Document:

exv10w67

 

Exhibit 10.67

INFOMMERSION, INC.

AMENDMENT NO. 1

TO

2002 STOCK INCENTIVE PLAN

     1. Purposes of the Plan. The purposes of this Stock Incentive Plan are to attract and
retain the best available personnel, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Company’s business.

     2. Definitions. As used herein, the following definitions shall apply:

          (a) “Administrator” means the Board or any of the Committees appointed to administer
the Plan.

          (b) “Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms in Rule 12b-2 promulgated under the Exchange Act.

          (c) “Applicable Laws” means the legal requirements relating to the administration of
stock incentive plans, if any, under applicable provisions of federal and state securities laws,
the corporate laws of California and, to the extent other than California, the corporate law of the
state of the Company’s incorporation, the Code, the rules of any applicable stock exchange or
national market system, and the rules of any foreign jurisdiction applicable to Awards granted to
residents therein.

          (d) “Assumed” means that (i) pursuant to a Corporate Transaction defined in Section
2(q)(i), 2(q)(ii) or 2(q)(iii) or a Related Entity Disposition, the contractual obligations
represented by the Award are assumed by the successor entity or its Parent in connection with the
Corporate Transaction or Related Entity Disposition or (ii) pursuant to a Corporate Transaction
defined in Section 2(q)(iv) or 2(q)(v), the Award is affirmed by the Company. The Award shall not
be deemed “Assumed” for purposes of terminating the Award (in the case of a Corporate Transaction)
and the termination of the Continuous Service of the Grantee (in the case of a Related Entity
Disposition) if pursuant to a Corporate Transaction or a Related Entity Disposition the Award is
replaced with a comparable award with respect to shares of capital stock of the successor entity or
its Parent. However, for purposes of determining whether the vesting of the Award accelerates, the
Award shall be deemed “Assumed” if the Award is replaced with such a comparable stock award or the
Award is replaced with a cash incentive program of the successor entity or Parent thereof which
preserves the compensation element of such Award existing at the time of the Corporate Transaction
or Related Entity Disposition and provides for subsequent payout in accordance with the same
vesting schedule applicable to such Award. The determination of Award comparability shall be made
by the Administrator and its determination shall be final, binding and conclusive.

          (e) “Award” means the grant of an Option, Restricted Stock, or other right or benefit
under the Plan.

1

 

          (f) “Award Agreement” means the written agreement evidencing the grant of an Award
executed by the Company and the Grantee, including any amendments thereto.

          (g) “Board” means the Board of Directors of the Company.

          (h) “Cause” means, with respect to the termination by the Company or a Related Entity
of the Grantee’s Continuous Service, that such termination is for “Cause” as such term is expressly
defined in a then-effective written agreement between the Grantee and the Company or such Related
Entity, or in the absence of such then-effective written agreement and definition, is based on, in
the determination of the Administrator, the Grantee’s: (i) performance of any act or failure to
perform any act in bad faith and to the detriment of the Company or a Related Entity; (ii)
dishonesty, intentional misconduct or material breach of any agreement with the Company or a
Related Entity; or (iii) commission of a crime involving dishonesty, breach of trust, or physical
or emotional harm to any person.

          (i) “Change in Control” means a change in ownership or control of the Company after
the Registration Date effected through either of the following transactions:

          (i) the direct or indirect acquisition by any person or related group of persons (other than
an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a
person that directly or indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of
securities possessing more than fifty percent (50%) of the total combined voting power of the
Company’s outstanding securities pursuant to a tender or exchange offer made directly to the
Company’s shareholders which a majority of the Continuing Directors who are not Affiliates or
Associates of the offeror do not recommend such shareholders accept, or

          (ii) a change in the composition of the Board over a period of thirty-six (36) months or less
such that a majority of the Board members (rounded up to the next whole number) ceases, by reason
of one or more contested elections for Board membership, to be comprised of individuals who are
Continuing Directors.

          (j) “Code” means the Internal Revenue Code of 1986, as amended.

          (k) “Committee” means any committee appointed by the Board to administer the Plan.

          (l) “Common Stock” means the voting common stock of the Company.

          (m) “Company” means Infommersion, Inc., a Delaware corporation.

          (n) “Consultant” means any person (other than an Employee or a Director, solely with
respect to rendering services in such person’s capacity as a Director) who is engaged by the
Company or any Related Entity to render consulting or advisory services to the Company or such
Related Entity.

2

 

          (o) “Continuing Directors” means members of the Board who either (i) have been Board
members continuously for a period of at least thirty-six (36) months or (ii) have been Board
members for less than thirty-six (36) months and were elected or nominated for election as Board
members by at least a majority of the Board members described in clause (i) who were still in
office at the time such election or nomination was approved by the Board.

          (p) “Continuous Service” means that the provision of services to the Company or a
Related Entity in any capacity of Employee, Director or Consultant, is not interrupted or
terminated. Continuous Service shall not be considered interrupted in the case of (i) any approved
leave of absence, (ii) transfers among the Company, any Related Entity, or any successor, in any
capacity of Employee, Director or Consultant, or (iii) any change in status as long as the
individual remains in the service of the Company or a Related Entity in any capacity of Employee,
Director or Consultant (except as otherwise provided in the Award Agreement). An approved leave of
absence shall include sick leave, military leave, or any other authorized personal leave. For
purposes of each Incentive Stock Option granted under the Plan, if such leave exceeds ninety (90)
days, and reemployment upon expiration of such leave is not guaranteed by statute or contract, then
the Incentive Stock Option shall be treated as a Non-Qualified Stock Option on the day three (3)
months and one (1) day following the expiration of such ninety (90) day period.

          (q) “Corporate Transaction” means any of the following transactions:

          (i) a merger or consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the Company is
incorporated;

          (ii) the sale, transfer or other disposition of all or substantially all of the assets of the
Company (including the capital stock of the Company’s subsidiary corporations);

          (iii) the complete liquidation or dissolution of the Company;

          (iv) any reverse merger in which the Company is the surviving entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of the Company’s
outstanding securities are transferred to a person or persons different from those who held such
securities immediately prior to such merger; or

          (v) acquisition in a single or series of related transactions by any person or related group
of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial
ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company’s outstanding securities but
excluding any such transaction or series of related transactions that the Administrator determines
shall not be a Corporate Transaction.

          (r) “Covered Employee” means an Employee who is a “covered employee” under Section
162(m)(3) of the Code.

3

 

          (s) “Director” means a member of the Board or the board of directors of any Related
Entity.

          (t) “Disability” means as defined under the long-term disability policy of the Company
or the Related Entity to which the Grantee provides services regardless of whether the Grantee is
covered by such policy. If the Company or the Related Entity to which the Grantee provides service
does not have a long-term disability plan in place, “Disability” means that a Grantee is unable to
carry out the responsibilities and functions of the position held by the Grantee by reason of any
medically determinable physical or mental impairment for a period of not less than ninety (90)
consecutive days. A Grantee will not be considered to have incurred a Disability unless he or she
furnishes proof of such impairment sufficient to satisfy the Administrator in its discretion.

          (u) “Employee” means any person, including an Officer or Director, who is in the
employ of the Company or any Related Entity, subject to the control and direction of the Company or
any Related Entity as to both the work to be performed and the manner and method of performance.
The payment of a director’s fee by the Company or a Related Entity shall not be sufficient to
constitute “employment” by the Company.

          (v) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (w) “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:

              (i) If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation The Nasdaq National Market or The Nasdaq SmallCap Market of
The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or system on the date of
determination (or, if no closing sales price or closing bid was reported on that date, as
applicable, on the last trading date such closing sales price or closing bid was reported), as
reported in The Wall Street Journal or such other source as the Administrator deems reliable;

              (ii) If the Common Stock is regularly quoted on an automated quotation system (including the
OTC Bulletin Board) or by a recognized securities dealer, but selling prices are not reported, the
Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on date of determination (or, if no such prices were reported on that
date, on the last date such prices were reported), as reported in The Wall Street Journal or such
other source as the Administrator deems reliable; or

              (iii) In the absence of an established market for the Common Stock of the type described in
(i) and (ii), above, the Fair Market Value thereof shall be determined by the Administrator in good
faith and in a manner consistent with Section 260.140.50 of Title 10 of the California Code of
Regulations which requires that consideration be given to (A) the price at which securities of
reasonably comparable corporations (if any) in the same industry are being traded, or (B) if there
are no securities of reasonably comparable corporations in the same

4

 

industry being traded, the earnings history, book value and prospects of the issuer in light
of market conditions generally.

          (x) “Grantee” means an Employee, Director or Consultant who receives an Award under
the Plan.

          (y) “Immediate Family” means any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in
law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any
person sharing the Grantee’s household (other than a tenant or employee), a trust in which these
persons (or the Grantee) have more than fifty percent (50%) of the beneficial interest, a
foundation in which these persons (or the Grantee) control the management of assets, and any other
entity in which these persons (or the Grantee) own more than fifty percent (50%) of the voting
interests; notwithstanding the foregoing, in the case of any inconsistency, and only during such
period or periods of inconsistency, the term “Immediate Family” shall be defined in a manner
consistent with Section 260.140.41 of Title 10 of the California Code of Regulations, as amended
from time to time.

          (z) “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.

          (aa) “Non-Qualified Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.

          (bb) “Officer” means a person who is an officer of the Company or a Related Entity
within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.

          (cc) “Option” means an option to purchase Shares pursuant to an Award Agreement
granted under the Plan.

          (dd) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

          (ee) “Performance-Based Compensation” means compensation qualifying as
“performance-based compensation” under Section 162(m) of the Code.

          (ff) “Plan” means this 2002 Stock Incentive Plan.

          (gg) “Post-Termination Exercise Period” means the period specified in the Award
Agreement of not less than thirty (30) days commencing on the date of termination (other than
termination by the Company or any Related Entity for Cause) of the Grantee’s Continuous Service, or
such longer period as may be applicable upon death or Disability.

          (hh) “Registration Date” means the first to occur of (i) the closing of the first sale
to the general public pursuant to a registration statement filed with and declared effective by the
Securities and Exchange Commission under the Securities Act of 1933, as amended, of (A) the Common
Stock or (B) the same class of securities of a successor corporation (or its

5

 

Parent) issued pursuant to a Corporate Transaction in exchange for or in substitution of the
Common Stock; and (ii) in the event of a Corporate Transaction, the date of the consummation of the
Corporate Transaction if the same class of securities of the successor corporation (or its Parent)
issuable in such Corporate Transaction shall have been sold to the general public pursuant to a
registration statement filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, on or prior to the date of consummation of such
Corporate Transaction.

          (ii) “Related Entity” means any Parent or Subsidiary of the Company and any business,
corporation, partnership, limited liability company or other entity in which the Company or a
Parent or a Subsidiary of the Company holds a substantial ownership interest, directly or
indirectly.

          (jj) “Related Entity Disposition” means the sale, distribution or other disposition by
the Company or a Parent or a Subsidiary of the Company of all or substantially all of the interests
of the Company or a Parent or a Subsidiary of the Company in any Related Entity effected by a sale,
merger or consolidation or other transaction involving that Related Entity or the sale of all or
substantially all of the assets of that Related Entity, other than any Related Entity Disposition
to the Company or a Parent or a Subsidiary of the Company.

          (kk) “Restricted Stock” means Shares issued under the Plan to the Grantee for such
consideration, if any, and subject to such restrictions on transfer, rights of first refusal,
repurchase provisions, forfeiture provisions, and other terms and conditions as established by the
Administrator.

          (ll) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor
thereto.

          (mm) “Share” means a share of the Common Stock.

          (nn) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing,
as defined in Section 424(f) of the Code.

     3. Stock Subject to the Plan.

          (a) Subject to the provisions of Section 10 below, the maximum aggregate number of Shares
which may be issued pursuant to all Awards (including Incentive Stock Options) is One Million
(1,000,000) Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.

          (b) Any Shares covered by an Award (or portion of an Award) which is forfeited or canceled,
expires or is settled in cash, shall be deemed not to have been issued for purposes of determining
the maximum aggregate number of Shares which may be issued under the Plan. Shares that actually
have been issued under the Plan pursuant to an Award shall not be returned to the Plan and shall
not become available for future issuance under the Plan, except that if unvested Shares are
forfeited, or repurchased by the Company at their original purchase price, such Shares shall become
available for future grant under the Plan.

6

 

     4. Administration of the Plan.

          (a) Plan Administrator.

          (i) Administration with Respect to Directors and Officers. Prior to the Registration
Date, with respect to grants of Awards to Directors or Employees who are also Officers or Directors
of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by
the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws.
On or after the Registration Date, with respect to grants of Awards to Directors or Employees who
are also Officers or Directors of the Company, the Plan shall be administered by (A) the Board or
(B) a Committee designated by the Board, which Committee shall be constituted in such a manner as
to satisfy the Applicable Laws and to permit such grants and related transactions under the Plan to
be exempt from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed,
such Committee shall continue to serve in its designated capacity until otherwise directed by the
Board.

          (ii) Administration With Respect to Consultants and Other Employees. With respect to
grants of Awards to Employees or Consultants who are neither Directors nor Officers of the Company,
the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which
Committee shall be constituted in such a manner as to satisfy the Applicable Laws. Once appointed,
such Committee shall continue to serve in its designated capacity until otherwise directed by the
Board.

          (iii) Administration With Respect to Covered Employees. Notwithstanding the
foregoing, as of and after the date that the exemption for the Plan under Section 162(m) of the
Code expires, as set forth in Section 20 herein, grants of Awards to any Covered Employee intended
to qualify as Performance-Based Compensation shall be made only by a Committee (or subcommittee of
a Committee) which is comprised solely of two or more Directors eligible to serve on a committee
making Awards qualifying as Performance-Based Compensation. In the case of such Awards granted to
Covered Employees, references to the “Administrator” or to a “Committee” shall be deemed to be
references to such Committee or subcommittee.

          (b) Multiple Administrative Bodies. The Plan may be administered by different bodies
with respect to Directors, Officers, Consultants, and Employees who are neither Directors nor
Officers.

          (c) Powers of the Administrator. Subject to Applicable Laws and the provisions of the
Plan (including any other powers given to the Administrator hereunder), and except as otherwise
provided by the Board, the Administrator shall have the authority, in its discretion:

              (i) to select the Employees, Directors and Consultants to whom Awards may be granted from time
to time hereunder;

              (ii) to determine whether and to what extent Awards are granted hereunder;

7

 

              (iii) to determine the number of Shares or the amount of other consideration to be covered by
each Award granted hereunder;

              (iv) to approve forms of Award Agreements for use under the Plan;

              (v) to determine the terms and conditions of any Award granted hereunder;

              (vi) to establish additional terms, conditions, rules or procedures to accommodate the rules
or laws of applicable foreign jurisdictions and to afford Grantees favorable treatment under such
rules or laws; provided, however, that no Award shall be granted under any such additional terms,
conditions, rules or procedures with terms or conditions which are inconsistent with the provisions
of the Plan;

              (vii) to amend the terms of any outstanding Award granted under the Plan, provided that any
amendment that would adversely affect the Grantee’s rights under an outstanding Award shall not be
made without the Grantee’s written consent;

              (viii) to construe and interpret the terms of the Plan and Awards, including without
limitation, any notice of award or Award Agreement, granted pursuant to the Plan; and

              (ix) to take such other action, not inconsistent with the terms of the Plan, as the
Administrator deems appropriate.

     5. Eligibility. Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants. Incentive Stock Options may be granted only to Employees of
the Company, a Parent or a Subsidiary. An Employee, Director or Consultant who has been granted an
Award may, if otherwise eligible, be granted additional Awards. Awards may be granted to such
Employees, Directors or Consultants who are residing in foreign jurisdictions as the Administrator
may determine from time to time.

     6. Terms and Conditions of Awards.

          (a) Type of Awards. The Administrator is authorized under the Plan to award any type
of arrangement to an Employee, Director or Consultant that is not inconsistent with the provisions
of the Plan and that by its terms involves or might involve the issuance of (i) Shares, (ii) an
Option, or similar right with a fixed or variable price related to the Fair Market Value of the
Shares and with an exercise or conversion privilege related to the passage of time, the occurrence
of one or more events, or the satisfaction of performance criteria or other conditions, or (iii)
any other security with the value derived from the value of the Shares. Such awards include,
without limitation, Options, or sales or bonuses of Restricted Stock, and an Award may consist of
one such security or benefit, or two (2) or more of them in any combination or alternative.

          (b) Designation of Award. Each Award shall be designated in the Award Agreement. In
the case of an Option, the Option shall be designated as either an Incentive Stock Option or a
Non-Qualified Stock Option. However, notwithstanding such designation, to the

8

 

extent that the aggregate Fair Market Value of Shares subject to Options designated as
Incentive Stock Options which become exercisable for the first time by a Grantee during any
calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such
excess Options, to the extent of the Shares covered thereby in excess of the foregoing limitation,
shall be treated as Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall
be taken into account in the order in which they were granted, and the Fair Market Value of the
Shares shall be determined as of the grant date of the relevant Option.

          (c) Conditions of Award. Subject to the terms of the Plan, the Administrator shall
determine the provisions, terms, and conditions of each Award including, but not limited to, the
Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form
of payment (cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance criteria established
by the Administrator may be based on any one of, or combination of, increase in share price,
earnings per share, total shareholder return, return on equity, return on assets, return on
investment, net operating income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator. Partial achievement of
the specified criteria may result in a payment or vesting corresponding to the degree of
achievement as specified in the Award Agreement.

          (d) Acquisitions and Other Transactions. The Administrator may issue Awards under the
Plan in settlement, assumption or substitution for, outstanding awards or obligations to grant
future awards in connection with the Company or a Related Entity acquiring another entity, an
interest in another entity or an additional interest in a Related Entity whether by merger, stock
purchase, asset purchase or other form of transaction.

          (e) Deferral of Award Payment. The Administrator may establish one or more programs
under the Plan to permit selected Grantees the opportunity to elect to defer receipt of
consideration upon exercise of an Award, satisfaction of performance criteria, or other event that
absent the election would entitle the Grantee to payment or receipt of Shares or other
consideration under an Award (but only to the extent that such deferral programs would not result
in an accounting compensation charge unless otherwise determined by the Administrator). The
Administrator may establish the election procedures, the timing of such elections, the mechanisms
for payments of, and accrual of interest or other earnings, if any, on amounts, Shares or other
consideration so deferred, and such other terms, conditions, rules and procedures that the
Administrator deems advisable for the administration of any such deferral program.

          (f) Separate Programs. The Administrator may establish one or more separate programs
under the Plan for the purpose of issuing particular forms of Awards to one or more classes of
Grantees on such terms and conditions as determined by the Administrator from time to time.

          (g) Individual Option Limit. Following the date that the exemption from application
of Section 162(m) of the Code described in Section 20 (or any exemption having similar effect)
ceases to apply to Awards, the maximum number of Shares with respect to which Options may be
granted to any Grantee in any fiscal year of the Company shall be Two Hundred Fifty Thousand
(250,000) Shares. In connection with a Grantee’s commencement of Continuous

9

 

Service, a Grantee may be granted Options for up to an additional Two Hundred Fifty Thousand
(250,000) Shares which shall not count against the limit set forth in the previous sentence. The
foregoing limitations shall be adjusted proportionately in connection with any change in the
Company’s capitalization pursuant to Section 10, below. To the extent required by Section 162(m)
of the Code or the regulations thereunder, in applying the foregoing limitations with respect to a
Grantee, if any Option is canceled, the canceled Option shall continue to count against the maximum
number of Shares with respect to which Options may be granted to the Grantee. For this purpose,
the repricing of an Option shall be treated as the cancellation of the existing Option and the
grant of a new Option.

          (h) Early Exercise. The Award Agreement may, but need not, include a provision
whereby the Grantee may elect at any time while an Employee, Director or Consultant to exercise any
part or all of the Award prior to full vesting of the Award. Any unvested Shares received pursuant
to such exercise may be subject to a repurchase right in favor of the Company or a Related Entity
or to any other restriction the Administrator determines to be appropriate.

          (i) Term of Award. The term of each Award shall be the term stated in the Award
Agreement, provided, however, that the term shall be no more than ten (10) years from the date of
grant thereof. However, in the case of an Incentive Stock Option granted to a Grantee who, at the
time the Option is granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock
Option shall be five (5) years from the date of grant thereof or such shorter term as may be
provided in the Award Agreement.

          (j) Transferability of Awards. Non-Qualified Stock Options shall be transferable (i)
by will, by the laws of descent and distribution, by instrument to an inter vivos or testamentary
trust in which the Non-Qualified Stock Options are to be passed to beneficiaries upon the death of
the Grantee or (ii) to the extent and in the manner authorized by the Administrator by gift to
members of the Grantee’s Immediate Family. Incentive Stock Options and other Awards may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will
or by the laws of descent or distribution and may be exercised, during the lifetime of the Grantee,
only by the Grantee.

          (k) Time of Granting Awards. The date of grant of an Award shall for all purposes be
the date on which the Administrator makes the determination to grant such Award, or such other date
as is determined by the Administrator. Notice of the grant determination shall be given to each
Employee, Director or Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.

     7. Award Exercise or Purchase Price, Consideration and Taxes.

          (a) Exercise or Purchase Price. The exercise or purchase price, if any, for an Award
shall be as follows:

10

 

          (i) In the case of an Incentive Stock Option:

              (A) granted to an Employee who, at the time of the grant of such Incentive Stock Option owns
stock representing more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be not less than one
hundred ten percent (110%) of the Fair Market Value per Share on the date of grant; or

              (B) granted to any Employee other than an Employee described in the preceding paragraph, the
per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant.

          (ii) In the case of a Non-Qualified Stock Option:

              (A) granted to a person who, at the time of the grant of such Option, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be not less than one hundred ten percent
(110%) of the Fair Market Value per Share on the date of grant; or

              (B) granted to any person other than a person described in the preceding paragraph, the per
Share exercise price shall be not less than eighty-five percent (85%) of the Fair Market Value per
Share on the date of grant.

          (iii) In the case of Awards intended to qualify as Performance-Based Compensation, the
exercise or purchase price, if any, shall be not less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant.

          (iv) In the case of the sale of Shares:

              (A) granted to a person who, at the time of the grant of such Award, or at the time the
purchase is consummated, owns stock representing more than ten percent (10%) of the voting power of
all classes of stock of the Company or any Parent or Subsidiary, the per Share purchase price shall
be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of
grant; or

              (B) granted to any person other than a person described in the preceding paragraph, the per
Share purchase price shall be not less than eighty-five percent (85%) of the Fair Market Value per
Share on the date of grant.

          (v) In the case of other Awards, such price as is determined by the Administrator.

          (vi) Notwithstanding the foregoing provisions of this Section 7(a), in the case of an Award
issued pursuant to Section 6(d), above, the exercise or purchase price for the Award shall be
determined in accordance with the principles of Section 424(a) of the Code.

11

 

          (b) Consideration. Subject to Applicable Laws, the consideration to be paid for the
Shares to be issued upon exercise or purchase of an Award including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined
at the time of grant). In addition to any other types of consideration the Administrator may
determine, the Administrator is authorized to accept as consideration for Shares issued under the
Plan the following, provided that the portion of the consideration equal to the par value of the
Shares must be paid in cash or other legal consideration permitted by the Delaware General
Corporation Law.

              (i) cash;

              (ii) check;

              (iii) delivery of Grantee’s promissory note with such recourse, interest, security, and
redemption provisions as the Administrator determines as appropriate (but only to the extent that
the terms of the promissory note would not result in an accounting compensation charge with respect
to the use of such promissory note to pay the exercise price unless otherwise determined by the
Administrator);

              (iv) if the exercise or purchase occurs on or after the Registration Date, surrender of Shares
or delivery of a properly executed form of attestation of ownership of Shares as the Administrator
may require which have a Fair Market Value on the date of surrender or attestation equal to the
aggregate exercise price of the Shares as to which said Award shall be exercised (but only to the
extent that such exercise of the Award would not result in an accounting compensation charge with
respect to the Shares used to pay the exercise price unless otherwise determined by the
Administrator; generally an accounting charge will result if the Shares used to pay the exercise
price were acquired less than six months before the exercise);

              (v) with respect to Options, if the exercise occurs on or after the Registration Date, payment
through a broker-dealer sale and remittance procedure pursuant to which the Grantee (A) shall
provide written instructions to a Company designated brokerage firm to effect the immediate sale of
some or all of the purchased Shares and remit to the Company, out of the sale proceeds available on
the settlement date, sufficient funds to cover the aggregate exercise price payable for the
purchased Shares and (B) shall provide written directives to the Company to deliver the
certificates for the purchased Shares directly to such brokerage firm in order to complete the sale
transaction; or

              (vi) any combination of the foregoing methods of payment.

          (c) Taxes. No Shares shall be delivered under the Plan to any Grantee or other person
until such Grantee or other person has made arrangements acceptable to the Administrator for the
satisfaction of any foreign, federal, state, or local income and employment tax withholding
obligations, including, without limitation, obligations incident to the receipt of Shares or the
disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon
exercise of an Award the Company shall withhold or collect from Grantee an amount sufficient to
satisfy such tax obligations.

12

 

     8. Exercise of Award.

          (a) Procedure for Exercise; Rights as a Shareholder.

              (i) Any Award granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator under the terms of the Plan and specified in the Award Agreement
but in the case of an Option, in no case at a rate of less than twenty percent (20%) per year over
five (5) years from the date the Option is granted, subject to reasonable conditions such as
continued employment. Notwithstanding the foregoing, in the case of an Option granted to an
Officer, Director or Consultant, the Award Agreement may provide that the Option may become
exercisable, subject to reasonable conditions such as such Officer’s, Director’s or Consultant’s
Continuous Service, at any time or during any period established in the Award Agreement.

              (ii) An Award shall be deemed to be exercised when written notice of such exercise has been
given to the Company in accordance with the terms of the Award by the person entitled to exercise
the Award and full payment for the Shares with respect to which the Award is exercised, including,
to the extent selected, use of the broker-dealer sale and remittance procedure to pay the purchase
price as provided in Section 7(b)(v). Until the issuance (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to Shares subject to an Award, notwithstanding the exercise of
an Option or other Award. No adjustment will be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued, except as provided in the Award
Agreement or Section 10 below.

          (b) Exercise of Award Following Termination of Continuous Service. In the event of
termination of a Grantee’s Continuous Service for any reason other than Disability or death (but
not in the event of a Grantee’s change of status from Employee to Consultant or from Consultant to
Employee), such Grantee may, but only during the Post-Termination Exercise Period (but in no event
later than the expiration date of the term of such Award as set forth in the Award Agreement),
exercise the portion of the Grantee’s Award that was vested at the date of such termination or such
other portion of the Grantee’s Award as may be determined by the Administrator. The Grantee’s
Award Agreement may provide that upon the termination of the Grantee’s Continuous Service for
Cause, the Grantee’s right to exercise the Award shall terminate concurrently with the termination
of Grantee’s Continuous Service. In the event of a Grantee’s change of status from Employee to
Consultant, an Employee’s Incentive Stock Option shall convert automatically to a Non-Qualified
Stock Option on the day three (3) months and one day following such change of status. To the
extent that the Grantee’s Award was unvested at the date of termination, or if the Grantee does not
exercise the vested portion of the Grantee’s Award within the Post-Termination Exercise Period, the
Award shall terminate.

          (c) Disability of Grantee. In the event of termination of a Grantee’s Continuous
Service as a result of his or her Disability, Grantee may, but only within twelve (12) months from
the date of such termination (and in no event later than the expiration date of the term of such
Award as set forth in the Award Agreement), exercise the portion of the Grantee’s Award that was
vested at the date of such termination; provided, however, that if such Disability

13

 

is not a “disability” as such term is defined in Section 22(e)(3) of the Code, in the case of
an Incentive Stock Option such Incentive Stock Option shall automatically convert to a
Non-Qualified Stock Option on the day three (3) months and one day following such termination. To
the extent that the Grantee’s Award was unvested at the date of termination, or if Grantee does not
exercise the vested portion of the Grantee’s Award within the time specified herein, the Award
shall terminate.

          (d) Death of Grantee. In the event of a termination of the Grantee’s Continuous
Service as a result of his or her death, or in the event of the death of the Grantee during the
Post-Termination Exercise Period or during the twelve (12) month period following the Grantee’s
termination of Continuous Service as a result of his or her Disability, the Grantee’s estate or a
person who acquired the right to exercise the Award by bequest or inheritance may exercise the
portion of the Grantee’s Award that was vested as of the date of termination, within twelve (12)
months from the date of death (but in no event later than the expiration of the term of such Award
as set forth in the Award Agreement). To the extent that, at the time of death, the Grantee’s
Award was unvested, or if the Grantee’s estate or a person who acquired the right to exercise the
Award by bequest or inheritance does not exercise the vested portion of the Grantee’s Award within
the time specified herein, the Award shall terminate.

     9. Conditions Upon Issuance of Shares.

          (a) Shares shall not be issued pursuant to the exercise of an Award unless the exercise of
such Award and the issuance and delivery of such Shares pursuant thereto shall comply with all
Applicable Laws, and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

          (b) As a condition to the exercise of an Award, the Company may require the person exercising
such Award to represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required by any Applicable
Laws.

     10. Adjustments Upon Changes in Capitalization.

     Subject to any required action by the shareholders of the Company, the number of Shares
covered by each outstanding Award, and the number of Shares which have been authorized for issuance
under the Plan but as to which no Awards have yet been granted or which have been returned to the
Plan, the exercise or purchase price of each such outstanding Award, the maximum number of Shares
with respect to which Options may be granted to any Grantee in any fiscal year of the Company, as
well as any other terms that the Administrator determines require adjustment shall be
proportionately adjusted for (i) any increase or decrease in the number of issued Shares resulting
from a stock split, reverse stock split, stock dividend, combination or reclassification of the
Shares, or similar transaction affecting the Shares, (ii) any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the Company, or (iii) as the
Administrator may determine in its discretion, any other transaction with respect to Common Stock
to which Section 424(a) of the Code applies or a similar transaction; provided, however that
conversion of any convertible securities of the Company shall not be

14

 

deemed to have been “effected without receipt of consideration.” Such adjustment shall be
made by the Administrator and its determination shall be final, binding and conclusive. Except as
the Administrator determines, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no adjustment by reason
hereof shall be made with respect to, the number or price of Shares subject to an Award.

     11. Corporate Transactions/Changes in Control/Related Entity Dispositions.

          (a) Termination of Award to Extent Not Assumed.

              (i) Corporate Transaction. Effective upon the consummation of a Corporate
Transaction, all outstanding Awards under the Plan shall terminate. However, all such Awards shall
not terminate to the extent they are Assumed in connection with the Corporate Transaction.

              (ii) Related Entity Disposition. Effective upon the consummation of a Related Entity
Disposition, for purposes of the Plan and all Awards, there shall be a deemed termination of
Continuous Service of each Grantee who is at the time engaged primarily in service to the Related
Entity involved in such Related Entity Disposition and each Award of such Grantee which is at the
time outstanding under the Plan shall be exercisable in accordance with the terms of the Award
Agreement evidencing such Award. However, such Continuous Service shall not be deemed to terminate
as to the portion of any such award that is Assumed.

          (b) Acceleration of Award Upon Corporate Transaction/Change in Control/Related Entity
Disposition. Except as provided otherwise in an individual Award Agreement, in the event of
any Corporate Transaction, Change in Control or Related Entity Disposition, there will not be any
acceleration of vesting or exercisability of any Award.

     12. Repurchase Rights. If the provisions of an Award Agreement grant to the Company
the right to repurchase Shares upon termination of the Grantee’s Continuous Service, the Award
Agreement shall (or may, with respect to Awards granted or issued to Officers, Directors or
Consultants) provide that:

          (a) the right to repurchase must be exercised, if at all, within ninety (90) days of the
termination of the Grantee’s Continuous Service (or in the case of Shares issued upon exercise of
Awards after the date of termination of the Grantee’s Continuous Service, within ninety (90) days
after the date of the Award exercise);

          (b) the consideration payable for the Shares upon exercise of such repurchase right shall be
made in cash or by cancellation of purchase money indebtedness within the ninety (90) day periods
specified in Section 12(a);

          (c) the amount of such consideration shall (i) be equal to the original purchase price paid by
Grantee for each such Share; provided, that the right to repurchase such Shares at the original
purchase price shall lapse at the rate of at least twenty percent (20%) of the Shares subject to
the Award per year over five (5) years from the date the Award is granted (without respect to the
date the Award was exercised or became exercisable), and (ii) with respect to Shares, other than
Shares subject to repurchase at the original purchase price pursuant to clause

15

 

(i) above, not less than the Fair Market Value of the Shares to be repurchased on the date of
termination of Grantee’s Continuous Service; and

          (d) the right to repurchase Shares, other than the right to repurchase Shares at the original
purchase price pursuant to clause (i) of Section 12(c), shall terminate on the Registration Date.

     13. Effective Date and Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board or its approval by the shareholders of the Company. It shall
continue in effect for a term of ten (10) years unless sooner terminated. Subject to Section 18
below, and Applicable Laws, Awards may be granted under the Plan upon its becoming effective.

     14. Amendment, Suspension or Termination of the Plan.

          (a) The Board may at any time amend, suspend or terminate the Plan. To the extent necessary to
comply with Applicable Laws, the Company shall obtain shareholder approval of any Plan amendment in
such a manner and to such a degree as required.

          (b) No Award may be granted during any suspension of the Plan or after termination of the
Plan.

          (c) Any amendment, suspension or termination of the Plan (including termination of the Plan
under Section 13 above) shall not adversely affect any rights under Awards already granted to a
Grantee, unless consented to by the Grantee.

     15. Reservation of Shares.

          (a) The Company, during the term of the Plan, will at all times reserve and keep available
such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

          (b) The inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority shall not have been
obtained.

     16. No Effect on Terms of Employment/Consulting Relationship. The Plan shall not
confer upon any Grantee any right with respect to the Grantee’s Continuous Service, nor shall it
interfere in any way with his or her right or the Company’s right to terminate the Grantee’s
Continuous Service at any time, with or without cause, and with or without notice. The Company’s
ability to characterize the termination of Continuous Service of a Grantee as a termination for
“Cause” as defined in the Plan does not affect the Grantee’s at will status.

     17. No Effect on Retirement and Other Benefit Plans. Except as specifically provided
in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not be
deemed compensation for purposes of computing benefits or contributions under any retirement

16

 

plan of the Company or a Related Entity, and shall not affect any benefits under any other
benefit plan of any kind or any benefit plan subsequently instituted under which the availability
or amount of benefits is related to level of compensation. The Plan is not a “Retirement Plan” or
“Welfare Plan” under the Employee Retirement Income Security Act of 1974, as amended.

     18. Shareholder Approval. Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the date the Plan is adopted.
Such shareholder approval shall be obtained in the degree and manner required under Applicable
Laws. Any Award exercised before shareholder approval is obtained shall be rescinded if
shareholder approval is not obtained within the time prescribed, and Shares issued on the exercise
of any such Award shall not be counted in determining whether shareholder approval is obtained.

     19. Information to Grantees. The Company shall provide to each Grantee, during the
period for which such Grantee has one or more Awards outstanding, copies of financial statements at
least annually.

     20. Effect of Section 162(m) of the Code. Section 162(m) of the Code does not apply
to the Plan prior to the Registration Date. Following the Registration Date, the Plan, and all
Awards (except Awards of Restricted Stock that vest over time) issued thereunder, are intended to
be exempt from the application of Section 162(m) of the Code, which restricts under certain
circumstances the Federal income tax deduction for compensation paid by a public company to named
executives in excess of $1 million per year. The exemption is based on Treasury Regulation Section
1.162-27(f), in the form existing on the effective date of the Plan, with the understanding that
such regulation generally exempts from the application of Section 162(m) of the Code compensation
paid pursuant to a plan that existed before a company becomes publicly held. Under such Treasury
Regulation, this exemption is available to the Plan for the duration of the period that lasts until
the earlier of (i) the expiration of the Plan, (ii) the material modification of the Plan, (iii)
the exhaustion of the maximum number of shares of Common Stock available for Awards under the Plan,
as set forth in Section 3(a), (iv) the first meeting of shareholders at which directors are to be
elected that occurs after the close of the third calendar year following the calendar year in which
the Company first becomes subject to the reporting obligations of Section 12 of the Exchange Act,
or (v) such other date required by Section 162(m) of the Code and the rules and regulations
promulgated thereunder. The Committee may, without shareholder approval, amend the Plan
retroactively and/or prospectively to the extent it determines necessary in order to comply with
any subsequent clarification of Section 162(m) of the Code required to preserve the Company’s
Federal income tax deduction for compensation paid pursuant to the Plan. To the extent that the
Administrator determines as of the date of grant of an Award that (i) the Award is intended to
qualify as Performance-Based Compensation and (ii) the exemption described above is no longer
available with respect to such Award, such Award shall not be effective until any shareholder
approval required under Section 162(m) of the Code has been obtained.

17Exhibit 4.1

 

Exhibit 4.1

THIS WARRANT, AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT, HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO MTI TECHNOLOGY CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

	 	 	 
	Warrant No. WB-___

	 	Number of Shares:                     
	 

	 	(subject to adjustment)
	Date of Issuance: November 2, 2005
	 	 

MTI TECHNOLOGY CORPORATION

Common Stock Purchase Warrant1

(Void after November 2, 2015)

     MTI Technology Corporation, a Delaware corporation (the “Company”), for value received, hereby
certifies that ___, or its registered assigns (the “Registered Holder”), is
entitled, subject to the terms and conditions set forth below, to purchase from the Company, at any
time or from time to time on or before 5:00 p.m. (Pacific time) on November 2, 2015,
___(___) shares of Common Stock, $0.001 par value per share, of the
Company (“Common Stock”). The purchase price shall be $1.26 per share. The shares purchasable
upon exercise of this Warrant, and the purchase price per share, each as adjusted from time to time
pursuant to the provisions of this Warrant, are hereinafter referred to as the “Warrant Shares” and
the “Purchase Price,” respectively. For purposes of this Warrant, “Warrant Issue Date” shall mean
the date on which this Warrant was first issued, regardless of any subsequent transfer or partial
exercise of this Warrant that may occur after such date.

     1. Exercise

     (a) Exercise for Cash. The Registered Holder may, at its option, elect to
exercise this Warrant, in whole or in part and at any time or from time to time, by
surrendering this Warrant, with the purchase form appended hereto as Exhibit I duly
executed by or on behalf of the Registered Holder, at the principal office of the Company, or
at such other office or

 

			
	1	 	See the schedule following the text of
this document for a list of holders of warrants the terms of which are
substantially identical in all material respects to this form of Common Stock
Purchase Warrant.

 

 

agency as the Company may designate, accompanied by payment in full, in lawful money of
the United States, of the Purchase Price payable in respect of the number of Warrant Shares
purchased upon such exercise.

     (b) Cashless Exercise

     (i) The Registered Holder may, at its option, elect to exercise this Warrant, in
whole or in part from time to time, on a cashless basis, by surrendering this Warrant,
with the purchase form appended hereto as Exhibit I duly executed by or on behalf
of the Registered Holder, at the principal office of the Company, or at such other office
or agency as the Company may designate, by canceling a portion of this Warrant in payment
of the Purchase Price payable in respect of the number of Warrant Shares purchased upon
such exercise. In the event of an exercise pursuant to this subsection 1(b), the number
of Warrant Shares issued to the Registered Holder shall be determined according to the
following formula:

X = Y(A-B)

       A

	 	 	 	 	 	 	 	 	 
	 

	 	Where:
	 	X
	 	=
	 	the number of Warrant Shares that shall be issued to the Registered Holder
pursuant to the cashless exercise;
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Y
	 	=
	 	the number of Warrant Shares for which this
Warrant is being exercised (which shall include both the number of Warrant
Shares issued to the Registered Holder and the number of Warrant Shares
subject to the portion of the Warrant being cancelled in payment of the
Purchase Price);
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	A
	 	=
	 	the Fair Market Value (as defined below) of one
share of Common Stock; and
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	B
	 	=
	 	the Purchase Price then in effect.

     (ii) For purpose of this Warrant, “Fair Market Value” per share of Common Stock
shall be determined as follows:

     (A) If the Common Stock is listed on a national securities exchange, the Nasdaq
SmallCap Market or another nationally recognized trading system as of the Exercise
Date, the Fair Market Value per share of Common Stock shall be deemed to be the
average of the high and low reported sale prices per share of Common Stock thereon
on the five (5) trading days immediately preceding (and not including) the Exercise
Date.

     (B) If as of the Exercise Date the Common Stock is not listed on a national
securities exchange, the Nasdaq SmallCap Market or another nationally recognized
trading system as of the Exercise Date, the Fair Market Value per share of Common
Stock shall be deemed to be the amount most recently determined by the Board of
Directors of the Company (the “Board”) to represent

-2-

 

the fair market value per share of the Common Stock (including a determination
for purposes of granting Common Stock options or issuing Common Stock under any
plan, agreement or arrangement with employees of the Company); and, upon request of
the Registered Holder, such Board (or a representative thereof) shall, as promptly
as reasonably practicable but in any event not later than five (5) days after such
request, notify the Registered Holder of the Fair Market Value per share of Common
Stock and furnish the Registered Holder with reasonable documentation of such
Board’s determination of such Fair Market Value. Notwithstanding the foregoing, if
the Board has not made such a determination within the three-month period prior to
the Exercise Date, then (a) the Board shall make, and shall provide or cause to be
provided to the Registered Holder notice of, a determination of the Fair Market
Value per share of the Common Stock within fifteen (15) days of a request by the
Registered Holder that it do so, and (b) the exercise of this Warrant pursuant to
this subsection 1(b) shall be delayed until such determination is made and notice
thereof is provided to the Registered Holder.

     (c) Exercise Date. Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this Warrant shall
have been surrendered to the Company as provided in subsection 1(a) or 1(b) above (the
“Exercise Date”). At such time, the person or persons in whose name or names any certificates
for Warrant Shares shall be issuable upon such exercise as provided in subsection 1(d) below
shall be deemed to have become the holder or holders of record of the Warrant Shares
represented by such certificates.

     (d) Issuance of Certificates. As soon as practicable after the exercise of this
Warrant in whole or in part, and in any event within three (3) Trading Days (as defined below)
thereafter, the Company, at its expense, shall cause to be issued in the name of, and
delivered to, the Registered Holder, or as the Registered Holder (upon payment by the
Registered Holder of any applicable transfer taxes) may direct:

	 	(i)	 	a certificate or certificates for the number of full Warrant
Shares to which the Registered Holder shall be entitled upon such exercise
plus, in lieu of any fractional share to which the Registered Holder would
otherwise be entitled, cash in an amount determined pursuant to Section 3
below; and
	 
	 	(ii)	 	in case such exercise is in part only, a new warrant or
warrants of like tenor, calling in the aggregate on the face or faces thereof
for the number of Warrant Shares equal (without giving effect to any adjustment
therein) to the number of such shares called for on the face of this Warrant
minus the number of Warrant Shares for which this Warrant was so exercised.

For purposes of this Warrant, “Trading Day” shall mean (a) any day on which quotations or
listings with respect to the Common Stock are provided on the Nasdaq SmallCap Market or
another nationally recognized quotation or trading system or (b) if the Common Stock is not
then listed or quoted on the Nasdaq SmallCap Market or another nationally recognized

-3-

 

trading system, then a day on which trading occurs on the New York Stock Exchange (or any
successor thereto).

     2. Adjustments

     (a) Adjustment for Stock Splits and Combinations. If the Company shall at any
time or from time to time after the Warrant Issue Date (i) effect a subdivision of the
outstanding shares of Common Stock (whether by stock split, stock dividend or otherwise), or
(ii) combine the outstanding shares of Common Stock (whether by reverse stock split or
otherwise), the Purchase Price in effect immediately before that subdivision or combination
shall be proportionately adjusted. Any adjustment under this paragraph shall become effective
concurrently with the effectiveness of the applicable subdivision or combination of the
outstanding shares of Common Stock. Notwithstanding Section 13 hereof or the foregoing, in the
event (a) the Company effects a split of the Common Stock by means of a stock dividend and the
Purchase Price of and the number of Warrant Shares are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such dividend) and (b) the
Registered Holder exercises this Warrant between the record date and the distribution date for
such stock dividend, the Registered Holder shall be entitled to receive, on the distribution
date, the stock dividend with respect to the shares of Common Stock acquired upon such
exercise, notwithstanding the fact that such shares were not outstanding as of the close of
business on the record date for such stock dividend.

     (b) Adjustments for Dividends and Other Distributions. In the event the Company
at any time or from time to time after the Warrant Issue Date shall make or issue, or fix a
record date for the determination of holders of Common Stock entitled to receive, a dividend
or other distribution payable in shares of Common Stock or other securities of the Company or
in cash or other property, then, and in each such event, the Registered Holder shall receive
upon exercise hereof, in addition to the number of shares of Common Stock to be received upon
such exercise, the kind and amount of securities of the Company, cash or other property that
they would have been entitled to receive had this Warrant been exercised (without use of the
cashless exercise provisions) for shares of Common Stock immediately prior to such event and
had they thereafter, during the period from the date of such event to and including the
exercise date, retained such securities, giving application to all adjustments called for
during such period under this paragraph with respect to the rights of the Registered Holder.

     (c) Adjustment for Merger or Reorganization, etc. If there shall occur any
reorganization, recapitalization, reclassification, consolidation or merger involving the
Company in which the Common Stock is converted into or exchanged for securities, cash or other
property (other than a transaction covered by Subsections 2(a) or 2(b)), then, following any
such reorganization, recapitalization, reclassification, consolidation or merger, this Warrant
shall be exercisable into the kind and amount of securities, cash or other property that a
holder of the number of shares of Common Stock of the Company issuable upon exercise of this
Warrant immediately prior to such reorganization, recapitalization, reclassification,
consolidation or merger would have been entitled to receive pursuant to such transaction; and,
in such case, appropriate adjustment (as determined in good faith by the Board) shall be made
in the application of the provisions in

-4-

 

this Warrant with respect to the rights and interests thereafter of the Registered
Holder, to the end that the provisions set forth in this Warrant (including provisions with
respect to changes in and other adjustments of the Purchase Price) shall thereafter be
applicable, as nearly as reasonably may be, in relation to any securities or other property
thereafter deliverable upon the exercise of this Warrant.

     (d) Rounding of Calculations. All calculations under this Warrant shall be made
to the nearest whole number of shares, with five tenths (0.5) of a share rounded up. The
number of shares of Common Stock outstanding at any given time shall not include shares owned
or held by or for the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock.

     (e) Certificate as to Adjustments. Upon the occurrence of each adjustment
pursuant to this Warrant, the Company at its expense will promptly compute such adjustment in
accordance with the terms hereof and prepare a certificate describing in reasonable detail
such adjustment and the transactions giving rise thereto, including all facts upon which such
adjustment is based. The Company will promptly deliver a copy of each such certificate to the
Registered Holder and to the Company’s Transfer Agent. The Company shall, as promptly as
reasonably practicable after the written request at any time of any Registered Holder (but in
any event not later than ten (10) days thereafter), furnish or cause to be furnished to such
Registered Holder a certificate setting forth (i) the Purchase Price then in effect, and (ii)
the number of shares of Common Stock and the amount, if any, of other securities, cash or
property that then would be received upon the exercise of this Warrant.

     (f) No Impairment. The Company shall at all times in good faith assist in the
carrying out of all terms and taking of all actions as may be necessary or appropriate,
pursuant to this Section 2, in order to protect the rights of the Registered Holder against
impairment.

     3. Fractional Shares. The Company shall not be required upon the exercise
of this Warrant to issue any fractional shares, but shall pay the value thereof to the Registered
Holder in cash on the basis of the Fair Market Value per share of Common Stock.

     4. Compliance with Securities Laws; Investment Representations.

     (a) The Registered Holder is acquiring the Warrant for investment and not with a view to
the resale or distribution of the Warrant or the Warrant Shares, or any interest therein,
without prejudice, however, to the Registered Holder’s right, subject to compliance with the
Transaction Documents, including the Investor Rights Agreement (as each are defined in that
certain Securities Purchase Agreement dated August 19, 2005 by and among the Company and the
several purchasers named as “Purchasers” in Schedule A thereto), at all times to sell
or otherwise dispose of all or any part of such Warrant or Warrant Shares pursuant to an
effective registration statement under the Securities Act or under an exemption from such
registration and in compliance with applicable federal and state securities laws. Nothing
contained herein shall be deemed a representation or warranty by the Registered Holder to hold
any of the Warrant or Warrant Shares for any period of time. The Registered Holder is
acquiring the Warrant hereunder in the ordinary course of business. Except as contemplated by
the Investor Rights Agreement, the Registered Holder has no agreement, undertaking,
arrangement, obligation or commitment providing for the

-5-

 

disposition of such Warrant or Warrant Shares. The Registered Holder has not been
organized, reorganized or recapitalized specifically for the purpose of investing in the
Purchased Securities. At all times since the time the Registered Holder was initially offered
the Warrant, such Purchaser has been an “accredited investor” as such term is defined in
Regulation D under the Securities Act of 1933, as amended.

     (b) The Registered Holder has substantial experience in evaluating and investing in
private placement transactions of securities in companies similar to the Company so that it is
capable of evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. The Registered Holder will bear the economic risk of
this investment until the Warrant or Warrant Shares are registered pursuant to the Securities
Act, or an exemption from registration is available.

     (c) Unless a registration statement under the Act is effective with respect to the
Warrant Shares to be issued upon the exercise of this Warrant, the certificate representing
such Warrant Shares shall bear the following legend, in addition to any legend imposed by
applicable state securities laws:

THE SHARES OF COMMON STOCK EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT AND APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO MTI TECHNOLOGY
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

     (d) Upon the exercise of this Warrant, the Registered Holder shall become a party to
the Investor Rights Agreement, to the extent not already a party thereto, and shall be
entitled to all of the benefits and subject to all of the burdens of such agreement.

     5. Transfers, etc.

     (a) The Company shall maintain a register containing the name and address of the
Registered Holder of this Warrant. The Registered Holder may change its address as shown on
the warrant register by written notice to the Company requesting such change.

     (b) Subject to the provisions of this Section 5 and the Investor Rights Agreement, this
Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this
Warrant with a properly executed assignment (in the form of Exhibit II hereto) at the
principal office of the Company (or, if another office or agency has been designated by the
Company for such purpose, then at such other office or agency); provided, however, that any
such transfer must be in compliance with all applicable federal and state securities laws and
must include the delivery to the Company of representations of the transferee substantially
similar to those set forth in Section 4 hereof and, if this Warrant or any rights hereunder
are sold, pledged or hypothecated in whole or in part, legal opinions with respect thereto in
a form reasonably satisfactory to the Company, if such are requested by the Company.

-6-

 

     6. Remedies. Nothing herein shall limit a Registered Holder’s right to
pursue any other remedies available to it hereunder, at law or in equity, including a decree of
specific performance and/or injunctive relief with respect to the Company’s failure to timely
deliver certificates representing shares of Common Stock upon exercise of this Warrant as required
pursuant to the terms hereof.

     7. Notices of Record Date, etc. In the event:

	 	(a)	 	the Company shall take a record of the holders of its Common Stock (or
other stock or securities at the time deliverable upon the exercise of this Warrant)
for the purpose of entitling or enabling them to receive any dividend or other
distribution, or to receive any right to subscribe for or purchase any shares of
stock of any class or any other securities, or to receive any other right; or
	 
	 	(b)	 	of any capital reorganization of the Company, any reclassification of the
Common Stock of the Company, any consolidation or merger of the Company with or into
another entity (other than a consolidation or merger in which the Company is the
surviving entity and its Common Stock is not converted into or exchanged for any
other securities or property), or any transfer of all or substantially all of the
assets of the Company; or
	 
	 	(c)	 	of the voluntary or involuntary dissolution, liquidation or winding-up of
the Company,

then, and in each such case, the Company will send or cause to be sent to the Registered Holder a
notice specifying, as the case may be, (i) the record date for such dividend, distribution or
right, and the amount and character of such dividend, distribution or right, or (ii) the effective
date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up is to take effect, and the time, if any is to be fixed, as of which the
holders of record of Common Stock (or such other stock or securities at the time deliverable upon
the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such
other stock or securities) for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up. Such
notice shall be sent at least ten (10) days prior to the record date or effective date for the
event specified in such notice.

     8. Charges, Taxes and Expenses. The Company shall pay any and all issue and
other similar taxes that may be payable in respect of any issuance or delivery of shares of Common
Stock upon exercise of this Warrant. The Company shall not, however, be required to pay any tax
that may be payable in respect of any transfer involved in the issuance and delivery of Warrant
Shares or Warrants in a name other than that in which this Warrant is registered.

     9. Reservation of Stock. The Company shall at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant, such number of
Warrant Shares and other securities, cash and/or property, as from time to time shall be issuable
upon the exercise of this Warrant. If the number of shares of Common Stock so reserved is
insufficient, in addition to any other remedy available to the Registered Holder, the Company shall
take any corporate action that is necessary to make available a sufficient number of authorized but

-7-

 

unissued and otherwise unreserved shares of Common Stock within sixty (60) days after the
occurrence of such deficiency.

     10. Obtaining Approvals and Listings. The Company will, at its own expense,
obtain and keep effective any and all permits, consents and approvals of governmental agencies and
authorities which may from time to time be required of the Company in order to issue shares of
Common Stock upon the exercise of the Warrants and otherwise to perform its obligations hereunder,
except, in each case, for any such permits, consents and approvals (other than those relating to
blue sky laws) required as a result of the status of a Registered Holder of the Warrants. The
Company will, at its expense, obtain promptly and maintain the approval for listing on the Nasdaq
SmallCap Market or any successor thereto or comparable system, upon official notice of issuance,
the shares of Common Stock issuable upon exercise of the then outstanding Warrants and maintain the
listing or quoting of such shares after their issuance so long as the Common Stock is so listed or
quoted.

     11. Exchange or Replacement of Warrants

     (a) Upon the surrender by the Registered Holder, properly endorsed, to the Company at the
principal office of the Company, the Company shall, subject to the provisions of Section 5
above, issue and deliver to or upon the order of the Registered Holder, at the Company’s
expense, a new Warrant or Warrants of like tenor, in the name of the Registered Holder or as
the Registered Holder (upon payment by the Registered Holder of any applicable transfer taxes)
may direct, calling in the aggregate on the face or faces thereof for the number of shares of
Common Stock (or other securities, cash and/or property) then issuable upon exercise of this
Warrant.

     (b) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon
delivery of an indemnity agreement to the Company, or (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.

     12. Notices. All notices and other communications from the Company to the
Registered Holder in connection herewith shall be mailed by certified or registered mail, postage
prepaid, or sent via a reputable nationwide overnight courier service guaranteeing next business
day delivery, to the address last furnished to the Company in writing by the Registered Holder.
All notices and other communications from the Registered Holder to the Company in connection
herewith shall be mailed by certified or registered mail, postage prepaid, or sent via a reputable
nationwide overnight courier service guaranteeing next business day delivery, to the Company at its
principal office. If the Company should at any time change the location of its principal office to
a place other than its current principal office, it shall give prompt written notice to the
Registered Holder and thereafter all references in this Warrant to the location of its principal
office at the particular time shall be as so specified in such notice. All such notices and
communications shall be deemed delivered (a) two (2) business days after being sent by certified or
registered mail, return receipt requested, postage prepaid, or (b) one (1) business day after being
sent via a reputable nationwide overnight courier service guaranteeing next business day delivery.

-8-

 

     13. No Rights as Stockholder. Subject to Section 2 and Section
7 hereof, the Registered Holder shall not be entitled to vote or receive dividends or be deemed
the holder of Common Stock or any other securities of the Company that may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer
upon the Registered Holder, as such, any of the rights of a stockholder of the Company or any right
to vote for the election of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value, or change of stock to no par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to
receive dividends or otherwise until and to the extent the Warrant shall have been exercised as
provided herein.

     14. Amendment. This Warrant may be amended only by a writing signed by both
the Company and the Registered Holder (or their respective successors or assigns).

     15. Construction. The section headings in this Warrant are for the
convenience of the parties and in no way alter, modify, amend, limit or restrict the contractual
obligations of the parties. The word “including” as used herein shall not be construed so as to
exclude any other thing not referred to or described. In case any one or more of the provisions of
this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any way be affected or impaired
thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision
which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

     16. Governing Law; Waiver of Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the State of Delaware. Each party
hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law. Each of the Company and the Registered
Holder hereby waives all rights to a trial by jury.

     17. Facsimile Signature. This Warrant may be executed by facsimile
signature.

[signature page follows]

-9-

 

     Executed as of the Date of Issuance indicated above.

	 	 	 	 	 	 	 
	 	 	MTI TECHNOLOGY CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Thomas P. Raimondi, Jr.	 	 
	 

	 	Title:
	 	 President and Chief Executive Officer	 	 

	 	 	 	 	 
	Attest:	 	 
	 
	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	Name: Scott J. Poteracki	 	 
	Title:

	 	Chief Financial Officer and Secretary	 	 

 

Exhibit I

PURCHASE FORM

			
	 	 	 
	To: MTI Technology Corporation
	 	Dated:                     

     The undersigned is the Registered Holder of Warrant No. WB-___(the “Warrant”) issued by MTI
Technology Corporation, a Delaware corporation (the “Company”). Capitalized terms used herein and
not otherwise defined have the respective meanings set forth in the Warrant.

	 	a.	 	The Warrant is currently exercisable to purchase a total of ___Warrant
Shares.
	 
	 	b.	 	The Registered Holder hereby exercises its right to purchase ___
Warrant Shares pursuant to the Warrant. Following this exercise, the Warrant shall be
exercisable to purchase a total of ___shares.
	 
	 	c.	 	The Registered Holder intends that payment of the Purchase Price shall be made as
(check one):
	 
	 	 	 	                     “Cash Exercise” under Subsection 1(a) of the Warrant
	 
	 	 	 	                     “Cashless Exercise” under Subsection 1(b) of the Warrant
	 
	 	d.	 	If the holder has elected a Cash Exercise, the Registered Holder shall pay the
sum of $___to the Company in accordance with the terms of the Warrant.
	 
	 	e.	 	Pursuant to this exercise, the Company shall deliver to the Registered Holder
___Warrant Shares in accordance with the terms of the Warrant.

     The undersigned hereby represents and warrants to the Company that: (i) the Warrant Shares
acquired hereby are being acquired solely for the Registered Holder’s own account and not as a
nominee for any other party, and solely for investment, and the Registered Holder will not offer,
sell or otherwise dispose of any Warrant Shares acquired hereby except under circumstances that
will not result in a violation of the Securities Act of 1933, as amended (the “Act”), or any
applicable state securities laws; (ii) it is an “accredited investor” within the meaning of Rule
501 promulgated under the Act; (iii) it has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of its investment in the Warrant Shares
acquired hereby and has the ability to bear the economic risks of its investment in the Warrant
Shares acquired hereby; and (iv) it has made such inquiry of and concerning the Company and its
business and personnel as it has deemed appropriate.

     The undersigned hereby agrees to be bound by the terms and conditions of the Investor Rights
Agreement with respect to all Warrant Shares received upon said exercise of the Warrant.

	 	 	 	 	 
	Dated:      
      ,         

	 	Registered Holder:
	 	 

	 	 	 	 	 
	 

	 	By:
	 	 

	 	 	 	 	 
	 

	 	Name:
	 	 

	 	 	 	 	 
	 

	 	Title:
	 	 

	 	 	 
	 

	 	(Signature must conform in all respects to name
of holder as specified on the face of the
Warrant)

I-1

 

EXHIBIT
I

ASSIGNMENT FORM

     For Value Received,                                                              hereby sells, assigns and
transfers all of the rights of the undersigned under the attached Warrant (No. WB-___) with
respect to the number of shares of Common Stock of MTI Technology Corporation. covered thereby set
forth below, unto:

	 	 	 	 	 
	Name of Assignee	 	Address	 	No. of Shares
	 
	 	 	 	 

	 	 	 
	Dated:

	 	Registered Holder:
	 

	 	By:
	 

	 	Name:
	 

	 	Title:
	 

	 	(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)

Signature Guaranteed:

	 	 	 	 	 
	By:  	
 	 	 
	     The signature should be guaranteed by an eligible guarantor institution (banks,
stockbrokers, savings and loan associations and
credit unions with membership in an approved
signature guarantee medallion program) pursuant
to Rule 17Ad-15 under the Securities Exchange Act
of 1934. 	 	 

II-1

 

Schedule of Holders

	 	 	 	 	 
	Name	 	Shares Subject to Warrant
	Digital Media & Communications III Limited Partnership
	 	 	931,388	 
	Digital Media & Communications III-A Limited Partnership
	 	 	445,969	 
	Digital Media & Communications III-B Limited Partnership
	 	 	165,045	 
	Digital Media & Communications III-C Limited Partnership
	 	 	2,313,011	 
	Digital Media & Communications III-D C.V.
	 	 	305,813	 
	Digital Media & Communications III-E C.V.
	 	 	203,873	 
	Advent Partners DMC III Limited Partnership
	 	 	65,531	 
	Advent Partners II Limited Partnership
	 	 	18,806	 
	EMC Corporation
	 	 	1,483,151	 

II-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00092-of-00352.parquet"}]]