Document:

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                                                                   Exhibit 10.65

                              SEVERANCE AGREEMENT

         This Agreement (the "AGREEMENT") is made and entered into as of
November 30, 2001, between MTI Technology Corporation, a corporation organized
under the laws of the State of Delaware (the "COMPANY"), and Todd Schaeffer (the
"EXECUTIVE").

                                    RECITALS

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

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

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

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

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

          1.   Term Of Agreement.  This Agreement shall commence as of the
date first set forth above and shall continue in effect until November 30,
2003; provided, however, that commencing on November 30 and on each November 30
thereafter, the term of this Agreement shall automatically be extended for one
(1) year unless the Company or the Executive shall have given written notice to
the other at least ninety (90) days prior thereto that the term of this
Agreement shall not be so extended; and provided, further, however, that
notwithstanding any such notice by the Company not to extend, the term of this
Agreement shall not expire prior to the expiration of twelve (12) months after
the occurrence of a Change in Control.

          2.   Definitions.

               2.1  Accrued Compensation. For purposes of this Agreement,
"Accrued Compensation" shall mean an amount which shall include all amounts
earned or accrued through
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the "Termination Date" (as hereinafter defined) but not paid as of the
Termination Date, including (i) base salary, (ii) reimbursement for reasonable
and necessary expenses incurred by the Executive on behalf of the Company during
the period ending on the Termination Date, (iii) vacation pay and (iv) bonuses
and incentive compensation (other than the Pro Rata Bonus (as hereinafter
defined)).

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

         2.3  Bonus Amount.  For purposes of this Agreement, "Bonus Amount"
shall mean the greatest of: (a) 100% of the annual bonus payable to the
Executive under the Company's Executive Management Bonus Plan for the fiscal
year in which the Termination Date occurs: (b) the annual bonus paid or payable
to the Executive under the Company's Executive Management Bonus Plan for the
full fiscal year ended prior to the fiscal year during which the Termination
Date occurred; (c) the annual bonus paid or payable to the Executive under the
Company's Executive Management Bonus Plan for the full fiscal year ended prior
to the fiscal year during which a Change in Control occurred; (d) the average of
the annual bonuses paid or payable to the Executive under the Company's
Executive Management Bonus Plan during the three full fiscal years ended prior
to the fiscal year during which the Termination Date occurred; or (e) the
average of the annual bonuses paid or payable to the Executive under the
Company's Executive Management Bonus Plan during the three (3) full fiscal years
ended prior to the fiscal year during which the Change in Control occurred.

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

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          2.5. Change In Control.

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

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

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

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

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

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

          2.7. Disability. For purposes of this Agreement, "Disability" shall
mean a physical or mental infirmity which impairs the Executive's ability to
substantially perform the Executive's duties with the Company for a total period
of ninety (90) days and the Executive has

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not returned to full time employment prior to the Termination Date as stated in
the "Notice of Termination."

         2.8  Good Reason.

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

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

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

                  (iii)   the Company's requiring the Executive to be based at
     any place outside a 25-mile radius from the Company's Corporate Office,
     located at 4905 E. La Palma Avenue, Anaheim, CA 92807, except for
     reasonably required travel on the Company's business which is not
     materially greater than such travel requirements prior to the Change in
     Control;

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

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

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                    (vi)   any material breach by the Company of any provision
     of this Agreement, and failure of the Company to cure such breach within
     ten (10) days from the Company's receipt of written notice from the
     Executive setting forth the nature of the alleged breach;

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

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

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

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

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

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

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

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     3.   Termination Of Employment.

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

               (a)  If the Executive's employment with the Company shall be
terminated (1) by the Company for Cause or Disability, (2) by reason of the
Executive's death or (3) by the Executive other than for Good Reason, the
Company shall pay to the Executive the Accrued Compensation and, if such
termination is other than by the Company for Cause, the Company shall also pay
the Executive a Pro Rata Bonus.

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

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

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

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

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

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

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

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

   4. Notice Of Termination. Within one (1) year following a Change in Control,
any purported termination of the Executive's employment shall be communicated by
Notice of Termination to the Executive. For purposes of this Agreement, no such
purported termination shall be effective without such Notice of Termination.

   5. Excise Tax Limitation.

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

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to prevent any item of expense or deduction of the Company from being disallowed
as a result of the application of Code Section 280G, but only if the after-tax
payments and benefits payable or provided to the Executive are greater after
application of the forfeiture provision than if the forfeiture provision did
not apply. The interpretation of this subsection 5(a), its application to any
occurrence or event, the determination of whether any payment or benefit would
not be treated as a parachute payment, the determination of the aggregate
present value of all payments and benefits to be made or provided to the
Executive, the determination of the value of the payments and benefits payable
or to be provided to the Executive after reduction for all applicable taxes,
and what specific payments or benefits otherwise available to the Executive
shall be limited or eliminated by operation of this subsection 5(a) shall be
reasonably made by the Company and shall be binding on all persons.

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

     6.   Successors: Binding Agreement.

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

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

     7.   Confidential Information. Executive understands and acknowledges that
his work as an employee of the Company involves access to and creation of
confidential, proprietary, and trade secret information of the Company and its
affiliates, consultants, customers, clients, and

                                       8

Todd Schaeffer Severance Agr.
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business associates (collectively, as defined more extensively in Exhibit "A,"
"Proprietary Information"). As part of this Agreement, Executive agrees to
execute, and be bound by, the Company's "Employee/Consultant Proprietary
Information Agreement," a copy of which is attached hereto as Exhibit "A."

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

                  If to the Company:
                  MTI Technology Corporation
                  4905 E. La Palma Avenue
                  Anaheim, California 92807
                  Attention: Chief Executive Officer
                  Fax: (714) 693-2607

                  With a copy to:

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

                  If to the Executive:

                  Todd Schaeffer
                  21 Chaumont
                  Mission Viejo, CA 92692
                  Tel: (949) 461-0173

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

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

Todd Schaeffer Severance Agr.          9

<PAGE>
which the Executive is otherwise entitled to receive under any plan or program
of the Company shall be payable in accordance with such plan or program, except
as explicitly modified by this Agreement.

     10.  No Implied Employment Rights. Executive acknowledges and agrees that
nothing in this Agreement shall be construed to imply that his employment is
guaranteed for any period of time. Executive understands that his employment is
"at will," which means that either the Company or the Executive can terminate
the employment relationship at any time, with or without advance notice, for any
reason or no reason, with or without cause. Executive understands that the only
way that his "at will" employment relationship can be altered is by a written
agreement signed by the Executive and the President of the Company.

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

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

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

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

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

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

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

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

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

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

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

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

                                        MTI TECHNOLOGY CORPORATION

                                        By: /s/ THOMAS P. RAIMONDI, JR.
                                            ------------------------------
                                            Title: Chief Executive Officer

                                         /s/ TODD SCHAEFFER
                                        ----------------------------------
                                         Todd Schaeffer

Todd Schaeffer Severance Agr.          11

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                                  EXHIBIT "A"

                                  Exhibit "A"

Todd Schaeffer Severance Agr.
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                    STATEMENT REGARDING EMPLOYEE/CONSULTANT
                       PROPRIETARY INFORMATION AGREEMENT

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

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

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

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

I HAVE READ AND UNDERSTAND

THE ATTACHED AGREEMENT:

Executive Name: Todd Schaeffer

Executive Signature:
                    ---------------------------
Title: Corporate Controller

Date:
     ------------------------------------------

                                      A-1

Todd Schaeffer Severance Agr.
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             EMPLOYEE/CONSULTANT PROPRIETARY INFORMATION AGREEMENT

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

         1.       Proprietary Information.

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

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

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

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<PAGE>
     2.   Use of Proprietary Information.

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

     3.   Third-Party Information.

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

     4.   Inventions.

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

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

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

                                      A-3
Todd Schaeffer Severance Agr.
<PAGE>

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

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

     5.   Termination of Employment.

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

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

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

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

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

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

                                      A-4
Todd Schaeffer Severance Agr.

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

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

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

     6.   Disclosure.

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

     7.   Former or Conflicting Agreements.

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

     8.   Information on Company Premises.

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

                                      A-5
Todd Schaeffer Severance Agr.
<PAGE>
electronic-mail or voicemail systems) is the property of the Company, and I
hereby waive any property or privacy rights that I may have with respect to
such information.

     9.   Reserved Inventions.

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

     10.  Choice of Law.

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

     11.  Remedies.

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

     12.  Successors and Assigns.

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

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

     13.  Severability.

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

                                      A-6

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<PAGE>
         14.     Entire Agreement.

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

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

         This Agreement is made and entered into as of November 30, 2001.

                                             MTI TECHNOLOGY CORPORATION

                                             By: /s/ Thomas P. Raimondi, Jr.
                                                 -------------------------------
                                                 Title: Chief Executive Officer

                                             Executive: Todd Schaeffer

                                             Signature: /s/ Todd Schaeffer
                                                        ------------------------

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<PAGE>
                                   SCHEDULE A

                     California Labor Code Section 2870(a)

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

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

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

                                   Schedule A

Todd Schaeffer Severance Agr.
<PAGE>
                                   SCHEDULE B

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

     ___________________________________________________________________________

     ___________________________________________________________________________

     ___________________________________________________________________________

     ___________________________________________________________________________

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

     ___________________________________________________________________________

     ___________________________________________________________________________

     ___________________________________________________________________________

     ___________________________________________________________________________

Name: Todd Schaeffer

Signature: ____________________________

Date: _________________________________

                                   Schedule B

Todd Schaeffer Severance Agr.

<PAGE>
                                   SCHEDULE C

                            TERMINATION CERTIFICATE

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

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

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

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

Name: Todd Schaeffer

Signature:_____________________________

Date:__________________________________

                                   Schedule C

Todd Schaeffer Severance Agr.[ON LETTERHEAD OF CGI INFORMATION SYSTEMS AND MANAGEMENT CONSULTANTS, INC.]

                                Letter of Intent

         This is a Letter of Intent (this "Letter") entered into as of this 24th
day of July,  2002, by and among CGI Group Inc., a corporation  organized  under
the laws of the Province of Quebec ("CGI"), INSpire Insurance Solutions, Inc., a
corporation organized under the laws of the State of Delaware  ("Solutions") and
INSpire Claims Management,  Inc., a corporation  organized under the laws of the
State of Texas ("Management" and, together with Solutions, "INSpire").

         Solutions and Management  have each filed petitions under Chapter 11 of
the United States  Bankruptcy Code (the "Bankruptcy  Code") in the United States
Bankruptcy Court for the Northern  District of Texas (the  "Bankruptcy  Court"),
such petitions jointly administered as Bankruptcy Case No. 75-2595937; and

         CGI desires to make a proposal to purchase all or substantially  all of
the  assets of  INSpire  in  consideration  of a certain  cash  payment  and the
assumption of certain specified  liabilities of INSpire, as more fully described
in this Letter; and

         INSpire  desires  to  encourage  CGI to make  such  proposal  by making
certain agreements more fully described in this Letter;

         In  consideration  of the  foregoing  and the mutual  agreements of the
parties set forth in this  Letter,  the parties to this Letter  hereby  agree as
follows:

1.       Structure  of  the  Transaction.  CGI's  proposal  is  structured  as a
         purchase  of  substantially  all of  the  assets  of  INSpire  and  the
         assumption of certain specified liabilities of INSpire.  Except for the
         liabilities and obligations  specifically assumed by CGI, CGI will have
         no  liability  for  any  administrative,   tax,  priority,  secured  or
         unsecured  claims  against  the  bankruptcy  estates  of  Solutions  or
         Management or for any other  liabilities or obligations.  Such purchase
         of assets and assumption of liabilities will be made pursuant to a plan
         of  reorganization  or other  appropriate  order(s)  of the  Bankruptcy
         Court,  in each case in form and  substance  satisfactory  to CGI (such
         plan or order(s), a "Plan of Reorganization").

2.       Negotiation in Good Faith. CGI and INSpire will negotiate in good faith
         to reach agreement on the terms and conditions of a mutually  agreeable
         Asset  Purchase  Agreement  (the  "Definitive  Agreement").  As soon as
         practicable,  CGI's  legal  counsel  will  tender a  proposed  draft of
         Definitive  Agreement  for  INSpire's  review.  Unless  and  until  the
         Definitive Agreement is executed and delivered by CGI, CGI will have no
         obligation  whatsoever to enter into any transaction  with INSpire with
         respect to any  matter,  including  the  purchase of any assets and the
         assumption  of any  liabilities  of  INSpire.  Subject to the  parties'
         obligation  to  negotiate  in  good  faith,  no  party  will  have  any
         obligation  to enter  into a  Definitive  Agreement  and each party may
         withhold,  in its sole and absolute  discretion,  its  agreement to any
         such Definitive Agreement.

                                       1
<PAGE>

3.       Anticipated  Terms  of  Definitive  Agreement.  The  parties  currently
         anticipate that the Definitive Agreement will contain substantially the
         terms and conditions set forth in this Section 3. However, this Section
         3 is not all inclusive and changes in such terms and  conditions may be
         made as the parties to this Letter and their  respective  legal counsel
         deem necessary, prudent or desirable.

         (a)      Purchased  Assets.  The Definitive  Agreement will provide for
                  the purchase by CGI of the business  conducted by INSpire (the
                  "Business"),  the goodwill  associated  with the Business (the
                  "Goodwill") and all of INSpire's right,  title and interest in
                  and  to the  assets  related  to,  employed  in or  reasonably
                  necessary  for the  conduct of the  Business  (the  "Purchased
                  Assets").  The Purchased  Assets will include all of INSpire's
                  (i) real property and  improvements  thereon,  (ii) equipment,
                  inventory  and other  personal  property,  (iii)  intellectual
                  property,  (iv) cash, cash equivalents,  accounts  receivable,
                  prepaid  expenses,  tax credits and refunds,  (v) rights under
                  the  Assumed  Contracts  (as  defined  below),   (vi)  claims,
                  warranties,  guarantees and similar intangible  rights,  (vii)
                  rights under contracts,  licenses,  leases and permits, (viii)
                  books,  records and other  documentary  assets relating to the
                  Business and (ix) other assets  specifically  identified  on a
                  schedule  to be  attached  to the  Definitive  Agreement.  The
                  Purchased Assets will also include any claims that INSpire may
                  have,  whether pursuant to Chapter 5 of the Bankruptcy Code or
                  otherwise, against certain key employees, customers or vendors
                  of  the  Business  that  are   identified  in  the  Definitive
                  Agreement.  The  Purchased  Assets  will not  include  certain
                  assets  specifically  identified in the Definitive  Agreement,
                  including without limitation, prepaid expenses relating to D&O
                  insurance,  certain specified tax refunds, claims that INSpire
                  may have under Chapter 5 of the Bankruptcy  Code (except those
                  described  above as  Purchased  Assets)  and  other  specified
                  causes of actions that INSpire may presently have.

         (b)      Consideration.  The aggregate consideration to be given by CGI
                  for the Business,  the Goodwill and the Purchased  Assets will
                  be (i) the payment by CGI, in cash, of  $8,200,000  (the "Cash
                  Purchase Price"),  adjusted as set forth herein,  and (ii) the
                  assumption by CGI of certain  liabilities  and  obligations of
                  INSpire  relating  to the  Purchased  Assets and  specifically
                  identified in the  Definitive  Agreement;  provided,  however,
                  that the aggregate  liability to be assumed by CGI pursuant to
                  all such  assumed  liabilities  will not  exceed  $14,000,000.
                  Subject to such proviso, the assumed liabilities will include,
                  to  the  extent  specifically  identified  in  the  Definitive
                  Agreement,  (A) performance and payment  obligations under the
                  Assumed  Contracts,   (B)  liabilities  for  unearned  revenue
                  related to Assumed  Contracts as  reflected  in the  financial
                  statements  of  the  Business,  (C)  liabilities  for  accrued
                  property  and sales  taxes,  (D) to the  extent  permitted  by
                  applicable  bankruptcy  law,   pre-petition   obligations  for
                  accrued  payroll and  compensation  and deferred  compensation
                  owed to  employees  of the  Business  and  other  pre-petition
                  liabilities  and  obligations   (including  accounts  payable)
                  incurred by INSpire in the ordinary course of business and (E)
                  post-petition liabilities and

                                       2
<PAGE>

         (c)      obligations  incurred  by  INSpire in the  ordinary  course of
                  business.   Any   liability  or   obligation  of  INSpire  not
                  specifically  assumed by CGI in the Definitive  Agreement will
                  be retained by INSpire,  including without  limitation certain
                  particular  liabilities identified in the Definitive Agreement
                  (e.g., liabilities related to indebtedness for borrowed money,
                  disputed services under contracts,  the Sul America claim, the
                  Lockheed claim or terminated services or office closures).

         (d)      Cash Purchase Price Adjustment.

                  (i)      The amount of the Cash Purchase Price is based on the
                           assumption  that the "Net Asset  Value"  (as  further
                           described in Section 3(c)(iv) below) will be equal to
                           $7,000,000 (the "Assumed Net Asset Value").

                  (ii)     Seven  business  days prior to the  closing,  INSpire
                           will  deliver  to CGI a revised  estimate  of the Net
                           Asset Value (the  "Estimated Net Asset Value").  Such
                           estimate  will be  subject to the  approval  of CGI's
                           financial  advisors.  The Cash Purchase Price payable
                           at closing will be adjusted  (upward or downward,  as
                           appropriate) by the amount by which the Estimated Net
                           Asset Value (as  approved)  differs  from the Assumed
                           Net  Asset   Value;   provided,   however,   that  no
                           adjustment  will  be  made  to the  extent  that  the
                           Estimated Net Asset Value exceeds $8,400,000.

                  (iii)    Within thirty  business  days  following the closing,
                           CGI will  have  the  right to  audit  the  books  and
                           records of INSpire to determine  the actual Net Asset
                           Value (the  "Actual  Net Asset  Value").  CGI will be
                           entitled  to  withdraw  from the Escrow  Account  (as
                           defined  below) the amount by which the Estimated Net
                           Asset  Value (or  $8,400,000,  if less)  exceeds  the
                           Actual Net Asset  Value.  INSpire will have the right
                           to review CGI's determination of the Actual Net Asset
                           Value  and  any  dispute  relating  thereto  will  be
                           resolved,   by  an   independent   certified   public
                           accounting firm, whose fees will be paid by the party
                           not substantially prevailing in the dispute.

                  (iv)     Net Asset Value will be calculated by subtracting the
                           value of all  liabilities  assumed by CGI pursuant to
                           the  Definitive  Agreement  from  the  value  of  the
                           Purchased Assets, all such values to be calculated as
                           of the date of closing.  A schedule to the Definitive
                           Agreement   will  set   forth  an   example   of  the
                           calculation of Net Asset Value  (including the manner
                           in which each type or class of assets and liabilities
                           will be valued) and the  determination  of  Estimated
                           Net Asset  Value and Actual  Net Asset  Value will be
                           made on a basis  consistent with such schedule.  This
                           schedule  will  be  prepared  by the  parties  in the
                           course  of  CGI's  due  diligence   investigation  of
                           INSpire.

         (e)      Escrow  Holdback.   Twenty-five  percent  (25%)  of  the  Cash
                  Purchase  Price will be  deposited by CGI into an account (the
                  "Escrow  Account")  with an escrow  agent  selected by CGI but

                                       3

<PAGE>

                  reasonably   acceptable  to  INSpire.   For  nine  (9)  months
                  following the closing date,  CGI will be entitled to draw upon
                  the Escrow Account for  satisfaction  of (i) the  post-closing
                  Net Asset Value  adjustment  described  in Section  3(c)(iii),
                  (ii)  any  damages  suffered  by CGI or  its  related  parties
                  relating  to  breaches  by  INSpire  of  its  representations,
                  warranties and covenants and (iii) any damages suffered by CGI
                  or its related parties relating to any liability or obligation
                  not  expressly  assumed  by CGI  pursuant  to  the  Definitive
                  Agreement. After the one year anniversary of the closing date,
                  any monies  remaining in the Escrow Account and not subject to
                  any outstanding  claim by CGI will be paid by the escrow agent
                  to or for the benefit of INSpire.

         (f)      Representations,  Warranties  and  Covenants.  The  Definitive
                  Agreement   will  contain   representations,   warranties  and
                  covenants  of  the  parties  customary  in an  asset  purchase
                  transaction of like size and subject matter, including without
                  limitation,  (i)  representations  and warranties  relating to
                  enforceability,    INSpire's    financial    statements    and
                  liabilities,  the  Purchased  Assets  and  the  state  of  the
                  Business  and (ii)  covenants  relating  to the conduct of the
                  Business in the  ordinary  course prior to closing and certain
                  actions to be taken with respect to INSpire's bankruptcy case.

         (g)      Plan of Reorganization.  The Definitive Agreement will contain
                  covenants of INSpire relating to the preparation,  filing, and
                  confirmation of the Plan of Reorganization,  including without
                  limitation, (i) the preparation and filing with the Bankruptcy
                  Court  of  a  Disclosure   Statement   and  proposed  Plan  of
                  Reorganization   (providing  for  the   consummation   of  the
                  transactions   contemplated  by  the.  Definitive   Agreement)
                  promptly following the execution of the Definitive  Agreement,
                  (ii) the  opportunity  of CGI to  review  and  comment  on the
                  proposed form of the Plan of Reorganization  and other filings
                  with the Bankruptcy  Court  relating  thereto prior to filing,
                  (iii)  the  terms  and  provisions  of the  proposed  Plan  of
                  Reorganization,  as they relate to the  Definitive  Agreement,
                  the  Purchased  Assets,  the Assumed  Contracts,  the Business
                  and/or the  liabilities  proposed to be assumed by CGI,  being
                  reasonably   satisfactory  to  CGI,  (iv)  the  making  of  no
                  modifications,  amendments,  additions or other changes to the
                  terms and  provisions of the proposed Plan of  Reorganization,
                  as they  relate to the  Definitive  Agreement,  the  Purchased
                  Assets,  the  Assumed  Contracts,   the  Business  and/or  the
                  liabilities  proposed to be assumed by CGI,  without the prior
                  written  consent of CGI,  such consent to not be  unreasonably
                  withheld  and (v) the use by  INSpire  of its best  efforts to
                  cause  (A) the  Disclosure  Statement  to be  approved  by the
                  Bankruptcy  Court,  (B) the  creditors  of  INSpire  and other
                  interest-holders  to  vote  for  confirmation  of the  Plan of
                  Reorganization  and (C) the  Bankruptcy  Court to confirm  the
                  Plan of Reorganization.

         (h)     Acceptance  and Rejection of Contracts by INSpire.  All INSpire
                 leases  and  executory  contracts  that CGI  desires  to assume
                 pursuant to the Definitive  Agreement (the "Assumed Contracts")

                                       4
<PAGE>

                 will be assigned  to, and assumed by, CGI  pursuant to the Plan
                 of Reorganization.  All cure costs associated with such Assumed
                 Contracts  will be paid by CGI  and  identified  as an  assumed
                 liability  on  the  appropriate   schedule  to  the  Definitive
                 Agreement.  INSpire will file motions with the Bankruptcy Court
                 to reject all of its other leases and executory  contracts (the
                 "Rejected Contracts").

         (i)      Employees.  It is contemplated  that the employees of INSpire,
                  as of  the  closing,  will  be  offered  employment  with  CGI
                  following  the  closing  date.   CGI  will  request  that  the
                  employees  apply for continued  employment,  and will evaluate
                  each  applicant  in  accordance   with  its  standard   hiring
                  procedures. CGI anticipates that such applicants will be given
                  offers  of  employment  in  accordance   with  CGI's  standard
                  employment  policies.  It is also  contemplated  that  salary,
                  bonus and  employee  benefits for each person who accepts such
                  an  offer  of   continued   employment   by  CGI  will  be  on
                  substantially  the same terms and  conditions as their current
                  employment,   but  CGI  reserves   the  right,   in  its  sole
                  discretion,  to refuse to employ  and to make  adjustments  to
                  salary,  bonus  or  benefits,  as  CGI  deems  necessary  on a
                  case-by-case  basis.  CGI will  attempt to continue  insurance
                  coverage  without  interruption and to give credit for service
                  at their current employer for purposes of vacation, sick leave
                  and 401(k) benefits.

         (j)      Management Employees. CGI anticipates entering into employment
                  agreements  with  current  INSpire  management   employees  on
                  mutually acceptable terms and conditions, including agreements
                  not to  compete  with  CGI and  its  affiliates  during  their
                  employment and for a three-year period thereafter.

         (k)      Liability for Pre-Closing Obligations to Employees.  Except as
                  otherwise  specifically  provided in the Definitive Agreement,
                  CGI will not assume any liability of INSpire for salary, bonus
                  or employee benefits owing to any INSpire employee relating to
                  any period prior to the closing date,  except that each person
                  who accepts an offer of continued  employment with CGI will be
                  given full credit for prior  service with INSpire with respect
                  to future vacation,  sick and personal days as well as for all
                  current accrued and unused vacation, sick and personal days.

         (l)      Conditions to Closing. The obligation of CGI to consummate the
                  transactions  contemplated by the Definitive Agreement will be
                  subject to certain  conditions,  including without limitation,
                  (i) satisfactory  conclusion of due diligence by CGI (such due
                  diligence  to be  completed  within  thirty  (30)  days of the
                  execution of the  Definitive  Agreement),  (ii) the absence of
                  any  material  adverse  change  in the  Business  prior to the
                  closing date,  (iii) the approval of the Board of Directors of
                  CGI,  (iv) the Estimated Net Asset Value (as approved by CGI's
                  financial  advisors)  being no less than  $5,600,000,  (v) the
                  receipt of all consents and regulatory  approvals  required to
                  consummate  the  purchase  of the  Purchased  Assets  and  the
                  assumption of the Assumed Contracts by CGI (including consents

                                       5
<PAGE>

                  required  to  transfer   intellectual   property),   (vi)  the
                  employment by CGI of employees of the Business  (including all
                  key employees)  that are reasonably  necessary for the conduct
                  of the Business  following the closing on terms and conditions
                  that are  mutually  satisfactory  to such  employees  and CGI,
                  (vii) the  confirmation of the Plan of  Reorganization  by the
                  Bankruptcy  Court  and the entry of such  other  orders by the
                  Bankruptcy  Court as CGI may deem  necessary  or  advisable to
                  consummate  the  transactions  contemplated  by the Definitive
                  Agreement,  (viii) the entry of the Buyer Protection Order (as
                  defined  in  Section  4) by the  Bankruptcy  Court;  (ix)  the
                  assumption by CGI of customer  contracts of INSpire that will,
                  under  their  terms,  generate  gross  revenues  of  at  least
                  $28,700,000   during  the  twelve-month   period   immediately
                  following  the  closing  date  and  (x) the  Bankruptcy  Court
                  entering an order  approving  the  rejection  of the  Rejected
                  Contracts,  such order to be in form and substance  acceptable
                  to CGI. The obligation of CGI to consummate  the  transactions
                  contemplated  by the Definitive  Agreement will not be subject
                  to any financing  contingency  and CGI does not anticipate the
                  need to  obtain  any  regulatory  approvals,  other  than  the
                  confirmation of the Plan of Reorganization and other approvals
                  required from the Bankruptcy Court.

         (m)      Termination.   CGI  will  have  the  right  to  terminate  the
                  Definitive  Agreement  if, among other  things,  (i) the Buyer
                  Protection Order is not entered by the Bankruptcy Court within
                  thirty (30) calendar  days of the execution of the  Definitive
                  Agreement, (ii) the Bankruptcy Court does not confirm the Plan
                  of  Reorganization  on or before  October 31, 2002,  (iii) the
                  consummation   of  the   transactions   contemplated   by  the
                  Definitive  Agreement does not occur on or before November 15,
                  2002,  (iv)  any  of  the  information   provided  to  CGI  in
                  connection  with  its due  diligence  investigation  adversely
                  affects CGI's  valuation of the Business or (v) CGI determines
                  that the  provision  of  information  to any  third  party may
                  adversely affect the ability of CGI to  competitively  conduct
                  the Business following the closing.

         (n)      Transfer Taxes.  INSpire will be responsible for all transfer,
                  sales,  use,  gains,  excise and  similar  taxes  incurred  in
                  connection with the transfer of the Business, the Goodwill and
                  the Purchased Assets.

         (o)      Expenses.  CGI and  INSpire  will  be  responsible  for  their
                  respective  fees and expenses  incurred in connection with the
                  Definitive  Agreement,  except as  otherwise  provided  in the
                  Buyer Protection Order.

4.       Buyer Protection Order. Within three business days of the execution and
         delivery of this Letter, INSpire will file a motion requesting a prompt
         hearing before the Bankruptcy Court to establish by order of such court
         (the "Buyer Protection Order") the right of CGI to receive from INSpire
         a break-up fee if the closing of the  transactions  contemplated by the
         Definitive  Agreement  does not occur on or before  November  15, 2002,
         other than due to the  material  fault of CGI. The break-up fee will be
         an  amount  equal to  $325,000,  and  will be  payable  in  immediately

                                       6

<PAGE>

         available funds on or before November 18, 2002.  INSpirewill thereafter
         use its best efforts to obtain the entry by the Bankruptcy Court of the
         Buyer Protection Order.

5.       Due Diligence.  As soon as practicable,  and from time to time prior to
         the closing of the  Definitive  Agreement,  INSpire will permit CGI and
         its employees, legal counsel,  accountants and other representatives to
         make such reasonable  investigation  of the properties,  businesses and
         operations of INSpire and such  examination  of the books,  records and
         financial  condition of INSpire as it  reasonably  requests and to make
         extracts and copies of such books and records.  Such  investigation and
         examination  will be conducted  during regular  business  hours,  under
         reasonable circumstances and upon reasonable prior notice to INSpire.

6.       Ordinary  Course.  Prior to the  closing of the  Definitive  Agreement,
         INSpire  will  conduct its  business  and affairs  only in the ordinary
         course of business,  except as otherwise approved in advance in writing
         by CGI or the Bankruptcy Court. Without limiting the foregoing, INSpire
         will operate the Business in a manner that will  preserve the Business,
         the  Purchased   Assets  and  the  Assumed   Contracts,   including  by
         maintaining  good business  relationships  with customers,  vendors and
         others with whom INSpire does business.  INSpire  covenants that, prior
         to the closing of the Definitive Agreement, it will not take any action
         to assume or reject any contract,  liability or  obligation  (including
         seeking  Bankruptcy Court approval thereof) without the prior,  written
         consent of CGI.

7.       Non-Solicitation.

         (a)      Covenant.  After the date of this  Letter and before the first
                  to occur  of the  execution  of the  Definitive  Agreement  or
                  November 15,  2002,  INSpire will not (and will not permit any
                  of its directors, officers, employees,  consultants, agents or
                  representatives to), directly or indirectly, initiate, solicit
                  or encourage any third party to make, or facilitate, entertain
                  or discuss, or accept or enter into any agreement with respect
                  to,  any  proposal  for an  Acquisition  (as  defined  below).
                  Notwithstanding the foregoing, this covenant will not prohibit
                  INSpire from providing  information about INSpire to any third
                  party to the extent required for the directors and officers of
                  INSpire to discharge their  respective  fiduciary duties under
                  applicable law, if the following conditions are satisfied: (i)
                  the information provided is requested by such thud party, (ii)
                  a copy of all  information  provided  to such  third  party is
                  contemporaneously  provided to CGI, (iii) the information does
                  not  include  the terms and  conditions  of this Letter or the
                  substance of any  discussions  between CGI,  INSpire and their
                  related parties relating to the  transactions  contemplated by
                  this Letter,  (iv) the third party is a qualified bidder,  (v)
                  the third party enters into a  confidentiality  agreement with
                  INSpire no less restrictive than the Confidentiality Agreement
                  (as  defined  below) and (vi)  INSpire  has not  breached  its
                  obligations under this Section 7.

         (b)      Notice of Proposals.  Upon receiving any Acquisition proposal,
                  INSpire will promptly  notify CGI of such proposal  (including
                  the  identity  of the  offeror  and a  complete  and  accurate

                                       7
<PAGE>

                  description  of the material  terms  thereof),  and thereafter
                  keep CGI informed, on a current basis, of the status and terms
                  of such Acquisition  proposal.  INSpire will promptly (by hand
                  delivery,  fax and/or  e-mail)  provide CGI with a copy of all
                  pleadings filed in connection with its bankruptcy.

         (c)      "Acquisition"  means  (i)  any  merger,  consolidation,  share
                  exchange or business  combination  involving  Solutions and/or
                  Management,  (ii)  any  sale of 20% of more of the  assets  or
                  profit- or  revenue-generating  capacity of  Solutions  and/or
                  Management,  (iii)  any sale of 20% or more of the  shares  of
                  capital  stock  (including,  without  limitation,  by way of a
                  tender  offer)  of  Solutions  and/or  Management,   (iv)  any
                  recapitalization of Solutions and/or Management (regardless of
                  the form of  transaction  by which  such  recapitalization  is
                  accomplished  and  whether  pursuant  to a  filing  under  the
                  Bankruptcy  Code  or  otherwise)  or  (v)  any  other  similar
                  transaction  involving  any third parry and  Solutions  and/or
                  Management.

8.       Confidentiality.  The Confidentiality  Agreement,  dated as of February
         18,  2002  (the  "Confidentiality   Agreement"),  by  and  between  CGI
         Information Systems and Management Consultants, Inc. and Solutions will
         remain in full force and effect.  This Letter,  the  discussions of the
         parties related to this Letter and/or the Definitive  Agreement and all
         information provided pursuant to Section 5 in each case whether oral or
         written,  will  be  deemed  confidential  information  subject  to  the
         Confidentiality Agreement.

9.       Binding Effect. Section 1 through Section 3, inclusive,  of this Letter
         of Intent is provided for discussion  purposes only, is non-binding and
         does not constitute an offer by CGI to purchase the Purchased Assets or
         an agreement of CGI to enter into any other  transaction  with INSpire.
         No party will have any obligation  with respect to any such purchase or
         transaction  unless a  Definitive  Agreement is executed by the parties
         and only as provided therein.  Section 4 through Section 15, inclusive,
         of this  Letter  will be binding  upon and inure to the  benefit of the
         parties and their respective successors and permitted assigns.  Nothing
         in this  Letter  will  create or be deemed  to create  any third  party
         beneficiary rights in any person or entity not party to this Letter.

10.      Assignment.   No  assignment  of  this  Letter  or  of  any  rights  or
         obligations under this Letter may be made by any party (by operation of
         law or  otherwise)  without  the prior  written  consent of each of the
         other parties to this Letter and any attempted  assignment without such
         required consents will be void; provided,  however, that CGI may assign
         to one  or  more  of its  affiliates  any  or  all  of its  rights  and
         obligations  under this Letter without the prior written consent of any
         other party.

11.      Specific  Performance.  CGI and INSpire each acknowledge and agree that
         the  breach  of any  binding  provision  of  this  Letter  would  cause
         irreparable damage to the other party and that the other party will not
         have an adequate remedy at law.  Therefore,  the binding obligations of
         each of CGI and  INSpire  under this Letter  will be  enforceable  by a
         decree  of  specific  performance  issued  by any  court  of  competent

                                       8
<PAGE>

         jurisdiction,  and appropriate injunctive relief may be applied for and
         granted  in  connection  therewith.  Such  remedies,  however,  will be
         cumulative  and not  exclusive  and will be in  addition  to any  other
         remedies that any party may have under this Letter or otherwise.

12.      GOVERNING  LAW.  THIS  LETTER  WILL BE  GOVERNED  BY AND  CONSTRUED  IN
         ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REFERENCE TO THE
         PRINCIPLES  OF  CONFLICTS  OF LAWS OR ANY OTHER  PRINCIPLE  THAT  COULD
         RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.

13.      Dispute  Resolution.  Any dispute that may arise between the parties to
         this  Letter  relating  to the  subject  matter of this  Letter will be
         finally resolved in the Bankruptcy Court and each party consents to the
         exclusive jurisdiction of such courts.

14.      Duration  of Offer.  This Letter may be accepted by INSpire at any time
         prior to 5:00 p.m.,  Central Daylight Time, on Friday,  August 2, 2002.
         If this  Letter is not  executed  by 1NSpire  prior to such time,  this
         Letter  will  thereafter  be null and void and of no force  and  effect
         whatsoever.

15.      Counterparts.   This   Letter  may  be   executed   in  any  number  of
         counterparts,  each of which,  will be deemed an  original,  but all of
         which together will constitute one and the same instrument.

                                       9
<PAGE>

This Letter of Intent is agreed and  acknowledged  as of the date first  written
above by:

CGI Group, Inc.

/s/ Michael Roach
--------------------------------------
By:  Michael Roach
Title:  President and Chief Operating
        Officer

INSpire Insurance Solutions, Inc.

/s/ Richard J. Marxen
--------------------------------------
By:  Richard J. Marxen
Title:  President

INSpire Claims Management, Inc.

/s/ Richard J. Marxen
-------------------------------------
By:  Richard J. Marxen
Title:  President

                                       10

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