EXHIBIT
10.2


 


 


AMENDED
AND RESTATED

1996 EMPLOYEE STOCK PURCHASE PLAN

OF

OVERLAND STORAGE, INC.


 


(Amended
and Restated Effective September 6, 2003)


 

















 


TABLE OF
CONTENTS


 


	
  I.

  	
  Purpose

  
	
   

  	
   

  
	
  2.

  	
  Definitions

  
	
   

  	
   

  
	
  3.

  	
  Eligibility

  
	
   

  	
   

  
	
  4.

  	
  Participation

  
	
   

  	
   

  
	
  5.

  	
  Offering

  
	
   

  	
   

  
	
  6.

  	
  Purchase of Stock

  
	
   

  	
   

  
	
  7.

  	
  Payment and Delivery

  
	
   

  	
   

  
	
  8.

  	
  Recapitulation

  
	
   

  	
   

  
	
  9.

  	
  Merger,
  Liquidation, Other Corporation Transactions

  
	
   

  	
   

  
	
  10.

  	
  Transferability

  
	
   

  	
   

  
	
  11.

  	
  Amendment or
  Termination of the Plan

  
	
   

  	
   

  
	
  12.

  	
  Administration

  
	
   

  	
   

  
	
  13.

  	
  Committee
  Rules for Foreign Jurisdictions

  
	
   

  	
   

  
	
  14.

  	
  Securities Laws
  Requirements

  
	
   

  	
   

  
	
  15.

  	
  Government Regulations

  
	
   

  	
   

  
	
  16.

  	
  No Enlargement of
  Employee Rights

  
	
   

  	
   

  
	
  17.

  	
  Governing Law

  
	
   

  	
   

  
	
  18.

  	
  Effective Date

  



 

















 


AMENDED
AND RESTATED
1996 EMPLOYEE STOCK PURCHASE PLAN
OF OVERLAND STORAGE, INC.


 


(Amended
and Restated Effective September 6, 2003)


 


1. 
PURPOSE.


 


The
purpose of this Plan is to provide an opportunity for Employees of Overland
Storage, Inc. (the “Corporation”) and its Designated Subsidiaries, to purchase
Common Stock of the Corporation and thereby to have an additional incentive to
contribute to the prosperity of the Corporation.  It is the intention of the Corporation that the Plan qualify as
an “Employee Stock Purchase Plan” under Section 423 of the Internal
Revenue Code of 1986, as amended, although the Corporation makes no undertaking
nor representation to maintain such qualification.


 


2. 
DEFINITIONS.


 


(a)                                  “Board”
shall mean the Board of Directors of the Corporation.


 


(b)                                 “Base
Compensation” means, with respect to each Participant for each
pay period, such Participant’s Compensation, excluding (i) Bonus Compensation;
(ii) any amounts contributed by the Corporation or a Designated Subsidiary to
any pension plan, deferred compensation plan, or other similar plan; (iii) any
automobile allowance (or reimbursement for such expenses); and (iv) any amounts
paid as a starting bonus or finder’s fee.


 


(c)                                  “Bonus
Compensation” means, with respect to each Participant for each
period with respect to which a cash bonus is payable to such Employee, the
amount of the cash bonus payable to such Participant for such period.  Except as determined by the Committee, Bonus
Compensation does not include: (i) any amounts contributed by the Corporation
or a Designated Subsidiary to any pension plan, deferred compensation plan, or
other similar plan; (ii) any automobile allowance (or reimbursement for such
expenses); or (iii) any amounts paid as a starting bonus or finder’s fee.


 


(d)                                 “Code”
shall mean the Internal Revenue Code of 1986, as amended.


 


(e)                                  “Committee”
shall mean the committee appointed by the Board in accordance with
Section 12 of the Plan.


 


(f)                                    “Common
Stock” shall mean the Common Stock of the Corporation, or any stock
into which such Common Stock may be converted.


 


(g)                                 “Compensation”
shall mean an Employee’s wages or salary and other amounts payable to an
Employee on account of personal services rendered by the Employee to the
Corporation or a Designated Subsidiary and which are reportable as wages or
other compensation


 


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on the Employee’s Form W-2, plus pre-tax contributions of the Employee
under a cash or deferred arrangement (401(k) plan) or cafeteria plan maintained
by the Corporation or a Designated Subsidiary, but excluding, however, (1)
non-cash fringe benefits, (2) special payments as determined by the Committee
(e.g., moving expenses, unused vacation, severance pay), (3) income from the
exercise of stock options or other stock purchases and (4) any other items of
Compensation as determined by the Committee.


 


(h)                                 “Corporation”
shall mean Overland Storage, Inc., a California corporation.


 


(i)                                     “Designated
Subsidiary” shall mean a Subsidiary which has been designated by the
Board as eligible to participate in the Plan.


 


(j)                                     “Employee”
shall mean an individual classified as an employee (within the meaning of Code
Section 3401(c) and the regulations thereunder) by the Corporation or a
Designated Subsidiary on the Corporation payroll records during the relevant
participation period.


 


(k)                                  “Entry
Date” shall mean the first day of each Option Period.


 


(l)                                     “Exercise
Date” shall mean the last business day of each Exercise Period.


 


(m)                               “Exercise
Period” shall mean a three-month, six-month or other period as
determined by the Board.  The first
Exercise Period during an Option Period shall commence on the first day of such
Option Period.  Subsequent Exercise
Periods, if any, shall run consecutively after the termination of the preceding
Exercise Period.  The last Exercise
Period in an Option Period shall terminate on the last day of such Option
Period.


 


(n)                                 “Fair
Market Value” shall mean the value of one (1) share of Common Stock on the
relevant date, determined as follows:


 


(1)                                  If
the shares are traded on an exchange, the reported “closing price” on the last
trading date immediately preceding the relevant date;


 


(2)                                  If the shares are traded over-the-counter on the
NASDAQ Stock Market, the NASDAQ Official Closing Price reported for the last
trading date immediately preceding the relevant date;


 


(3)                                  If
neither (1) nor (2) applies, the fair market value as determined by the
Committee in good faith.  Such
determination shall be conclusive and binding on all persons.


 


(o)                                 “Maximum
Percentage” means the maximum percentage of (i) Base
Compensation, or (ii) Base Compensation and Bonus Compensation, which a
Participant may elect to have withheld from Compensation pursuant to
Section 4.  The Maximum Percentage
will be fifteen percent (15%) unless a lower percentage amount is designated by
the Committee with respect to an Option Period.


 


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(p)                                 “Option
Period” shall mean a period of up to twenty-seven (27) months as
determined by the Committee.  The Board
may determine that the Option Period and the Exercise Period are the same.


 


(q)                                 “Participant”
shall mean a participant in the Plan as described in Section 4 of the
Plan.


 


(r)                                    “Plan”
shall mean this employee stock purchase plan.


 


(s)                                  “Shareholder”
shall mean a record holder of shares entitled to vote shares of Common Stock
under the Corporation’s by-laws.


 


(t)                                    “Subsidiary”
shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, as described in Code
Section 424(f).


 


3.                                      ELIGIBILITY.


 


Any
Employee regularly employed on a full-time basis by the Corporation or by any
Designated Subsidiary on an Entry Date shall be eligible to participate in the
Plan with respect to the Option Period commencing on such Entry Date, provided
that the Committee may establish administrative rules requiring that employment
commence some minimum period (e.g., one pay period) prior to an Entry Date to
be eligible to participate with respect to that Entry Date and provided further
that (1) the Board may extend eligibility to part-time Employees pursuant to
criteria and procedures established by the Committee and (2) the Board may
impose an eligibility period on participation of up to two years with respect
to participation on any prospective Entry Date.  The Board may also determine that a designated group of highly
compensated Employees (e.g., Employees subject to Section 16(b) of the
Securities Exchange Act of 1934) are ineligible to participate in the
Plan.  An Employee shall be considered
employed on a full-time basis unless his or her customary employment is less
than 20 hours per week or five months per year.  No Employee may participate in the Plan if immediately after an
option is granted the Employee owns or is considered to own (within the meaning
of Code Section 424(d)), shares of stock, including stock which the
Employee may purchase by conversion of convertible securities or under
outstanding options granted by the Corporation, possessing five percent (5%) or
more of the total combined voting power or value of all classes of stock of the
Corporation or of any of its Subsidiaries. 
All Employees who participate in the Plan shall have the same rights and
privileges under the Plan except for differences which may be mandated by local
law and which are consistent with Code Section 423(b)(5).  The Board may impose restrictions on
eligibility and participation of Employees who are officers and directors to
facilitate compliance with federal or state securities laws or foreign laws.


 


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4.                                      PARTICIPATION.


 


4.1                                 An
Employee who is eligible to participate in the Plan in accordance with
Section 3 may become a Participant by filing, on a date prescribed by the
Committee prior to an applicable Entry Date, a completed payroll deduction
authorization and Plan enrollment form provided by the Corporation.  An eligible Employee may authorize payroll
deductions at the rate of any whole percentage (i.e., 1%, 2%, 3%, etc.), up to
the Maximum Percentage, of either (i) the Employee’s Base Compensation, or (ii)
the Employee’s Base Compensation and Bonus Compensation, as elected by the
Employee in the payroll deduction authorization and Plan enrollment form. If an
Employee has elected to participate in the Plan but has not made an election
whether payroll deductions should be calculated and withheld from the
Employee’s Base Compensation, or from the Employee’s Base Compensation and
Bonus Compensation, then payroll deductions shall be calculated and withheld
from such Employee’s Base Compensation only. 
All payroll deductions may be held by the Corporation and commingled
with its other corporate funds.  No
interest shall be paid or credited to the Participant with respect to such
payroll deductions except where required by local law as determined by the
Committee.  A separate bookkeeping
account for each Participant shall be maintained by the Corporation under the
Plan and the amount of each Participant’s payroll deductions shall be credited
to such account.  A Participant may not
make any additional payments into such account.


 


4.2                                 Under
procedures established by the Committee, a Participant may suspend or
discontinue participation in the Plan at any time during an Exercise Period by
completing and filing a new payroll deduction authorization and Plan enrollment
form with the Corporation.  A
Participant may increase or decrease his or her rate of payroll deductions, or
change his or her election of the portion of Compensation (i.e., Base
Compensation, or Base Compensation and Bonus Compensation) from which payroll
deductions will be calculated and withheld, by filing a new payroll deduction
authorization and Plan enrollment form at any time. Changes in rate shall be
effective as soon as reasonably practicable after the Corporation has received
such form.  Changes in the portion of
Compensation from which payroll deductions will be calculated and withheld will
be effective for the next commencing Exercise Period, subject to continuing
eligibility of the Participant pursuant to Section 3.  The Committee may establish rules limiting
the frequency with which Participants may increase or decrease the rate of
payroll deduction, or change the election of the portion of Compensation from
which payroll deductions will be calculated and withheld, and may impose a
waiting period on Participants wishing to increase the rate of payroll
deductions after a decrease. If a new payroll deduction authorization and Plan
enrollment form is not filed with the Corporation, the rate of payroll
deductions and the portion of Compensation from which payroll deductions will
be calculated and withheld shall continue as originally elected (i) throughout
the Option Period and (ii) subject to continued eligibility as determined under
Section 3, for succeeding Option Periods; unless in either case the
Committee determines to change the Maximum Percentage.


 


If a
Participant suspends participation during an Exercise Period, his or her
accumulated payroll deductions will remain in the Plan for purchase of shares
as specified in Section 6 on the following Exercise Date, but the
Participant will not again participate until he or she completes a


 


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new payroll deduction authorization and Plan enrollment form.  The Committee may establish rules limiting
the frequency with which Participants may suspend and resume payroll deductions
under the Plan and may impose a waiting period on Participants wishing to
resume suspended payroll deductions.  If
a Participant discontinues participation in the Plan, the amount credited to
the Participant’s individual account shall be paid to the Participant without
interest (except where required by local law).  In the event any Participant terminates employment with the
Corporation or any Subsidiary for any reason (including death) prior to the
expiration of an Option Period, the Participant’s participation in the Plan shall
terminate and all amounts credited to the Participant’s account shall be paid
to the Participant or the Participant’s estate without interest (except where
required by local law).  Whether a
termination of employment has occurred shall be determined by the
Committee.  The Committee may also establish
rules regarding when leaves of absence or change of employment status (e.g.,
from full-time to part-time) will be considered to be a termination of
employment, and the Committee may establish termination of employment
procedures for this Plan which are independent of similar rules established
under other benefit plans of the Corporation and its Subsidiaries.


 


In the
event of a Participant’s death, any accumulated payroll deductions will be
paid, without interest, to the estate of the Participant.


 


5. 
OFFERING.


 


5.1                                 The
maximum number of shares of Common Stock which may be issued pursuant to the
Plan shall be 600,000 shares.  The Board
may designate any amount of available shares for offering for any Option Period
determined pursuant to Section 5.2.


 


5.2                                 Each
Option Period, Entry Date and Exercise Period shall be determined by the
Board.  The Board shall have the power
to change the duration of future Option Periods or future Exercise Periods, and
to determine whether or not to have overlapping Option Periods, with respect to
any prospective offering, without shareholder approval, and without regard to
the expectations of any Participants.


 


5.3                                 With
respect to each Option Period, each eligible Employee who has elected to
participate as provided in Section 4.1 shall be granted an option to
purchase that number of shares of Common Stock which may be purchased with the
payroll deductions accumulated on behalf of such Employee (assuming payroll
deductions at a rate of 15% of Compensation) during each Exercise Period within
such Option Period at the purchase price specified in Section 5.4 below;
provided, however, (1) in no event shall the Employee be entitled to accrue
rights to purchase shares under the Plan (and all other employee stock purchase
plans, as defined in Code Section 423, of the Corporation and its
subsidiaries) at a rate which exceeds $25,000 of the Fair Market Value of such
stock (determined at the time the option is granted) for any calendar year in
which such option is outstanding at any time, and (2) the maximum shares
subject to any option shall in no event exceed 1,500.


 


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5.4                                 The
option price under each option shall be the lower of: (i) a percentage
(not less than eighty-five percent (85%)) established by the Board (“Designated
Percentage”) of the Fair Market Value of the Common Stock on the Entry Date on
which an option is granted, or (ii) the Designated Percentage of the Fair
Market Value on the Exercise Date on which the Common Stock is purchased.  The Board may change the Designated
Percentage with respect to any future Option Period, but not below eighty-five
percent (85%).


 


5.5                                 If
the total number of shares of Common Stock for which options granted under the
Plan are exercisable exceeds the maximum number of shares offered on any Entry
Date, the number of shares which may be purchased under options granted on the
Entry Date shall be reduced on a pro rata basis in as nearly a uniform manner
as shall be practicable and equitable. 
In this event, payroll deductions shall also be reduced or refunded
accordingly.  If an Employee’s payroll
deductions during any Exercise Period exceeds the purchase price for the
maximum number of shares permitted to be purchased under Section 5.3, the
excess shall be refunded to the Participant without interest (except where
otherwise required by local law).


 


5.6                                 In
the event that the Fair Market Value of the Corporation’s Common Stock is lower
on the first day of an Exercise Period within an Option Period (subsequent
“Reassessment Date”) than it was on the Entry Date for such Option Period, all
Employees participating in the Plan on the Reassessment Date shall be deemed to
have relinquished the unexercised portion of the option granted on the Entry
Date and to have enrolled in and received a new option commencing on such
Reassessment Date, unless the Board has determined not to permit overlapping
Option Periods or to restrict such transfers to lower price Option Periods.


 


6.                                      PURCHASE OF STOCK.


 


Upon
the expiration of each Exercise Period, a Participant’s option shall be
exercised automatically for the purchase of that number of full shares of
Common Stock which the accumulated payroll deductions credited to the
Participant’s account at that time shall purchase at the applicable price
specified in Section 5.4.


 


7.                                      PAYMENT AND DELIVERY.


 


Upon
the exercise of an option, the Corporation shall deliver to the Participant the
Common Stock purchased and the balance of any amount of payroll deductions
credited to the Participant’s account not used for the purchase.  The Board may permit or require that shares
be deposited directly with a broker designated by the Participant (or a broker
selected by the Committee) or to a designated agent of the Company, and the
Committee may utilize electronic or automated methods of share transfer.  The Board may require that shares be
retained with such broker or agent for a designated period of time (and may
restrict dispositions during that period) and/or may establish other procedures
to permit tracking of disqualifying dispositions of such shares or to restrict
transfer of such shares.  To the extent
the unused cash balance represents a fractional share, the unused cash balance
credited to the Participant’s account shall be carried over to the next
Exercise Period, if the Participant is also a Participant in the Plan at that
time or


 


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refunded to the Participant, as determined by the Committee.  The Corporation shall retain the amount of
payroll deductions used to purchase Common Stock as full payment for the Common
Stock and the Common Stock shall then be fully paid and non-assessable.  No Participant shall have any voting,
dividend, or other stockholder rights with respect to shares subject to any
option granted under the Plan until the option has been exercised and shares
issued.


 


8.                                      RECAPITALIZATION.


 


If
after the grant of an option, but prior to the purchase of Common Stock under
the option, there is any increase or decrease in the number of outstanding
shares of Common Stock because of a stock split, stock dividend, combination or
recapitalization of shares subject to options, the number of shares to be
purchased pursuant to an option, the share limit of Section 5.3 and the
maximum number of shares specified in Section 5.1 shall be proportionately
increased or decreased, the terms relating to the purchase price with respect
to the option shall be appropriately adjusted by the Board, and the Board shall
take any further actions which, in the exercise of its discretion, may be
necessary or appropriate under the circumstances.


 


The
Board, if it so determines in the exercise of its sole discretion, also may
adjust the number of shares specified in Section 5.1, as well as the price
per share of Common Stock covered by each outstanding option and the maximum
number of shares subject to any individual option, in the event the Corporation
effects one or more reorganizations, recapitalizations, spin-offs, split-ups,
rights offerings or reductions of shares of its outstanding Common Stock.


 


The
Board’s determinations under this Section 8 shall be conclusive and
binding on all parties.


 


9.                                      MERGER, LIQUIDATION, OTHER
CORPORATION TRANSACTIONS.


 


In the
event of the proposed liquidation or dissolution of the Corporation, the Option
Period will terminate immediately prior to the consummation of such proposed
transaction, unless otherwise provided by the Board in its sole discretion, and
all outstanding options shall automatically terminate and the amounts of all
payroll deductions will be refunded without interest to the Participants.


 


In the
event of a proposed sale of all or substantially all of the assets of the
Corporation, or the merger or consolidation of the Corporation with or into
another corporation, then in the sole discretion of the Board, (1) each option
shall be assumed or an equivalent option shall be substituted by the successor
corporation or parent or subsidiary of such successor corporation, (2) a date
established by the Board on or before the date of consummation of such merger,
consolidation or sale shall be treated as an Exercise Date, and all outstanding
options shall be deemed exercisable on such date or (3) all outstanding options
shall terminate and the accumulated payroll deductions shall be returned to the
Participants.


 


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10.                               TRANSFERABILITY.


 


Options
granted to Participants may not be voluntarily or involuntarily assigned,
transferred, pledged, or otherwise disposed of in any way, and any attempted
assignment, transfer, pledge, or other disposition shall be null and void and
without effect.  If a Participant in any
manner attempts to transfer, assign or otherwise encumber his or her rights or
interest under the Plan, other than as permitted by the Code, such act shall be
treated as an election by the participant to discontinue participation in the
Plan pursuant to Section 4.2.


 


11.                               AMENDMENT OR TERMINATION OF THE PLAN.


 


11.1                           The
Plan shall continue until, January 31, 2007 unless previously terminated
in accordance with Section 11.2.


 


11.2                           The
Board may, in its sole discretion, insofar as permitted by law, terminate or
suspend the Plan, or revise or amend it in any respect whatsoever, except that,
without approval of the shareholders, no such revision or amendment shall:


 


(a)                                  materially
increase the number of shares subject to the Plan, other than an adjustment
under Section 8 of the Plan;


 


(b)                                 materially
modify the requirements as to eligibility for participation in the Plan, except
as otherwise specified in this Plan;


 


(c)                                  materially
increase the benefits accruing to Participants;


 


(d)                                 reduce
the purchase price specified in Section 5.4, except as specified in
Section 8;


 


(e)                                  extend
the term of the Plan beyond the date specified in Section 11.1; or


 


(f)                                    amend
this Section 11.2 to defeat its purpose.


 


12.                               ADMINISTRATION.


 


The
Board shall appoint a Committee consisting of at least two members who will
serve for such period of time as the Board may specify and who may be removed
by the Board at any time.  The Committee
will have the authority and responsibility for the day-to-day administration of
the Plan, the authority and responsibility specifically provided in this Plan
and any additional duties, responsibility and authority delegated to the
Committee by the Board, which may include any of the functions assigned to the
Board in this Plan.  The Committee shall
have full power and authority to promulgate any rules and regulations which it
deems necessary for the proper administration of the Plan, to interpret the
provisions and supervise the administration of the Plan, and to take all action
in connection with administration of the Plan as it deems necessary or


 


8

















 


advisable, consistent with the delegation from the Board.  Decisions of the Board and the Committee
shall be final and binding upon all participants.  Any decision reduced to writing and signed by a majority of the
members of the Committee shall be fully effective as if it had been made at a
meeting of the Committee duly held.  The
Corporation shall pay all expenses incurred in the administration of the
Plan.  No Board or Committee member
shall be liable for any action or determination made in good faith with respect
to the Plan or any option granted thereunder.


 


13.                               COMMITTEE RULES FOR FOREIGN
JURISDICTIONS.


 


The
Committee may adopt rules or procedures relating to the operation and
administration of the Plan in non-United States jurisdictions to accommodate
the specific requirements of local laws and procedures.  Without limiting the generality of the
foregoing, the Committee is specifically authorized to adopt rules and
procedures regarding handling of payroll deductions, payment of interest, conversion
of local currency, withholding procedures and handling of stock certificates
which vary with local requirements.


 


14.                               SECURITIES LAWS REQUIREMENTS.


 


The
Corporation shall not be under any obligation to issue Common Stock upon the
exercise of any option unless and until the Corporation has determined that:
(i) it and the Participant have taken all actions required to register the
Common Stock under the Securities Act of 1933, or to perfect an exemption from
the registration requirements thereof; (ii) any applicable listing requirement of
any stock exchange on which the Common Stock is listed has been satisfied; and
(iii) all other applicable provisions of state, federal and applicable foreign
law have been satisfied.


 


15.                               GOVERNMENTAL REGULATIONS.


 


This
Plan and the Corporation’s obligation to sell and deliver shares of its stock
under the Plan shall be subject to the approval of any governmental authority
required in connection with the Plan or the authorization, issuance, sale, or
delivery of stock hereunder.


 


16.                               NO ENLARGEMENT OF EMPLOYEE RIGHTS.


 


Nothing
contained in this Plan shall be deemed to give any Employee the right to be
retained in the employ of the Corporation or any Designated Subsidiary or to
interfere with the right of the Corporation or Designated Subsidiary to
discharge any Employee at any time.


 


17.                               GOVERNING LAW.


 


This
Plan shall be governed by California law.


 


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18.                               EFFECTIVE DATE AND SUBSEQUENT PLAN HISTORY.


 


This
Plan became effective on the first date in 1997 in which the Common Stock
traded on the NASDAQ System or NASDAQ National Market System.  The Board approved an increase in shares of
Common Stock that may be issued under the Plan from 250,000 to 500,000 on
September 25, 1998, which increase was approved by shareholders on
November 12, 1998.  The Board
approved certain amendments to the Plan on August 20, 2003, which
amendments did not require the approval of the shareholders of the Corporation.  The Board approved an increase in shares of
Common Stock that may be issued under the Plan from 500,000 to 600,000 on
September 6, 2003, which increase is reflected in Section 5.1, but is
subject to approval of the shareholders of the Corporation within 12 months of
its adoption by the Board of Directors.


 


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