<PAGE>   1
                                                                   EXHIBIT 10.31

                               SEVERANCE AGREEMENT

      This Agreement, (the "Agreement") is made and entered into as of July 15,
1998, is entered into between MTI Technology Corporation, a corporation
organized under the laws of the State of Delaware (the "Company"), and Gary
Scott (the "Executive").

                                    RECITALS

      A.    Executive is currently serving as an officer of the Company.

      B.    The Board of Directors of the Company (the "Board") recognizes that
the possibility of a Change in Control (as hereinafter defined) exists and that
the threat or the occurrence of a Change in Control can result in significant
distractions to its key management personnel because of the uncertainties
inherent in such a situation;

      C.    The Board has determined that it is essential and in the best
interest of the Company and its stockholders to retain the services of the
Executive in the event of a threat or occurrence of a Change in Control and to
ensure the Executive's continued dedication and efforts in such event without
undue concern for the Executive's personal, financial and employment security;
and

      D.    In order to induce the Executive to remain in the employ of the
Company, particularly in the event of a threat or the occurrence of a Change in
Control, the Company desires to enter into this Agreement with the Executive to
provide the Executive with certain benefits in the event that the Executive's
employment is terminated as a result of, or in connection with, a Change in
Control.

                                    AGREEMENT

      In consideration of the respective agreements of the parties contained
herein, it is agreed as follows:

      1.    Term Of Agreement. This Agreement shall commence as of the date
first set forth above and shall continue in effect until July 15, 2000;
provided, however, that commencing on July 15, 2000 and on each July 15
thereafter, the term of this Agreement shall automatically be extended for one
(1) year unless the Company or the Executive shall have given written notice to
the other at least ninety (90) days prior thereto that the term of this
Agreement shall not be so extended; and provided, further, however, that
notwithstanding any such notice by the Company not to extend, the term of this
Agreement shall not expire prior to the expiration of twelve (12) months after
the occurrence of a Change in Control.

      2.    Definitions.

            2.1.  Accrued Compensation. For purposes of this Agreement, "Accrued
Compensation" shall mean an amount which shall include all amounts earned or
accrued through the "Termination Date" (as hereinafter defined) but not paid as
of the Termination Date,


<PAGE>   2

including (i) base salary, (ii) reimbursement for reasonable and necessary
expenses incurred by the Executive on behalf of the Company during the period
ending on the Termination Date, (iii) vacation pay and (iv) bonuses and
incentive compensation (other than the "Pro Rata Bonus" (as hereinafter
defined)).

            2.2.  Base Amount. For purposes of this Agreement, "Base Amount"
shall mean the greater of the Executive's annual base salary (a) at the rate in
effect on the Termination Date or (b) at the highest rate in effect at any time
during the ninety (90) day period prior to the Change in Control, and shall
include all amounts of base salary that are deferred under the Executive benefit
plans of the Company or any other agreement or arrangement.

            2.3.  Bonus Amount. For purposes of this Agreement, "Bonus Amount"
shall mean the greatest of: (a) 100% of the annual bonus payable to the
Executive under the Company's Executive Management Bonus Plan for the fiscal
year in which the Termination Date occurs; (b) the annual bonus paid or payable
to the Executive under the Company's Executive Management Bonus Plan for the
full fiscal year ended prior to the fiscal year during which the Termination
Date occurred; (c) the annual bonus paid or payable to the Executive under the
Company's Executive Management Bonus Plan for the full fiscal year ended prior
to the fiscal year during which a Change in Control occurred; (d) the average of
the annual bonuses paid or payable to the Executive under the Company's
Executive Management Bonus Plan during the three full fiscal years ended prior
to the fiscal year during which the Termination Date occurred; or (e) the
average of the annual bonuses paid or payable to the Executive under the
Company's Executive Management Bonus Plan during the three full fiscal years
ended prior to the fiscal year during which the Change in Control occurred.

            2.4.  Cause. The Company may terminate this Agreement and discharge
Executive for Cause (as defined) at any time upon written notice. For purposes
of this Agreement, the term "Cause" shall mean: (i) a material breach of any
term of this Agreement and failure to cure such breach within ten (10) days
after written notice thereof from the Company; (ii) the willful and continued
failure by Executive substantially to perform his duties for the Company (other
than any such failure resulting from his incapacity due to death or physical or
mental illness), after written demand for substantial performance is delivered
to Executive by the Company, which specifically identifies the manner in which
the Company believes that Executive has not substantially performed his duties;
(iii) the failure by Executive to follow the reasonable instructions of the
Board of Directors; (iv) the willful engaging by Executive in misconduct that is
materially injurious to the Company, monetarily or otherwise; (v) Executive's
final conviction for fraud or of any felony; or (vi) Executive's habitual use of
illegal drugs and/or abuse of alcohol; provided, however, that as to alcohol
abuse, Executive shall be given notice and a thirty (30) day opportunity to
remedy the problem. For purposes of this paragraph, no act, or failure to act,
on Executive's part shall be considered "willful" unless done, or omitted to be
done, by Executive other than in good faith and without reasonable belief that
Executive's action or omission was in the best interest of the Company.



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<PAGE>   3

            2.5.  Change In Control.

                  (a)   For purposes of this Agreement, "Change of Control"
shall mean:

                        (i)   any "person" as such term is defined in Sections
      13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
      "Exchange Act"), other than (1) a trustee or other fiduciary holding
      securities under an Executive benefit plan of the Company, (2) a
      corporation owned, directly or indirectly, by the stockholders of the
      Company in substantially the same proportions as their ownership of stock
      of the Company, or (3) any current beneficial stockholder or group, as
      defined by Rule 13d-5 of the Exchange Act, of securities possessing more
      than [TWENTY-FIVE] percent (25%) of the total combined voting power of the
      Company's outstanding securities, hereafter becomes the "beneficial
      owner," as defined in Rule 13d-3 under of the Exchange Act, directly or
      indirectly, of securities of the Company representing [TWENTY-FIVE]
      percent (25%) or more of the total combined voting power of the Company's
      then outstanding securities, or

                        (ii)  during any period of two consecutive years,
      individuals who at the beginning of such period constitute the Board of
      Directors of the Company and any new director whose election by the Board
      of Directors or nomination for election by the Company's stockholders was
      approved by a vote of at least two-thirds (2/3) of the directors then
      still in office who either were directors at the beginning of the period
      or whose election or nomination for election was previously so approved,
      cease for any reason to constitute a majority thereof, or

                        (iii) the stockholders of the Company approve a merger
      or consolidation of the Company with any other corporation, other than a
      merger or consolidation which would result in the voting securities of the
      Company outstanding immediately prior thereto continuing to represent
      (either by remaining outstanding or by being converted into voting
      securities of the surviving entity) at least eighty percent (80%) of the
      total voting power represented by the voting securities of the Company or
      such surviving entity outstanding immediately after such merger or
      consolidation, or the stockholders of the Company approve a plan of
      complete liquidation of the Company or an agreement for the sale or
      disposition by the Company, in one transaction or a series of
      transactions, of all or substantially all of the Company's assets; or

                         (iv) the sale of substantially all of the Company's
      assets.

            2.6.  Company. For purposes of this Agreement, the "Company" shall
mean MTI Incorporated and its Subsidiaries and shall include MTI's Successors
and Assigns (as hereinafter defined).

            2.7.  Disability. For purposes of this Agreement, "Disability" shall
mean a physical or mental infirmity which impairs the Executive's ability to
substantially perform the Executive's duties with the Company for a total period
of ninety (90) days and the Executive has not returned to full time employment
prior to the Termination Date as stated in the "Notice of Termination."


                                        3

<PAGE>   4

            2.8.  Good Reason.

                  (a)   For purposes of this Agreement, "Good Reason" shall mean
the occurrence after a Change in Control of any of the events or conditions
described in subsections (1) through (8) hereof:

                        (i)   a change in the Executive's status, title,
      position or responsibilities (including reporting responsibilities) which,
      in the Executive's reasonable judgment, represents an adverse change from
      the Executive's status, title, position or responsibilities as in effect
      at any time within ninety (90) days preceding the date of a Change in
      Control or at any time thereafter; the assignment to the Executive of any
      duties or responsibilities which, in the Executive's reasonable judgment,
      are inconsistent with the Executive's status, title, position or
      responsibilities as in effect at any time within ninety (90) days
      preceding the date of a Change in Control or at any time thereafter; or
      any removal of the Executive from or failure to reappoint or reelect the
      Executive to any of such offices or positions, except in connection with
      the termination of the Executive's employment for Disability, Cause, as a
      result of the Executive's death or by the Executive;

                        (ii) a reduction in the Executive's base salary or any
      failure to pay the Executive any compensation or benefits to which the
      Executive is entitled within ten (10) days of the date due after receipt
      of written notice from Executive;

                        (iii) the Company's requiring the Executive to be based
      at any place outside a 25-mile radius from MTI's Germany Office, located
      at Otto-Von-Guericke, Ring15, 65205 Wiesbaden, Germany except for
      reasonably required travel on the Company's business which is not
      materially greater than such travel requirements prior to the Change in
      Control;

                        (iv)  the failure by the Company to (A) continue in
      effect (without reduction in benefit level and/or reward opportunities)
      any material compensation or Executive benefit plan in which the Executive
      was participating at any time within ninety (90) days preceding the date
      of a Change in Control or at any time thereafter unless such plan is
      replaced with a plan that provides substantially equivalent compensation
      or benefits to the Executive, or (B) provide the Executive with
      compensation and benefits, in the aggregate, at least equal (in terms of
      benefit levels and/or reward opportunities) to those provided for under
      each other Executive benefit plan, program and practice in which the
      Executive was participating at any time within ninety (90) days preceding
      the date of a Change in Control or at any time thereafter;

                        (v)   the insolvency or the filing (by any party,
      including the Company) of a petition for bankruptcy of the Company, which
      petition is not dismissed within sixty (60) days;

                        (vi)  any material breach by the Company of any
      provision of this Agreement;



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<PAGE>   5

                        (vii) any purported termination of the Executive's
      employment for Cause by the Company which does not comply with the terms
      of Section 2.4; or

                        (viii) the failure of the Company to obtain an
      agreement, satisfactory to the Executive, from any Successors and Assigns
      to assume and agree to perform this Agreement, as contemplated in Section
      6 hereof.

                  (b)   The Executive's right to terminate the Executive's
employment pursuant to this Section 2.8 shall not be affected by the Executive's
incapacity due to physical or mental illness.

            2.9.  Notice Of Termination. For purposes of this Agreement,
following a Change in Control, "Notice of Termination" shall mean a written
notice of termination of the Executive's employment from the Company, which
notice indicates the date on which termination is to be effective, the specific
termination provision in this Agreement relied upon and which sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.

            2.10. Pro Rata Bonus. For purposes of this Agreement, "Pro Rata
Bonus" shall mean an amount equal to the Bonus Amount multiplied by a fraction
the numerator of which is the number of days in the fiscal year through the
Termination Date and the denominator of which is 365.

            2.11. Successors And Assigns. For purposes of this Agreement,
"Successors and Assigns" shall mean a corporation or other entity acquiring all
or substantially all of the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.

            2.12. Termination Date. For purposes of this Agreement, "Termination
Date" shall mean in, the case of the Executive's death, the Executive's date of
death, in the case of Good Reason, the last day of the Executive's employment
and, in all other cases, the date specified in the Notice of Termination;
provided, however, that if the Executive's employment is terminated by the
Company for Cause or due to Disability, the date specified in the Notice of
Termination shall be at least thirty (30) days from the date the Notice of
Termination is given to the Executive, provided that, in the case of Disability,
the Executive shall not have returned to the full-time performance of the
Executive's duties during such period of at least thirty (30) days.

      3.    Termination Of Employment.

            3.1.  If, during the term of this Agreement, the Executive's
employment with the Company shall be terminated within twelve (12) months
following a Change in Control, the Executive shall be entitled to the following
compensation and benefits:

                  (a)   If the Executive's employment with the Company shall be
terminated (1) by the Company for Cause or Disability, (2) by reason of the
Executive's death or (3) by the Executive other than for Good Reason, the
Company shall pay to the Executive the Accrued Compensation


                                       5

<PAGE>   6

and, if such termination is other than by the Company for Cause, the Company
shall also pay the Executive a Pro Rata Bonus.

                  (b)   If the Executive's employment with the Company shall be
terminated for any reason other than as specified in Section 3.1(a), the
Executive shall be entitled to the following:

                        (i)   the Company shall pay the Executive all Accrued
      Compensation and a Pro Rata Bonus;

                        (ii)  the Company shall pay the Executive as severance
      pay and in lieu of any further compensation for periods subsequent to the
      Termination Date, in a single payment, an amount in cash equal to the sum
      of (A) the Base Amount and (B) the Bonus Amount; and

                        (iii) for a number of months equal to twelve (12) (the
      "Continuation Period"), the Company shall, at its expense, continue on
      behalf of the Executive and the Executive's dependents and beneficiaries
      the life insurance, disability, medical, dental and hospitalization
      benefits provided (A) to the Executive at any time during the 90-day
      period prior to the Change in Control or at any time thereafter or (B) to
      other similarly situated executives who continue in the employ of the
      Company during the Continuation Period. The coverage and benefits
      (including deductibles and costs) provided in this Section 3.1(b)(iii)
      during the Continuation Period shall be no less favorable to the Executive
      and the Executive's dependents and beneficiaries, than the most favorable
      of such coverages and benefits during any of the periods referred to in
      clauses (A) and (B) above. The Company's obligation hereunder with respect
      to the foregoing benefits shall be limited to the extent that the
      Executive obtains any such benefits pursuant to a subsequent employer's
      benefit plans, in which case the Company may reduce the coverage of any
      benefits it is required to provide the Executive hereunder as long as the
      aggregate coverages and benefits of the combined benefit plans are no less
      favorable to the Executive than the coverages and benefits required to be
      provided hereunder. This subsection (iii) shall not be interpreted so as
      to limit any benefits to which the Executive or the Executive's dependents
      or beneficiaries may be entitled under any of the Company's Executive
      benefit plans, programs or practices following the Executive's termination
      of employment, including without limitation, retiree medical and life
      insurance benefits.

                  (c)   The amounts provided for in Sections 3.1(a) and
3.1(b)(i) and (ii) shall be paid in a single lump sum cash payment within
forty-five (45) days after the Executive's Termination Date (or earlier, if
required by applicable law).

                  (d)   The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, and no such payment shall be offset or reduced by the amount of
any compensation or benefits provided to the Executive in any subsequent
employment except as provided in Section 3.1(b)(iii).


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<PAGE>   7

            3.2.  (a) The severance pay and benefits provided for in this
Section 3 shall be in lieu of any other severance or termination pay to which
the Executive may be entitled under any Company severance or termination plan,
program, practice or arrangement.

                  (b) The Executive's entitlement to any other compensation or
benefits shall be determined in accordance with the Company's Executive benefit
plans and other applicable programs, policies and practices then in effect.

      4.    Notice Of Termination. Following a Change in Control, any purported
termination of the Executive's employment shall be communicated by Notice of
Termination to the Executive. For purposes of this Agreement, no such purported
termination shall be effective without such Notice of Termination.

      5.    Excise Tax Limitation.

                  (a)   Notwithstanding anything in this Agreement to the
contrary, if any portion of any payments to Executive by the Company under this
Agreement and any other present or future plan of the Company or other present
or future agreement between Executive and the Company would not be deductible by
the Company (collectively, "Payments") for federal income tax purposes by reason
of application of Section 162(m) of the Internal Revenue Code (the "Code"), then
payment of that portion to Executive shall be deferred until the earliest date
upon which payment thereof can be made to Executive without being non-deductible
pursuant to Section 162(m) of the Code. In the event of such deferral, the
Company shall pay interest to Executive on the deferred amount at 120% of the
applicable federal rate provided for in Section 1274(d)(1) of the Code. In
addition, notwithstanding any provision of this Agreement to the contrary, the
aggregate present value of the payments and benefits (excluding those payments
and benefits not treated as parachute payments under Code Section 280G(b)) to be
made or provided to the Executive by the Company (whether pursuant to this
Agreement or otherwise) shall not exceed three times the Executive's annualized
includible compensation for the base period, as defined in Code Section 280G(d)
of the Code, minus one dollar ($1.00) (the "Limited Payment Amount"), and any
excess payments or benefits shall be forfeited; provided, however, that the
forfeiture provision of this sentence shall apply only if such forfeiture
provision results in larger aggregate after-tax payments and benefits to the
Executive than if the forfeiture provision did not apply. The intent of this
portion of this subsection 5(a) is to prevent any payment or benefit to the
Executive from being subject to the excise tax imposed by Code Section 4999 and
to prevent any item of expense or deduction of the Company from being disallowed
as a result of the application of Code Section 280G, but only if the after-tax
payments and benefits payable or provided to the Executive are greater after
application of the forfeiture provision than if the forfeiture provision did not
apply. The interpretation of this subsection 5(a), its application to any
occurrence or event, the determination of whether any payment or benefit would
not be treated as a parachute payment, the determination of the aggregate
present value of all payments and benefits to be made or provided to the
Executive, the determination of the value of the payments and benefits payable
or to be provided to the Executive after reduction for all applicable taxes, and
what specific payments or benefits otherwise available to the Executive


                                        7


<PAGE>   8

shall be limited or eliminated by operation of this subsection 5(a) shall be
reasonably made by the Company and shall be binding on all persons.

                  (b)   An initial determination as to whether the Payments
shall be reduced to the Limited Payment Amount and the amount of such Limited
Payment Amount shall be made, at the Company's expense, by the accounting firm
that is the Company's independent accounting firm as of the date of the Change
in Control (the "Accounting Firm"). The Accounting Firm shall provide its
determination (the "Determination", together with detailed supporting
calculations and documentation, to the Company and the Executive within twenty
(20) days of the Termination Date if applicable, or such other time as requested
by the Company or by the Executive (provided the Executive reasonably believes
that any of the Payments may be subject to the Excise Tax), and if the
Accounting Firm determines that there is substantial authority (within the
meaning of Section 6662 of the Code) that no Excise Tax is payable by the
Executive with respect to a Payment or Payments, it shall furnish the Executive
with an opinion reasonably acceptable to the Executive that no Excise Tax will
be imposed with respect to any such Payment or Payments. Within ten (10) days of
the delivery of the Determination to the Executive, the Executive shall have the
right to dispute the Determination (the "Dispute"). If there is no Dispute, the
Determination shall be binding, final and conclusive upon the Company and the
Executive.

      6.    Successors, Binding Agreement.

                  (a)   This Agreement shall be binding upon and shall inure to
the benefit of the Company, its Successors and Assigns and the Company shall
require any Successors and Assigns to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place.

                  (b)   Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the Executive or the
Executive's beneficiaries or legal representatives, except by will or by the
laws of descent and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive's legal personal representative.

      7.    Confidential Information. The Company and Executive acknowledge that
Executive, in performing the terms and conditions of Executive's employment, has
and will continue to directly or indirectly gain access to information about
Company and its operations, including, but not limited to, its modes and methods
of conducting its business and producing and marketing its products, its
employee, customer, vendor and referral source lists, its trade secrets, its
copyrighted and non-copyrighted or non-protected computer software programs, its
techniques of operation, its financial structure, and its weakness, if any. As
part of this Agreement, Executive agrees to execute, and be bound by, the
Company's "Employee/ Consultant Proprietary Information Agreement," a copy of
which is attached hereto as Exhibit "A."

      8.    Notice. All notices, requests, demands, and other communications
hereunder shall be in writing, and shall be delivered in person, by facsimile,
or by certified or registered mail with

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<PAGE>   9

return receipt requested. Each such notice, request, demand, or other
communication shall be effective (a) if delivered by hand, when delivered at the
address specified in this Section; (b) if given by facsimile, when such
facsimile is transmitted to the telefacsimile number specified in this Section
and confirmation is received; or (c) if given by certified or registered mail,
three days after the mailing thereof Notices shall be delivered as follows:

                   If to the Company:

                      MTI Technology Corporation
                      4905 E. La Palma Avenue
                      Anaheim, California 92807
                      Attention:   Chief Financial Officer
                      Fax:   (714) 693-2202

                   With a copy to:

                      Morrison & Foerster LLP
                      19900 MacArthur Boulevard
                      12th Floor
                      Irvine, California 92612
                      Attention:   Tamara Powell Tate
                      Fax:  (714) 251-0900

                   If to the Executive:

                      Gary Scott
                      Kufsteiner Platz 3
                      81679 Munich
                      Germany

Any party may change its address by notice giving notice to the other party of a
new address in accordance with the foregoing provisions.

      9.    Non-Exclusivity Of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company (except for
any severance or termination policies, plans, programs or practices) and for
which the Executive may qualify, nor shall anything herein limit or reduce such
rights as the Executive may have under any other agreements with the Company
(except for any severance or termination agreement). Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan
or program of the Company shall be payable in accordance with such plan or
program, except as explicitly modified by this Agreement.

      10.   Settlement Of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against an Executive or others.


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<PAGE>   10

      11.   Miscellaneous. No provision of this Agreement may be modified,
waived or discharged, unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreement or representation,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement.

      12.   Governing Law. This Agreement has been negotiated and exactitude in
the State of California and is to be performed in Orange County, California.
This Agreement shall be governed by and interpreted in accordance with the laws
of the State of California, including all matters of construction, validity,
performance, and enforcement, without giving effect to principles of conflict of
laws. Any dispute, action, litigation, or other proceeding concerning this
Agreement shall be instituted, maintained, heard, and decided in Orange County,
California.

      13.   Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

      14.   Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.

      15.   Remedies. All rights, remedies, undertakings, obligations, options,
covenants, conditions, and agreements contained in this Agreement shall be
cumulative and no one of them shall be exclusive of any other.

      16.   Interpretation. The language in all parts of this Agreement shall be
in all cases construed simply according to its fair meaning and not strictly for
or against any party. Whenever the context requires, all words used in the
singular will be construed to have been used in the plural, and vice versa. The
descriptive headings of the sections and subsections of this Agreement are
inserted for convenience only and shall not control or affect the interpretation
or construction of any of the provisions herein.

      17.   Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

      18.   Further Documents and Acts. Each of the parties hereto agrees to
cooperate in good faith with the other and to execute and deliver such further
instruments and perform such other acts as may be reasonably necessary or
appropriate to consummate and carry into effect the transactions contemplated
under this Agreement.



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<PAGE>   11

      19.   Consultation with Counsel. Executive acknowledges (a) that he has
been given the opportunity to consult with counsel of his own choice concerning
this Agreement, and (b) that he has read and understands the Agreement, is fully
aware of its legal effect, and has entered into it freely based upon his own
judgment with or without the advice of such counsel.

EXECUTIVE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT AND UNDERSTANDS ITS
CONTENTS. EXECUTIVE FURTHER ACKNOWLEDGES THAT THE COMPANY HAS ADVISED HIM OF HIS
RIGHT TO CONSULT WITH LEGAL COUNSEL OF HIS OWN CHOICE CONCERNING THIS AGREEMENT.
BY SIGNING THIS AGREEMENT, EXECUTIVE AND THE COMPANY AGREE TO BE BOUND BY ALL OF
THE TERMS AND CONDITIONS OF THIS AGREEMENT.

   IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Executive has executed this Agreement as of
the day and year first above written.

                                           MTI TECHNOLOGY CORPORATION

                                           By:  /s/ DALE R. BOYD
                                              ----------------------------------
                                              Title: Sr. V.P. & CFO

                                               /s/ GARY SCOTT
                                           -------------------------------------
                                           Gary Scott


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<PAGE>   12

                                  EXHIBIT "A"












                                  Exhibit "A"

<PAGE>   13

                     STATEMENT REGARDING EMPLOYEE/CONSULTANT
                        PROPRIETARY INFORMATION AGREEMENT

Attached to this statement is your Employee/Consultant Proprietary Information
Agreement (the "Agreement") with MTI Technology Corporation (together with its
subsidiaries, the "Company").

Please take the time to review the Agreement carefully. It contains material
restrictions on your right to disclose or use, during or after your employment,
certain information and technology learned or developed by you during your
employment with the Company. The Company considers this Agreement to be very
important to the protection of its business.

If you have any questions concerning the Agreement, you may wish to consult an
attorney. Managers, legal counsel, and others in the Company are not authorized
to give you legal advice concerning the Agreement.

If you have read and understand the Agreement, and if you agree to its terms and
conditions, please return a fully executed copy of it to the Company, retaining
one copy for yourself.


I HAVE READ AND UNDERSTAND

THE ATTACHED AGREEMENT:



Executive Name:  Gary M. Scott
               ----------------------------
Executive Signature:  /s/ GARY M. SCOTT
                    -----------------------
Title:   Sr. V.P. Europe
      -------------------------------------
Date:   July 15, 1998
     --------------------------------------




                                      A-1
<PAGE>   14
                    EMPLOYEE/CONSULTANT PROPRIETARY INFORMATION AGREEMENT

        In consideration of my present and future employment by MTI Technology
Corporation (together with its subsidiaries, the "Company"), I agree to the
following:

      1.    Proprietary Information.

                  (a)   I understand and acknowledge that my work as an employee
of the Company has involved and will continue to involve access to and creation
of confidential, proprietary, and trade secret information of the Company and
its affiliates, consultants, customers, clients, and business associates
(collectively, as defined more extensively below, "Proprietary Information"). I
further understand and acknowledge that the Company and its clients have
developed, compiled, and otherwise obtained this Proprietary Information often
at great expense, and that such information has great value to their respective
businesses. I agree to hold in strict confidence and in trust for the sole
benefit of the Company and its clients all Proprietary Information. I further
agree that I shall treat all Proprietary Information as private, privileged, and
confidential, and that I shall not use, disclose, or release any Proprietary
Information in any way to any person, firm, or institution at any time, even
after termination of my employment, except to the extent necessary to carry out
my responsibilities as an Executive of the Company. I further understand and
agree that the publication of Proprietary Information through literature or
speeches must be approved in advance in writing by a duly authorized officer of
the Company.

                  (b)   I understand and acknowledge that, for purposes of this
Agreement, "Proprietary Information" means all confidential, proprietary, or
trade secret information and ideas in whatever form, tangible or intangible,
whether disclosed to or learned or developed by me, prior or subsequent to the
date hereof, pertaining in any manner to the business of the Company or to the
Company's affiliates, consultants, clients, or business associates, unless: (i)
the information is or becomes publicly known through lawful means; (ii) the
information was rightfully in my possession or part of my general knowledge
prior to my employment by the Company; or (iii) the information is disclosed to
me without confidential or proprietary restriction by a third party who
rightfully possesses the information (without confidential or proprietary
restriction) and did not learn of it, directly or indirectly, from the Company.

                  (c)   Without limiting the generality of the foregoing, I
understand and acknowledge that "Proprietary Information" includes all: (i)
inventions, computer codes, computer programs, formulas, schematics, techniques,
algorithms, employee suggestions, development tools and processes, computer
printouts, design drawings and manuals, and improvements or modification to any
of the foregoing; (ii) information about costs, profits, markets, and sales;
(iii) plans for future development and new product concepts; and (iv) all
documents, books, papers, drawings, models, sketches, and other data of any kind
and description, including electronic data recorded or retrieved by any means,
that have been or will be given to me by the Company (or any present or future
affiliates, consultants, customers, clients, and business associates of the
Company), as well as written or verbal instructions or comments.




                                       A-2

<PAGE>   15

      1.    Use Of Proprietary Information.

      I agree that I will maintain at my work station or in other places under
my control only such Proprietary Information that I have a current "need to
know," and that I will return to the appropriate person or location, or
otherwise dispose of, Proprietary Information once my need to know no longer
exists. I agree that I will not make copies of information unless I have a
legitimate need for such copies in connection with my work.

      2.    Third-Party Information.

      I recognize that the Company has received and in the future will receive
from third parties their confidential or proprietary information subject to a
duty on the Company's part to maintain the confidentiality of such information
and to use it only for certain limited purposes. I agree that I owe the Company
and such third parties, during the term of my employment and thereafter, a duty
to hold all such confidential or proprietary information in the strictest
confidence and not to disclose it to any person, firm, or corporation (except as
necessary in carrying out my work for the Company consistent with the Company's
agreement with such third party) or to use it for the benefit of anyone other
than for the Company or such third party (consistent with the Company's
agreement with such third party) without the express written authorization of a
duly authorized officer of the Company.

      3.    Inventions.

                  (a)   Subject to Section 9 below, I hereby assign to the
Company, without additional consideration, all right, title and interest
(throughout the United States and in all foreign countries) in all ideas,
processes, inventions, technology, writings, computer programs, designs,
formulas, discoveries, patents, copyrights, trademarks, service marks, original
works of authorship, any claims or rights, and any improvements or modifications
to the foregoing (collectively, "Inventions"), whether or not subject to patent
or copyright protection, relating to any activities of the Company that have
been or will be conceived, developed, or reduced to practice by me alone or with
others (i) during the term of my employment, whether or not conceived or
developed during regular business hours, and whether or not conceived before,
on, or after the date hereof or (ii) if based on Proprietary Information, after
termination of my employment. Such Inventions shall be the sole property of the
Company and, to the maximum extent permitted by applicable law, shall be deemed
works made for hire.

                  (b)   I will, whether during or after my employment by the
Company, execute such written instruments and do other such acts as may be
necessary in the opinion of the Company to obtain a patent, register a
copyright, or otherwise enforce the Company's rights in such Inventions (and I
hereby irrevocably appoint the Company and any of its officers as my attorney in
fact to undertake such acts in my name).

                  (c)   I understand that the assignment by me to the Company
does not apply to Inventions that qualify fully under Section 2870(a) of the
California Labor Code, which is set forth on Schedule "A." I understand that
nothing in this Agreement is intended to expand the scope of protection provided
by Sections 2870 through 2872 of the California Labor Code. Except as disclosed
in Schedule "B", there are no ideas, inventions, technology, computer

                                       A-3

<PAGE>   16

programs, processes, trademarks, service marks, original works of authorship,
designs, formulas, discoveries, patents, copyrights, any claims or rights, and
any improvements or modifications to the foregoing that I wish to exclude from
the operation of this Agreement.

                  (d)   To the best of my knowledge, there is no existing
contract in conflict with this Agreement or any other contract in existence
between me and any other person or entity to assign ideas, inventions,
technology, computer programs, processes, trademarks, service marks, original
works of authorship, designs, formulas, discoveries, patents, copyrights, any
claims or rights, and any improvements or modifications to the foregoing.

      1.    Termination of Employment.

                  (a)   I hereby acknowledge and agree that nothing in this
Agreement shall be construed to imply that the term of my employment is of any
definite duration. I further acknowledge and agree that I am employed on an
"at-will" basis, which means that I may quit at any time with or without cause,
and the Company may terminate my employment at any time with or without cause.

                  (b)   I acknowledge that, because of my responsibilities at
the Company, I have helped and will continue to help to develop and have been
and will be exposed to the Company's research and development, products,
business strategies, information on customers and clients, and other valuable
Proprietary Information, and that use or disclosure of such Proprietary
Information in breach of this Agreement would be extremely difficult to detect
or prove. I also acknowledge that the Company's relationships with its
employees, affiliates, consultants, customers, clients, business associates, and
other persons are valuable business assets. To forestall any use or disclosure
of Proprietary Information in breach of this Agreement, I agree that for the
term of this Agreement and for a period of one (1) year after termination of my
employment with the Company, I shall not, for myself or any third party,
directly or indirectly:

                        (i)   divert or attempt to divert from the Company any
            business of any kind in which it is engaged, including, without
            limitation, the solicitation of or interference with any of its
            suppliers or customer; or

                        (ii)  employ, solicit for employment, or recommend for
            employment any person employed by the Company.

      Furthermore, I agree that during the period of my employment with the
Company I shall not engage in any business activity that is or may be
competitive with the Company. I understand that none of my activities will be
prohibited under this section if I can prove that the action was taken without
the use in any way of Proprietary Information.

                        (c)   I acknowledge that, because of the difficulty of
establishing when any Invention is first conceived or developed by me, or
whether it results from access to Proprietary Information or the Company's
equipment, facilities, and data, I agree that any ideas, inventions, technology,
computer programs, processes, trademarks, service marks, original works of
authorship, designs, formulas, discoveries, patents, copyrights, any claims or
rights, and any improvements or modifications to the foregoing shall be presumed
to be an Invention if


                                       A-4

<PAGE>   17

conceived, developed, used, sold, exploited, or reduced to practice by me or
with my aid within one (1) year after my termination of employment with the
Company. I can rebut the above presumption if I prove that the invention, idea,
process, etc., is not an Invention as defined in paragraph 4(a).

               (d) I hereby acknowledge and agree that all personal property
including, without limitation, all books, manuals, records, models, drawings,
reports, notes, contracts, lists, files, computer software, computer tapes or
disks, blueprints, and other documents or materials (or copies thereof),
Proprietary Information, and equipment furnished to or prepared by me in the
course of or incident to my employment, belong to the Company and shall be
promptly returned to the Company once my employment with the Company is
terminated, for any reason. I will not retain any written or other tangible
information pertaining to any Invention. In the event of the termination of my
employment, I agree to sign and deliver the Termination Certificate attached as
Schedule "C" to this Agreement.

               (e) I understand that my obligations contained in this Agreement
will survive the termination of my employment with the Company, and that I will
continue to make all disclosures required of me by Paragraph 6.

      1.    Disclosure.

      I agree to maintain adequate and current written records on the
development of all Inventions and to disclose promptly to the Company all
Inventions and relevant records, which records will remain the sole property of
the Company. I further agree that all information and records pertaining to any
Inventions conceived, developed, or reduced to practice by me (alone or with
others) during my period of employment or during the one-year period following
termination of my employment, shall be promptly disclosed to the Company (any
such disclosures made after the termination of my employment shall be received
by the Company in confidence for the purpose of determining if they have been
based on any Proprietary Information). The Company shall examine such
information to determine if in fact such information are Inventions subject to
this Agreement.

      2.    Former or Conflicting Agreements.

      During my employment with the Company, I will not disclose to the Company,
or use, or induce the Company to use, any confidential, proprietary, or trade
secret information of others. I represent and warrant that I have returned all
property and confidential, proprietary and trade secret information belonging to
all prior employers, if any. I further represent and warrant that my performance
of the terms of this Agreement will not breach any agreement to keep in
confidence confidential proprietary and trade secret information acquired by me
in confidence or in trust prior to my employment by the Company. I have not
entered into, and I agree I will not enter into, any oral or written agreement
in conflict herewith.

      3.    Information on Company Premises.

      I acknowledge that all information generated, received, or maintained by
or for me on the premises or equipment of the Company (including, without
limitation, computer systems and


                                       A-5


<PAGE>   18

electronic-mail or voicemail systems) is the property of the Company, and I
hereby waive any property or privacy rights that I may have with respect to such
information.

      4.    Reserved Inventions.

      To avoid future confusion, I have listed on Schedule "B" a description of
all Inventions, if any, developed or conceived by me in which I claim any
ownership or other right. I understand that, by not listing an Invention, I am
acknowledging that the Invention was not developed or conceived before
commencement of my employment.

      10.   Choice of Law.

      The validity, interpretation, enforceability, and performance of this
Agreement shall be governed by and construed in accordance with the laws of the
State of California without giving effect to its conflict of law rules. Any
dispute, action, litigation, or other proceeding concerning this Agreement shall
be instituted, maintained, heard, and decided in Orange County, California.

      11.   Remedies.

      I recognize that nothing in this Agreement is intended to limit any remedy
of the Company under the California Uniform Trade Secrets Act and that I could
face possible criminal and civil actions, resulting in imprisonment and
substantial monetary liability, if I misappropriate the Company's or its
clients' trade secrets. In addition, I recognize that my violation of this
Agreement could cause the Company irreparable harm and significant injury, the
amount of which may be extremely difficult to estimate, thus, making any remedy
at law or in damages inadequate. Therefore, I agree that, in the event of a
breach or threatened breach that involves Proprietary Information of the Company
or its clients, the Company shall have the right to apply to any court of
competent jurisdiction for an order restraining any breach or threatened breach
of this Agreement and for any other relief the Company deems appropriate. This
right shall be in addition to any other remedy available to the Company in law
or equity.

      12.   Successors and Assigns.

            (a) I understand and agree that the Company may assign to another
        person or entity any of its rights under this Agreement.

            (b) I further understand and agree that this Agreement shall be
        binding upon me and my heirs, executors, administrators, and successors,
        and shall inure to the benefit of the Company's successors and assigns.

      12.   Severability.

      If any provision of this Agreement is determined to be invalid, illegal or
unenforceable, the validity or enforceability of the other provisions shall not
be affected.


                                       A-6

<PAGE>   19



        13.          Entire Agreement.

        The terms of this Agreement are the final expression of my agreement
with respect to the subject matter hereof and may not be contradicted by
evidence of any prior or contemporaneous agreement. This Agreement shall
constitute the complete and exclusive statement of its terms and no extrinsic
evidence whatsoever may be introduced in any judicial, administrative, or other
legal proceeding involving this Agreement. No modification or amendment of this
Agreement shall be binding unless executed in writing by me and a duly
authorized officer of the Company.

I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE COMPLETELY
NOTED ON SCHEDULE "B" TO THIS AGREEMENT ANY PROPRIETARY INFORMATION, IDEAS,
PROCESSES, CREATIONS, TECHNOLOGY, INVENTIONS, PATENTS, COPYRIGHTS, OR
TRADEMARKS, WRITINGS, PROGRAMS, DESIGNS, FORMULAS, DISCOVERIES, OR IMPROVEMENTS,
RIGHTS, OR CLAIMS RELATING TO THE FOREGOING, THAT I DESIRE TO EXCLUDE FROM THIS
AGREEMENT.

        This Agreement is made and entered into as of July 15, 1998.




MTI TECHNOLOGY CORPORATION



By: /s/ DALE R. BOYD
   ----------------------------------------
   Title:   Sr. V.P. & CFO
         ----------------------------------
Executive:   Gary M. Scott
          ---------------------------------
Signature: /s/ GARY M. SCOTT
          ---------------------------------





                                       A-7

<PAGE>   20
                                   SCHEDULE A

                      California Labor Code Section 2870(a)

      Any provision in an employment agreement which provides that an employee
shall assign, or offer to assign, any of his or her rights in an invention to
his or her employer shall not apply to an invention that the employee developed
entirely on his or her own time without using the employer's equipment,
supplies, facilities, or trade secret information, except for those inventions
that either:

      (1) Relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer; or

      (2) Result from any work performed by the employee for the employer.








                                   Schedule A

<PAGE>   21



                                   SCHEDULE B

      1.    Proprietary Information. Except as set forth below, I acknowledge
            that at this time I know nothing about the business or Proprietary
            Information of the Company, other than information I have learned
            from the Company in the course of being hired:

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

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

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

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


2.      Reserved Inventions. Except as set forth below, there are no ideas,
        processes, inventions, technology, writings, programs, designs,
        formulas, discoveries, patents, copyrights, or trademarks, or any
        claims, rights, or improvements to the foregoing, that I wish to exclude
        from the operation of this Agreement:


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

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

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

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




Name:  Gary M. Scott
     ------------------------------
Signature: /s/ GARY M. SCOTT
          -------------------------
Date:     July 15, 1998
     ------------------------------





                                   Schedule B


<PAGE>   22
                                   SCHEDULE C

                             TERMINATION CERTIFICATE

      This is to certify that I have returned all personal property of the
Company, including, without limitation, all books, manuals, records, models,
drawings, reports, notes, contracts, lists, blueprints, and other documents and
materials, Proprietary Information, and equipment furnished to or prepared by me
in the course of or incident to my employment with the Company, and that I did
not make or distribute any copies of the foregoing.

      I further certify that I have reviewed the Employee/Consultant Proprietary
Information Agreement signed by me and that I have complied with and will
continue to comply with all of its terms including, without limitation: (i) the
reporting of any invention, process, idea, etc. conceived or developed by me and
covered by the Agreement; and (ii) the preservation as confidential of all
Proprietary Information pertaining to the Company. This certificate in no way
limits my responsibilities or the Company's rights under the Agreement.

      On termination of my employment with the Company, I will be employed by
[NAME OF EMPLOYER AND DIVISION/DEPARTMENT THAT EMPLOYEE WILL BE IN], and I will
be working in connection with the following projects:



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

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

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




Name:
     ------------------------------
Signature:
          -------------------------
Date:
     ------------------------------




                                   Schedule C