EXHIBIT 10.3

 

SECOND TRANSITION AMENDMENT [* * *]

 

THIS SECOND TRANSITION AMENDMENT (the “Second Amendment”) is made and entered
into as of this 29th day of June, 2007 (the “Effective Date’) by and between
SANMINA-SCI Corporation, a Delaware corporation having its principal place of
business at 2700 North First Street, San Jose, California 95134 on behalf of
itself and its subsidiaries and affiliates (collectively “SANMINA-SCI”) and
Overland Storage, Inc., a California corporation having its principal place of
business at 4820 Overland Avenue, San Diego, CA 92123 (“Overland”).  SANMINA-SCI
and Overland are collectively referred to as the “Parties.”

 

W I T N E S S E T H

 

WHEREAS, the Parties are parties to a Transition Amendment [* * *] dated
September 29, 2006 (“Transition Amendment”) pursuant to which they amended the
Manufacturing and Supply Agreement dated as of November 23, 2004, as amended by
Amendment No. 1 dated May 30, 2005 and as amended by Amendment No. 2, dated
January 1, 2006 (as so amended (the “Agreement”) pursuant to which SANMINA-SCI
has agreed to manufacture certain products for Overland; and

 

WHEREAS, the Parties have resolved all open issues in the Transition Amendment,
including the Transition Plan and wish to amend the Transition Amendment to
reflect such resolutions

 

NOW, THEREFORE, in consideration of the premises and covenants contained herein
and for other consideration, the receipt and sufficiency of all such
consideration being expressly acknowledged by the parties hereto, the parties
agree as follows:

 

1.                                       [* * *].  Overland hereby agrees that
Sanmina-SCI has met all conditions for [* * *] provided for in paragraph 4(a) of
the Transition Agreement to transfer the manufacture of the Products from
Sanmina-SCI to Overland in accordance with the transition plan set forth in
Exhibit A of the Transition Agreement (the “Transition Plan”).

 

2.                                       [* * *].  Upon Overland’s payment to
Sanmina-SCI of the Settlement Amount (as adjusted as set forth below),
Sanmina-SCI hereby agrees that Overland will have met all conditions for [* * *]
provided for in paragraph 4(b) of the Transition Agreement to transfer the
manufacture of the Products from Sanmina-SCI to Overland in accordance with the
Transition Plan.  The Settlement Amount shall be [* * *] (as adjusted pursuant
to paragraph e below) and will be paid in accordance with the following:

 

a.               On or before June 29, 2007, Overland shall issue to Sanmina-SCI
a purchase order [* * *] (the “June Order”), which reflects the value of the
Obsolete Components at Sanmina-SCI. Sanmina-SCI shall, under Overland’s
observation and verification, dispose of the Obsolete Components, at
Sanmina-SCI’s factory or warehouse, on or before July 31, 2007. Overland shall
pay the entire amount of the June Order no later than July 31, 2007.

 

b.              In addition to the June Order (which relates to the obsolete
Components), on or before September 1, 2007, Overland shall issue to Sanmina-SCI
purchase orders for “Active Components” [* * *], less the aggregate value of
previously issued purchase orders for Active Components, and subject to
adjustment as indicated in paragraph e below (all such purchase orders in the
aggregate face amount of [* * *] being collectively referred to as the
“September Order”).  The parties expressly agree that the June Order (which
covers Obsolete Components rather than Active Components) does not constitute a
“previously issued purchase order for Active Components.”  Sanmina-SCI shall
deliver the Active Components no later than September 30, 2007. Overland shall
pay for the September Order (as adjusted below) no later than 30 days after the
delivery date.

 

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c.               Attached as Exhibit A is a preliminary statement of the [* * *]
worth of raw material, parts and components to which Overland acquires ownership
as a result of the June Order and September Order (the “Purchased Components”). 
Sanmina-SCI shall arrange for the Purchased Components to be warehoused at a
location of its choosing and at its expense. Title and risk of loss of the
Purchased Components shall transfer to Overland Ex Works Sanmina-SCI’s facility
(Incoterms 2000) at the time Sanmina-SCI delivers (or in the case of the
June Order makes the Purchased Components available for inspection) the
Purchased Components to Overland at Sanmina-SCI’s facility.

 

d.              Sanmina-SCI shall retain ownership of, and Overland shall have
no liability for, all other raw material, parts and components not included in
the Purchased Components.  Sanmina-SCI shall be entitled to dispose of such
other material, parts and components as Sanmina-SCI sees fit, and Sanmina-SCI
shall retain all sums received as a result of their disposition.

 

e.               The parties acknowledge that Exhibit A may not be precisely
accurate and that the actual amount of the Purchased Components delivered to
Overland will be subject to Overland’s (1) verification of quantity with respect
to the June Order and (2) inspection and verification of the quantity and
condition with respect to the September Order, with the result that the total
amounts due from Overland will be the lesser of (i) [* * *] or (ii) such lesser
amount resulting from adjustment based upon the Purchased Assets actually
delivered.

 

f.                 As an example, assume that the parties’ final count of the
components constituting the June Order is [* * *] ([* * *]short of the [* * *]
face amount of the June Order).  Overland shall pay the [* * *], and shall
deduct the [* * *] off of the September Order. In the event the parties’ count
of the components constituting the September Order is [* * *] ([* * *] short of
the [* * *] set forth in (b)), then Overland shall be required to revise the
amount of the September Order by a total of [* * *] (the [* * *] from the
June Order and the [* * *] from the September Order) and issue a purchase order
in the amount of [* * *].

 

g.              Sanmina-SCI shall pay for all costs to warehouse the Purchased
Components through September 30, 2007.  At that time, Overland shall either
(i) transfer the Purchased Components to another location or (ii) enter into its
own lease with the owner of the warehouse.

 

3.                                       [* * *]

 

4.                                       Sections 15.1 (Integration) and 15.5
(Governing Law) of the Agreement shall apply to this Second Amendment.

 

5.                                       Any capitalized terms contained in this
Transition Amendment and not defined in this Second Amendment have the meanings
for such terms as are set forth in the Agreement.

 

6.                                       Except as expressly provided in or
required as a consequence of this Second Amendment, the Agreement remains
un-amended and unmodified and in full force and effect.

 

7.                                       This Second Amendment, the Transition
Amendment, the Agreement, Amendment No. 1 and Amendment No. 2, contains the
entire agreement between the parties with respect to the subject matter hereof
and supersedes any prior agreements, negotiations, or representations between
the parties with respect to the subject matter hereof, whether written or oral. 
Notwithstanding the foregoing or paragraphs 4 or 6 above, with respect to
component related liability and any other obligation of either party with
respect to raw materials, parts and components, this Second Amendment represents
the entire agreement of the parties and in the event of any conflict between
this Second Amendment and any of the other aforementioned documents, this Second
Amendment shall control.

 

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8.                                       This Second Agreement may be modified
only by a subsequent written agreement signed by the parties.

 

9.                                       If any provision of this Second
Amendment is held to be unenforceable, the remaining provisions will continue
unaffected.

 

IN WITNESS WHEREOF, the undersigned hereunto set their hands and seals this as
of the date first written above.

 

 

SANMINA-SCI CORPORATION

 

OVERLAND STORAGE, INC.

 

 

 

 

 

 

/s/ Tom Clawson

 

/s/ Vernon A. LoForti

By: Tom Clawson

 

By: Vernon A. LoForti

Title: Executive Vice President

 

Title: Chief Financial Officer

 

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Exhibit A

 

Components

 

[* * *]

 

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