**Exhibit 10.42**

**OVERLAND STORAGE, INC.**

**SUMMARY SHEETOFDIRECTOR AND EXECUTIVE OFFICER COMPENSATION**

**Non-Employee Director Compensation**

Ourcompensation plan for non-employee directors consists of both a cash componentand an equity component. We pay each non-employee director $5,000 per quarter,plus $2,500 for each Board meeting attended ($1,250 if held telephonically),plus reimbursement for expenses. The Chairman of the Board receives anadditional $2,500 per quarter in addition to the non-employee director fee of$5,000 per quarter. Members of the Audit Committee and the CompensationCommittee receive a retainer of $500 per quarter in lieu of a fee for committeemeetings attended during a quarter and members of the Nominating and GovernanceCommittee receive $500 for each committee meeting attended ($250 if heldtelephonically and no fee if held the same day as a Board meeting). Members ofthe Shareholder Value Committee will receive $500 for each committee meetingattended (whether telephonically or in person). Such fee will not be paid forcommittee meetings in joint session with the full board.

Inaddition to the cash component of compensation, each non-employee directorreceives stock options. Under our 2003 Equity Incentive Plan, which we refer toas the 2003 Incentive Plan, each non-employee director receives a ten-yearnonqualified stock option to purchase 18,000 shares on the same date as thecompany’s annual meeting of shareholders. These options are exercisable at fairmarket value on the date of grant and vest in equal monthly installments over a12-month period, as measured from the grant date. When a new non-employeedirector joins the board, such director will be awarded a new option for anumber of shares determined by multiplying 1,500 by the number of monthsremaining until the next scheduled annual meeting date, giving credit for anypartial month. Such option will vest at the rate of 1,500 shares per month andwill be fully vested at the next annual meeting date, at which time thedirector will receive the normal annual grant.

OnNovember 14, 2006, the date of our last annual meeting of shareholders, RobertDegan, Bill Miller and Michael Norkus each received an option for 18,000shares.

**Compensation of Executive Officers**

Ourexecutive officers serve at the discretion of the Board of Directors. From timeto time, the Compensation Committee of the Board of Directors reviews anddetermines the salaries that are paid to our executive officers. The followingtable sets forth the annual salary rates for our current executive officers asof the date of this report on Form 10-K:
| W. Michael Gawarecki |   | $ | 246,500 |   |
|----------------------|--------|---|---------|--------|
| Kurt L.  Kalbfleisch |   | $ | 200,000 |   |
| Michael S.  Kerman   |   | $ | 225,000 |   |
| Vernon A.  LoForti   |   | $ | 400,000 |   |
| Robert J. Scroop     |   | $ | 220,500 |   |

 

**Employment Arrangements with Current Executive Officers**

Thefollowing discussion summarizes the employment arrangements between us and ourcurrent executive officers as of the date of this report on Form 10-K:

**W. Michael Gawarecki.  **Asour Vice President of Operations, Mr. Gawarecki is an at-will employee and maybe terminated by us for any reason, with or without notice. He currently earnsan annual salary of $246,500. On August 13, 2007, he received an option topurchase up to 100,000 shares of the Company’s common stock at the purchaseprice of $1.62 per share (the closing price of the Company’s common stock onthe date of grant) pursuant to the 2003 Incentive Plan. The option will 

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vestover one year in equal monthly installments. The option will accelerate upon a “Changein Control” as defined in the 2003 Incentive Plan. The option has a three-yearlife, subject to continuous service to the Company.

**Kurt L.Kalbfleisch**. As our Interim Chief Financial Officer and VicePresident of Finance, Mr. Kalbfleisch is an at-will employee and may beterminated by us for any reason, with or without notice. He currently earns anannual salary of $200,000 per year and will earn cash bonuses of $10,000 eachin October 2007, January 2008, April 2008 and July 2008, subject to hiscontinued employment at our company at those times. On August 13, 2007, hereceived an option to purchase up to 75,000 shares of the Company’s commonstock at the purchase price of $1.62 per share (the closing price of theCompany’s common stock on the date of grant) pursuant to the 2003 IncentivePlan. The option will vest over one year in equal monthly installments. Theoption will accelerate upon a “Change in Control” as defined in the 2003Incentive Plan. The option has a three-year life, subject to continuous serviceto the Company.

**Michael S. Kerman.**Mr. Kerman, our Vice President of Marketing and ChiefStrategy Officer, is an at-will employee and may be terminated by us for anyreason, with or without notice. Mr. Kerman currently earns an annual salary of$225,000 per year. On August 13, 2007, he received an option to purchase up to150,000 shares of the Company’s common stock at the purchase price of $1.62 pershare (the closing price of the Company’s common stock on the date of grant)pursuant to the 2003 Incentive Plan. The option will vest over one year inequal monthly installments. The option will accelerate upon a “Change inControl” as defined in the 2003 Incentive Plan. The option has a three-yearlife, subject to continuous service to the Company.

**Vernon A. LoForti.**In connection with his appointment as President andChief Executive Officer on August 7, 2007, Mr. LoForti’s annual base salary wasincreased from $297,750 to $400,000. We entered into an employment agreementwith Mr. LoForti on December 4, 2000 pursuant to which Mr. LoForti was employedas our Vice President and Chief Financial Officer. Other than conformingchanges to reflect Mr. LoForti’s new positions and base salary, there will beno material changes to Mr. LoForti’s employment agreement. The employmentagreement has a one-year term, automatically renews for successive one-yearterms, and provides that our Board may unilaterally modify Mr. LoForti’scompensation at any time. If we terminate Mr. LoForti’s employment withoutcause, then we are obligated to pay him a severance payment equal to his basesalary, payable on a pro-rated basis according to our normal payroll cycle forthe 12 months following his termination. In addition, he is entitled toreceive accelerated vesting for any stock options that would otherwise havevested during the 12-month period following his termination. He is alsoentitled to receive the cash severance payment if he resigns for good reasonbecause of any of the following events: (i) reduction in compensation of morethan 10%; (ii) change in position or duties so that his duties are no longerconsistent with his previous position; or (iii) change in principal place ofwork to more than 50 miles from our current facility without his approval. OnAugust 13, 2007, he received an option to purchase up to 250,000 shares of theCompany’s common stock at the purchase price of $1.62 per share (the closingprice of the Company’s common stock on the date of grant) pursuant to the 2003Incentive Plan. The option will vest over one year in equal monthlyinstallments. The option will accelerate upon a “Change in Control” as definedin the 2003 Incentive Plan. The option has a three-year life, subject tocontinuous service to the Company.

**Robert J. Scroop.**As our Vice President, New Product Delivery, Mr.Scroop is an at-will employee and may be terminated by us for any reason, withor without notice. Mr. Scroop currently earns an annual salary of $220,500 peryear. On August 13, 2007, he received an option to purchase up to 75,000 sharesof the Company’s common stock at the purchase price of $1.62 per share (theclosing price of the Company’s common stock on the date of grant) pursuant tothe 2003 Incentive Plan. The option will vest over one year in equal monthlyinstallments. The option will accelerate upon a “Change in Control” as definedin the 2003 Incentive Plan. The option has a three-year life, subject tocontinuous service to the Company.

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**Retention Agreements**

We entered into retentionagreements with Messrs. LoForti, Scroop and Gawarecki effectiveJanuary 27, 2000, with Mr. Kerman effective August 30, 2004, and withMr. Kalbfleisch effective July 23, 2007. These agreements provide that theofficer will receive a severance payment if, within two years of theconsummation of a change in control of Overland, he is terminated without causeor resigns with good reason. These severance payments are based on the officer’sbase salary at the time of the consummation of the change in control or thetermination date, whichever is higher, plus his or her target bonus for theyear prior to the consummation of the change in control. The agreements providethat, upon a change in control, Mr. LoForti would be entitled to receivean amount equal to 2.0 times his base salary plus target bonus; andMessrs. Gawarecki, Kalbfleisch, Kerman, and Scroop each would be entitledto an amount equal to his respective base salary plus target bonus. If anyportion of any payment under any of the agreements would constitute an “excessparachute payment” within the meaning of Section 280G of the InternalRevenue Code, then that payment will be reduced to an amount that is one dollarless than the threshold for triggering the tax imposed by Section 4999 ofthe Internal Revenue Code.

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