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                                                                   EXHIBIT 10.70

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                           MTI TECHNOLOGY CORPORATION

                           LOAN AND SECURITY AGREEMENT

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        This LOAN AND SECURITY AGREEMENT is entered into as of November 13,
2002, by and between COMERICA BANK-CALIFORNIA ("Bank") and MTI TECHNOLOGY
CORPORATION ("Borrower").

                                    RECITALS

        Borrower wishes to obtain credit from time to time from Bank, and Bank
desires to extend credit to Borrower. This Agreement sets forth the terms on
which Bank will advance credit to Borrower, and Borrower will repay the amounts
owing to Bank.

                                    AGREEMENT

        The parties agree as follows:

        1. DEFINITIONS AND CONSTRUCTION.

               1.1 Definitions. As used in this Agreement, the following terms
shall have the following definitions:

                      "Advance" or "Advances" means a cash advance or cash
advances under the Revolving Facility.

                      "Affiliate" means, with respect to any Person, any Person
that owns or controls directly or indirectly such Person, any Person that
controls or is controlled by or is under common control with such Person, and
each of such Person's senior executive officers, directors, and partners.

                      "Bank Expenses" means all: reasonable costs or expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
the preparation, negotiation, administration, and enforcement of the Loan
Documents; and Bank's reasonable attorneys' fees and expenses incurred in
amending, enforcing or defending the Loan Documents (including fees and expenses
of appeal), incurred before, during and after an Insolvency Proceeding, whether
or not suit is brought.

                      "Business Day" means any day that is not a Saturday,
Sunday, or other day on which banks in the State of California are authorized or
required to close.

                      "Change in Control" shall mean a transaction in which any
"person" or "group" (within the meaning of Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly,
of a sufficient number of shares of all classes of stock then outstanding of
Borrower ordinarily entitled to vote in the election of directors, empowering
such "person" or "group" to elect a majority of the Board of Directors of
Borrower, who did not have such power before such transaction.

                      "Closing Date" means the date of this Agreement.

                      "Code" means the California Uniform Commercial Code.

                      "Collateral" means the property described on Exhibit A
attached hereto.

                      "Contingent Obligation" means, as applied to any Person,
any direct or indirect liability, contingent or otherwise, of that Person with
respect to (i) any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn
letters of credit, corporate credit cards, or merchant services issued or
provided for the account of that Person; and (iii) all obligations arising under
any interest rate, currency or commodity swap agreement, interest rate cap
agreement, interest rate collar agreement, or other agreement or arrangement
designed to protect such Person against fluctuation in interest rates, currency
exchange

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rates or commodity prices; provided, however, that the term "Contingent
Obligation" shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith; provided, however, that such
amount shall not in any event exceed the maximum amount of the obligations under
the guarantee or other support arrangement.

                      "Credit Extension" means each Advance, Letter of Credit,
or any other extension of credit by Bank for the benefit of Borrower hereunder.

                      "Daily Balance" means the amount of the Obligations owed
at the end of a given day.

                      "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and the regulations thereunder.

                      "Event of Default" has the meaning assigned in Article 8.

                      "Foreign Subsidiary" means any Subsidiary of Borrower
organized, existing and doing business exclusively outside of the United States
and Canada.

                      "GAAP" means generally accepted accounting principles as
in effect from time to time.

                      "Indebtedness" means (a) all indebtedness for borrowed
money or the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.

                      "Insolvency Proceeding" means any proceeding commenced by
or against any person or entity under any provision of the United States
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, formal or informal
moratoria, compositions, extension generally with its creditors, or proceedings
seeking reorganization, arrangement, or other relief.

                      "IRC" means the Internal Revenue Code of 1986, as amended,
and the regulations thereunder.

                      "Lien" means any mortgage, lien, deed of trust, charge,
pledge, security interest or other encumbrance.

                      "Loan Documents" means, collectively, this Agreement, any
note or notes executed by Borrower, and any other agreement entered into in
connection with this Agreement, all as amended or extended from time to time.

                      "Material Adverse Effect" means a material adverse effect
on (i) the business operations, condition (financial or otherwise) of Borrower
and its Subsidiaries taken as a whole or (ii) the ability of Borrower to repay
the Obligations or otherwise perform its obligations under the Loan Documents.

                      "Obligations" means all debt, principal, interest, Bank
Expenses and other amounts owed to Bank by Borrower pursuant to this Agreement
or any other agreement, whether absolute or contingent, due or to become due,
now existing or hereafter arising, including any interest that accrues after the
commencement of an Insolvency Proceeding and including any debt, liability, or
obligation owing from Borrower to others that Bank may have obtained by
assignment or otherwise.

                      "Periodic Payments" means all installments or similar
recurring payments that Borrower may now or hereafter become obligated to pay to
Bank pursuant to the terms and provisions of any instrument, or agreement now or
hereafter in existence between Borrower and Bank.

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                      "Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or governmental agency.

                      "Prime Rate" means the variable rate of interest, per
annum, most recently announced by Bank, as its "prime rate," whether or not such
announced rate is the lowest rate available from Bank.

                      "Responsible Officer" means each of the Chief Executive
Officer, the Chief Operating Officer, the Chief Financial Officer and the
Controller of Borrower.

                      "Revolving Facility" means the facility under which
Borrower may request Bank to issue Advances, as specified in Section 2.1(a)
hereof.

                      "Revolving Line" means a credit extension of up to Seven
Million Dollars ($7,000,000).

                      "Revolving Maturity Date" means the earlier of (i) the day
before the first anniversary of the Closing Date or (ii) October 31, 2003.

                      "Schedule" means the schedule of exceptions attached
hereto and approved by Bank, if any.

                      "Subordinated Debt" means any debt incurred by Borrower
that is subordinated to the debt owing by Borrower to Bank on terms acceptable
to Bank (and identified as being such by Borrower and Bank).

                      "Subsidiary" means any corporation, company or partnership
in which (i) any general partnership interest or (ii) more than 50% of the stock
or other units of ownership which by the terms thereof has the ordinary voting
power to elect the Board of Directors, managers or trustees of the entity, at
the time as of which any determination is being made, is owned by Borrower,
either directly or through an Affiliate.

               1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all calculations
made hereunder shall be made in accordance with GAAP. When used herein, the
terms "financial statements" shall include the notes and schedules thereto.

        2. LOAN AND TERMS OF PAYMENT.

               2.1 Credit Extensions.

                      Borrower promises to pay to the order of Bank, in lawful
money of the United States of America, the aggregate unpaid principal amount of
all Credit Extensions made by Bank to Borrower hereunder. Borrower shall also
pay interest on the unpaid principal amount of such Credit Extensions at rates
in accordance with the terms hereof.

                      (a) Revolving Advances.

                             (i) Subject to and upon the terms and conditions of
this Agreement, Borrower may request Advances in an aggregate outstanding amount
not to exceed the Revolving Line, minus, in each case, the aggregate face amount
of all outstanding Letters of Credit. Subject to the terms and conditions of
this Agreement, amounts borrowed pursuant to this Section 2.1(a) may be repaid
and reborrowed at any time prior to the Revolving Maturity Date, at which time
all Advances under this Section 2.1(a) shall be immediately due and payable.
Borrower may prepay any Advances without penalty or premium.

                             (ii) Whenever Borrower desires an Advance, Borrower
will notify Bank by facsimile transmission or telephone no later than 3:00 p.m.
Pacific time, on the Business Day that the Advance is to be made. Each such
notification shall be promptly confirmed by a Payment/Advance Form in
substantially the form of Exhibit B hereto. Bank is authorized to make Advances
under this Agreement, based upon instructions received

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from a Responsible Officer or a designee of a Responsible Officer, or without
instructions if in Bank's discretion such Advances are necessary to meet
Obligations which have become due and remain unpaid. Bank shall be entitled to
rely on any telephonic notice given by a person who Bank reasonably believes to
be a Responsible Officer or a designee thereof, and Borrower shall indemnify and
hold Bank harmless for any damages or loss suffered by Bank as a result of such
reliance. Bank will credit the amount of Advances made under this Section 2.1(a)
to Borrower's deposit account.

                      (b) Letters of Credit.

                             (i) Subject to the terms and conditions of this
Agreement, at any time prior to the Revolving Maturity Date, Bank agrees to
issue or cause to be issued letters of credit for the account of Borrower (each,
a "Letter of Credit" and collectively, the "Letters of Credit") in an aggregate
outstanding face amount not to exceed the Revolving Line, minus the aggregate
amount of the outstanding Advances at any time, provided that the aggregate face
amount of all outstanding Letters of Credit shall not exceed $1,000,000. All
Letters of Credit shall be, in form and substance, acceptable to Bank in its
sole discretion and shall be subject to the terms and conditions of Bank's form
of standard application and letter of credit agreement (the "Application"),
which Borrower hereby agrees to execute, including Bank's standard fee equal to
1.25% per annum of the face amount of each Letter of Credit. On any drawn but
unreimbursed Letter of Credit, the unreimbursed amount shall be deemed an
Advance under Section 2.1(a). As of the Revolving Maturity Date, Borrower shall
secure in cash all obligations under any outstanding Letters of Credit which
have terms that extend beyond the Revolving Maturity Date on terms acceptable to
Bank.

                             (ii) The obligation of Borrower to reimburse Bank
for drawings made under Letters of Credit shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, the Application, and such Letters of Credit, under all
circumstances whatsoever. Borrower shall indemnify, defend, protect, and hold
Bank harmless from any loss, cost, expense or liability, including, without
limitation, reasonable attorneys' fees, arising out of or in connection with any
Letters of Credit, except for expenses caused by Bank's gross negligence or
willful misconduct.

               2.2 Overadvances. If the aggregate amount of the outstanding
Advances plus the aggregate face amount of all outstanding Letters of Credit
exceeds the Revolving Line at any time, Borrower shall immediately pay to Bank,
in cash, the amount of such excess.

               2.3 Interest Rates, Payments, and Calculations.

                      (a) Interest Rates. Except as set forth in Section 2.3(b),
the Advances shall bear interest, on the outstanding Daily Balance thereof, at a
rate equal to the Prime Rate.

                      (b) Late Fee; Default Rate. If any payment is not made
within ten (10) days after the date such payment is due, Borrower shall pay Bank
a late fee equal to the lesser of (i) five percent (5%) of the amount of such
unpaid amount or (ii) the maximum amount permitted to be charged under
applicable law. All Obligations shall bear interest, from and after the
occurrence and during the continuance of an Event of Default, at a rate equal to
five (5) percentage points above the interest rate applicable immediately prior
to the occurrence of the Event of Default.

                      (c) Payments. Interest hereunder shall be due and payable
on the first calendar day of each month during the term hereof. Bank shall, at
its option, charge such interest, all Bank Expenses, and all Periodic Payments
against any of Borrower's deposit accounts or against the Revolving Line, in
which case those amounts shall thereafter accrue interest at the rate then
applicable hereunder. Any interest not paid when due shall be compounded by
becoming a part of the Obligations, and such interest shall thereafter accrue
interest at the rate then applicable hereunder. All payments shall be free and
clear of any taxes, withholdings, duties, impositions or other charges, to the
end that Bank will receive the entire amount of any Obligations payable
hereunder, regardless of source of payment.

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                      (d) Computation. In the event the Prime Rate is changed
from time to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased, effective as of the day the Prime Rate is changed, by an
amount equal to such change in the Prime Rate. All interest chargeable under the
Loan Documents shall be computed on the basis of a three hundred sixty (360) day
year for the actual number of days elapsed.

               2.4 Crediting Payments. Prior to the occurrence of an Event of
Default, Bank shall credit a wire transfer of funds, check or other item of
payment to such deposit account or Obligation as Borrower specifies. After the
occurrence of an Event of Default, the receipt by Bank of any wire transfer of
funds, check, or other item of payment shall be immediately applied to
conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds or unless
and until such check or other item of payment is honored when presented for
payment. Notwithstanding anything to the contrary contained herein, any wire
transfer or payment received by Bank after 12:00 noon Pacific Time shall be
deemed to have been received by Bank as of the opening of business on the
immediately following Business Day. Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date
that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.

               2.5 Fees. Borrower shall pay to Bank the following:

                      (a) Non-Usage Fee. A fee equal to one third of one percent
(0.333%) of the difference between the amount then available under the Revolving
Line and the average Daily Balance outstanding thereunder during the term
hereof, paid quarterly in arrears, which shall be nonrefundable; and

                      (b) Bank Expenses. On the Closing Date, all Bank Expenses
incurred through the Closing Date, including reasonable attorneys' fees and
expenses and, after the Closing Date, all Bank Expenses, including reasonable
attorneys' fees and expenses, as and when they become due.

               2.6 Additional Costs. If, after the date hereof, any law,
regulation, treaty or official directive or the interpretation or application
thereof by any court or any governmental authority charged with the
administration thereof or the compliance with any guideline or request of any
central bank or other governmental authority (whether or not having the force of
law):

                      (a) subjects Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by Borrower or
otherwise with respect to the transactions contemplated hereby (except for taxes
on the overall net income of Bank imposed by the United States of America or any
political subdivision thereof);

                      (b) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against assets held
by, or deposits in or for the account of, or loans by, Bank; or

                      (c) imposes upon Bank any other condition with respect to
its performance under this Agreement,

and the result of any of the foregoing is to increase the cost to Bank, reduce
the income receivable by Bank or impose any expense upon Bank with respect to
the Obligations, Bank shall notify Borrower in writing thereof. Borrower agrees
to pay to Bank the amount of such increase in cost, reduction in income or
additional expense as and when such cost, reduction or expense is incurred or
determined, upon presentation by Bank of a statement of the amount and setting
forth Bank's calculation thereof, all in reasonable detail, which statement
shall be deemed true and correct absent manifest error. Notwithstanding anything
in this Section 2.6 to the contrary, Bank shall be entitled to be compensated
for amounts pursuant to this Section 2.6 only to the extent that Bank makes
comparable demands to its other borrowers who are similarly situated and face
similar circumstances.

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               2.7 Term; Optional Termination or Reduction.

                      (a) Term. This Agreement shall become effective on the
Closing Date and, subject to Section 12.7, shall continue in full force and
effect for so long as any Obligations remain outstanding or Bank has any
obligation to make Credit Extensions under this Agreement. Notwithstanding the
foregoing, Bank shall have the right to terminate its obligation to make Credit
Extensions under this Agreement immediately and without notice upon the
occurrence and during the continuance of an Event of Default. Notwithstanding
termination, Bank's Lien on the Collateral shall remain in effect for so long as
any Obligations are outstanding.

                      (b) Optional Termination or Reduction in Revolving Line.
Borrower shall have the right, upon not less than five Business Days' notice to
Bank, to terminate the Revolving Line or, from time to time, to reduce the
amount of the Revolving Line, provided that no such reduction or termination
shall be permitted if, after giving effect thereto, and to any prepayment of
Advances made on the effective date therein, the then aggregate amount of the
outstanding Advances plus the aggregate face amount of all outstanding Letters
of Credit would exceed the aggregate amount of the Revolving Line as so reduced.

        3. CONDITIONS OF LOANS.

               3.1 Conditions Precedent to Initial Credit Extension. The
obligation of Bank to make the initial Credit Extension is subject to the
condition precedent that Bank shall have received, in form and substance
satisfactory to Bank, the following:

                      (a) this Agreement;

                      (b) a certificate of the Secretary of Borrower with
respect to incumbency and resolutions authorizing the execution and delivery of
this Agreement;

                      (c) a Standby Letter of Credit, issued by Bank of America
for the benefit of Bank, in the minimum amount of the Revolving Line;

                      (d) payment of the fees and Bank Expenses then due
specified in Section 2.5 hereof;

                      (e) current financial statements of Borrower; and

                      (f) such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.

               3.2 Conditions Precedent to all Credit Extensions. The obligation
of Bank to make each Credit Extension, including the initial Credit Extension,
is further subject to the following conditions:

                      (a) timely receipt by Bank of the Payment/Advance Form as
provided in Section 2.1; and

                      (b) the representations and warranties contained in
Section 5 shall be true and correct in all material respects on and as of the
date of such Payment/Advance Form and on the effective date of each Credit
Extension as though made at and as of each such date, and no Event of Default
shall have occurred and be continuing, or would exist after giving effect to
such Credit Extension (provided, however, that those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of such date). The making of each Credit
Extension shall be deemed to be a representation and warranty by Borrower on the
date of such Credit Extension as to the accuracy of the facts referred to in
this Section 3.2.

        4. LETTER OF CREDIT. Borrower shall cause Bank of America to issue a
letter of credit, under which Bank is the beneficiary, in form and substance
satisfactory to Bank, in an amount of at least Seven Million Dollars
($7,000,000). Such letter of credit shall have an expiration date at least 30
days past the Revolving Maturity Date. Bank shall be entitled to draw down on
such letter of credit for the entire amount owing from Borrower to

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Bank upon the occurrence of an Event of Default. Such letter of credit shall
remain in full force and effect so long as any Obligations are owing from
Borrower to Bank, unless such obligations have become cash-secured prior to
expiration or termination thereof.

        5. REPRESENTATIONS AND WARRANTIES.

               Borrower represents and warrants as follows:

               5.1 Due Organization and Qualification. Borrower and each
Subsidiary is a corporation duly existing under the laws of its state of
incorporation and qualified and licensed to do business in any state in which
the conduct of its business or its ownership of property requires that it be so
qualified.

               5.2 Due Authorization; No Conflict. The execution, delivery, and
performance of the Loan Documents are within Borrower's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Certificate of Incorporation or Bylaws, nor
will they constitute an event of default under any material agreement to which
Borrower is a party or by which Borrower is bound. No material default exists
under any material agreement to which Borrower is a party or by which it is
bound.

               5.3 Name; Location of Chief Executive Office. Except as disclosed
in the Schedule, Borrower has not done business under any name other than that
specified on the signature page hereof. The chief executive office of Borrower
is located at the address indicated in Section 10 hereof.

               5.4 Litigation. Except as set forth in the Schedule, there are no
actions or proceedings pending by or against Borrower or any Subsidiary before
any court or administrative agency in which an adverse decision could have a
Material Adverse Effect.

               5.5 No Material Adverse Change in Financial Statements. All
consolidated and consolidating financial statements related to Borrower and any
Subsidiary that Bank has received from Borrower fairly present in all material
respects Borrower's financial condition as of the date thereof and Borrower's
consolidated and consolidating results of operations for the period then ended.
There has not been a material adverse change in the consolidated or the
consolidating financial condition of Borrower since the date of the most recent
of such financial statements submitted to Bank.

               5.6 Solvency, Payment of Debts. Borrower is solvent and able to
pay its debts (including trade debts) as they mature.

               5.7 Regulatory Compliance. Borrower and each Subsidiary have met
the minimum funding requirements of ERISA with respect to any employee benefit
plans subject to ERISA, and no event has occurred resulting from Borrower's
failure to comply with ERISA that could result in Borrower's incurring any
material liability. Borrower is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940. Borrower is not engaged principally, or as one of the
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations T and U
of the Board of Governors of the Federal Reserve System). Borrower has complied
with all the provisions of the Federal Fair Labor Standards Act. Borrower has
not violated any statutes, laws, ordinances or rules applicable to it, violation
of which could have a Material Adverse Effect.

               5.8 Environmental Condition. Except as disclosed in the Schedule,
none of Borrower's or any Subsidiary's properties or assets has ever been used
by Borrower or any Subsidiary or, to the best of Borrower's knowledge, by
previous owners or operators, in the disposal of, or to produce, store, handle,
treat, release, or transport, any hazardous waste or hazardous substance other
than in accordance with applicable law; to the best of Borrower's knowledge,
none of Borrower's properties or assets has ever been designated or identified
in any manner pursuant to any environmental protection statute as a hazardous
waste or hazardous substance disposal site, or a candidate for closure pursuant
to any environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned by Borrower or any Subsidiary; and neither Borrower nor any
Subsidiary has received a summons, citation, notice, or directive from the

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Environmental Protection Agency or any other federal, state or other
governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste
or hazardous substances into the environment.

               5.9 Taxes. Borrower and each Subsidiary have filed or caused to
be filed all tax returns required to be filed, and have paid, or have made
adequate provision for the payment of, all taxes reflected therein, except any
such taxes (i) the payment of which borrower or any such Subsidiary is
diligently contesting in good faith by appropriate proceedings, and (ii) for
which adequate reserves have been provided on the books of Borrower or such
Subsidiary involved to the extent required by GAAP.

               5.10 Subsidiaries. Borrower does not own any stock, partnership
interest or other equity securities of any Person, except for Permitted
Investments.

               5.11 Government Consents. Borrower and each Subsidiary have
obtained all consents, approvals and authorizations of, made all declarations or
filings with, and given all notices to, all governmental authorities that are
necessary for the continued operation of Borrower's business as currently
conducted, the failure to obtain which could have a Material Adverse Effect.

               5.12 Accounts. Except for cash and cash equivalents maintained
outside the United States, none of Borrower's cash or cash equivalents is
maintained or invested with a Person other than Bank.

               5.13 Full Disclosure. No representation, warranty or other
statement made by Borrower in any certificate or written statement furnished to
Bank contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained in such
certificates or statements not misleading.

        6. AFFIRMATIVE COVENANTS.

               Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as Bank may have any commitment to make
a Credit Extension hereunder, Borrower shall do all of the following:

               6.1 Good Standing. Borrower shall maintain its and each of its
Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which it is
required under applicable law. Borrower shall maintain, and shall cause each of
its Subsidiaries to maintain, in force all licenses, approvals and agreements,
the loss of which could have a Material Adverse Effect.

               6.2 Government Compliance. Borrower shall meet, and shall cause
each Subsidiary to meet, the minimum funding requirements of ERISA with respect
to any employee benefit plans subject to ERISA. Borrower shall comply, and shall
cause each Subsidiary to comply, with all statutes, laws, ordinances and
government rules and regulations to which it is subject, noncompliance with
which could have a Material Adverse Effect.

               6.3 Financial Statements, Reports, Certificates. Borrower shall
deliver the following to Bank: (a) as soon as available, but in any event within
forty-five (45) days after the end of the first three quarterly periods of each
fiscal year of Borrower, a company prepared consolidated balance sheet, income,
and cash flow statement covering Borrower's consolidated operations during such
period, prepared in accordance with GAAP, consistently applied, in a form
acceptable to Bank and certified by a Responsible Officer; (b) as soon as
available, but in any event within ninety (90) days after the end of Borrower's
fiscal year, audited consolidated financial statements of Borrower prepared in
accordance with GAAP, consistently applied, together with an unqualified opinion
on such financial statements of an independent certified public accounting firm
reasonably acceptable to Bank; (c) if applicable, copies of all statements,
reports and notices sent or made available generally by Borrower to its security
holders or to any holders of Subordinated Debt and all reports on Forms 10-K and
10-Q filed with the Securities and Exchange Commission; (d) promptly upon
receipt of notice thereof, a report of any legal actions pending or threatened
against Borrower or any Subsidiary that could result in damages or costs to
Borrower or any

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Subsidiary of One Hundred Thousand Dollars ($100,000) or more; and (e) such
budgets, sales projections, operating plans or other financial information as
Bank may reasonably request from time to time generally prepared by Borrower in
the ordinary course of business.

        Borrower shall deliver to Bank with the quarterly financial statements a
Compliance Certificate signed by a Responsible Officer in substantially the form
of Exhibit C hereto.

               6.4 Taxes. Borrower shall make, and shall cause each Subsidiary
to make, due and timely payment or deposit of all material federal, state, and
local taxes, assessments, or contributions required of it by law, and will
execute and deliver to Bank, on demand, appropriate certificates attesting to
the payment or deposit thereof; and Borrower will make, and will cause each
Subsidiary to make, timely payment or deposit of all material tax payments and
withholding taxes required of it by applicable laws, including, but not limited
to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
state, and federal income taxes, and will, upon request, furnish Bank with proof
satisfactory to Bank indicating that Borrower or a Subsidiary has made such
payments or deposits; provided that Borrower or a Subsidiary need not make any
payment if the amount or validity of such payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent required by GAAP)
by Borrower.

               6.5 Insurance.

                      (a) Borrower shall maintain insurance relating to
Borrower's business in amounts and of a type that are customary to businesses
similar to Borrower's.

                      (b) All such policies of insurance shall be in such form,
with such companies, and in such amounts as are reasonably satisfactory to Bank.
Upon Bank's request, Borrower shall deliver to Bank certified copies of such
policies of insurance and evidence of the payments of all premiums therefor.

               6.6 Accounts. Borrower shall maintain its primary depository,
operating, and investment accounts with Bank and/or Comerica Securities, Inc.

               6.7 Further Assurances. At any time and from time to time
Borrower shall execute and deliver such further instruments and take such
further action as may reasonably be requested by Bank to effect the purposes of
this Agreement.

        7. NEGATIVE COVENANTS.

               Borrower covenants and agrees that until payment in full of the
outstanding Obligations, and for so long as Bank may have any commitment to make
any Credit Extensions, Borrower will not do any of the following:

               7.1 Change in Business; Change in Control or Executive Office.
Engage in any business, or permit any of its Subsidiaries to engage in any
business, other than the businesses currently engaged in by Borrower and any
business substantially similar or related thereto (or incidental thereto); or
cease to conduct business in the manner conducted by Borrower as of the Closing
Date; or suffer or permit a Change in Control; or without thirty (30) days prior
written notification to Bank, relocate its chief executive office or state of
incorporation or change its legal name; or without Bank's prior written consent,
change the date on which its fiscal year ends.

               7.2 Mergers or Acquisitions. Merge or consolidate, or permit any
of its Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person.

               7.3 Transactions with Affiliates. Directly or indirectly enter
into or permit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a non-affiliated Person.

                                       9
<PAGE>

               7.4 Compliance. Become an "investment company" or be controlled
by an "investment company," within the meaning of the Investment Company Act of
1940, or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Credit Extension for such
purpose. Fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur, fail
to comply with the Federal Fair Labor Standards Act or violate any law or
regulation, which violation could have a Material Adverse Effect, or a material
adverse effect on the Collateral or the priority of Bank's Lien on the
Collateral, or permit any of its Subsidiaries to do any of the foregoing.

        8. EVENTS OF DEFAULT.

               Any one or more of the following events shall constitute an Event
of Default by Borrower under this Agreement:

               8.1 Payment Default. If Borrower fails to pay within five (5)
days of the date when due, any of the Obligations;

               8.2 Covenant Default. If Borrower fails to perform any obligation
under Article 6 or violates any of the covenants contained in Article 7 of this
Agreement, or fails or neglects to perform, keep, or observe any other material
term, provision, condition, covenant, or agreement contained in this Agreement,
in any of the Loan Documents, or in any other present or future agreement
between Borrower and Bank and as to any default that can be cured, has failed to
cure such default within ten (10) days after Borrower receives notice thereof or
any officer of Borrower becomes aware thereof; provided, however, that if the
default cannot by its nature be cured within the ten (10) day period or cannot
after diligent attempts by Borrower be cured within such ten (10) day period,
and such default is likely to be cured within a reasonable time, then Borrower
shall have an additional reasonable period (which shall not in any case exceed
thirty (30) days) to attempt to cure such default, and within such reasonable
time period the failure to have cured such default shall not be deemed an Event
of Default (provided that no Credit Extensions will be required to be made
during such cure period);

               8.3 Material Adverse Effect. If there occurs any circumstance or
circumstances that could have a Material Adverse Effect;

               8.4 Attachment. If any material portion of Borrower's assets are
attached, seized, subjected to a writ or distress warrant, or are levied upon,
or come into the possession of any trustee, receiver or person acting in a
similar capacity and such attachment, seizure, writ or distress warrant or levy
has not been removed, discharged or rescinded within thirty (30) days, or if
Borrower is enjoined, restrained, or in any way prevented by court order from
continuing to conduct all or any material part of its business affairs, or if a
judgment or other claim becomes a lien or encumbrance upon any material portion
of Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within thirty (30)
days after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
that no Credit Extensions will be required to be made during such cure period);

               8.5 Insolvency. If Borrower becomes insolvent, or if an
Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding
is commenced against Borrower and is not dismissed or stayed within forty-five
(45) days (provided that no Credit Extensions will be made prior to the
dismissal of such Insolvency Proceeding);

               8.6 Other Agreements. If there is a default or other failure to
perform in any agreement to which Borrower is a party or by which it is bound
resulting in a third party or parties accelerating the maturity of any
Indebtedness in an amount in excess of One Hundred Thousand Dollars ($100,000);
or which could have a Material Adverse Effect;

                                       10
<PAGE>

               8.7 Judgments. If a judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least One Hundred
Thousand Dollars ($100,000) shall be rendered against Borrower and shall remain
unsatisfied, unbonded and unstayed for a period of thirty (30) days (provided
that no Credit Extensions will be made prior to the satisfaction or stay of such
judgment); or

               8.8 Misrepresentations. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to Bank by any Responsible
Officer pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document.

               8.9 Letter of Credit. If the letter of credit issued by Bank of
America to Bank pursuant to Section 4 is terminated or notice is given to Bank
or Bank otherwise has reason to believe that such letter of credit may be
terminated, not renewed or otherwise cease to be in full force and effect in the
form approved by Bank and in the amount of at least Seven Million Dollars
($7,000,000).

        9. BANK'S RIGHTS AND REMEDIES.

               9.1 Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default, Bank may, at its election, without notice of
its election and without demand, do any one or more of the following, all of
which are authorized by Borrower:

                      (a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
Section 8.5, all Obligations shall become immediately due and payable without
any action by Bank);

                      (b) Cease advancing money or extending credit to or for
the benefit of Borrower under this Agreement or under any other agreement
between Borrower and Bank;

                      (c) Set off and apply to the Obligations any and all (i)
balances and deposits of Borrower held by Bank, or (ii) indebtedness at any time
owing to or for the credit or the account of Borrower held by Bank;

                      (d) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower.

               9.2 Bank Expenses. If Borrower fails to pay any amounts or
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Bank may do any or all of the
following after reasonable notice to Borrower: (a) make payment of the same or
any part thereof; (b) set up such reserves under a loan facility in Section 2.1
as Bank deems necessary to protect Bank from the exposure created by such
failure; or (c) obtain and maintain insurance policies of the type discussed in
Section 6.5 of this Agreement, and take any action with respect to such policies
as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute
Bank Expenses, shall be immediately due and payable, and shall bear interest at
the then applicable rate hereinabove provided, and shall be secured by the
Collateral. Any payments made by Bank shall not constitute an agreement by Bank
to make similar payments in the future or a waiver by Bank of any Event of
Default under this Agreement.

               9.3 Remedies Cumulative. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Bank of one right
or remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election, or acquiescence by it. No waiver by Bank
shall be effective unless made in a written document signed on behalf of Bank
and then shall be effective only in the specific instance and for the specific
purpose for which it was given.

                                       11
<PAGE>

               9.4 Demand; Protest. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Bank on which Borrower may in any way be liable.

        10. NOTICES.

               Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by a recognized
overnight delivery service, certified mail, postage prepaid, return receipt
requested, or by telefacsimile to Borrower or to Bank, as the case may be, at
its addresses set forth below:

        If to Borrower:      MTI TECHNOLOGY CORPORATION
                             4905 E. LaPalma Avenue
                             Anaheim, CA 92807
                             Attn:  Chief Financial Officer
                             FAX: (714) 693-2256

        With a copy to:      MTI TECHNOLOGY CORPORATION
                             4905 E. LaPalma Avenue
                             Anaheim, CA 92807
                             Attn:  Chief Executive Officer
                             Fax: 714-693-2363

        If to Bank:          Comerica Bank-California
                             9920 S. La Cienega Blvd., Suite 1401
                             Inglewood, CA 90301
                             Attn:  Manager
                             FAX: (310) 338-6110

        with a copy to:      Comerica Bank-California
                             4 Venture, Suite 305
                             Irvine, CA 92618
                             Attn: Mr. Derek M. Hoyt
                             FAX: (949 ) 754-5105

        The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.

        11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

               This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of California, without regard to principles
of conflicts of law. Each of Borrower and Bank hereby submits to the exclusive
jurisdiction of the state and Federal courts located in the County of Santa
Clara, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

                                       12
<PAGE>

        12. GENERAL PROVISIONS.

               12.1 Successors and Assigns. This Agreement shall bind and inure
to the benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this Agreement nor any rights hereunder
may be assigned by Borrower without Bank's prior written consent, which consent
may be granted or withheld in Bank's sole discretion. Bank shall have the right
without the consent of or notice to Borrower to sell, transfer, negotiate, or
grant participation in all or any part of, or any interest in, Bank's
obligations, rights and benefits hereunder.

               12.2 Indemnification. Borrower shall defend, indemnify and hold
harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank
as a result of or in any way arising out of, following, or consequential to
transactions between Bank and Borrower whether under this Agreement, or
otherwise (including without limitation reasonable attorneys' fees and
expenses), except for losses caused by Bank's gross negligence or willful
misconduct.

               12.3 Time of Essence. Time is of the essence for the performance
of all obligations set forth in this Agreement.

               12.4 Severability of Provisions. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.

               12.5 Amendments in Writing, Integration. Neither this Agreement
nor the Loan Documents can be amended or terminated orally. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties hereto with respect to the subject matter of this Agreement
and the Loan Documents, if any, are merged into this Agreement and the Loan
Documents.

               12.6 Counterparts. This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same Agreement.

               12.7 Survival. All covenants, representations and warranties made
in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding or Bank has any obligation to make Credit
Extensions to Borrower. The obligations of Borrower to indemnify Bank with
respect to the expenses, damages, losses, costs and liabilities described in
Section 12.2 shall survive until all applicable statute of limitations periods
with respect to actions that may be brought against Bank have run.

               12.8 Confidentiality. In handling any confidential information
Bank and all employees and agents of Bank, including but not limited to
accountants, shall exercise the same degree of care that it exercises with
respect to its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to this Agreement except that disclosure of such information may be
made (i) to the subsidiaries or affiliates of Bank in connection with their
present or prospective business relations with Borrower, (ii) to prospective
transferees or purchasers of any interest in the Loans, provided that they have
entered into a comparable confidentiality agreement in favor of Borrower and
have delivered a copy to Borrower, (iii) as required by law, regulations, rule
or order, subpoena, judicial order or similar order, (iv) as may be required in
connection with the examination, audit or similar investigation of Bank and (v)
as Bank may determine in connection with the enforcement of any remedies
hereunder. Confidential information hereunder shall not include information that
either: (a) is in the public domain or in the knowledge or possession of Bank
when disclosed to Bank, or becomes part of the public domain after disclosure to
Bank through no fault of Bank; or (b) is disclosed to Bank by a third party,
provided Bank does not have actual knowledge that such third party is prohibited
from disclosing such information.

                                       13
<PAGE>

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.

                                        MTI TECHNOLOGY CORPORATION

                                        By: /s/ MARK A. FRANZEN
                                            ------------------------------------

                                        Title: Chief Financial Officer
                                               ---------------------------------

                                        COMERICA BANK-CALIFORNIA

                                        By: /s/ DEREK HOYT
                                            ------------------------------------

                                        Title: Commercial Banking Officer
                                               ---------------------------------

                                       14Employment agreement dated January 1, 2002

 EXHIBIT 10.1 
  
 EMPLOYMENT AGREEMENT 
  
 (David N. Keys) 
  
 This Employment Agreement (“Agreement”), entered into effective January 1, 2002, is between American Pacific Corporation., a Delaware corporation
having its principal place of business at 3770 Howard Hughes Parkway, Suite 300, Las Vegas Nevada 89109 (the ”Company”), and David N. Keys, an individual residing in Clark County, Nevada (the ”Executive”) (collectively, “the
parties”). 
  
 RECITALS 
  
 1.    The Company, through its subsidiary corporations, is engaged in the manufacture of specialty chemicals, including perchlorate chemicals, sodium azide and HalotronTM fire suppression agents, the design and manufacture of environmental protection products
and other products as may be acquired or developed over time, and real estate development. 
  
 2.    Executive has been employed by the Company since July 1, 1989, and is currently serving as the Company’s Executive Vice President, Chief Financial Officer, Secretary and Treasurer. 

 
 3.    The Company desires to continue to employ Executive and to assure itself of the continued services of
Executive for the term of this Agreement, and Executive desires to be employed by the Company for such period, upon the following terms and conditions. 
  
 AGREEMENT 
  
 ACCORDINGLY, the parties agree as follows: 
  
 1.    Period of Employment 
  
 a.    Basic Term.    The Company shall continue to employ Executive to render services to the Company in the
position and with the duties and responsibilities described in Section 2 from the date of this Agreement through December 31, 2004 (the “Term Date”), unless Executive’s employment is terminated sooner in accordance with Section 4
below. 
  
 b.    Annual Renewal.    Each year the term
and provisions of this Agreement shall automatically extend for a total three-year period, to and including the year in which the Executive attains age sixty-five (65), and unless either party notifies the other in writing to the contrary at least
30 days prior to the applicable December 31 date that it, or he, does not want the term to so extend. If the Company provides such notice, the severance benefits and arrangements described in Section 4c shall apply at the end of the existing term of
the Agreement. Regardless of the Term Date, this Agreement shall end on December 31 of the year in which the Executive attains age sixty-five (65). 
  
 2.    Position, Duties, Responsibilities 
  
 a.    Position:    Executive is employed by the Company to render services to the Company in the positions of Executive Vice President, Chief Financial Officer, Secretary and
Treasurer, and shall perform all services appropriate to those positions, as well as such other services as may reasonably be assigned by the Company. The duties assigned to the Executive may be, but need not be, the same duties that are presently
assigned to the Executive, and may be changed from time to time. Initially, the Executive shall act as the Chief Financial Officer of the Company and shall have all of the responsibilities and duties, including fiduciary duties, associated with such
position. In addition, during such periods of time as the Executive serves as the Executive Vice President, Secretary, Treasurer or other officer of the Company, the Executive’s service as an officer shall additionally be governed by the
Company’s Bylaws from time to time in effect, and by the laws of the state of the Company’s incorporation. Executive shall at all times perform his duties and discharge his responsibilities under this Agreement and under applicable law
diligently and conscientiously, and to the best of his ability, and 

 
 1 

  
 shall direct his best efforts to further and maximize the business and interests of the Company and its
shareholders, in accordance with sound business practices and applicable laws and regulations. Executive shall report to the Chief Executive Officer of the Company. 
  
 b.    Other Activities.    Except upon the prior written consent of the Company, Executive will not (i)
accept any other employment, or (ii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that is or may be in conflict with, or that might place Executive in a conflicting position to that
of, the Company. Without limitation, the Executive shall not act in any advisory or other capacity for any individual, firm, association or corporation other than the Company and its subsidiary corporations in matters in any way pertaining to any
business or undertaking in any way similar to or competitive with the business or activities of the Company and its subsidiary corporations. Notwithstanding the foregoing, while the Company does not request Executive’s service on the boards of
directors of other corporations, the Company does not, in principle, object to such service where Executive would have no conflict of interest with duties owed to the Company. 
  
 c.    Proprietary Information.    “Proprietary Information” is all information and any idea in
whatever form, tangible or intangible, pertaining in any manner to the business of the Company and its subsidiary corporations, or its employees, clients, consultants, or business associates, which was produced by any employee of the Company or its
subsidiary corporations, in the course of his or her employment or otherwise produced or acquired by or on behalf of the Company or its subsidiary corporations. All Proprietary Information not generally known outside of the Company’s
organization, and all Proprietary Information so known only through improper means, shall be deemed “Confidential Information.” Without limiting the foregoing definition, Proprietary and Confidential Information shall include, but not be
limited to: (i) formulas, teaching and development techniques, processes, trade secrets, computer programs, electronic codes, inventions, improvements, and research projects; (ii) information about costs, profits, markets, sales, and lists of
customers or clients; (iii) business, marketing, and strategic plans; and (iv) employee personnel files and compensation information. Executive should consult any Company procedures instituted to identify and protect certain types of Confidential
Information, which are considered by the Company to be safeguards in addition to the protection provided by this Agreement. Nothing contained in those procedures or in this Agreement is intended to limit the effect of the other. 

 
 d.    General Restrictions on Use.    During the Period of
Employment, Executive shall use Proprietary Information, and shall disclose Confidential Information, only for the benefit of the Company and as is necessary to carry out his responsibilities under this Agreement. Following termination, Executive
shall neither, directly or indirectly, use any Proprietary Information nor disclose any Confidential Information, except as expressly and specifically authorized in writing by the Company. The publication of any Proprietary Information through
literature or speeches must be approved in advance in writing by the Company. 
  
 3.    Compensation. 
  
 In consideration of the services to be rendered
under this Agreement, Executive shall be entitled to the following: 
  
 a.    The
Company shall continue to pay Executive as compensation for services a base salary at the annual rate of $301,800, or at such higher rate as the Compensation Committee of the Board of Directors may determine from time to time. Such salary shall be
payable in accordance with the standard payroll procedures of the Corporation. Once the Corporation’s Compensation Committee of the Board of Directors has increased such salary, it thereafter shall not be reduced. The annual compensation
specified in this Section 3, together with any increases in such compensation that the Compensation Committee of the Board of Directors may grant from time to time, is referred to in this Agreement as “Base Compensation.” 

 
 2 

  
 b.    The Company (or the employing
subsidiary corporation) shall review the above Base Compensation on or about June 1 of each calendar year, and may make any increase it deems appropriate. Any such increase shall be made effective as soon as may be practicable following each review.

  
 c.    Executive shall be eligible to participate in all the Company’s
(or the employing subsidiary corporation’s) benefit plans, and to receive perquisites of employment, as established by the Company, and as may be amended from time to time in the Company’s sole discretion at least equal to those provided
to other Company officers. 
  
 4.    Termination of Employment 
  
 a.    Termination By Death.    Executive’s employment shall terminate
automatically upon the death of Executive. Company shall pay to Executive’s beneficiaries or estate, as appropriate, any compensation then due and owing, and shall continue to pay Executive’s salary and benefits, through the second full
month after Executive’s death. As of the date of death, all stock options available to Executive through the Term Date shall be deemed accelerated and vested, and may be exercised by the appropriate representative beneficiary of
Executive’s estate. Thereafter, all obligations of Company under this Agreement shall cease. Nothing in this Section shall affect any entitlement of Executive’s heirs to the benefits of any life insurance plan or other applicable benefits.

  
 b.    Termination By Disability.    If, in the
sole opinion of the Company, Executive shall be prevented from properly performing his duties hereunder by reason of any physical or mental incapacity for a period of more than ninety (90) days in the aggregate in any twelve-month period, then, to
the extent permitted by law, Company may terminate Executive’s employment. Company shall pay to Executive all compensation to which Executive is entitled up through the last day of the month in which the 90th day of incapacity occurs, and
thereafter, all of Company’s obligations under this Agreement shall cease. Nothing in this Section shall affect Executive’s rights under any disability plan in which he is a participant. 
  
 c.    Termination By Company Not For Cause.    At any time, Employer may
terminate the Period of Employment Not For Cause for any reason by providing Executive thirty (30) days’ advance written notice, provided that Executive shall, in addition to all compensation due and owing through the last day actually worked,
receive the following: 
  
 (i)  The Company shall pay Executive a severance payment equal
to three years of the Executive’s then current Base Compensation. The severance payment will be made in the form of salary continuation for three years (the “Severance Period”), payable on the Company’s normal payroll schedule.

  
 (ii)  During the Severance Period, Executive will continue to receive other perquisites
of employment that he would have received had he remained employed as the Company’s Executive Vice President, Chief Financial Officer, Secretary and Treasurer. 
  
 (iii)  The Company shall provide Executive and his covered dependants, if any, with continuing health insurance coverage throughout the Severance
Period. Upon conclusion of Severance Period, Executive is eligible to elect to convert his health insurance benefits under COBRA for a period of up to eighteen (18) months. 
  
 (iv)  All shares of stock granted to Executive and all unexercised options to purchase Company stock that are unvested at the time of the
termination of employment shall become fully vested and exercisable. 
  
 (v)  The amount of
any payment provided for in this Section 4.c shall not be reduced, offset or subject to recovery by the Company by reason of any compensation earned by Executive as the result 

 
 3 

  
 of employment by another employer during the Severance Period so long as
Executive does not violate the provisions of Section 6.d below. 
  
 (vi)  The severance
benefits described in this Section 4.c shall be conditioned upon Executive’s continued observance of the obligations described in Section 6.d throughout the Severance Period. Should Executive engage in or pursue any of the activities described
in Section 6.d at any time during the Severance Period, all severance benefits described in this Section 4.c shall cease. In addition, receipt of the benefits described in this Section 4.c are contingent upon Executive executing a release of claims
against the Company. 
  
 d.    Termination By Company For
Cause.    At any time, and without prior notice, the Company may terminate Executive’s employment For Cause (as defined below). The Company shall pay Executive all compensation then due and owing; thereafter, all of the
Company’s obligations under this Agreement shall cease. Termination for “Cause” shall mean termination of Executive’s employment because of Executive’s (i) involvement in fraud, misappropriation or embezzlement related to
the business or property of the company; (ii) conviction for, or guilty plea to, a felony; (iii) willful material breach of this Agreement; (iv) willful and continued failure to substantially perform his duties under this Agreement, provided,
however, that if such Cause is reasonably curable, the company shall not terminate Executive’s employment hereunder unless the Company first gives notice of its intention to terminate and the grounds of such termination, and the Executive has
not, within thirty (30) days following receipt of this notice, cured such Cause. 
  
 e.    By Executive Not for Good Reason.    At any time, Executive may terminate the Period of Employment for any reason, with or without cause, by providing Employer thirty (30)
days’ advance written notice. Employer shall have the option, in its complete discretion, to make termination of the Period of Employment effective at any time prior to the end of such notice period, provided Employer pays Executive all
compensation due and owing through the last day actually worked, plus an amount equal to the base salary Executive would have earned through the balance of the above notice period, thereafter, all of Employer’s obligations under this Agreement
shall cease. 
  
 f.    By Executive for Good
Reason.    Executive may terminate, without liability, the Period of Employment for Good Reason (as defined below), provided Executive gives Employer ninety (90) days’ advance written notice of the reason for termination
and his intent to terminate this Agreement. During this period, Employer shall have an opportunity to correct the condition constituting Good Reason. If the condition is remedied within this period, Executive’s notice to terminate shall be
rescinded automatically; if not remedied, termination of the Period of Employment shall become effective upon expiration of the above notice period. In this event, Employer shall pay Executive all compensation due and owing through the last day
actually worked including any accrued but unused vacation. Employer shall also have the option, in its complete discretion, to make termination effective at any time prior to the end of the notice period, provided that Employer pays Executive all
compensation due and owing through the balance of the notice period (not to exceed ninety (90) days). Executive shall be entitled to exercise his right to terminate this Agreement for Good Reason only if he gives the required notice not more than
sixty (60) days after the occurrence of the event that is the basis for the Good Reason. If Executive terminates the Period of Employment for Good Reason pursuant to the provisions of this Section 4.f, Executive shall receive the severance benefits
described in and pursuant to the terms of subparagraph 4.c above. 
  
 The following shall constitute a termination by Executive for
“Good Reason”: (A) without Executive’s express written consent there is an assignment to the Executive of any duties or the reduction of the Executive’s duties, either of which is materially inconsistent with Executive’s
position or responsibilities with the Company in effect immediately prior to such assignment, except in connection with the termination of employment For Cause (as defined in Section 4.d above), or due to disability or death; (B) there is a
reduction by the Company in the Executive’s annual salary then in effect; (C) a material reduction by the Company in the kind or level of benefits provided to Executive under any benefit plan of the Company in which the Executive is
participating with the result 

 
 4 

  
 that Executive’s overall benefits package is significantly reduced; (D) any
material breach by the Company of any material provision of this Agreement; or (E) a relocation of Executive’s principal place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected by
the Employer without Executive’s consent. 
  
 g.    Good
Faith Commitment to Negotiate Transition Agreement.    Company and Executive mutually agree to negotiate in good faith with regard to a Transition Agreement, which would be offered to Executive in the event that he is
replaced as Executive Vice President, Chief Financial Officer, Secretary and/or Treasurer of the Company. For his part, Executive agrees that he will utilize his best efforts to assist in a smooth transition to any successor Executive Vice
President, Chief Financial Officer, Secretary and/or Treasurer. 
  
 h.    Corporate Transaction.  
  
 (i)  Corporate Transaction Defined. For purposes of this Agreement, a “Corporate Transaction” shall include any of the following transactions to which the Company is a party: (A) a merger or consolidation in which
the Company is not the surviving entity and securities representing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to holder different from those who held such securities
immediately prior to such merger; (B) the sale, transfer or other disposition of all or substantially all of the assets of the Company in liquidation or dissolution of the Company; (C) any reverse merger in which the Company is the surviving entity
but in which securities representing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to holder different from those who held such securities immediately prior to such
merge; or (D) any cash dividend paid by the Company that, in the aggregate with all other dividends paid in any twelve month period, is greater than the combined earnings of the Company for the Company’s two fiscal years prior to such dividend
payment date. In addition, a Corporate Transaction shall also include a “Change of Control” as such term is defined in the Company’s 2001 Stock Option Plan, a “Capital Change of the Company” as such term is defined in the
Company’s 1997 Stock Option Plan, a “Corporate Capital Transaction” as such term is defined in the Company’s 1991 Stock Option Plan, a “Change in Control” as such term is defined in the Indenture of the Company’s
Senior Notes or a “Change in Control” as such term is defined in the Company’s Supplemental Executive Retirement Plan. 
  
 (ii)  Acceleration of vesting at time of Corporate Transaction. Should a Corporate Transaction take place, all shares of stock granted to Executive and all unexercised options to purchase
Company stock granted to the Executive that are unvested at the time of the Corporate Transaction shall become fully vested and exercisable. 
  
 (iii)  Benefits Upon Occurrence of Corporate Transaction. Upon a the occurrence of a Corporate Transaction and subject to the obligations in Section 6.d-.e below, Executive shall be entitled
to the benefits described in Section 4.c above regardless of whether the Executive’s employment is terminated in connection with such Corporate Transaction. In the event the event the Executive collects benefits pursuant to this Section
4.h(iii) the Executive shall lose the right to terminate the Agreement for Good Reason. 
  
 5.    SECTION 280G PAYMENTS 
  
 a.    Gross-Up Payment.    In the event it is determined that any payment or distribution of any type to or for the benefit of the employee, pursuant to this Agreement or otherwise, by
the Corporation, any Person who acquires ownership or effective control of the Corporation, or ownership of a substantial portion of the assets of the Corporation (within the meaning of section 280G of the Code and the regulations, including
proposed regulations, thereunder) or any affiliate of such Person (the “Total Payments”) would be subject to the excise tax imposed by section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are collectively referred to as the “Excise Tax”), then the Employee shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that, after payment
by the Employee of all taxes, (including any interest or penalties imposed with respect 

 
 5 

  
 to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the
Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments. 
  
 b.    Determination by Accountant.    All mathematical determinations and determinations as to whether any of the Total Payments are “parachute payments” (within the meaning of
section 280G of the Code and the regulations, including proposed regulations, thereunder), in each case which determinations are required to be made under Section 5, including whether a Gross-Up Payment is required, the amount of such Gross-Up
Payment, shall be made by an independent accounting firm selected by the Employee from among the largest four accounting firms in the United States (the “Accounting Firm”). The Accounting Firm shall provide to the Corporation and to the
Employee its determination (the “Determination”), together with detailed supporting calculations regarding the amount of any Gross-Up Payment and any other relevant matter, within ten days after the occurrence of an event which would
trigger a parachute payment, or at such earlier time following such an event as is requested by the Employee (if the Employee reasonably believes that any of the Total Payments may be subject to the Excise Tax). If the Accounting Firm determines
that no Excise Tax is payable by the Employee, it shall furnish the Employee with a written statement that such Accounting Firm has concluded that no Excise Tax is payable (including the reasons therefore) and that the Employee has substantial
authority not to report any Excise Tax on the Employee’s federal income tax return. If a Gross-Up Payment is determined to be payable, it shall be paid to the Employee within ten days after the Determination is delivered to the Corporation or
the Employee. Any determination by the Accounting Firm shall be binding upon the Corporation and the Employee, absent manifest error. 
  
 As a result of uncertainty in the application of section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments not made by the Corporation and
members of the Corporation should have been made (“Underpayment”), or that Gross-Up Payments will have been made by the Corporation and members of the Corporation that should not have been made (“Overpayments”). In either such
event, the Accounting Firm shall determine the amount of the Underpayment or Overpayment that has occurred. In the case of an Underpayment, the Corporation promptly shall pay, or cause to be paid, the amount of such Underpayment to or for the
benefit of the Employee. In the case of an Overpayment, the Employee shall, at the direction and expense of the Corporation, take such steps as are reasonably necessary (including the filing of returns and claims for refund), follow reasonable
instructions from, and procedures established by, the Corporation, and otherwise reasonably cooperate with the Corporation to correct such Overpayment; provided, however that (1) Employee shall not in any event be obligated to return to the
Corporation an amount greater than the net after-tax portion of the Overpayment that he has retained or recovered as a refund from the applicable taxing authorities and (2) this provision shall be interpreted in a manner consistent with the intent
of Section 5(a), which is to make the Employee whole, on an after-tax basis, from the application of the Excise Tax, it being understood that the correction of an Overpayment may result in the Employee repaying to the Corporation an amount that is
less than the Overpayment. 
  
 6.    Termination Obligations 
  
 a.    Return of Company’s Property.    Executive hereby acknowledges
and agrees that all personal property, including, without limitation, all books, manuals, records, reports, notes, contracts, lists, blueprints, and other documents, or materials, or copies thereof, and equipment furnished to or prepared by
Executive in the course of or incident to Executive’s employment, belong to Company and shall be promptly returned to Company upon termination of Executive’s employment. 
  
 b.    Representations and Warranties Survive Termination of Employment.    The representations and warranties
contained herein, except Executive’s obligations under Section 2.b, shall survive termination of Executive’s employment and expiration of this Agreement. 

 
 6 

  
 c.    Cooperation in Pending
Work.    Following any termination of Executive’s employment, Executive shall fully cooperate with Company in all matters relating to the winding up of pending work on behalf of Company and the orderly transfer of work
to other employees of Company. Executive shall also cooperate in the defense of any action brought by any third party against Company that relates in any way to Executive’s acts or omissions while employed by Company. If Executive’s
cooperation in the defense of any such action requires more than ten (10) hours of Executive’s time, the Executive and Company shall agree on appropriate remuneration for Executive’s time and expenses. 
  
 d.    Noncompetition.    Executive acknowledges and agrees that during his
employment with the Company, he has had access to confidential information and the activities forbidden by this subsection would necessarily involve the improper use and disclosure of this confidential information. To forestall this use or
disclosure, Executive agrees that during the Severance Period described in Section 4.c, or for two years after the termination of Executive for reasons other than by Company Not for Cause, Executive shall not, directly or indirectly, (i) divert or
attempt to divert from the Company (or any Affiliate) any business of any kind in which it is engaged; (ii) employ or recommend for employment any person employed by the Company (or any Affiliate); or (iii) engage in any business activity that is
competitive with the Company (or any Affiliate) in any state where the Company conducts its business, unless Executive can prove that any of the above actions was done without the use of confidential information. In addition to the above
restrictions on noncompetitive activity, and regardless of whether any use of confidential information is involved, Executive agrees that during the Severance Period Executive shall not, directly or indirectly, (i) solicit any customer of the
Company (or any Affiliate) known to Executive (while he was employed by the Company) to have been a customer with respect to products or services competitive with products or services offered by the Company; or (ii) solicit for employment any person
employed by the Company (or any Affiliate). 
  
 e.    Confidential
Information. 
  
 (i)  The Executive shall never, either during the Term of the
Executive’s Employment by the Company or thereafter, use or employ for any purpose or disclose to any other individual or entity any Confidential Information. The Executive acknowledges and agrees that all Confidential Information is
proprietary to the Company, is extremely important to the Company’s business, and that the use by or disclosure of such Confidential Information to a Competitor could materially and adversely affect the Company, its business and its customers.

  
 (ii)  For purposes of this Agreement, the term “Company” shall refer to the
Company and each of its subsidiary corporations, and any other corporation or entity that is owned or controlled, directly or indirectly, by the Company or that is under common ownership or control with the Company. 
  
 (iii)  For purposes of this Agreement, the term “Confidential Information” shall mean information in
any form that is not generally known to the public that relates to the Company’s past, present or future operations, processes, products or services, or to any research, development, manufacture, purchasing, accounting, engineering, marketing,
merchandising, advertising, selling, leasing, financing or business methods or techniques (including without limitation customer lists, records of customer services, usages and requirements, sketches and diagrams of Company or customer facilities
and like and similar information relating to actual or prospective customers) that is or may be related thereto. All information disclosed to the Executive or to which the Executive obtains access during any Term of the Executive’s Employment
with the Company, whether pursuant to this Agreement or otherwise, or to which the Executive obtains access by reason of his employment by the Company, that the Executive has a reasonable basis to believe is or may be Confidential Information, shall
be presumed for purposes of this Agreement to be Confidential Information. 

 
 7 

  
 7.    Notices 
  
 All notices or other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given if delivered by hand or
mailed, postage prepaid, by certified or registered mail, return receipt requested, and addressed to the Company: 
  
 American Pacific Corporation 
 3770 Howard Hughes Parkway, Suite 300 
 Las Vegas, NV 89109 
  
 and to Executive at: 
  
 The Executive’s address as set forth on the signature page to this Agreement. 
  
 Executive and the Company shall be obligated to notify the other party of any change in address. Notice of change of address shall be effective only when made in accordance with this Section. 
  
 8.    Entire Agreement 
  
 This Agreement is intended to be the final, complete, and exclusive statement of the terms of Executive’s employment by The Company. Except for any stock option agreements and any other agreements evidencing a loan or
trust from the Company to Executive (including but not limited to the Trust Agreement for American Pacific Corporation, Supplemental Executive Retirement Plan dated November 23, 1999, and the American Pacific Corporation Supplemental Executive
Retirement Plan dated January 1, 1999), this Agreement supersedes all other prior and contemporaneous agreements and statements pertaining in any manner to the employment of Executive and it may not be contradicted by evidence of any prior or
contemporaneous statements or agreements. To the extent that the practices, policies, or procedures of Company, now or in the future, apply to Executive and are inconsistent with the terms of this Agreement, the provisions of this Agreement shall
control. 
  
 9.    Amendments, Waivers 
  
 This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by Executive and by a duly authorized representative of
Company other than Executive. No failure to exercise and no delay in exercising any right, remedy, or power under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, or power under this
Agreement preclude any other or further exercise thereof, or the exercise of any other right, remedy, or power provided herein or by law or in equity. 
  
 10.    Assignment; Successors and Assigns 
  
 Executive agrees
that he will not assign, sell, transfer, delegate or otherwise dispose of, whether voluntarily or involuntarily, or by operation of law, any rights or obligations under this Agreement, nor shall Executive’s rights be subject to encumbrance or
the claims of creditors. Any purported assignment, transfer, or delegation shall be null and void. Nothing in this Agreement shall prevent the consolidation of the Company with, or its merger into, any other corporation, or the sale by the Company
of all or substantially all of its properties or assets, or the assignment by the Company of this Agreement and the performance of its obligations hereunder to any successor in interest. In the event of a change in ownership or control of the
Company, the terms of this Agreement will remain in effect and shall be binding upon any successor in interest. Notwithstanding and subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the parties and
their respective heirs, legal representatives, successors, and permitted assigns, and shall not benefit any person or entity other than those enumerated above. 

 
 8 

  
 11.    Severability; Enforcement 

 
 If any provision of this Agreement, or the application thereof to any person, place, or circumstance, shall be held by a court of competent
jurisdiction to be invalid, unenforceable, or void, the remainder of this Agreement and such provisions as applied to other persons, places, and circumstances shall remain in full force and effect. 
  
 12.    Governing Law 
  
 The validity, interpretation, enforceability, and performance of this Agreement shall be governed by and construed in accordance with the law of the State of Nevada. 
  
 13.    Arbitration 
  
 Any claim or
controversy between Executive and Company or its successor arising under or in connection with this Agreement shall be settled by arbitration in accordance with the then current Employment Dispute Resolution Rules of the American Arbitration
Association and shall be the exclusive remedy for all Arbitrable Claims. Company and Executive agree that arbitration shall be held in or near Clark County, Nevada, before an arbitrator licensed to practice law in the State of Nevada. The arbitrator
shall have authority to award or grant both legal, equitable, and declaratory relief. Such arbitration shall be final and binding on the parties. The Federal Arbitration Act shall govern the interpretation and enforcement of this section pertaining
to Arbitration. 
  
 This Agreement to arbitrate survives termination of Executive’s employment. 
  
 In any dispute arising under or in connection with this Agreement, the prevailing party shall be entitled to recover all costs and reasonable attorney’s
fees. 
  
 14.    Acknowledgment of Parties 
  
 The parties acknowledge (a) that they have consulted with or have had the opportunity to consult with independent counsel of their own choice concerning this
Agreement, and (b) that they have read and understand the Agreement, are fully aware of its legal effect, and have entered into it freely based on their own judgment and not on any representations or promises other than those contained in this
Agreement. 

 
 9 

  
 15.    Date of Agreement 
  
 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. 
  
 
	 “COMPANY”
 AMERICAN
PACIFIC CORPORATION
 
	 
	 By:
 	 	 /s/    LINDA G.
FERGUSON        
 

	 Title:
 	 	 Vice President-Administration
 

 
  
 
	 “EXECUTIVE”
 
	 
	 /s/    DAVID N.
KEYS        
 

	 David N. Keys
 
	 
	 Address:
 
	 
	 1824 Glenview Drive
 
	 Las Vegas, Nevada 89134
 

 
  
 CONCUR:    Dated, 27 July 2002, Full
Management & Compensation Committee met and unanimously approved. 
  
 
	 MANAGEMENT & COMPENSATION COMMITTEE, 
 AMERICAN PACIFIC CORPORATION
 
	 
	 By:
 	 	 /s/    BERLYN D.
MILLER        
 

	  	 	 Berlyn D. Miller, Committee Chairman
 

 

 
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