Exhibit 10.17

Execution Copy

SECURITY AGREEMENT

1. THE SECURITY. OVERLAND STORAGE, INC., a California corporation (“Debtor”),
hereby grants to ADAPTEC, INC., a Delaware corporation (“Creditor”) a security
interest in all of the Debtor’s right, title and interest in, to and under the
following described property (“Collateral”):

A. All inventory now owned or hereafter acquired by Debtor;

B. All negotiable and nonnegotiable documents of title, insurance proceeds and
other proceeds now owned or hereafter acquired by Debtor covering any of the
above-described property; and

C. All books and records now owned or hereafter acquired by Debtor pertaining to
any of the above-described property, including but not limited to any
computer-readable memory and any computer hardware or software necessary to
process such memory (“Books and Records”).

2. THE INDEBTEDNESS. The Collateral secures and will secure the payment,
performance and observance of all indebtedness, obligations and liabilities of
Debtor to Creditor under that certain Promissory Note dated as of an even date
herewith executed by Debtor as maker in favor of Creditor in the original
principal amount of One Million Four Hundred Thirty One Thousand Seven Hundred
Eighteen Dollars and Forty Cents ($1,431,718.40) (as the same may be amended
from time to time, the “Note”). For the purposes of this Security Agreement,
“Indebtedness” means the obligations and liabilities of Debtor under the Note.

3. TITLE; NO OTHER LIENS. Debtor represents and warrants to Creditor that Debtor
owns the Collateral free and clear of any liens, claims, security interests,
encumbrances and restrictions on the transfer thereof, except the security
interest of Creditor.

4. DEBTOR’S COVENANTS. Debtor covenants and warrants that unless compliance is
waived by Creditor in writing:

A. Debtor will properly preserve the Collateral; defend the Collateral against
any material adverse claims and demands; and keep accurate Books and Records.

B. Debtor has notified Creditor in writing of, and will notify Creditor in
writing prior to any change in, the locations of (i) Debtor’s place of business
or Debtor’s chief executive office if Debtor has more than one place of
business, and (ii) any Collateral.

C. Debtor will notify Creditor in writing prior to any change in Debtor’s name,
identity or business structure.

D. Debtor will maintain and keep in force insurance covering the Collateral
against loss or damage of the kinds customarily insured against by persons
engaged in the same or similar business, of such types and in such amounts as
are customarily carried under similar circumstances by such other persons. Such
insurance shall be issued by insurance companies acceptable to Creditor and, if
requested by Creditor, include a loss payable endorsement in favor of Creditor
in a form acceptable to Creditor.

 

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E. Debtor has not granted and will not grant any security interest in any of the
Collateral except to Creditor, and will keep the Collateral free of all liens,
claims, security interests, encumbrances and restrictions on the transfer
thereof except the security interest of Creditor.

F. Debtor will not sell, lease, agree to sell or lease, or otherwise dispose of,
or remove from Debtor’s place of business any Collateral except in the ordinary
course of business as heretofore conducted by Debtor.

G. Debtor will promptly notify Creditor in writing of any event which affects
the value of the Collateral, the ability of Debtor or Creditor to dispose of the
Collateral, or the rights and remedies of Creditor in relation thereto,
including, but not limited to, the levy of any legal process against any
Collateral.

H. If any Collateral is or becomes the subject of any negotiable document of
title, including any warehouse receipt or bill of lading, Debtor shall deliver
such document to Creditor.

I. Until Creditor exercises its rights to make collection, Debtor will
diligently collect all Collateral.

5. ADDITIONAL REQUIREMENTS. Debtor agrees that Creditor may at its option at any
time, whether or not Debtor is in default:

A. Require Debtor to deliver to Creditor (i) copies of or extracts from the
Books and Records, and (ii) information on matters affecting the Collateral.

B. Examine the Collateral, including the Books and Records, and make copies of
or extracts from the Books and Records, and for such purposes enter at any
reasonable time upon the property where any Collateral or any Books and Records
are located.

6. DEFAULTS. Any one or more of the following shall be a default hereunder:

A. Debtor fails to pay any Indebtedness after the same becomes due, whether at
stated maturity, by acceleration or otherwise, beyond any applicable grace
periods.

B. Debtor fails to perform or observe (i) the covenant set forth in Section 4(F)
or (ii) any other covenant or agreement under this Security Agreement on its
part to be performed or observed and such failure continues for 30 days.

C. Debtor becomes insolvent, or is generally not paying or admits in writing its
inability to pay its debts as they become due, makes a general assignment for
the benefit of creditors, or commences any case, proceeding or other action
under any bankruptcy or other law for the relief of debtors.

 

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D. Any custodian, receiver or trustee is appointed to take possession, custody
or control of all or a substantial portion of the property of Debtor and the
appointment continues undischarged or unstayed for 60 calendar days.

E. Any case, proceeding or other action is commenced against Debtor under any
bankruptcy or other law for the relief of debtors and continues undismissed or
unstayed for 60 calendar days or an order for relief is entered in any such
proceeding.

7. CREDITOR’S REMEDIES AFTER DEFAULT. In the event of any default Creditor may
do any one or more of the following:

A. Declare any Indebtedness immediately due and payable.

B. Enforce the security interest given hereunder pursuant to the Uniform
Commercial Code and any other applicable law.

C. Require Debtor to assemble the Collateral, including the Books and Records,
and make them available to Creditor at a place designated by Creditor.

D. Enter upon the property where any Collateral, including any Books and
Records, are located and take possession of such Collateral and such Books and
Records.

E. Grant extensions and compromise or settle claims with respect to the
Collateral.

F. Use the Debtor’s rights and interests in Intellectual Property now owned or
hereafter acquired by Debtor, but only to the extent such use is necessary for
the sale or disposition of the Collateral, including the taking of the measures
set forth in paragraph H below. Debtor agrees that any such use shall be without
any additional consideration to Debtor. As used in this paragraph, “Intellectual
Property” means service marks, trademarks, trade names, trade styles,
copyrights, patents, working drawings, instructional manuals, and rights in
processes for packaging and labeling, in which Debtor has any right or interest,
whether by ownership, license, contract or otherwise.

G. Have a receiver appointed by any court of competent jurisdiction to take
possession of the Collateral.

H. Take such measures as Creditor may deem necessary or advisable to take
possession of, hold, preserve, process, assemble, insure, prepare for sale or
lease, market for sale or lease, sell or lease, or otherwise dispose of, any
Collateral, and Debtor hereby irrevocably constitutes and appoints Creditor as
Debtor’s attorney-in-fact to perform all acts and execute all documents in
connection therewith. Debtor acknowledges, consents and agrees that the power of
attorney granted pursuant to this section is irrevocable and coupled with an
interest. All or any part of the Collateral may be sold for cash or other value
in any number of lots at public or private sale, without demand, advertisement
or notice; provided, however, that unless the Collateral to be sold threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, Creditor shall give Debtor 10 days’ prior written notice of the time and
place of any public sale, or the time after which a private sale may be made,
which notice each of Debtor and

 

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Creditor agrees to be reasonable. At any sale or sales of Collateral, Creditor
or any of its assigns may bid for and purchase all or any part of the property
and rights so sold and may use all or any portion of the Indebtedness owed to
Creditor as payment for the property or rights so purchased, all without further
accountability to the Company.

8. CUSTODY OF COLLATERAL. Except as provided by applicable law that cannot be
waived, Creditor will have no duty as to the custody and protection of the
Collateral, the collection of any part thereof or of any income thereon or the
preservation or exercise of any rights pertaining thereto, including rights
against prior parties, except for the use of reasonable care in the custody and
physical preservation of any Collateral in its possession. Creditor may disclaim
any and all warranties in disposing of any Collateral.

9. SUBSTITUTION OF COLLATERAL. Promptly upon, and in any event within 10 days
of, a request made by Debtor, which request may be made at any time and in
Debtor’s sole and absolute discretion, Creditor shall return any pledged
Collateral to Debtor and shall endorse, execute, deliver, record and file all
instruments and documents, and do all other acts and things, reasonably required
for the return of the Collateral to Debtor and to evidence or document the
release of Creditor’s liens and interests in the Collateral, all as reasonably
requested by, and at the sole expense of, Debtor, provided that Debtor shall
concurrently execute and deliver to Creditor such documents and agreements and
take all other actions as may be reasonably required by Creditor to grant
Creditor a replacement lien on the Purchased IP as security for the
Indebtedness. As used herein, “Purchased IP” shall mean the “Purchased IP” (as
such term is defined in that certain Asset Purchase Agreement of even date
herewith executed by Debtor and Creditor) purchased by Debtor from Creditor as
the same existed on the date of such purchase.

10. TERMINATION. This Security Agreement shall be automatically released when
all Indebtedness has been paid in full in cash or otherwise performed in full.
Upon such release, Creditor shall return any pledged Collateral to Debtor and
shall endorse, execute, deliver, record and file all instruments and documents,
and do all other acts and things, reasonably required for the return of the
Collateral to Debtor and to evidence or document the release of Creditor’s
interests arising under this Security Agreement, all as reasonably requested by,
and at the sole expense of, Debtor.

11. REIMBURSEMENT OF EXPENSES. Debtor shall promptly pay on demand all
reasonable expenses of Creditor (including reasonable attorneys fees and
expenses) in connection with the enforcement of the Note and collection hereof,
whether before or after bankruptcy of similar proceedings (and whether or not
allowed as a claim herein).

12. MISCELLANEOUS.

A. Any waiver, express or implied, of any provision hereunder and any delay or
failure by Creditor to enforce any provision shall not preclude Creditor from
enforcing any such provision thereafter.

B. Debtor shall, at the request of Creditor, execute such other agreements,
documents, instruments, or financing statements in connection with this Security
Agreement as Creditor may reasonably deem necessary. Debtor hereby authorizes
the Creditor to file or record Uniform Commercial Code financing statements in
all jurisdictions and with all filing offices as Creditor may deem necessary or
advisable to perfect the security interests granted to Creditor hereunder.

 

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C. This Security Agreement shall be governed by and construed according to the
laws of the State of California, to the jurisdiction of which the parties hereto
submit.

D. All rights and remedies herein provided are cumulative and not exclusive of
any rights or remedies otherwise provided by law. Any single or partial exercise
of any right or remedy shall not preclude the further exercise thereof or the
exercise of any other right or remedy.

E. All terms not defined herein are used as set forth in the Uniform Commercial
Code.

F. In the event of any action by Creditor to enforce this Security Agreement or
to protect the security interest of Creditor in the Collateral, or to take
possession of, hold, preserve, process, assemble, insure, prepare for sale or
lease, market for sale or lease, sell or lease, or otherwise dispose of, any
Collateral, Debtor agrees to pay the costs and expenses thereof, together with
reasonable attorney’s fees.

G. Notices shall be furnished in writing to each party at its addresses
appearing below or as it may otherwise direct in writing actually received by
the other party.

H. This Security Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns; provided that neither the
Debtor nor the Creditor may assign its rights or obligations hereunder without
the prior written consent of the other party.

I. If any term of this Security Agreement shall be held to be invalid, illegal
or unenforceable, the validity of all other terms hereof shall in no way be
affected thereby.

J. For the convenience of the parties and to facilitate execution, this Security
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same document.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Debtor has executed this Security Agreement effective as
of the date written below.

Dated: June 27, 2008

 

OVERLAND STORAGE, INC. a California corporation By:  

/s/ Vernon A. LoForti

  Vernon A. LoForti   President and Chief Executive Officer Address: 4820
Overland Avenue San Diego, CA 92123

Acknowledged and Agreed:

 

ADAPTEC, INC.

a Delaware corporation

By:  

/s/ Subramanian Sundaresh

  Subramanian Sundaresh   President and Chief Executive Officer Address: 691 S.
Milpitas Blvd. Milpitas, CA 95035

[Security Agreement – Signature Page]