FIRST AMENDMENT TO LEASE(Extension of Term)

THIS FIRST AMENDMENT TO LEASE (this “ Amendment ”) is dated as of June 30, 2009, by and between TAPO CANYON WAREHOUSE, INC., a Delaware corporation (“ Landlord ”), and QUALSTAR CORPORATION, a California corporation (“ Tenant ”).

A.            Strategic Performance Fund – II, Inc. (“ SPF ”) and Tenant entered into that certain Lease (Multi-Tenant) dated September 20, 2000 (the “ Lease ”), for certain premises consisting of approximately 56,845 square feet (the “ Premises ”) in the building located at 3990-B Heritage Oaks Court, Simi Valley, California (the “ Building ”), which is part of that certain industrial complex known as Tapo Canyon Business Park (the “ Project ”).  Landlord has succeeded to the interest of SPF as “Landlord” under the Lease.

B.             The Term of the Lease is scheduled to expire on January 9, 2011.

C.             Capitalized terms used but not defined herein shall have the meanings attributed to them in the Lease.

D.             Landlord and Tenant presently desire to amend the Lease to extend the Term of the Lease, as more fully set forth below.

NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1.              Extension of Term; Options to Renew .

(a)            Extension of Term .  The Term of the Lease is hereby extended so that the expiration date of the Lease shall be December 31, 2015.  The period commencing on April 1, 2009 and ending on December 31, 2015 is hereinafter referred to as the “ Extension Term ”.

(b)            Options to Renew .  Section 39 (Options) of the Lease is hereby deleted in its entirety and shall be of no further force or effect. Tenant shall be permitted to extend the Term of the Lease in accordance with the terms of Exhibit D attached hereto.

2.              Rent .

(a)            Base Rent .  Notwithstanding anything to the contrary set forth in the Lease, commencing on April 1, 2009 and thereafter on or before the first day of each calendar month during the Extension Term, in addition to additional rent as provided in the Lease, as amended by this Amendment, Tenant shall pay to Landlord Base Rent, in the manner provided in the Lease, in the following amounts:

(b)            Landlord and Tenant acknowledge that Tenant has paid the Base Rent for the Premises for the months of April, May and June 2009 based on a higher amount than set forth in this Amendment. The difference between the amount of Base Rent paid by Tenant for these three (3) months and the amount of Base Rent due under the Lease, as amended hereby, for such months is $32,638.44 (the “ Excess Base Rent ”). Notwithstanding anything to contrary contained herein, Landlord shall credit the Excess Base Rent against Base Rent due for the month of August 2009.  Furthermore, if Tenant pays any additional installments of Base Rent at the rate set forth in the Lease which are in excess of the schedule set forth in Section 2(a) above, then Landlord shall credit any such overpayment against Rent next due under the Lease, as amended hereby.

(c)            Nothing herein shall be construed to limit or alter Tenant’s obligation to pay Tenant’s Share of Operating Expenses and real property taxes throughout the Extension Term in accordance with the terms of the Lease.

(c)             Condition of Premises .  Tenant shall accept the Premises in its “AS IS” state and condition effective as of the commencement of the Extension Term, subject to any obligations by Landlord to repair and/or maintain the Premises as set forth in the Lease.  Tenant acknowledges that Landlord shall have no obligation to make or pay for any improvements to the Premises or otherwise prepare the Premises for Tenant’s occupancy during the Extension Term.

3.               Subordination .  Landlord hereby reaffirms its obligation set forth in Section 30.3 of the Lease to obtain a commercially reasonable non-disturbance agreement from the beneficiary of any future Security Device which is secured by the Building.

4.1            Notice Provision .  Landlord’s new address for receipt of notices under the Lease is as follows:

c/o Invesco Real Estate

500 Three Galleria Tower

13155 Noel Road

Dallas, TX 75240

Attention:  Tapo Canyon Asset Manager

4.2             Security Deposit .  The parties acknowledge that Landlord is currently holding a security deposit in the amount of $48,965.63 pursuant to the Lease. Landlord will require a security deposit in the amount of $38,086.15 to be held in accordance with the terms of the Lease for the remainder of the Term (including the Extension Term).  Promptly following the full execution of this Amendment by Landlord and Tenant, Landlord shall credit the amount of $10,879.40 against Base Rent due for the month of August 2009.

4.3             Surrender Obligations .  Section 7.5.1 of the Lease is hereby revised by the addition of the following language: “Tenant shall not be required to remove:  (i) any of its improvements or alterations that were approved by Landlord and completed during the initial construction of the Premises prior to the original commencement date of the Lease (the “ Initial Improvements ”), and (ii) any improvements existing in the Premises as of April 1, 2009.”  Tenant represents and warrants to Landlord that Tenant has not made any material alterations in, or improvements to, the Premises since the construction of the Initial Improvements.

4.4             Additional Provisions .  As of the date of this Amendment, the following provisions are hereby added to the Lease:

“59.           USA Patriot Act and Anti-Terrorism Laws .

(a)            Tenant represents and warrants to, and covenants with, Landlord that neither Tenant nor any of its respective constituent owners or affiliates currently are, or shall be at any time during the term hereof, in violation of any laws relating to terrorism or money laundering (collectively, the “ Anti-Terrorism Laws ”), including without limitation Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (the “ Executive Order ”) and/or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) (the “ USA Patriot Act ”).

(b)            Tenant covenants with Landlord that neither Tenant nor any of its respective constituent owners or affiliates is or shall be during the term hereof a “Prohibited Person,” which is defined as follows:  (i) a person or entity that is listed in the Annex to, or is otherwise subject to, the provisions of the Executive Order; (ii) a person or entity owned or controlled by, or acting for or on behalf of, any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a person or entity with whom Landlord is prohibited from dealing with or otherwise engaging in any transaction by any Anti-Terrorism Law, including without limitation the Executive Order and the USA Patriot Act; (iv) a person or entity who commits, threatens or conspires to commit or support “terrorism” as defined in Section 3(d) of the Executive Order; (v) a person or entity that is named as a “specially designated national and blocked person” on the then-most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov/offices/eotffc/ofac/sdn/t11sdn.pdf , or at any replacement website or other replacement official publication of such list; and (vi) a person or entity who is affiliated with a person or entity listed in items (i) through (v) above.

(c)            At any time and from time to time during the Term, Tenant shall deliver to Landlord, within ten (10) days after receipt of a written request therefor, a written certification or such other evidence reasonably acceptable to Landlord evidencing and confirming Tenant’s compliance with this Section 59 .

60.             Mold .  It is generally understood that mold spores are present essentially everywhere and that mold can grow in most any moist location.  Emphasis is properly placed on prevention of moisture and on good housekeeping and ventilation practices.  Tenant acknowledges the necessity of commercially reasonable housekeeping, ventilation and moisture control (especially in kitchens, janitor’s closets, bathrooms, break rooms and around outside walls) for mold prevention.  Without limiting the generality of the foregoing, Tenant shall adopt and implement the following guidelines: (A) report any maintenance problems involving water, moist conditions or mold to the property manager for the Industrial Center (the “ Property Manager ”) promptly and conduct its required activities in a commercially reasonable manner that prevents unusual moisture conditions or mold growth; (B) do not block or inhibit the flow of return or make-up air into the HVAC system; (C) maintain the Premises at a consistent temperature and humidity level in accordance with the Property Manager’s instructions; (D) regularly conduct janitorial activities, especially in bathrooms, kitchens and janitorial spaces, to remove mildew and prevent or correct moist conditions using commercially reasonable measures; and (E) maintain water in all drain taps at all times.  In signing that certain First Amendment to Lease, Tenant acknowledges that it is currently in occupancy of the Premises and certifies that, to the best of Tenant’s knowledge, Tenant has not observed mold, mildew or moisture within