Exhibit 10.1


 


November 22,
2005


 


Scott
McClendon


Chairman
of the Board


Overland
Storage, Inc.


4820
Overland Avenue

San Diego, CA  92123-1599


 


Re: Agreement to Decrease Annual Salary


 


Scott:


 


Reference is made to the Employment Agreement (the “Employment Agreement”)
and the Retention Agreement (the “Retention Agreement”), each dated March 12,
2001 and each between Overland Storage, Inc. (the “Company”) and the
undersigned.  Capitalized terms used in
this letter that are not otherwise defined shall have the meanings given them
in the Employment Agreement and the Retention Agreement, as applicable.


 


I am writing this letter to confirm the voluntary offer I made at the November 15,
2005 meeting of the Board of Directors of the Company to have my gross annual
base salary reduced from $500,000 to $395,000, effective as of that date (the “Salary
Reduction”).  This reduction, if
accepted, will be binding going forward, and the Company, through its Board of
Directors, will have sole and absolute discretion to modify my compensation, as
set forth in Section 2.4 of the Employment Agreement, including any
increase in compensation. Please be advised that this offer is subject to our
understanding that (i) solely for purposes of determining the “Severance
Payment,” as defined in Section 5.2 of the Employment Agreement, “Base
Salary” shall be calculated using the greater of (x) my salary in effect
immediately prior to this reduction ($500,000) and (y) my salary in effect at
the time of termination of my employment; and (ii) solely for purposes of determining
the severance payable under Section 4.1(b) of the Retention
Agreement, “Base Salary” shall be calculated using the greatest of (x) my salary
in effect immediately prior to this reduction ($500,000), (y) my salary at the
time of a Change of Control and (z) my salary at the time of the Termination
Date.  For all other purposes of the
Employment Agreement and the Retention Agreement, “Base Salary” shall be $395,000.


 


I acknowledge and agree that the Salary Reduction will reduce the annual
bonus I am eligible for under Section 2.2 of the Employment Agreement and
accordingly, the “Target Bonus,” as defined in the Retention Agreement.  I further acknowledge and agree that (i) the
Salary Reduction does not and will not constitute “Good Reason” under either Section 5.3
of the Employment Agreement or under Section 1.5 of the Retention
Agreement, and (ii) nothing in this letter shall be deemed to restrict or
otherwise limit the Company’s right to modify my compensation in the future pursuant
to Section 2.4 of the Employment Agreement, inclusive of the right to
reduce my Base Salary by 10% without giving rise to “Good Reason” under Section 5.3
of the Employment Agreement or Section 1.5 of the Retention Agreement.


 


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Please
execute the acknowledgment below to indicate your agreement with the foregoing.


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  /s/
  Christopher Calisi

  	
   

  
	
   

  	
  Christopher
  Calisi

  



 


 


ACKNOWLEDGED
AND AGREED TO:


 


 


	
  By:

  	
  /s/ Scott McClendon

  	
   

  
	
   

  	
  Scott
  McClendon, Chairman of the Board

  



 


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