Exhibit 10.2


 


OVERLAND STORAGE,
INC.


 


Stock Option
Cancellation Agreement


 


This Stock Option Cancellation Agreement (the “Agreement”)
is entered into between Overland Storage, Inc. (the “Company”) and
                      
(the “Optionholder”) (together the “Parties”) on this 27th day of September,  2007, to cancel certain stock options previously granted to
the Optionholder under the Overland Storage, Inc. 2003 Equity Incentive
Plan (the “Plan”), or the Company’s 1995 Stock Option Plan, 1997 Executive Stock
Option Plan, or 2000 Stock Option Plan.


 


WHEREAS, the Company and the Optionholder previously entered
into stock option agreement(s) described on Exhibit A (the “Option
Agreement(s)”);


 


WHEREAS, pursuant to the Option Agreement(s), the
Optionholder holds the right to purchase shares of Company common stock in the
amounts and at the exercise price(s), as listed on Exhibit A (the “Option(s)”);


 


WHEREAS, the Board of Directors of the Company (the “Board”)
deems it to be in the best interests of the Company to cancel the Option(s),
subject to approval of the Company’s shareholders (the “Shareholders”), for
reasons which include the Board’s determination to seek approval of the
Shareholders for an increase in available shares of Company common stock under
the Plan consistent with the approval models of major institutional
shareholders and their advisors;


 


WHEREAS, the Plan constitutes an important incentive for
participants by linking employees, outside directors and consultants directly
to the Shareholders’ interests through increased stock ownership, and further,
the Plan is essential to the Company’s continued success by serving as a tool
to attract and retain qualified individuals to serve on behalf of the Company;
and


 


WHEREAS, the Optionholder expects to benefit from the
cancellation of the Option(s) as a holder of other equity securities of
the Company.


 


NOW, THEREFORE, in consideration and the mutual covenants heretofore
recited, the sufficiency of which are hereby acknowledged, the Parties agree as
follows:


 


1.             Cancellation of Option(s). The Parties hereby
agree that the Option(s) shall be cancelled on the date approval of the
Shareholders is obtained to effectuate the cancellation of the Option(s) (the
“Effective Date”), with the understanding that the underlying shares of Company
common stock will no longer be available for issuance under the Plan. Upon such
cancellation, the Optionholder will forever waive and relinquish all rights to
the Option(s) and under the Option Agreement(s).


 


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2.             Agreement Not to Exercise. The Optionholder
agrees not to exercise the Option(s) on or before the Effective Date.


 


3.             Termination of Agreement. This Agreement shall
terminate and have no further force or effect if the Shareholders do not
approve the cancellation of the Option(s) at the Company’s 2007 Annual
Meeting of Shareholders, including any adjournment thereof. In such event, the
Option(s) will remain outstanding and exercisable in accordance with the
terms of the Option Agreement(s).


 


4.             Entire Agreement. This Agreement constitutes the
entire agreement between the Parties with respect to the subject matter hereof
and supersedes in its entirety any and all prior undertakings and agreements
between the Parties with respect to the subject matter hereof.


 


5.             Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same Agreement. Facsimile copies of
originally executed signature pages shall serve for all purposes as
originally executed signature pages.


 


IN WITNESS WHEREOF, each of the Parties have executed
this Agreement as of the date first set forth above.


 


 


	
  OPTIONHOLDER

  	
  OVERLAND
  STORAGE, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  	
   

  
	
  Printed
  Name

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
								



 


 


 


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EXHIBIT A


 


OPTION(S)


 


3

















 


Table of Options Scheduled
to be Cancelled Under the Agreements


 


The following table sets forth the stock
options scheduled for cancellation under the Stock Option Cancellation
Agreements entered into with each of the persons named below. The stock options
were cancelled effective November 13, 2007 upon shareholder approval
of  Proposal 2 of our definitive proxy
statement filed with the SEC on October 10, 2007.


 


	
   

  	
   

  	
  Option

  	
   

  	
  Number

  	
   

  	
  Per Share

  	
   

  	
   

  	
   

  
	
  Optionee
  Name

  	
   

  	
  Grant Date

  	
   

  	
  of Shares

  	
   

  	
  Exercise Price

  	
   

  	
  Plan Name

  	
   

  
	
  Robert Degan

  	
   

  	
  1/20/2003

  	
   

  	
  22,000

  	
   

  	
  $

  	
  14.75

  	
   

  	
  2000 Stock Option Plan

  	
   

  
	
   

  	
   

  	
  3/3/2005

  	
   

  	
  12,000

  	
   

  	
  $

  	
  14.67

  	
   

  	
  2003 Equity Incentive Plan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Robert Farkaly

  	
   

  	
  6/25/2003

  	
   

  	
  5,000

  	
   

  	
  $

  	
  20.25

  	
   

  	
  2000 Stock Option Plan

  	
   

  
	
   

  	
   

  	
  11/18/2004

  	
   

  	
  5,000

  	
   

  	
  $

  	
  13.98

  	
   

  	
  2003 Equity Incentive Plan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mike Gawarecki

  	
   

  	
  4/21/2000

  	
   

  	
  20,000

  	
   

  	
  $

  	
  10.00

  	
   

  	
  1997 Stock Option Plan

  	
   

  
	
   

  	
   

  	
  7/10/2002

  	
   

  	
  52,500

  	
   

  	
  $

  	
  13.50

  	
   

  	
  2000 Stock Option Plan

  	
   

  
	
   

  	
   

  	
  11/17/2003

  	
   

  	
  10,000

  	
   

  	
  $

  	
  19.33

  	
   

  	
  2003 Equity Incentive Plan

  	
   

  
	
   

  	
   

  	
  11/15/2004

  	
   

  	
  31,400

  	
   

  	
  $

  	
  14.29

  	
   

  	
  2003 Equity Incentive Plan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kurt Kalbfleisch

  	
   

  	
  4/21/2000

  	
   

  	
  8,000

  	
   

  	
  $

  	
  10.00

  	
   

  	
  1995 Stock Option Plan

  	
   

  
	
   

  	
   

  	
  7/2/2003

  	
   

  	
  10,000

  	
   

  	
  $

  	
  20.13

  	
   

  	
  1995 Stock Option Plan

  	
   

  
	
   

  	
   

  	
  11/18/2004

  	
   

  	
  3,500

  	
   

  	
  $

  	
  13.98

  	
   

  	
  2003 Equity Incentive Plan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Vernon LoForti

  	
   

  	
  4/21/2000

  	
   

  	
  20,000

  	
   

  	
  $

  	
  10.00

  	
   

  	
  1997 Stock Option Plan

  	
   

  
	
   

  	
   

  	
  7/10/2002

  	
   

  	
  60,000

  	
   

  	
  $

  	
  13.50

  	
   

  	
  2000 Stock Option Plan

  	
   

  
	
   

  	
   

  	
  11/17/2003

  	
   

  	
  10,000

  	
   

  	
  $

  	
  19.33

  	
   

  	
  2003 Equity Incentive Plan

  	
   

  
	
   

  	
   

  	
  11/15/2004

  	
   

  	
  29,700

  	
   

  	
  $

  	
  14.29

  	
   

  	
  2003 Equity Incentive Plan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Scott McClendon

  	
   

  	
  1/20/2003

  	
   

  	
  11,000

  	
   

  	
  $

  	
  14.75

  	
   

  	
  2000 Stock Option Plan

  	
   

  
	
   

  	
   

  	
  11/17/2003

  	
   

  	
  18,000

  	
   

  	
  $

  	
  19.33

  	
   

  	
  2003 Equity Incentive Plan

  	
   

  
	
   

  	
   

  	
  11/15/2004

  	
   

  	
  18,000

  	
   

  	
  $

  	
  14.29

  	
   

  	
  2003 Equity Incentive Plan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Michael Norkus

  	
   

  	
  8/11/2004

  	
   

  	
  4,500

  	
   

  	
  $

  	
  11.05

  	
   

  	
  2003 Equity Incentive Plan

  	
   

  
	
   

  	
   

  	
  11/15/2004

  	
   

  	
  18,000

  	
   

  	
  $

  	
  14.29

  	
   

  	
  2003 Equity Incentive Plan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Robert Scroop

  	
   

  	
  7/10/2002

  	
   

  	
  60,000

  	
   

  	
  $

  	
  13.50

  	
   

  	
  2000 Stock Option Plan

  	
   

  
	
   

  	
   

  	
  11/17/2003

  	
   

  	
  10,000

  	
   

  	
  $

  	
  19.33

  	
   

  	
  2003 Equity Incentive Plan

  	
   

  
	
   

  	
   

  	
  11/15/2004

  	
   

  	
  29,700

  	
   

  	
  $

  	
  14.29

  	
   

  	
  2003 Equity Incentive Plan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Shares Cancelled

  	
   

  	
   

  	
   

  	
  468,300

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


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