Exhibit 10.1

THIS AMENDED & RESTATED PROMISSORY NOTE (THIS “NOTE”) IS SUBJECT TO THE TERMS OF
THAT CERTAIN SUBORDINATION AGREEMENT DATED AS OF MAY 15, 2014 BY AND BETWEEN
PAYEE AND SILICON VALLEY BANK (AS AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED
FROM TIME TO TIME, THE “SUBORDINATION AGREEMENT”).

OVERLAND STORAGE, INC.

AMENDED & RESTATED PROMISSORY NOTE DUE MAY 15, 2018

 

$10,000,000.00    

San Diego, California

September 8, 2014

FOR VALUE RECEIVED, OVERLAND STORAGE, INC., a California corporation (“Maker”),
unconditionally promises to pay SPHERE 3D CORPORATION, an Ontario corporation
(“Payee”), on May 15, 2018 in the manner and at the place hereinafter provided,
the principal amount equal to the lesser of (x) Ten Million and no/100 Dollars
($10,000,000.00) and (y) the unpaid principal amount of all advances made by
Payee to Maker (plus, in each case, interest that has been added to the
principal amount of this Note in accordance with the terms hereof). This Note
amends and restates in its entirety that certain Promissory Note dated as of
May 15, 2014 by Maker in favor of Payee (the “Existing Note”). This Note is
executed and delivered in substitution for, but not in satisfaction of, the
Existing Note, and this Note shall not constitute a refinancing or novation of
the Existing Note.

Maker also promises to pay interest on the unpaid principal amount hereof from
the date hereof until paid in full at a fluctuating interest rate per annum that
is at all times equal to the Reference Rate (capitalized terms used herein and
not otherwise defined herein shall have the meanings provided in Section 8
below) plus 2.00%, such interest rate to change when and as the Reference Rate
changes; provided that any principal amount not paid when due and, to the extent
permitted by applicable law, any interest not paid when due, in each case
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (both before as well as after judgment), shall bear interest
payable upon demand at a rate that is 2.00% per annum in excess of the rate of
interest otherwise payable under this Note. Interest on this Note shall be
payable semiannually in arrears on November 15 and May 15 of each year (each, an
“Interest Payment Date”), upon any prepayment of this Note (to the extent
accrued on the amount being prepaid) and at maturity. The entire amount of the
interest payable on each Interest Payment Date on this Note shall be paid
through an increase in the principal amount of the Note. All computations of
interest shall be made by Payee on the basis of a 365-day year, for the actual
number of days elapsed in the relevant period (including the first day but
excluding the last day). In no event shall the interest rate payable on this
Note exceed the maximum rate of interest permitted to be charged under
applicable law.

1. Advances. Payee hereby agrees to lend to Maker funds in an aggregate
principal amount equal to $10,000,000.00 as follows: (a) the first borrowing
shall occur no later than May 20, 2014 and shall be for an aggregate principal
amount of

 

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$2,500,000.00, (b) the second borrowing shall occur on or prior to June 1, 2014
and shall be for an aggregate principal amount of $2,500,000.00, (c) the third
borrowing shall occur on or prior to July 17, 2014 and shall be for an aggregate
principal amount of $500,000.00, (d) the fourth borrowing shall occur on or
prior to July 31, 2014 and shall be for an aggregate principal amount of
$500,000.00, (e) the fifth borrowing shall occur on or prior to August 11, 2014
and shall be for an aggregate principal amount of $500,000.00, (f) the sixth
borrowing shall occur on or prior to September 4, 2014 and shall be for an
aggregate principal amount of $500,000.00 (g) the seventh borrowing shall occur
on or prior to five business days from acceptance of the Amended Subordination
Agreement and shall be for an aggregate principal amount of $2,000,000.00 and
(g) in Payee’s discretion, one or more additional borrowings from time to time
in an aggregate amount not to exceed $1,000,000; provided that, in each case,
the Merger Agreement shall not have been terminated in accordance with the terms
thereof. Amounts borrowed under this Section 1 and subsequently repaid or
prepaid may not be reborrowed. Payee shall make the proceeds of each borrowing
available to Maker by causing an amount equal to such borrowing in lawful money
of the United States of America in same day funds to be deposited to such
account(s) as Maker shall direct.

2. Payments. All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day funds
at the office of Payee located at 240 Matheson Blvd. East, Mississauga, ON L4Z
1X1, or at such other place as Payee may direct; provided that, immediately
prior to the Closing (as such term is defined in the Merger Agreement), Maker
shall, subject to the terms of the Subordination Agreement, transfer to Payee
all common shares of Payee then held by Maker (or, if such shares then held by
Maker have an aggregate value in excess of the outstanding principal amount of
the Note and interest thereon, common shares of Payee then held by Maker equal
to the outstanding principal amount of the Note and interest thereon), and such
transfer shall constitute payment of the principal and interest in respect of
this Note to the extent of the value of such shares. Whenever any payment on
this Note is stated to be due on a day that is not a Business Day, such payment
shall instead be made on the next Business Day, and such extension of time shall
be included in the computation of interest payable on this Note. Each payment
made hereunder shall be credited first to interest then due and the remainder of
such payment shall be credited to principal, and interest shall thereupon cease
to accrue upon the principal so credited. Each of Payee and any subsequent
holder of this Note agrees, by its acceptance hereof, that before disposing of
this Note or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest hereon has
been paid; provided, however, that the failure to make a notation of any payment
made on this Note shall not limit or otherwise affect the obligation of Maker
hereunder with respect to payments of principal or interest on this Note.

3. Prepayments. Maker shall have the right at any time and from time to time to
prepay the principal of this Note in whole or in part, without premium or
penalty. Any prepayment hereunder shall be accompanied by interest on the
principal amount of the Note being prepaid to the date of prepayment.

4. Reference Agreements. This Note is issued pursuant to the terms of the Merger
Agreement and is subject to the terms and conditions thereof. This Note and
payment hereof are subject to the terms of the Subordination Agreement. Anything
contained

 

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in this Note to the contrary notwithstanding, in the event restrictions under
the Subordination Agreement prevent payments of any amount due hereunder, such
payments will be deferred until such restrictions are removed or otherwise cease
to exist, and such deferral will not constitute an Event of Default hereunder.
This Note is secured pursuant to the provisions of the Security Agreement.

5. Representations and Warranties. Maker hereby represents and warrants to Payee
that:

(a) it is a duly organized and validly existing corporation in good standing
under the laws of the jurisdiction of its organization and has the corporate
power and authority to own and operate its properties, to transact the business
in which it is now engaged and to execute and deliver this Note;

(b) this Note constitutes the duly authorized, legally valid and binding
obligation of Maker, enforceable against Maker in accordance with its terms;

(c) all consents and grants of approval required to have been granted by any
Person in connection with the execution, delivery and performance of this Note
have been granted;

(d) the execution, delivery and performance by Maker of this Note do not and
will not (i) violate any law, governmental rule or regulation, court order or
agreement to which it is subject or by which its properties are bound or the
charter documents or bylaws of Maker or (ii) result in the creation of any lien
or other encumbrance with respect to the property of Maker;

(e) there is no action, suit, proceeding or governmental investigation pending
or, to the knowledge of Maker, threatened against Maker or any of its
subsidiaries or any of their respective assets which, if adversely determined,
would have a material adverse effect on the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Maker and its
subsidiaries, taken as a whole, or the ability of Maker to comply with its
obligations hereunder; and

(f) the proceeds of the loan evidenced by this Note shall be used by Maker for
working capital and/or to pay certain obligations of one or more of Maker’s
subsidiaries to Nordea Bank Norge ASA and/or certain affiliates thereof;
provided that no part of such proceeds will be used by Maker to purchase or
carry any “margin stock” within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect or to extend credit to others for the purpose of purchasing or
carrying any such “margin stock” or to reduce or retire any indebtedness
incurred for any such purpose, and neither Maker nor any of its subsidiaries is
engaged principally or as one of its important activities in the business of
extending credit for the purpose of purchasing or carrying any such “margin
stock”.

 

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6. Events of Default. The occurrence of any of the following events shall
constitute an “Event of Default”:

(a) failure of Maker to pay any principal under this Note when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise, or failure of Maker to pay any interest or other amount due under
this Note within five (5) Business Days after the date due; or

(b) failure of Maker to pay, or the default in the payment of, any amount due
under or in respect of any promissory note, indenture or other agreement or
instrument relating to any indebtedness owing by Maker, to which Maker is a
party or by which Maker or any of its property is bound under which principal
amounts outstanding exceed $1,000,000 or the occurrence of any other default in
the performance of or compliance with any term of any evidence of any such
indebtedness, in each case after the expiration of any grace period provided
with respect thereto, which default shall have resulted in such indebtedness
becoming or being declared due and payable prior to the date on which it would
otherwise have become due and payable, without such indebtedness having been
discharged, or such acceleration having been rescinded or annulled; or

(c) any representation or warranty made by Maker to Payee in connection with
this Note shall prove to have been false in any material respect when made; or

(d) (i) a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Maker in an involuntary case under Title 11 of
the United States Code entitled “Bankruptcy” (as now and hereinafter in effect,
or any successor thereto, the “Bankruptcy Code”) or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, which decree or
order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Maker under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect; or a decree or order of a court having jurisdiction
in the premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over Maker or over all
or a substantial part of its property shall have been entered; or the
involuntary appointment of an interim receiver, trustee or other custodian of
Maker for all or a substantial part of its property shall have occurred; or a
warrant of attachment, execution or similar process shall have been issued
against any substantial part of the property of Maker, and, in the case of any
event described in this clause (ii), such event shall have continued for sixty
(60) days unless dismissed, bonded or discharged; or

(e) an order for relief shall be entered with respect to Maker or Maker shall
commence a voluntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or shall
consent to the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law, or
shall consent to the appointment of or taking possession by a receiver, trustee
or other custodian for all or a substantial part of its property; or Maker shall
make an assignment for the benefit of creditors; or Maker shall be unable or
fail, or shall admit in writing its inability, to pay its debts as such debts
become due; or the Board of Directors of Maker (or any committee thereof) shall
adopt any resolution or otherwise authorize action to approve any of the
foregoing; or

 

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(f) Maker shall challenge, or institute any proceedings to challenge, the
validity, binding effect or enforceability of this Note or any endorsement of
this Note; or

(g) any provision of this Note or the Security Agreement or any provision hereof
or thereof shall cease to be in full force or effect or shall be declared to be
null or void or otherwise unenforceable in whole or in part; or subject to the
Subordination Agreement, Payee shall not have or shall cease to have a valid and
perfected first priority security interest in the collateral described in the
Security Agreement.

7. Remedies. Upon the occurrence of any Event of Default specified in
Section 6(d) or 6(e) above, the principal amount of this Note together with
accrued interest thereon shall become immediately due and payable, without
presentment, demand, notice, protest or other requirements of any kind (all of
which are hereby expressly waived by Maker). Upon the occurrence and during the
continuance of any other Event of Default Payee may, by written notice to Maker,
declare the principal amount of this Note together with accrued interest thereon
to be due and payable, and the principal amount of this Note together with such
interest shall thereupon immediately become due and payable without presentment,
further notice, protest or other requirements of any kind (all of which are
hereby expressly waived by Maker).

8. Definitions. The following terms used in this Note shall have the following
meanings (and any of such terms may, unless the context otherwise requires, be
used in the singular or the plural depending on the reference):

“Business Day” means any day other than a Saturday, Sunday or legal holiday
under the laws of the State of California or any other day on which banking
institutions located in such state are authorized or required by law or other
governmental action to close.

“Event of Default” means any of the events set forth in Section 6.

“Merger Agreement” means that certain Agreement and Plan of Merger dated as of
May 15, 2014 by and among Maker, Payee and S3D Acquisition Company, a California
corporation and a wholly-owned subsidiary of Payee.

“Person” means any individual, partnership, limited liability company, joint
venture, firm, corporation, association, bank, trust or other enterprise,
whether or not a legal entity, or any government or political subdivision or any
agency, department or instrumentality thereof.

“Reference Rate” means the rate of interest per annum from time to time
published in the money rates section of the Wall Street Journal or any successor
publication thereto as the “prime rate” then in effect; provided that if such
rate of interest, as set forth from time to time in the money rates section of
the Wall Street

 

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Journal, becomes unavailable for any reason as determined by Payee, the “Prime
Rate” shall mean the rate of interest per annum announced by Silicon Valley Bank
as its prime rate in effect at its principal office in the State of California.

“Security Agreement” means that certain Security Agreement dated as of May 15,
2014 by and between Maker and Payee, as the same may be amended, supplemented or
otherwise modified from time to time.

9. Miscellaneous.

(a) All notices, consents, requests, approvals, demands, or other communication
pursuant to this Note by Maker or Payee must be in writing and shall be deemed
to have been validly served, given, or delivered: (i) upon the earlier of actual
receipt and three (3) Business Days after deposit in the U.S. mail, first class,
registered or certified mail return receipt requested, with proper postage
prepaid; (ii) upon transmission, when sent by electronic mail or facsimile
transmission; (iii) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number or email address of Maker or
Payee, as applicable, specified below its signature to this Note. Payee or Maker
may change its mailing or electronic mail address or facsimile number by giving
the other party written notice thereof in accordance with the terms of this
Section 9(a).

(b) Maker agrees to indemnify Payee against any losses, claims, damages and
liabilities and related expenses, including counsel fees and expenses, incurred
by Payee arising out of or in connection with or as a result of the transactions
contemplated by this Note. In particular, Maker promises to pay all reasonable
and documented out-of-pocket costs and expenses, including reasonable attorneys’
fees, incurred in connection with the collection and enforcement of this Note.

(c) No failure or delay on the part of Payee or any other holder of this Note to
exercise any right, power or privilege under this Note and no course of dealing
between Maker and Payee shall impair such right, power or privilege or operate
as a waiver of any default or an acquiescence therein, nor shall any single or
partial exercise of any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies expressly provided in this Note are cumulative to, and
not exclusive of, any rights or remedies that Payee would otherwise have. No
notice to or demand on Maker in any case shall entitle Maker to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the right of Payee to any other or further action in any circumstances
without notice or demand.

(d) Maker and any endorser of this Note hereby consent to renewals and
extensions of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind and, to
the full extent permitted by law, the right to plead any statute of limitations
as a defense to any demand hereunder.

 

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(e) THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF MAKER AND PAYEE HEREUNDER SHALL
BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.

(f) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST MAKER ARISING OUT OF OR RELATING TO
THIS NOTE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS NOTE MAKER
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS NOTE. Maker hereby agrees
that service of all process in any such proceeding in any such court may be made
by registered or certified mail, return receipt requested, to Maker at its
address set forth below its signature hereto, such service being hereby
acknowledged by Maker to be sufficient for personal jurisdiction in any action
against Maker in any such court and to be otherwise effective and binding
service in every respect. Nothing herein shall affect the right to serve process
in any other manner permitted by law or shall limit the right of Payee to bring
proceedings against Maker in the courts of any other jurisdiction.

(g) MAKER AND PAYEE AND, BY ITS ACCEPTANCE OF THIS NOTE, ANY SUBSEQUENT HOLDER
OF THIS NOTE, HEREBY IRREVOCABLY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
NOTE OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS NOTE
AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of
this waiver is intended to be all-encompassing of any and all disputes that may
be filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty claims
and all other common law and statutory claims. Maker and Payee and, by its
acceptance of this Note, any subsequent holder of this Note, each
(i) acknowledges that this waiver is a material inducement to enter into a
business relationship, that each has already relied on this waiver in entering
into this relationship, and that each will continue to rely on this waiver in
their related future dealings and (ii) further warrants and represents that each
has reviewed this waiver with its legal counsel and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER

 

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SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
OF THIS NOTE. In the event of litigation, this provision may be filed as a
written consent to a trial by the court.

(h) Maker hereby waives the benefit of any statute or rule of law or judicial
decision, including without limitation California Civil Code § 1654, which would
otherwise require that the provisions of this Note be construed or interpreted
most strongly against the party responsible for the drafting thereof.

 

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IN WITNESS WHEREOF, each of Maker and Payee has caused this Note to be executed
and delivered by its duly authorized officer as of the date first above written.

 

MAKER: OVERLAND STORAGE, INC. By:  

/s/ Kurt L. Kalbfleisch

Name:  

Kurt L. Kalbfleisch

Title:  

Chief Financial Officer

Address: 9112 Spectrum Center Blvd. San Diego, CA 92123 Facsimile: (858)
495-4267 Email: kkalbfleisch@overlandstorage.com PAYEE: SPHERE 3D CORPORATION
By:  

/s/ T. Scott Worthington

Name:  

T. Scott Worthington

Title:  

Chief Financial Officer

Address:

240 Matheson Blvd. East

Mississauga, ON L4Z 1X1

Canada Facsimile: 905.282.9966 Email: scott.worthington@sphere3d.com

Amended and Restated Promissory Note

 

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