Exhibit 10.1


 


Confidential
portions of this document have been redacted and filed separately with the
Commission.

[***] symbolizes language omitted pursuant to an application for Confidential
Treatment


 


TRANSITION
AMENDMENT [***] 


 


THIS TRANSITION AMENDMENT (“the
Transition Amendment”) is made and entered into as of this 29th day
of September, 2006 (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 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, by letter dated
June 26, 2006, Overland advised SANMINA-SCI of Overland’s view that Sanmina-SCI
was in breach of the Agreement (“Breach Letter”); and


 


WHEREAS, by letter dated
July 26, 2006, Sanmina-SCI responded to Overland’s Breach Letter; and


 


WHEREAS, the parties
desire [***] and to reflect such agreements in this Transition Amendment.


 


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.             Transition. The Parties hereby agree to transfer
the manufacture of the Products from Sanmina-SCI to Overland in accordance with
the transition plan set forth in Exhibit A (the “Transition Plan”).


 


2.             Termination of Agreement. The parties mutually agree
that upon completion of the Transition Plan the Agreement will automatically
terminate.


 


3.             Prices. The prices for Products shall [***] from
the Effective Date until the completion of the Transition Plan; provided,
however that Sanmina-SCI [***] any component, part or raw material
(collectively “Components”). In the event Overland wishes Sanmina-SCI to
manufacture Product for it after the completion of the Transition Plan, the
parties shall negotiate in good faith the pricing of such Products. In the event
the parties are unable to reach agreement on the pricing, Sanmina-SCI shall be
released of any obligation to manufacture such products, and Overland shall be
responsible for all Components ordered by Sanmina-SCI to produce the products
in accordance with the Agreement (including Section 4.2 thereof).


 


4.             [***]


 


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


 


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


 


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Confidential
portions of this document have been redacted and filed separately with the
Commission.

[***] symbolizes language omitted pursuant to an application for Confidential
Treatment


 


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


 


8.             This 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.


 


9.             This Transition Agreement may be
modified only by a subsequent written agreement signed by the parties.


 


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


 


IN WITNESS WHEREOF, the
undersigned hereunto set their hands and seals this 29th day of
September, 2006.


 


 


	
   

  	
  SANMINA-SCI CORPORATION

  	
  OVERLAND STORAGE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: Tom Clawson

  	
  By: Vernon A. LoForti

  
	
   

  	
  Title: Executive Vice
  President

  	
  Title: Vice President
  & CFO

  
					



 


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Confidential
portions of this document have been redacted and filed separately with the
Commission.

[***] symbolizes language omitted pursuant to an application for Confidential
Treatment


 


Exhibit A
– Transition Plan


 


 


A.  Sanmina-SCI’s Obligations


[***]


 


1.               Supplier
Notification. Within 30 days of the Effective Date, Sanmina-SCI shall issue
letters to its suppliers giving the suppliers permission to share pricing
information with Overland and allowing Overland to place orders directly with
the suppliers for Components. Sanmina-SCI shall use its best commercial efforts
to settle any outstanding payment issues (delinquencies, credit holds) with any
such supplier.


 


2.               Documentation.
Prior to the completion of the Transition Plan, Sanmina-SCI shall provide
Overland with all of the following items it has in its possession: (i)
electronic and/or hard copies of method sheets for the production of the
Products; (ii) electronic and/or hard copies of AVL/AML and RoHS
certifications; (iii) copies of all receiving inspection files for Components
used in the production of the Products (iv) copies of all Overland Product
label files and (v) electronic copies of bills of material.


 


3.               Equipment. Prior
to the completion of this Transition Plan, Sanmina-SCI shall return to Overland
all Overland-owned equipment, tooling, and fixtures (collectively “Overland
Equipment”) used in the manufacturing of the Products. In the event Sanmina-SCI
does not have in its possession any of the Overland Equipment (e.g., the
Equipment is lost) or in the event the Overland Equipment is defective as a
result of Sanmina-SCI’s failure to maintain it in accordance with Section 8.2
of the Agreement, then, in lieu of returning the missing or damaged Overland
Equipment, Sanmina-SCI shall pay Overland an amount equal to the net book value
of missing or damaged Overland Equipment, and such payment shall satisfy
Sanmina-SCI’s obligations under this paragraph. [***].


 


4.               Training. According
to the schedule in the Transition Plan, Sanmina-SCI shall provide up to 500
hours (excluding travel time) of on the job training on its manufacturing
process and/or other technical issues to enable Overland to manufacture the
Products. [***]. Overland shall be responsible for all costs associated with
its employees’ attendance at such training.


 


B.  Overland’s Obligations


[***]


 


5.              Components. Prior to the
completion of this Transition Plan and conditioned upon [***], Overland shall
purchase from Sanmina-SCI all Components that Overland is required to purchase
under Sections 10.4(a) and Section 4.2(g) of the Agreement, and such purchase
will be subject to the terms and conditions set forth in the Agreement except
that such Components will be sold and purchased at the Delivered Cost (plus a
2.5% material overhead charge) [***].


 


C.  Other Obligations


 


6.               Hiring. Overland
shall have the right to make offers to hire any Sanmina-SCI employee currently
involved with the Overland program in Rapid City, provided that it first
obtains Sanmina-SCI’s consent, which consent will not be unreasonably refused.


 


3

















 


Confidential
portions of this document have been redacted and filed separately with the
Commission.

[***] symbolizes language omitted pursuant to an application for Confidential
Treatment


 


7.               Escorts. From
the Effective Date until the completion of the Transition Plan, Sanmina shall
no longer require Overland employees to have escorts in the visitors conference
room, the common areas and in the Overland manufacturing area of the Rapid City
facility.


 


8.               ECOs. [***].


 


9.               Sanmina-SCI shall
sell to Overland, at a mutually agreed-upon price not exceeding the net book
value of the Equipment, any unique Equipment (originally sold by Overland to
Sanmina-SCI) used in manufacturing the Products as mutually agreed between the
Parties in good faith. Sanmina-SCI shall pay for the cost of shipping (via UPS
ground) the Equipment to Overland’s facility in San Diego, CA. Any Equipment
sold to Overland under this paragraph shall be sold “AS IS” without warranty.


 


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