<PAGE>

                                                                  EXHIBIT 10.40


                              CONSULTING AGREEMENT

        This Consulting Agreement is made and entered into August 1, 2001 by and
between MTI TECHNOLOGY CORPORATION, A DELAWARE CORPORATION ("MTI" or "the
COMPANY") at 4905 E. La Palma Avenue, Anaheim, CA 92807 and RICHARD L. RUSKIN
("CONSULTANT").

                                    RECITALS

        WHEREAS, Consultant represents that he has expertise in the area of
______________________________.

        WHEREAS, MTI, in reliance on Consultant's representations, is willing to
engage Consultant as an independent contractor, and not as an employee to
perform services as described in Exhibit "A" attached hereto. Consultant desires
to provide these services to the Company pursuant to the terms and conditions
set forth below.

        WHEREAS, THE COMPANY has spent significant time, effort, and money
developing its Proprietary Information, which is vital to the Company's business
and goodwill. The Company necessarily will reveal this Proprietary Information
to Consultant during the Term of this Agreement. Hence, the Company and the
Consultant have agreed that the Company will only retain Consultant's services
if Consultant agrees to maintain all Proprietary Information in strict
confidence pursuant to the terms of this Agreement.

        WHEREAS, THE COMPANY and Consultant have agreed that Consultant will
provide consulting services as an independent contractor pursuant to the terms
and conditions set forth in this Agreement.

                                    AGREEMENT

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

        1. Duties of Consultant.

           a. The Company hereby retains Consultant as an independent contractor
to provide the services as described in Exhibit "A" attached hereto. Consultant
shall provide such additional services as to MTI's senior management. Consultant
will devote his best efforts to the performance of these services.

           b. Consultant's relationship with the Company will be that of an
independent contractor. Nothing in this Agreement will be construed to create a
partnership, joint venture, or employer-employee relationship between Consultant
and the Company. Accordingly, MTI and Consultant agree, covenant, and represent
that:



<PAGE>

               (i) The parties acknowledge and agree that the Company has no
right to control the manner, means, or method by which Consultant performs the
services called for by this Agreement except to: (1) direct Consultant with
respect to the elements of the services to be performed by Consultant and the
results to be derived by the Company, (2) to inform Consultant as to where and
when such services will be performed, and (3) to review and assess the
performance of the services by Consultant for the limited purposes of ensuring
that the services have been performed and confirming that results are
satisfactory.

               (ii) Consultant will provide his or her own tools of the trade
and will not be required to work exclusively on the Company's premises, and will
not have any responsibility for hiring or supervising any of the Company's
employees. The Company and Consultant will mutually agree upon the place or
places at which the services required by this Agreement are to be performed.

        2. Compensation.

           a. In consideration of the services to be performed by Consultant,
the Company will pay Consultant the fees shown in Exhibit "B". Consultant will
invoice the Company on a monthly basis for all hours worked under this Agreement
during the preceding month. Within forty-five (45) days after receipt of
Consultant's invoice, the Company will pay the agreed-upon amount.

           b. The Company and Consultant agree, covenant, and represent that,
because Consultant is an independent contractor and not an employee of the
Company, the Company will not withhold from Consultant's professional fee and
Consultant will be responsible for paying, any federal, state or local payroll,
social security, disability, workers' compensation, self-employment insurance,
income and other taxes or assessments. Consultant will, at his or her cost and
expense, pay and be fully liable and responsible for, and indemnify and hold the
Company harmless for, any taxes, assessments, fines or penalties relating to the
Company's failure to pay or withhold any and all taxes relating to any
compensation paid pursuant to this Agreement.

        3. Expenses. Consultant is responsible for paying all ordinary and
necessary expenses arising from the Consultant's performance of the services
under this Agreement, including his or her own business, unless agreed to in
writing by the parties. Any travel and other expenses requested by the Company
will be paid for by the Company and may be billed to Company by Consultant above
the compensation defined in Section 2.



                                       2
<PAGE>

        4. Rights in Data.

           a. Any MTI Work Product will be considered a "work for hire" and will
remain the exclusive property of MTI.

           b. "MTI Work Product" means only the ideas, processes, methods,
programming aids, reports, programs, manuals, tapes, software, flowcharts,
systems or improvements, enhancements, or modifications, that the Consultant
produces, develops, prepares, conceives, makes, or suggests in the performance
of the services under this Agreement, including all related developments
originated or conceived during the term of this Agreement but completed or
reduced to practice after termination.

           c. All right, title, and interest in and to any programs, systems,
data, and materials furnished to MTI and/or developed, at private expense, by
Consultant outside the scope of this Agreement are and will remain the exclusive
property of Consultant. These "Consultant Products" anticipated to be relevant
to this Agreement, if any, are listed in Exhibit "D".

        5. Term and Termination.

           a. This Agreement is effective beginning August 1, 2001 and
terminates August 31, 2002 (the "Term"). The Company and Consultant agree that
this Agreement will remain in effect for the full term as set forth above. The
Parties agree, however, that this Agreement may be terminated for any reason,
with or without cause, by the Company or Consultant upon 30 days' written notice
to the other party.

           b. If either party materially breaches any of the provisions of this
Agreement, the non-breaching party may terminate this Agreement by giving
written notification to the breaching party. Termination will be effective
immediately on receipt of the written notification by the breaching party, or
five days after mailing of the notice to the address set forth in the notice
provisions below, whichever occurs first. For purposes of this section, material
breach of this Agreement will include but not be limited to the following: (i)
the Company's failure to pay for Consultant's services, or to reimburse
Consultant's expenses as agreed in writing, within forty-five (45) days after
receipt of Consultant's written demand for payment in accordance with the notice
provisions set forth below; and (ii) failure of Consultant to adequately perform
the services required by Consultant under this Agreement, as determined by the
Company in its sole discretion.

           c. This Agreement will terminate automatically on the occurrence of
any of the following events:

               i. the appointment of a receiver, liquidator, or trustee for
either party by decree of competent authority in connection with any
adjudication or determination by such authority that either Party is bankrupt or
insolvent; the filing by either Party of a petition in voluntary bankruptcy, the
making of an assignment for the benefit of its creditors, or the entering into
of a composition with its creditors; or (c) any formal action of MTI's Board of
Directors to terminate the Company's existence or otherwise to wind up Company's
affairs;

               ii. Sale of the business, or change in control, of either party;
or



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<PAGE>

               iii. Consultant's death.

           d. Within 30 days after termination of this Agreement for any reason,
Consultant will submit to MTI a final itemized invoice for any outstanding fees
or expenses under this Agreement. Upon termination of this Agreement and payment
of the final invoice, the Company will owe Consultant no further amounts or
obligations.

        6. Benefits.

           a. Consultant enters into this Agreement as, and will continue to be,
an independent contractor. Therefore, Consultant will not be entitled to any
benefits accorded to MTI's employees including, but not limited to: workers'
compensation insurance, unemployment insurance, disability insurance, medical
insurance, dental insurance, retirement plans, 401(k) plans, stock option plans,
stock purchase plans, vacation pay, and sick pay.

           b. Consultant will be responsible for providing, at Consultant's
expense and in Consultant's name, disability, workers' compensation, and other
insurance as well as licenses and permits usual or necessary for performing the
services contemplated by this Agreement.

           c. The Company and Consultant acknowledge that the services that
Consultant will provide pursuant to the terms of this Agreement are specialized
in nature, that the parties established Consultant's professional fee to ensure
that Consultant could provide his or her own benefits, and that Consultant has
no current or future expectation that he will be entitled to participate in any
of the benefits of employment that the Company may from time to time provide its
employees. Accordingly, the Company and Consultant agree, covenant, and
represent that, even if Consultant's working relationship with the Company is
reclassified from the relationship of independent contractor to the relationship
of employer-employee, Consultant will be entitled to participate in any benefits
of employment that the Company may from time to time provide to its employees.

           d. Consultant's exclusion from benefit programs maintained by Company
is a material component of the terms of compensation negotiated by the parties,
and is not premised on Consultant's status as a non-employee with respect to the
Company. To the extent that Consultant may become eligible for any benefit
programs maintained by Company (regardless of the timing of or reason for
eligibility), Consultant hereby waives Consultant's right to participate in the
programs. Consultant's waiver is not conditioned on any representation or
assumption concerning Consultant's status as an independent contractor.
Consultant also agrees that, consistent with Consultant's independent contractor
status, Consultant will not apply for any government-sponsored benefits that are
intended to apply to employees, including, but not limited to, unemployment
benefits.

        7. Proprietary Information and Ownership of Intellectual Property. The
Company has spent significant time and money developing Proprietary Information
(as defined in Exhibit "C") that is vital to the Company's business and
goodwill. The Company and Consultant acknowledge that Consultant, in performing
the terms and conditions of this Agreement and the Former Agreement, has and
will continue to directly or indirectly gain access to information about the
Company and its operations, including, but not limited to, its modes and methods
of



                                       4
<PAGE>

conducting its business and producing and marketing its services; its employees,
customers, vendors and referral source lists; its trade secrets; its copyrighted
and non-copyrighted or non-protected computer software programs; its financial
structure; and its weakness, if any. Therefore, as part of this Agreement,
Consultant agrees to execute, and be bound by, the Company's "Independent
Contractor Proprietary Information Agreement," a copy of which is attached
hereto as Exhibit "C".

        8. Subsequent Consulting and Employment. After the termination of this
Agreement with the Company, Consultant agrees, covenants, and represents that he
will not enter into any agreement that conflicts with the Consultant's
obligations under this Agreement and the Proprietary Information Agreement
attached as Exhibit "C". Consultant further agrees that it will inform any
subsequent parties who engage Consultant's services, or with whom Consultant
becomes employed, of Consultant's obligations under this Agreement and the
Proprietary Information Agreement.

        9. Consultant's Representations and Indemnities.

           a. Consultant represents that Consultant has the qualifications and
ability to perform the services under this Agreement in a professional manner
without the advice, control, or supervision of the Company's management.
Consultant will be solely responsible for the professional performance of the
services and will receive no assistance, direction, or control from MTI.
Consultant will have sole discretion and control of Consultant's services and
the manner in which they are to be performed. The parties acknowledge and agree
that, although MTI has no right to control the manner by which Consultant
performs the services called for by this Agreement, MTI is entitled to: (i)
advise Consultant with respect to the elements of the services to be performed
by Consultant under this Agreement; and (ii) to review and assess the
performance of the services by Consultant for the limited purpose of assuring
that the services have been performed, and confirming that the results are
satisfactory.

           b. Consultant will and does hereby indemnify, defend, and hold
harmless the Company, and the Company's officers, directors, employees and
shareholders, from and against any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries, and deficiencies,
including interest and penalties that the Company may incur or suffer and that
result from, or are related to, any breach or failure of Consultant to perform
any of the representations, warranties, and agreements in this Agreement.

        10. Confidentiality and Publicity.

            a. Consultant agrees, covenants, and represents that the facts
relating to the existence of this Agreement, the negotiations leading to the
execution of this Agreement, and the terms of this Agreement will be held in
confidence and will not be disclosed or communicated to any person, other than
those who must perform tasks to effectuate this Agreement, unless required by
law or with advance written consent from an officer of the Company to each
disclosure.



                                       5
<PAGE>

            b. Consultant will not at any time use MTI's name or any MTI
trademarks or trade names in any advertising, without first obtaining the
Company's advance written consent to each disclosure.

        11. Arbitration. All disputes between Consultant and MTI relating in any
manner whatsoever to Consultant's consulting relationship with MTI or the
termination of Consultant's consulting relationship with MTI ("Arbitrable
Claims") including, without limitation, all disputes relating to the validity,
interpretation, or enforcement of this Agreement, will be resolved exclusively
by arbitration in Orange County, California, by the Judicial Arbitration &
Mediation Services, Inc. (the "JAMS"). Such arbitration will be conducted in
accordance with the then-existing arbitration rules of JAMS, with the cost of
such arbitration to be borne equally by the parties. The parties to this
Agreement, and all who claim thereunder, will be (i) conclusively bound by the
arbitrator's decision or award, which will not be subject to appeal; and (ii)
have the right to have any decision or award rendered in accordance with this
provision entered as a judgment in a court in the State of California or any
other court having jurisdiction. The arbitrator will have the authority to award
or grant legal, equitable, and declaratory relief. The parties hereby waive any
rights they may have to trial by jury. The Federal Arbitration Act will govern
the interpretation and enforcement of this Section pertaining to arbitration,
unless it is found inapplicable in which case the California Arbitration Act
will control.

        12. Notices. Any notice under this Agreement must be in writing and will
be effective upon delivery by hand or five (5) business days after deposit in
the United States mail, postage prepaid, certified or registered, and addressed
to Company or to Consultant at the corresponding address below. Consultant will
be obligated to notify Company in writing of any change in Consultant's address.

        Company's Notice Address:          Consultant's Notice Address:

        MTI Technology Corporation         Richard L. Ruskin
        4905 E La Palma Ave                ____________________________
        Anaheim, CA 92807                  ____________________________
        Facsimile: (714) 693-2607
        Attention: Legal Department


        Notice of change of address will be effective only when done in
accordance with this Section.

        13. Assignments; Successors and Assigns. Consultant agrees that
Consultant will not assign, delegate, transfer, or otherwise dispose of, whether
voluntarily or involuntarily or by operation of law, any rights or obligations
under this Agreement without the written consent of MTI. Any purported
assignment, transfer, or delegation shall be null and void. Nothing in this
Agreement will prevent the consolidation of the Company with, or its merger
into, any other corporation, or the sale by the Company of all or substantially
all of its properties or assets, or the assignment by the Company of this
Agreement and the performance of its obligations hereunder to any successor in
interest or any affiliated Company. Subject to the foregoing, this Agreement
will be binding upon and will inure to the benefit of the parties and their
respective



                                       6
<PAGE>

heirs, legal representatives, successors, and permitted assigns, and will not
benefit any person or entity other than those enumerated above.

        14. Amendments; Waivers. This Agreement will not be varied, altered,
modified, changed or in any way amended except by an instrument in writing
executed by an officer of Consultant and the President of the Company. By an
instrument in writing similarly executed, either party may waive compliance by
the other party with any provision of this Agreement that such other party was
or is obligated to comply with or perform; provided, however, that such waiver
will not operate as a waiver of any other or subsequent failure. No failure to
exercise and no delay in exercising any right, remedy, or power hereunder will
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, or power hereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, or power provided herein or by law
or in equity.

        15. Severability; Enforcement.

            a. If any provision of this Agreement, or the application thereof to
any person, place, or circumstance, will be held by an arbitrator or a court of
competent jurisdiction to be invalid, unenforceable, or void, the remainder of
this Agreement and such provisions as applied to other persons, places, and
circumstances will remain in full force and effect, and such provision will be
enforced to fullest extent consistent with applicable law.

            b. This Agreement has been reviewed by the parties and by their
respective attorneys. The parties have had a full opportunity to negotiate the
contents of this Agreement. The parties to this Agreement expressly waive any
common-law or statutory rule of construction that ambiguities should be
construed against the drafter of the Agreement, and agree that the language in
all parts of this Agreement will be construed as a whole, according to its fair
meaning, and not in favor of or against any party.

        16. Headings. The headings contained in this Agreement are provided for
the convenience of the reader only. Accordingly, the headings and section
numbers in this Agreement shall not in any way define, limit, construe, or
describe the scope or intent of the provisions of this Agreement, and should be
ignored in the interpretation of this Agreement.

        17. Governing Law. Except as otherwise provided, the validity,
interpretation, enforceability, and performance of this Agreement will be
governed by and construed in accordance with the law of the State of California,
without giving effect to its law regarding the conflict of laws.

        18. Acknowledgment. The parties acknowledge that (i) they have each had
the opportunity to consult with independent counsel of their own choice
concerning this Agreement and have done so to the extent they deem necessary,
and (ii) they each have read and understand the Agreement, are fully aware of
its legal effect, and have entered into it voluntarily and freely based on their
own judgment and not on any promises or representations other than those
contained in the Agreement.

        19. Entire Agreement. The terms of this Agreement; and the Proprietary
Information Agreement attached as Exhibit "A" are intended by the parties to be
the final expression of their



                                       7
<PAGE>

agreement with respect to the retention of Consultant by the Company, and may
not be contradicted by evidence of any prior or contemporaneous agreement. The
parties further intend that this Agreement; and the Proprietary Information
Agreement attached as Exhibit "A" will constitute the complete and exclusive
statement of its terms and that no extrinsic evidence whatsoever may be
introduced in any judicial, administrative, or other legal proceeding involving
this Agreement. This Agreement; and the Proprietary Information Agreement
attached as Exhibit "A" supersede any prior oral or written consulting or other
agreements between Consultant and MTI.


EXECUTED BY:

MTI TECHNOLOGY CORPORATION,
A DELAWARE CORPORATION                       RICHARD L. RUSKIN


By: /s/ THOMAS P. RAIMONDI, JR.              By: /s/ RICHARD L. RUSKIN
    ------------------------------               ------------------------------

Title: President & CEO                       Title: Consultant
       ---------------------------                   --------------------------



                                       8
<PAGE>

                                   EXHIBIT "A"

                                  SCOPE OF WORK


Consultant will provide information and conduct research as requested by MTI
relating to sales management and practices.




                                       9
<PAGE>

                                   EXHIBIT "B"

                                      FEES


MTI agrees to pay Consultant $108.00 per hour per assignment, with the number of
billable hours per assignment to be mutually agreed upon by both MTI and
Consultant, in writing, prior to Consultant providing any services relating the
respective assignment, MTI retains the unilateral and sole right to determine if
any services are to be requested of the Consultant, and Consultant agrees not to
undertake any actions or provide any services under this Agreement unless
directed to do so by the appropriate representatives of MTI.

                                  PAYMENT TERMS

Upon completion of an assignment as set forth in Exhibit A and submission of an
invoice, the agreed-upon amount of the assignment's billable hours multiplied at
the rate of $108.00 per hour will be paid on a net forty-five (45) days.

                                   ASSIGNMENTS

The number of assignments that Consultant will be asked to be engage will be
solely determined by MTI. MTI may, at its sole discretion, elect not to engage
the Consultant for any assignment during the term of this Agreement. Unless the
Agreement is terminated by the Consultant pursuant to the terms and conditions
as set forth above. Consultant agrees that he will perform services as requested
if he is available to MTI at the requested time period during the term of the
Agreement.



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<PAGE>

                                   EXHIBIT "C"

                    CONFIDENTIALITY/NON-DISCLOSURE AGREEMENT


In consideration of MTI TECHNOLOGY CORPORATION, A DELAWARE CORPORATION (herein
"MTI") granting me access to MTI facilities and information, I agree as follows:

1.      As a Consultant, it is my understanding that, pursuant to the CONSULTING
        AGREEMENT dated AUGUST 1, 2001 between MTI and RICHARD L. RUSKIN, I will
        have access to and acquire techniques, know-how, or other information of
        a confidential nature concerning MTI experimental and developmental
        work, trade secrets, secret procedures, business matters or affairs
        including, but not limited to, information relating to ideas,
        discoveries, inventions, disclosures, processes, methods, systems,
        formulas, patents, patent applications, machines. materials, research
        plans and activities, research results, and business marketing
        information, plans, operations, activities, and results. I WILL NOT
        DISCLOSE ANY SUCH INFORMATION TO ANY PERSON OR ENTITY OR USE ANY SUCH
        INFORMATION WITHOUT MTI'S PRIOR WRITTEN CONSENT. Information will, for
        purposes of this Agreement, be considered to be confidential if not
        known in the field generally, even though such information has been
        disclosed to one or more third parties pursuant to joint research
        agreements, consulting agreements, or other agreements entered into by
        MTI or any of its affiliates. Excluded from the obligations of
        confidentiality and non-discloser agreed to herein is information (i)
        that I can establish I knew prior to my acquiring it from MTI; (ii) that
        I receive from a third party who, when providing it to me, is not under
        an obligation to MTI to keep the information confidential; or (iii) that
        enters the public domain through no fault of mine.

2.      If, as a consequence of my access to MTI facilities or information, I
        conceive of or make, alone or with others, ideas, inventions and
        improvements thereof of know-how related thereto that relate in any
        manner to the actual or anticipated business of MTI, I will assign and
        do hereby assign to MTI my right, title, and interest in each of the
        ideas, inventions and improvements thereof described in this paragraph.
        I will, at MTI's expense, execute, acknowledge, and deliver such
        documents.

3.      I agree that, upon the earlier of the completion of my work for MTI, as
        a Consultant or upon the termination of the Consulting Agreement between
        MTI and myself, I will deliver to MTI (and will not keep in my
        possession or deliver to anyone else) any and all devices, records,
        data, notebooks, notes, reports, proposals, lists, correspondence,
        specifications, drawings, blueprints, sketches, materials, equipment,
        other documents or property, or reproductions of any aforementioned
        items belonging to MTI, its successors or assigns.

4.      I agree to execute any proper oath or verify any proper document
        required to carry out the terms of this Agreement. I represent that my
        performance of all the terms of this Agreement will not breach any
        agreement to keep in confidence proprietary information acquired by me
        in confidence or in trust prior to my commencing work for MTI. I have
        not



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<PAGE>

        entered into, and I agree I will not enter into, any oral or written
        agreement in conflict herewith.

5.      This Agreement will be governed by the laws of the State of California.

6.      This Agreement sets forth the entire Agreement and understanding between
        MTI and me relating to the subject matter herein and merges all prior
        discussions between us. No modification of or amendment to this
        Agreement, nor any waiver of any rights under this agreement, will be
        effective unless in writing signed by the party to be charged. Any
        subsequent change or changes in my duties, salary or compensation will
        not affect the validity or scope of this Agreement.

7.      If one or more of the provisions in this Agreement are deemed void by
        law, then the remaining provisions will continue in full force and
        effect.

8.      This Agreement will be binding upon my heirs, executors, administrators
        and other legal representatives and will be for the benefit of MTI, its
        successors, and its assigns.

9.      This Agreement will remain in full force and effect so long as any
        materials referred to in paragraph 1 of Exhibit "A" remain trade secrets
        of MTI


Date:      9/6/01                              Signature: /s/ RICHARD L. RUSKIN
      --------------------------                          ----------------------

Witness:                                    Print Name: Richard L. Ruskin
         -----------------------                        -----------------------




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<PAGE>

                                   EXHIBIT "D"

                               CONSULTANT PRODUCTS

                                    (IF ANY)


(None known to be relevant or applicable to the Scope of Work in this
Agreement.)



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