to pay its
debts, or makes or attempts to make an assignment for the benefit of creditors.

(d) In the event of breach of any provision of this Agreement, except those
identified in Section 14(b) and (c), COMPANY shall have thirty (30) days from
the date of breach to cure such breach. If



                                       18






<PAGE>
COMPANY does not cure such breach within thirty (30) days, MS may suspend or
cancel this Agreement effective upon notice.

(e) Cancellation of this Agreement automatically accelerates, without further
notice, COMPANY's obligation to pay all sums COMPANY contracted to pay under
this Agreement, including all minimum commitment obligations.

(f) Upon cancellation or expiration of this Agreement, COMPANY shall cease
distribution of all Licensed Product and all of COMPANY's license rights herein
shall cease.

(g) Sections 4(b), 5, 6, 8(c), 9, 10, 12, 14, 15, and 16(b) of this Agreement
shall survive cancellation or expiration of this Agreement.

15. NOTICES.

All notices, authorizations, and requests in connection with this Agreement
shall be addressed as stated in the Addresses Schedule and shall be deemed
received three (3) business days after they are (i) deposited in the U.S.A.
mails, postage prepaid, certified or registered, return receipt requested; or
(ii) sent by international air express courier, charges prepaid; or (iii) for
email notices sent by MS to COMPANY regarding updates or changes to information,
instructions, or forms contained on the Embedded Systems Website, sent via
secured internet mail.

16. CHOICE OF LAW; JURISDICTION AND VENUE; ATTORNEYS FEES.

(a) This Agreement and all related matters shall be interpreted under and
controlled by the laws of the State of Washington, and COMPANY consents to
exclusive jurisdiction and venue in the state and federal courts sitting in the
State of Washington. Process may be served on either party as authorized by
applicable law or court rule.

(b) If either party employs attorneys to enforce any rights arising out of or
relating to this Agreement, the primarily prevailing party shall be entitled to
recover its reasonable attorney's fees, costs and other expenses.

17. GOVERNMENT REGULATIONS.

(a) COMPANY acknowledges that Licensed Product is subject to U.S. export
jurisdiction. COMPANY agrees to comply with all applicable international and
national laws that apply to the Licensed Product, including the U.S. Export
Administration Regulations, as well as end-user, end-use, and destination
restrictions issued by U.S. and other governments. For additional information,
see http://www.microsoft.com/exporting/.

(b) All Licensed Product provided to the U.S. Government pursuant to
solicitations issued on or after December 1, 1995 is provided with the
commercial license rights and restrictions described elsewhere herein. All
Licensed Product provided to the U.S. Government pursuant to solicitations
issued prior to December 1, 1995 is provided with "Restricted Rights" as
provided in FAR, 48 CFR 52.227-14 (JUNE ????), or DFAR, 48 CFR 252.227-7018 (OCT
1988), as applicable. The reseller is responsible for ensuring Licensed Product
is marked with the "Restricted Rights Notice" or "Restricted Rights Legend," as
required. All rights no expressly granted are reserved.

18. GENERAL.

(a) This Agreement does not constitute an offer by MS and it shall not be
effective until signed by both COMPANY and MS. Upon execution by both COMPANY
and MS, this Agreement, together with its schedules, shall constitute the entire
agreement between them and merges all prior and contemporaneous communications.
Except as otherwise expressly provided herein, this Agreement shall not be
modified except by a written agreement signed on behalf of COMPANY and MS by
their respective duly authorized representatives. Any statement appearing as a
restrictive endorsement on a check or other document which purports to modify a
right, obligation or liability of either party shall be of no force and effect.

(b) Neither the existence nor the terms of this Agreement shall be construed as
creating a partnership, joint venture or agency relationship or as granting a
franchise.

(c) If any provision of this Agreement shall be held by a court of competent
jurisdiction to be illegal, invalid or unenforceable, the remaining provisions
and license for remaining Licensed Product(s), as applicable, shall remain in
full force and effect.

(d) No waiver of any breach of any provision of this Agreement shall constitute
a waiver of any prior, concurrent or subsequent, and no waiver shall be
effective unless made in a writing signed by an authorized representative of the
waiving party.

19. ADDITIONAL REPORTS AND PAYMENTS TERM.

Six (6) months after the Effective Date, COMPANY and MS agree to enter into good
faith negotiations to amend Sections 3(a), 3(b) and the Minimum Commitment
Schedule of the Agreement to provide for quarterly reporting and payments.

20. CANCELLATION TERM.

If COMPANY finds a material flaw in the Licensed Product within ninety (90) days
of the Effective Date that prevents or seriously impairs the performance of a
major function of the Embedded System to the extent that COMPANY halts
distribution of the Embedded System, COMPANY may, as its sole remedy, terminate
the Agreement upon written notice to MS, unless MS provides Supplemental Code to
COMPANY to repair such material flaw in the Licensed Product within sixty (60)
days of receiving notice of the material flaw.


                                       19
<PAGE>
                         WINDOWS HARDWARE QUALITY LABS
                        TESTING AND QUICK-SIGN AGREEMENT

        THIS WINDOWS HARDWARE QUALITY LABS TESTING AND QUICK SIGN AGREEMENT (the
"Agreement") is made and entered into this 10 day of OCTOBER 2000 (the
"Effective Date"), by and between MICROSOFT CORPORATION, a Washington
corporation, with offices at One Microsoft Way, Redmond, WA 98052-6399
(hereafter "Microsoft"), and MTI TECHNOLOGY CORP. (hereafter "Company").

        Company is the owner or authorized licensor of certain computer products
defined herein as "Company Products" which Company: (i) desires to have tested
by Microsoft for compatibility with Microsoft System Products, and/or (ii)
desires to "Self-Test" as allowed herein; and

        Company also desires to "quick-sign" subsequent Drivers (if any)
associated with the same Company Products, if eligible as described herein; and

        Company has designed the Company Products to be in compliance with
Microsoft's current, or then current, specifications so as to be compatible with
the version(s) of Microsoft System Products identified herein; and

        Company desires to license Drivers for such Company Products to
Microsoft on an individual basis for distribution in object-code form to derive
a benefit from wider distribution by Microsoft in the event Microsoft elects
such distribution; and

        Microsoft desires to: (i) perform compatibility testing of Company
Products, and/or (ii) to review and approve the results of Company's
self-testing, in either case with the version(s) of Microsoft System Products as
specified in each applicable Exhibit A (using form attached, which may be
updated by Microsoft as appropriate from time to time); and

        Microsoft further desires the right to license and distribute to
end-users the Drivers for Company Products proven to be compatible with such
versions of Microsoft System Products, solely as permitted by Company herein.

The parties agree as follows:

1. DEFINITIONS.

        (a) "Approved Initial Version" shall mean a version of Company's
hardware,



<PAGE>
hardware ID, firmware, and device driver set including INF file, that has
received a Windows Logo designation (or subsequent equivalent designation).

       (b) "Company Products" means one or more of Company's computer products
and the hardware and firmware, and/or Drivers (as defined below) which Company
provides in conjunction with any such products.

        (c) "Drivers " means various software(s) which are required for the
Company Products to work with Microsoft System Products (e.g. printer drivers,
network drivers, etc.).

       (d) "HCL" means Microsoft's Hardware Compatibility List for Microsoft
System Products, and successors thereof, as hosted on a website by or for
Microsoft.

       (e) "Microsoft System Products" means (i) Microsoft Windows 98, Microsoft
Windows NT, Microsoft Windows 2000, Microsoft Windows CE, and successor
operating system products as designated by Microsoft; and (ii) certain other
major development platforms such as Microsoft BackOffice; including successor,
derivative and replacement products thereof as designated by Microsoft.

        (f) "Quick-Sign" shall mean the process (more fully described in
quick-sign guidelines available at the WHQL Website) pursuant to which Company
may obtain a digital signature for a Driver through a streamlined testing
procedure.

        (g) "Self-Test" means compatibility testing with Microsoft System
Products that is conducted by Company on Company's Products and performed in
accordance with then current Microsoft specifications.

        (h) "WHQL Website" means http://www.microsoft.com/hwtest/testkits (or
such successor website as Microsoft may specify).

2. MICROSOFT COMPATIBILITY TESTING AND STANDARDS.

        (a) Microsoft shall at all times have control of the manner and method
of compatibility testing. Additional Exhibit A(s) may be added to this Agreement
at any time during the term of this Agreement upon the agreement of the parties
as set forth in Sections 4(d) or 5(b) of this Agreement, pursuant to procedures
established by Microsoft from time to time and described on the WHQL Website.

        (b) Company's Products shall be in compliance with the Microsoft
specifications at the time of testing as set forth in the applicable test kit
available via the WHQL Website ("Test Kit").


                                       2
<PAGE>
         (c) Company's Products shall be able to accurately manipulate, process,
compare, display and calculate date or time data from, into, and between the
twentieth and twenty-first centuries, including leap years. Additionally,
Company agrees to work with Microsoft and provide all necessary information and
resources, including but not limited to consulting resources, in a prompt manner
should Microsoft have any inquiries regarding the Year 2000 readiness of Company
or Company's Products.

        (d) DRM COMPLIANCE. In the event Company desires that Drivers be tested
for optional Digital Rights Management (DRM) Compliance, Company must also
execute Exhibit C prior to such testing.

        (e) Microsoft may post information regarding any Company Product on the
HCL provided (i) such Company Product passes the compatibility testing described
herein; (ii) Company has not restricted distribution rights for Drivers
associated with such Company Product pursuant to Exhibits A and B; and (iii)
Company continues to support such Company Product for operation in conjunction
with the applicable Microsoft System Product and has not requested that
Microsoft exclude such Company Product from the HCL.

3. PROVISION OF COMPANY PRODUCTS TO MICROSOFT.

        (a) For all Company Products tested by Microsoft, Company will ship the
Company Products and associated test logs to the location designated by
Microsoft. Company shall be responsible for all costs associated with freight,
insurance and packaging related to the transportation of Company Products and/or
test log(s) to Microsoft's designated testing location. Company represents and
warrants that all of the Company Products submitted to Microsoft for
compatibility testing pursuant to this Agreement are in good condition and
working order, have been released or are ready for release for general
distribution, that Company has adequately and extensively tested the Company
Products, that any major errors affecting a Company Product's functionality
which have been detected by Company or its customers have been corrected, and
that the Company Products are subject to ongoing support, error detection and
correction. Company shall pre-test all the Company Products to ensure such
Company Products meet the minimum configuration requirements established by
Microsoft, and have the precise hardware, drivers, firmware and system
(including same version levels) for each configuration for which Company desires
to obtain a Microsoft compatibility logo hereunder. If requested by Microsoft,
Company shall also provide Microsoft with user, installation and technical
reference manuals for all products included in the Company Products, as well as
any other documentation reasonably requested by Microsoft for operating Company
Products and/or conducting the testing activities. The Microsoft compatibility
logo shall be issued under a separate "Designed for Windows" logo license, as
appropriate.



                                       3
<PAGE>
         (b) Company shall be responsible for maintaining the Company Products,
and shall designate a technical contact person for the particular Company
Products covered by a given Exhibit A as set forth in the Exhibit which person
shall be available by telephone during normal business hours, Pacific Standard
Time or Pacific Daylight Time, as applicable, to provide on-going technical
assistance to Microsoft. Upon notice by Microsoft of any failure of a Company
Product or any part thereof, Company, or a representative or dealer chosen at
the sole discretion of Company, shall promptly replace, repair or withdraw such
Company Product or part. Any testing schedule will be adjusted in accordance
with any delay caused by such failure. Microsoft shall not be liable for any
damage to the Company Products while on Microsoft's premises or in transit. In
addition to any support requirements set forth in Exhibit B, Company shall
continue to support the Company Products for so long as each applicable Company
Product is listed on the HCL, and shall notify Microsoft at least ninety (90)
days in advance of any cessation of support.

4. TESTING BY MICROSOFT.

        (a) MICROSOFT COMPATIBILITY TESTING. Microsoft will conduct
compatibility testing of the Company Products delivered to Microsoft pursuant to
this Agreement as specified in the applicable Exhibit A, such testing to be in
accordance with Microsoft's standard testing procedures and policies in effect
at the time of testing. The decision as to whether a particular Company Product
is deemed to have passed the compatibility test shall be made by Microsoft in
its sole discretion based on the Microsoft standard criteria in effect at the
time of testing. Microsoft reserves the right to contract with other companies
to perform some or all of the testing of the Company Products.

        (b) TESTING REPORT. Microsoft will provide Company with a written report
indicating whether the Company Products specified in a given Exhibit A have
passed the applicable compatibility test. In the event the Company Products pass
the applicable compatibility test, Company may republish the report in its
entirety only.

        (c) TESTING FAILURES. In the event a Company Product fails to pass the
test, Microsoft will indicate in the written report the reasons for the failure,
however, Microsoft will not provide recommendations for improvements to Company
Products. During the term of this Agreement, Company may request that Microsoft
retest the applicable Company Product if: (i) Microsoft at such time currently
offers such compatibility testing; (ii) Company pays Microsoft an additional
testing fee in effect at such time for the applicable compatibility testing
process; and (iii) Company satisfactorily complies with any other
prerequisite(s) to compatibility testing.

        (d) ADDITIONAL MICROSOFT COMPATIBILITY TESTING. In the event Company
during the term of this Agreement, desires. compatibility testing for additional
computer products, modified Company Products or additional Microsoft software
products or versions, Company may obtain such additional testing if: (i)
Microsoft at such time



                                       4
<PAGE>
currently offers such compatibility testing; (ii) Company pays Microsoft an
additional testing fee in effect at such time for the applicable compatibility
testing process; (iii) Company satisfactorily complies with other prerequisites
to compatibility testing; and (iv) Company and Microsoft execute a new Exhibit A
to this Agreement covering such additional products.

5. SELF-TESTING OF COMPANY PRODUCTS. Company may elect to self-test Company
Products as set forth in an applicable Exhibit A, subject to the following terms
and conditions:

        (a) SELF-TESTING BY COMPANY. Company shall conduct Self Testing of
Company Products, as specified in the applicable Exhibit A, to ensure to the
best of Company's knowledge that such Company Product meets the minimum
configuration requirements established by Microsoft. Any and all Self Testing by
Company shall be performed at Company's sole expense. Each Company Product
Self-Tested by Company shall be tested with the precise hardware, firmware,
drivers and system (including same version levels) for each configuration for
which Company desires to obtain a Microsoft compatibility logo hereunder.

        (b) PRODUCT SELF-TEST KITS. Company will request a Product Self-Test Kit
as directed by Microsoft on the WHQL Website. Upon completion of the testing
procedures, Company will deliver the written test logs to the location
designated by Microsoft, along with a signed original of this Agreement (and/or
an applicable Exhibit A), the appropriate Designed for Windows Logo License
Agreement, and payment as specified in the Product Self-Test Kit. Company shall
be responsible for all costs associated with freight, insurance and packaging
related to the transportation of the test log(s) to Microsoft or the location
designated by Microsoft.

        (c) ACCEPTANCE BY MICROSOFT. Microsoft will evaluate the test result
logs and determine, in Microsoft's sole opinion, if Company's Products specified
in a given Exhibit A and Self-Tested by Company have passed the applicable
compatibility test.

        (d) TESTING REPORT. Microsoft will provide Company with a written report
indicating whether the Company Products specified in a given Exhibit A have
passed the applicable compatibility test. In the event the Company Products pass
the applicable compatibility test, Company may republish the report in its
entirety only.

        (e) AUDIT. Microsoft shall have the right, upon written notice to
Company, to conduct an audit of any Products Self-Tested by Company for the
purposes of validating Self-Test results submitted by Company. Within five (5)
days of the date of the audit notice, Company shall send the Company Products
requested, along with the precise hardware, drivers and firmware (including same
version levels) for the configurations Self-Tested by Company. In addition,
Company shall also provide Microsoft with user, installation and technical
reference manuals for all products



                                       5
<PAGE>
included in the Company Products, as well as any other documentation reasonably
requested by Microsoft for operating Company Products and/or conducting the
testing activities. If, as a result of such audit, Microsoft determines that a
Company Product that was Self-Tested by Company did not actually pass the
relevant compatibility test, Microsoft shall so notify Company in writing, and
Company shall have thirty (30) days from the date of such notice to correct and
re-test such Company Product at Company's expense. In the event the Company
Product still fails compatibility testing, Microsoft's acceptance of such
Company Product shall be deemed revoked and any licenses contingent on such
acceptance shall immediately terminate. Failures of Company Products discovered
pursuant to audits described in this Section 5(e) constitute grounds for
refusing future Self-Testing by Company.

6. QUICK-SIGNING OF COMPANY DRIVERS. Company may Quick-Sign Drivers, provided
that (i) Company complies with the procedures and eligibility requirements
established by Microsoft in the Quick-Sign guidelines, as modified by Microsoft
from time to time and posted on the WHQL Website, and (ii) the Driver was
preceded by an Approved Initial Version. Issuance of digital signatures pursuant
to Quick-Sign, and continued participation in Quick-Sign, shall be based on
Company's strict compliance with such Quick-Sign guidelines. Microsoft shall
have audit rights for Quick-Signed Drivers similar in all relevant respects to
the audit rights described in Section 5(e).

7. PAYMENT.

       Company shall pay Microsoft by check the amounts according to the
applicable Test Kit and Quick-Sign procedures available on the WHQL Website.
Purchase orders will not be accepted unless Company has a current credit line in
good standing with Microsoft. Prices are exclusive of any federal, state,
municipal or other governmental taxes, duties, licenses, fees, excises or
tariffs now or hereafter imposed on Company's participation in or receipt of
information regarding compatibility testing. Payment is non-refundable except as
provided in Section 8.

8. DISCLAIMER OF WARRANTY.

        PROVIDED COMPANY COMPLIES WITH THE TERMS AND CONDITIONS OF THIS
AGREEMENT, MICROSOFT HEREBY AGREES TO IN GOOD FAITH PERFORM ITS THEN-CURRENT
COMPATIBILITY TEST ON THE COMPANY PRODUCTS FOLLOWING ACCEPTANCE OF THE
APPLICABLE EXHIBIT A. COMPANY'S SOLE REMEDY FOR MICROSOFT'S FAILURE TO PROVIDE
TESTING SERVICES IN GOOD FAITH SHALL BE, AT MICROSOFT'S OPTION, EITHER (a) A
RETEST, OR (b) A REFUND OF THE TEST FEES PAID HEREUNDER. EXCEPT FOR THE
PRECEDING SENTENCE, THE TEST KIT, MICROSOFT'S TESTING SERVICES AND ALL DIGITAL
SIGNATURES ARE PROVIDED "AS IS", AND MICROSOFT DISCLAIMS ALL WARRANTIES, WHETHER
EXPRESS OR IMPLIED, INCLUDING, WITHOUT


                                       6
<PAGE>
LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.

9. LIMITATION OF LIABILITIES.

       (a) COMPANY AGREES THAT MICROSOFT SHALL NOT BE LIABLE FOR ANY INDIRECT,
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, SPECIAL OR OTHER DAMAGES (INCLUDING,
WITHOUT LIMITATION, LOSS OF BUSINESS PROFITS OR OPPORTUNITIES OR DAMAGES
RESULTING FROM DELAYS IN TESTING), EVEN IF MICROSOFT HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. IN ANY EVENT, MICROSOFT'S LIABILITY SHALL NOT
EXCEED AMOUNTS PAID BY COMPANY HEREUNDER.


        (b) MICROSOFT AGREES THAT, EXCEPT FOR THE PROVISIONS OF EXHIBIT B,
COMPANY SHALL NOT BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, INCIDENTAL,
PUNITIVE, SPECIAL OR OTHER DAMAGES (INCLUDING WITHOUT LIMITATION, LOSS OF
BUSINESS PROFITS OR OPPORTUNITIES) EVEN IF COMPANY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.

10. COMPANY'S LICENSE GRANT TO MICROSOFT WITH RESPECT TO COMPANY'S DRIVERS.

        Company Products tested may include software Drivers that are required
for the Company Product to work with the Microsoft System Products, as set forth
in the applicable Exhibit A. In order to have such Company Product listed on the
HCL as described in Section 2(e), Company must license these Drivers to
Microsoft under the terms and conditions set forth in Exhibits A and B. THIS
AGREEMENT IS NOT VALID WITHOUT A FULLY EXECUTED EXHIBIT B. In the event of any
conflict between Exhibit B and this Agreement, this Agreement shall prevail.

11. NONDISCLOSURE.

        (a) Each party expressly undertakes to retain in confidence all
information and know-how transmitted to the other that the disclosing party has
identified as being proprietary and/or confidential or that, by the nature of
the circumstances surrounding the disclosure, ought in good faith to be treated
as proprietary and/or confidential, and will make no use of such information and
know-how except under the terms and during the existence of this Agreement.
However, neither party shall have an obligation to maintain the confidentiality
of information that (i) it received rightfully from another party prior to its
receipt from the disclosing party; (ii) the disclosing party has disclosed to a
third party without any obligation to maintain such information in confidence;
or (iii) is independently developed by the obligated party. Further, either
party may disclose confidential information as required by governmental or
judicial order, provided such party gives the other prompt notice prior to such
disclosure and



                                       7
<PAGE>
complies with any protective order (or equivalent) imposed on such disclosure.
Each party's obligation under this Section 11 shall extend to the earlier of
such time as the information protected hereby is publicly available through no
fault of the obligated party or five (5) years following receipt of the
confidential information.

       (b) The parties' obligations of confidentiality under this Agreement
shall not be construed to limit either party's right to independently develop or
acquire products without use of the other party's confidential information.
Further, either party shall be free to use for any purpose the residuals
resulting from access to or work with such confidential information, provided
that such party shall maintain the confidentiality of the confidential
information as provided herein. The term "residuals" means information in
non-tangible form, which may be retained by persons who have had access to the
confidential information, including ideas, concepts, know-how or techniques
contained therein. Neither party shall have any obligation to limit or restrict
the assignment of such persons or to pay royalties for any work resulting from
the use of residuals. However, the foregoing shall not be deemed to grant to
either party a license under the other party's copyrights or patents.

12. TERM AND TERMINATION.

        (a) TERM. The initial term of this Agreement shall commence as of the
Effective Date and shall continue for one (1) year. Thereafter the term of this
Agreement shall automatically renew for two (2) successive one-year periods
unless either party gives notice of its intent not to renew sixty (60) days
prior to the expiration of the initial term or any subsequent renewal term.

        (b) TERMINATION. Either party may terminate this Agreement with respect
to any Company Product at any time prior to Microsoft's commencing testing (or
review of Company's Self-Testing, as applicable) of such Company Product, upon
thirty (30) days' prior written notice to the other party.

        (c) SURVIVAL. Sections 3(b), 5(e) (and the related audit right in
Section 6), 8-14 and any fully executed Exhibit B shall survive termination of
this Agreement.

        (d) LICENSES. End user, OEM and distributor licenses properly granted
prior to any termination or expiration of this Agreement shall not be abridged
or diminished by any expiration or termination of this Agreement.

13. NOTICES.

All notices, authorizations, and requests in connection with this Agreement
shall be deemed given on the day they are (i) deposited in the U.S. mails,
postage prepaid, certified or registered, return receipt requested; or (ii) sent
by overnight courier, charges prepaid, with a confirming fax; and addressed as
follows:



                                       8
<PAGE>

COMPANY:           MTI TECHNOLOGY CORP.
                   --------------------------------
                   4905 EAST LA PALMA AVENUE
                   --------------------------------
                   ANAHEIM CA. 92807
                   --------------------------------
            Attn:  CHUCK KOOS
                   --------------------------------
            Fax:   714.970.5924
                   --------------------------------

MICROSOFT   Attn:  Windows Hardware Quality Labs
                   Microsoft Corporation
                   One Microsoft Way
                   Redmond, WA 98052-6399
            Fax:   (425) 936-7329

or to such other address as the party to receive the notice or request so
designates by written notice to the other.

14. MISCELLANEOUS.

       (a) GOVERNING LAW. This Agreement shall be construed and controlled by
the laws of the State of Washington, and Company consents to exclusive
jurisdiction and venue in the federal courts sitting in King County, Washington,
unless no federal jurisdiction exists, in which case Company consents to
exclusive jurisdiction and venue in the Superior Court of King County,
Washington. Company waives all defenses of lack of personal jurisdiction and
forum non conveniens. Process may be served on either party in the manner
authorized by applicable law or court rule.

        (b) ATTORNEYS' FEES. If either party employs attorneys to enforce any
rights arising out of or relating to this Agreement, the prevailing party shall
be entitled to recover its reasonable costs and attorney's fees.

        (c) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements or communications with respect to the
subject matter hereof. This Agreement shall not be modified except by a written
agreement dated subsequent to the date of this Agreement and signed on behalf of
Company and Microsoft by their respective duly authorized representatives. No
waiver of any breach of any provision of this Agreement shall constitute a
waiver of any prior, concurrent or subsequent breach of the same or any other
provisions hereof, and no waiver shall be effective unless made in writing and
signed by an authorized representative of the waiving party.

        (d) PROHIBITION ON ASSIGNMENT. This Agreement may be assigned by
Microsoft but shall not be assigned by Company without Microsoft's prior written
approval.



                                       9
<PAGE>
Except as otherwise provided, this Agreement shall be binding upon and inure to
the benefit of the parties' successors and lawful assigns.

        (e) NO PARTNERSHIP. Neither this Agreement, nor any terms or conditions
contained herein, shall be construed as creating a partnership, joint venture,
agency relationship or franchise.

        (f) SEVERABILITY. If any provision of this Agreement shall be held by a
court of competent jurisdiction to be illegal, invalid or unenforceable, the
remaining provisions shall remain in full force and effect.

        (g) SECTION HEADINGS. The Section headings herein are for the
convenience of the parties and shall not be deemed to supersede or modify any
provisions.

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.


MICROSOFT CORPORATION                  MTI TECHNOLOGY CORP.
                                       -----------------------------------------
                                       COMPANY

                                       /s/ CHUCK KOOS
----------------------------------     -----------------------------------------
  By (sign)                              By (sign)

                                       CHUCK KOOS
----------------------------------     -----------------------------------------
  Name (print)                           Name (print)

                                       DIRECTOR OF ENGINEERING
----------------------------------     -----------------------------------------
  Title                                  Title

                                        10.10.2000
----------------------------------     -----------------------------------------
  Date                                   Date


                                       10
<PAGE>
                                    EXHIBIT A


                to the WINDOWS HARDWARE QUALITY LABS TESTING and
                              QUICK-SIGN AGREEMENT


The Company Product and Driver(s) described below are hereby subject to the
terms and conditions of the WHQL Testing and Quick-Sign Agreement (Effective
Date 10-10-2000) between Microsoft and Company, including distribution pursuant
to Exhibit B thereof except as restricted in Section V below.

I. COMPATIBILITY TESTING

[ ] Microsoft [ ] Company (please select) will perform compatibility testing for
the Company Product specified hereunder in conjunction with the version(s) of
Microsoft System Products specified in the Test Kits on the WHQL Website.

II. Company Product:

Product Name:   V.Vant               Model#   V20

III. Company Device Software

Please provide the following information as applicable to Company Product:

Driver(s): N/A

Bios and/or Firmware:   N/A

IV. Contingent Distribution

If Company licensed Driver(s) from a third party and Company does not have
sufficient rights to sublicense redistribution rights to Microsoft, distribution
of the Driver(s) will be contingent on Microsoft obtaining such rights from such
third party.

[ ]  Distribution requires license from: N/A

V. HARDWARE COMPATIBILITY LIST (HCL)/WINDOWS UPDATE (WU) LISTING

A. Submissions without Driver(s)

By default, Company Product submitted without any Driver(s) will be listed on
the HCL upon passing compatibility testing. By checking the appropriate box(es)
below, Company may restrict listing of the Company Product from applicable
sections of the HCL.


<TABLE>
<CAPTION>
                                                                EXCLUDE
          MICROSOFT SYSTEM PRODUCT                              FROM HCL
          ------------------------                              --------
<S>                                                             <C>
          Windows 98                                               [ ]
          Windows 98 Second Edition                                [ ]
          Windows Millennium Edition                               [ ]
          Windows NT 4.0                                           [X]
          Windows 2000                                             [X]
</TABLE>

B. Submissions with Driver(s)

By default, Driver(s) submitted with the Company Product will be available for
download from the HCL upon passing compatibility testing. By checking the
appropriate box(es) below, Company may restrict Driver(s) availability for
download by (i) indicating that the Driver(s) shipped with the applicable
Microsoft System Product and therefore need not be available for download, (ii)
specifying an Alternate Driver for the applicable Microsoft System Product and
providing the Master ID, or (iii) choosing to



                                       11
<PAGE>
exclude Company Product from the HCL for the specific Microsoft System Product.
An Alternate Driver must be a driver that shipped with a Microsoft System
Product or that previously passed logo testing with Company Product. IF COMPANY
EXCLUDES A DRIVER FOR A PARTICULAR MICROSOFT SYSTEM PRODUCT AND DOES NOT SPECIFY
AN ALTERNATE DRIVER, THE ASSOCIATED COMPANY PRODUCT SHALL NOT BE LISTED ON THE
HCL FOR THAT MICROSOFT SYSTEM PRODUCT.

Drivers or Alternate Drivers listed under specific Microsoft System Products on
the HCL will, by default, also be posted on the Windows Update (WU) website for
the same Microsoft System Product(s) (if applicable). Alternate Drivers will not
be posted on WU if they have previously been distributed as part of the
applicable Microsoft System Product. Company may also restrict distribution of
the Driver or Alternative Driver for a Microsoft System Product via WU by
checking the appropriate "Exclude from WU" box below.


<TABLE>
<CAPTION>
                                                             DRIVERS            ALTERNATE DRIVER
                                                      -------------------    ---------------------
                                           IN THE     EXCLUDE     EXCLUDE                  EXCLUDE
     MICROSOFT SYSTEM PRODUCT               BOX?*     FROM HCL    FROM WU    MASTER ID     FROM WU
     ------------------------              ------     --------    -------    ---------     -------
<S>                                        <C>        <C>         <C>        <C>           <C>
     Windows 98                              [ ]         [ ]        [ ]                       [ ]
     Windows 98 Second Edition               [ ]         [ ]        [ ]                       [ ]
     Windows Millennium Edition              [ ]         [ ]        [ ]                       [ ]
     Windows NT 4.0                          [ ]         [ ]        N/A                       N/A
     Windows 2000                            [ ]         [ ]        [ ]                       [ ]
</TABLE>

*Please mark "In the Box" only if the Driver or Alternate Driver has been
shipped for Company Product with the indicated Microsoft System Product.

VI. FEES

Fees are payable prior to Microsoft commencing testing, or upon submission of
Self Test information to Microsoft. Testing fees are determined based on the fee
schedule listed in the applicable Test Kit.


VII. COMPANY TECHNICAL CONTACTS: (MUST BE THE SAME AS THE TEST KIT)


                Name                                Telephone Number
                ----                                ----------------
 Primary: Orlando McCorkle                          714.693.2375
          -------------------------------           ----------------------------
 Back-up: KATHY HUGHES                              714.693.2263
          -------------------------------           ----------------------------

IN WITNESS WHEREOF, the parties have executed this Exhibit A as of the date set
forth above.

MICROSOFT CORPORATION                  MTI TECHNOLOGY CORP.
                                       -----------------------------------------
                                       COMPANY

----------------------------------     -----------------------------------------
  By (sign)                              By (sign)

----------------------------------     -----------------------------------------
  Name (print)                           Name (print)

----------------------------------     -----------------------------------------
  Title                                  Title

----------------------------------     -----------------------------------------
  Date                                   Date



                                       12
<PAGE>
                                    EXHIBIT B
                      TO THE WINDOWS HARDWARE QUALITY LABS
                        TESTING and QUICK-SIGN AGREEMENT



     NOTE: THIS EXHIBIT IS NOT COMPLETE UNLESS AND UNTIL AN EXECUTED DRIVER
          DISTRIBUTION AGREEMENT HAS BEEN ATTACHED AS DESCRIBED BELOW.

License rights granted to Microsoft under this Agreement are to be supported by
either an existing driver distribution agreement(s) between Company and
Microsoft (dated no earlier than January 1,1998) (each a "Standing Driver
Agreement") or by a Driver Distribution Agreement (Logo Program) that is
designed for limited distribution channels, not including distribution as part
of a Microsoft operating system product.




_____ Driver Distribution Agreement (Logo Program) effective__________(attached)


_____ Standing Driver Agreement(s) effective_______________(attached) (note: may
require LCA review)


Company acknowledges and confirms that the drivers described in Exhibit A of a
Standing Driver Agreement include all drivers that Company has submitted to WHQL
to date, and in the event any such submitted drivers are not described in a
Standing Driver Agreement, Company will execute any amendments necessary to
include such drivers. Company acknowledges that all future drivers that are
submitted to WHQL must be provided with appropriate distribution rights, either
by amending, as necessary, its Standing Driver Agreement or by entering into a
new Driver Distribution Agreement (Logo Program).



                                       13
<PAGE>
                                    EXHIBIT C
                      TO THE WINDOWS HARDWARE QUALITY LABS
                        TESTING and QUICK-SIGN AGREEMENT

                               [under development]