Document:

EX 10.1 9.30.2013

Exhibit 10.1

AMENDMENT NO. 3 TO 
LOAN AND SECURITY AGREEMENT

THIS AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into this 8th day of August, 2013, by and between OVERLAND STORAGE, INC., a California corporation (“Borrower”) and SILICON VALLEY BANK (“Bank”).  Capitalized terms used herein without definition shall have the same meanings given them in the Loan Agreement (as defined below).
Recitals
A.    Borrower and Bank have entered into that certain Loan and Security Agreement dated as of August 9, 2011 (as may be amended, restated, or otherwise modified, the “Loan Agreement”), pursuant to which the Bank has extended and will make available to Borrower certain advances of money.
B.    Borrower desires that Bank amend the Loan Agreement upon the terms and conditions more fully set forth herein.  Subject to the representations and warranties of Borrower herein and upon the terms and conditions set forth in this Amendment, Bank is willing to so amend the Loan Agreement.
agreement
NOW, THEREFORE, in consideration of the foregoing Recitals and intending to be legally bound, the parties hereto agree as follows:
1.    Amendments to Loan Agreement.
1.1    Section 2.1.2 (Letters of Credit Sublimit).  Section 2.1.2 of the Loan Agreement is amended and restated in its entirety, as follows:
“2.1.2    Reserved.”
1.2    Section 2.1.3 (Foreign Exchange Sublimit).  Section 2.1.3 of the Loan Agreement is amended and restated in its entirety, as follows:
“2.1.3    Reserved.”
1.3    Section 2.1.4 (Cash Management Services Sublimit).  Section 2.1.4 of the Loan Agreement is amended and restated in its entirety, as follows:
“2.1.4    Bank Services.  Borrower may use, and Bank will provide, subject to (i) satisfaction of the conditions precedent (A) herein and (B) in the applicable Bank Services Agreement and (ii) the execution of such further documentation in connection therewith as Bank may reasonably request, Bank Services in an aggregate amount 

not to exceed Seven Hundred Fifty Thousand Dollars ($750,000.00).  Any amounts due and owing to Bank in respect of Bank Services will accrue interest at an interest rate not to exceed the interest rate applicable to Advances.”

1.4    Section 2.2 (Overadvances).  Section 2.2 of the Loan Agreement is amended and restated in its entirety, as follows:
“2.2    Overadvances.  If, at any time, the outstanding principal amount of any Advances exceeds the lesser of either the Revolving Line or the Borrowing Base (such excess being an “Overadvance”), Borrower shall immediately pay to Bank in cash such Overadvance.  Without limiting Borrower’s obligation to repay Bank any amount of the Overadvance, Borrower agrees to pay Bank interest on the outstanding amount of any Overadvance, on demand, at the Default Rate.”
1.5    Section 2.4(a) (Fees).  Section 2.4(a) of the Loan Agreement is amended and restated in its entirety, as follows:
“(a)    Commitment Fee.  A fully earned, non‐refundable commitment fee of Twenty-Two Thousand Five Hundred ($22,500.00), on the Third Amendment Effective Date, and on the first anniversary of the Third Amendment Effective Date;”
1.6    Section 2.4(b) (Fees).  Section 2.4(b) of the Loan Agreement is amended and restated in its entirety, as follows:
“(b)    Reserved.”  
1.7    Section 2.4(c) (Fees).  Section 2.4(c) of the Loan Agreement is amended and restated in its entirety, as follows:
“(c)    Unused Revolving Line Facility Fee.  A fee (the “Unused Revolving Line Facility Fee”), payable monthly, in arrears, on a calendar year basis, in an amount equal to one quarter of one percent (0.25%) per annum of the average unused portion of the Revolving Line, as determined by Bank in its reasonable good faith business judgment.  The unused portion of the Revolving Line, for purposes of this calculation, shall equal the difference between (x) the Revolving Line amount (as it may be reduced from time to time) and (y) the average for the period of the daily closing balance of the Revolving Line outstanding.  Borrower shall not be entitled to any credit, rebate or repayment of any Unused Revolving Line Facility Fee previously earned by Bank pursuant to this Section notwithstanding any termination of the Agreement or the suspension or termination of Bank’s obligation to make loans and advances hereunder;”
1.8    Section 2.4(d) (Fees). Section 2.4(d) of the Loan Agreement is amended by deleting the “.” at the end of the section and replacing it with “; and”.
1.9    Section 2.4(e) (Fees).  A new Section 2.4(e) is hereby added to the Loan Agreement, as follows:

“(e)    Collateral Handling Fee.  A fee of One Thousand Dollars ($1,000.00) (the “Collateral Handling Fee”), payable on the last Business Day of each month in which a Net Cash Event has occurred or is continuing.”
1.10    Section 3.5 (Procedures for Borrowing).  Section 3.5 of the Loan Agreement is amended and restated in its entirety, as follows:
“3.5    Procedures for Borrowing.  Subject to the prior satisfaction of all other applicable conditions to the making of an Advance set forth in this Agreement, to obtain an Advance, Borrower shall notify Bank (which notice shall be irrevocable) by electronic mail, facsimile, or telephone by 12:00 p.m. Pacific time on the Funding Date of the Advance.  Together with such notification Borrower must promptly deliver to Bank, by electronic mail or facsimile, one of the following executed by a Responsible Officer or his or her designee: (a) if a Net Cash Event has occurred and is continuing, a completed Transaction Report, and (b) if a Net Cash Event does not exist, an Advance Request Form in the form of Exhibit D attached hereto.  Bank shall credit Advances to the Designated Deposit Account.  Bank may make Advances under this Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the Advances are necessary to meet Obligations which have become due.  Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or designee.”
1.11    Section 4.1 (Grant of Security Interest).  Section 4.1 of the Loan Agreement is amended and restated in its entirety, as follows:
“4.1    Grant of Security Interest.  Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof.  The Collateral shall include all proceeds of all Intellectual Property (whether acquired upon the sale, lease, license, exchange or other disposition of such Intellectual Property) and all other rights arising out of Intellectual Property.
Borrower acknowledges that it previously has entered, and/or may in the future enter, into Bank Services Agreements with Bank. Regardless of the terms of any Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank thereunder shall be deemed to be Obligations hereunder and that it is the intent of Borrower and Bank to have all such Obligations secured by the first priority perfected security interest in the Collateral granted herein (subject only to Permitted Liens that may have superior priority to Bank’s Lien in this Agreement).
Borrower agrees that, unless otherwise agreed in a writing signed by Bank and Borrower, (a) the security interest granted herein by Borrower shall survive the termination of this Agreement and shall terminate only upon the termination of all Bank Services Agreements, and (b) if, on the effective date of the termination of this Agreement, there are any outstanding Letters of Credit, then on such date Borrower shall provide to Bank cash collateral in an amount equal to (i) 105% if the letter of credit is denominated in Dollars or (ii) 110% of the Dollar Equivalent if the letter of credit is denominated in Foreign Currency, of the face amount of all such Letters of Credit plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment), to secure all of the Obligations relating to such Letters of Credit.”
1.12    Section 6.9 (Financial Covenants).  Section 6.9 of the Loan Agreement is amended and restated in its entirety, as follows:

“Maintain at all times, to be tested as of the last day of each month, unless otherwise noted, on a consolidated basis with respect to Borrower and its Subsidiaries:
(a)    Liquidity Coverage Ratio. A ratio of (A) unrestricted cash and Cash Equivalents with Bank or Bank’s Affiliates plus net Eligible Accounts to (B) the aggregate of (i) the Dollar Equivalent amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) plus (ii) the outstanding principal balance of any Advances of not less than 1.75:1.00.”
1.13    Section 9.1(c) (Rights and Remedies).  Section 9.1(c) of the Loan Agreement is amended and restated in its entirety, as follows:
“(c)    for any Letters of Credit, demand that Borrower (i) deposit cash with Bank in an amount equal to (a) 105% if the letter of credit is denominated in Dollars or (b) 110% of the Dollar Equivalent if the letter of credit is denominated in Foreign Currency, of the face amount of all such Letters of Credit remaining undrawn (plus all interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment)), to secure all of the Obligations relating to such Letters of Credit, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid or payable over the remaining term of any Letters of Credit;”
1.14    Section 12.9 (Survival).  Section 12.9 of the Loan Agreement is amended and restated in its entirety, as follows:
“12.9    Survival.  All covenants, representations and warranties made in this Agreement continue in full force until this Agreement has terminated pursuant to its terms and all Obligations (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) have been satisfied.  The grant of security interest by Borrower in Section 4.1 shall survive until the termination of all Bank Services Agreements.  The obligation of Borrower in Section 12.3 to indemnify Bank shall survive until the statute of limitations with respect to such claim or cause of action shall have run.”
1.15    Section 13.1 (Definitions).  Subsection (e) of the definition of “Eligible Accounts” in Section 13.1 of the Loan Agreement is amended and restated in its entirety, as follows:
“(e)    Accounts owing from an Account Debtor which does not have its principal place of business in the United States unless (A) such Accounts are listed on Schedule A attached hereto, and (B) such Accounts in the aggregate do not exceed Five Million Dollars ($5,000,000.00);”
1.16    Section 13.1 (Definitions).  The following definitions in Section 13.1 of the Loan Agreement are hereby deleted in their entirety:
“FX Business Day”
“FX Reduction Amount”
“FX Reserve”

“Letter of Credit Reserve”
“Letter of Credit Application”
“Non-Formula Amount”
“Settlement Date”
1.17    Section 13.1 (Definitions).  Each of the following definitions is hereby: (a) to the extent already defined in Section 13.1 of the Loan Agreement, amended and restated in its entirety as follows, and (b) to the extent not already defined in Section 13.1 of the Loan Agreement, added to Section 13.1 of the Loan Agreement in its appropriate alphabetical order as follows:
““Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the amount available under the Borrowing Base, minus (b) the outstanding principal balance of any Advances.”  
““Bank Services” are any products, credit services, and/or financial accommodations previously, now, or hereafter provided to Borrower or any of its Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any letters of credit, Cash Management Services, interest rate swap arrangements, and foreign exchange services as any such products or services may be identified in Bank’s various agreements related thereto (each, a “Bank Services Agreement”).”
““Cash Management Services” are cash management services, which may include merchant services, direct deposit of payroll, business credit cards and check cashing services identified in Bank’s various management services agreement.”
““Credit Extension” is any Advance or any other extension of credit by Bank for Borrower’s benefit.”
““Collateral Handling Fee” is defined in Section 2.4.”  
““FX Forward Contract” is any foreign exchange contract by and between Borrower and Bank under which Borrower commits to purchase from or sell to Bank a specific amount of Foreign Currency on a specified date.”
““Letter of Credit” is a standby letter of credit issued by Bank or another institution upon request of Borrower based upon an application, guarantee, indemnity or similar agreement.”
““Loan Documents” are, collectively, this Agreement, the Perfection Certificate, any Bank Services Agreements, any note, or notes or guaranties executed by Borrower or any Guarantor, and any other present or future agreement between Borrower any Guarantor and/or for the benefit of Bank in connection with this Agreement, all as amended, restated, or otherwise modified.”
““Net Cash” is (A) unrestricted cash and Cash Equivalents with Bank or Bank’s Affiliates plus net Eligible Accounts less (B) the aggregate of (i) the Dollar Equivalent amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) (excluding, however, any Letters of Credit to the extent cash collateralized) plus (ii) the outstanding principal balance of any Advances.”  

““Net Cash Event” means any time that the Borrower’s Net Cash is less than Five Hundred Thousand Dollars ($500,000.00).”  
““Prime Rate Margin” is the basis points set forth below applicable to Borrower as determined by Borrower’s Net Cash:  
	
		
	Net Cash
	Prime Rate Margin

	Greater than $500,000.00
	100 basis points

	Less than or equal to $500,000.00
	  125 basis points”

““Ratio Event” is hereby deleted and replaced by the phrase “Net Cash Event” each time it appears in the following sections of the Loan Agreement: Section 5.3(a) (Accounts Receivable); Section 6.2(a) (Financial Statements, Reports, Certificates); Section 6.2(b) (Financial Statements, Reports, Certificates); and Section 6.3(c) (Accounts Receivable).”
““Revolving Line Maturity Date” is August 7, 2015.”  
““Third Amendment Effective Date” is August 8, 2013.”
1.18    Schedule A (List of Eligible Foreign Accounts).  Schedule A attached to this Amendment is hereby added to the Loan Agreement as Schedule A thereto.
1.19    Exhibit B (Form of Compliance Certificate).  Exhibit B to the Loan Agreement is hereby amended in its entirety by deleting it and replacing it with Exhibit A attached to this Amendment.  
1.20    Exhibit D (Advance Request Form).  Exhibit D to the Loan Agreement is hereby amended in its entirety by deleting it and replacing it with Exhibit B attached to this Amendment.  
2.    Limitation.  The amendments set forth in this Amendment shall be limited precisely as written and shall not be deemed (a) to be a forbearance, waiver or modification of any other term or condition of the Loan Agreement or of any other instrument or agreement referred to therein or to prejudice any right or remedy which Bank may now have or may have in the future under or in connection with the Loan Agreement or any instrument or agreement referred to therein; (b) to be a consent to any future amendment or modification, forbearance or waiver to any instrument or agreement the execution and delivery of which is consented to hereby, or to any waiver of any of the provisions thereof; or (c) to limit or impair Bank’s right to demand strict performance of all terms and covenants as of any date.  Except as expressly amended hereby, the Loan Agreement shall continue in full force and effect.  
3.    Representations and Warranties.  To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:
3.1    Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true, accurate and complete in all material respects as of such date), and (b) no Event of Default has occurred and is continuing;

3.2    Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;
3.3    The organizational documents of Borrower delivered to Bank remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;
3.4    The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized; 
3.5    The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower; 
3.6    The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on Borrower, except as already has been obtained or made or except for any filing, recording, or registration required by the Securities Exchange Act of 1934; and
3.7    This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.  
4.    Effectiveness.  This Amendment shall become effective upon the satisfaction of all the following conditions precedent:
4.1    Amendment.  Borrower and Bank shall have duly executed and delivered this Amendment to Bank;
4.2    Commitment Fee.  Borrower shall have paid to Bank a fully earned, non‐refundable commitment fee of Twenty-Two Thousand Five Hundred ($22,500.00); and
4.3    Payment of Bank Expenses.  Borrower shall have paid all Bank Expenses (including all reasonable attorneys’ fees and reasonable expenses) incurred through the date of this Amendment.  
5.    Counterparts.  This Amendment may be signed in any number of counterparts, and by different parties hereto in separate counterparts, with the same effect as if the signatures to each such counterpart were upon a single instrument.  All counterparts shall be deemed an original of this Amendment.  
6.    Integration.  This Amendment and any documents executed in connection herewith or pursuant hereto contain the entire agreement between the parties with respect to the subject matter hereof and supersede all prior 

agreements, understandings, offers and negotiations, oral or written, with respect thereto and no extrinsic evidence whatsoever may be introduced in any judicial or arbitration proceeding, if any, involving this Amendment; except that any financing statements or other agreements or instruments filed by Bank with respect to Borrower shall remain in full force and effect.  
7.    Governing Law; Venue.  THIS AMENDMENT SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.  Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County, California.  
    

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first written above.
		
	Borrower:
	OVERLAND STORAGE, INC.

a California corporation
By:    /s/ Kurt Kalbfleisch            
Printed Name:    Kurt Kalbfleisch        
Title:     SVP & CFO                
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first written above.

		
	Bank:
	SILICON VALLEY BANK

By:  /s/Ryan Edwards     
Printed Name:  Ryan Edwards    
Title:  VP    

SCHEDULE A
List of Eligible Foreign Accounts
		
	1.
	ADN Distribution GmbH ($200,000 credit limit)

		
	2.
	ArrowECS

		
	3.
	Avnet

		
	4.
	BE-IP France

		
	5.
	Bull SA Establissement D'Angers

		
	6.
	Bull SA Global Logistics

		
	7.
	CMS Peripherals LTD

		
	8.
	Datastore AG

		
	9.
	Drive Control Corporation

		
	10.
	Eld Datentechnik GmbH

		
	11.
	Fujitsu

		
	12.
	Hammer PLC

		
	13.
	HP

		
	14.
	Infodip

		
	15.
	Ingram Micro, S.L. Spain

		
	16.
	Memodis

		
	17.
	Stordata

		
	18.
	Systex Corporation

		
	19.
	Tech Data

		
	20.
	TimAG

		
	21.
	Westcon Group

		
	22.
	Zycko UK ($200,000 credit limit)

EXHIBIT A
Form of Compliance Certificate
TO:    SILICON VALLEY BANK                        Date:

FROM: OVERLAND STORAGE, INC.
The undersigned authorized officer of Overland Storage, Inc. (“Borrower”) certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (as amended from time to time, the “Agreement”), (1) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below, (2) there are no Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank.  Attached are the required documents supporting the certification.  The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes.  The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.  Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

[Remainder of Page Left Intentionally Blank]

	
			
	Please indicate compliance status by circling Yes/No under “Complies” column.

	 

	Reporting Covenant
	Required
	Complies

	 
	 
	 

	Transaction Report
	Monthly 
(Weekly after a Net Cash Event)
	Yes  No

	A/R and A/P Agings
	Monthly within 15 days (Weekly within 5 days after a Net Cash Event)
	Yes  No

	Monthly Oppenheimer Account Statement
	Monthly within 30 days
	Yes  No

	Monthly Financial Statements
	Monthly within 30 days
	Yes  No

	Compliance Certificate
	Monthly within 30 days,
Quarterly with Form 10-Q, but not later than 50 days after each fiscal quarter end, as applicable,
Annually with Form 10-K, but not later than 90 days after each fiscal year end, as applicable,
	Yes  No

	Quarterly cash holding report
	Quarterly within 30 days after the end of each fiscal quarter
	Yes  No

	Quarterly Financial Statements
	Quarterly within 50 days after the end of each fiscal quarter
	Yes  No

	Annual Financial Statements
	FYE within 90 days
	Yes  No

	Forms 10-Q, 10-K and 8-K
	Within 5 days after filing with SEC, but in the case of the 10-K report, not later than 90 days after FYE
	Yes  No

	Annual operating budgets and projections approved by Board of Directors
	Within 50 days after FYE
	Yes  No

	Field Exams
	Semi-Annually or as conditions warrant
	Yes  No

	Material change in composition of Intellectual Property, registration of new Intellectual Property, or event that materially or adversely affect value of Intellectual Property
	 
	Yes  No

	Pending or threatened legal action that could result in damages, individually or in the aggregate, of $100,000.00
	 
	Yes  No

[Remainder of Page Left Intentionally Blank]

	
		
	Net Cash
	Actual

	 
	 

	A.  Liquidity
	 

	1.  Unrestricted cash and Cash Equivalents
	$__________

	2.  Net Eligible Accounts
	$__________

	3.  Total Liquidity (sum 1 and 2)
	$__________

	 
	 

	B.  Outstandings
	 

	1.  Dollar Equivalent of Letters of Credit (including drawn but unreimbursed L/Cs, but 
excluding, any L/Cs to the extent cash collateralized)
	$__________

	2.  Outstanding principal balance of Advances
	$__________

	3.  Total Outstandings (sum of 1 and 2)
	$__________

	 
	 

	C.  Net Cash
	 

	1.  Total Liquidity (A.3)
	$__________

	2.  Total Outstandings (B.3)
	$__________

	3.  Actual Net Cash (C.1 minus C.2)
	$__________

	
		
	Pricing - Net Cash Event
	Complies

	Net Cash Event if Net Cash less than or equal to $500,000.00
	 

	Prime + 100 basis points if the Net Cash is greater than $500,000.00
	Yes  No

	Prime + 125 basis points if the Net Cash is less than or equal to $500,000.00
	Yes  No

	
			
	Financial Covenant
	Minimum Required
	Complies

	 
	 
	 

	Liquidity Coverage Ratio
	1.75 to 1.00
	Yes  No

	
			
	Permitted Operating Account
	Actual
	Complies

	 
	 
	 

	No more than $250,000 in Oppenheimer Account # G58-1409997
	 
	Yes  No*

	*If no, a Control Agreement must be provided.
	 
	 

The following are the exceptions with respect to the certification above:  (If no exceptions exist, state “No exceptions to note.”)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

	
		
	OVERLAND STORAGE, INC.
By:___________________________
Name:
Title:
	BANK USE ONLY
Received by: _____________________
authorized signer
Date: _________________________
Verified: ________________________
authorized signer
Date: _________________________
Compliance Status:Yes  No

EXHIBIT B
Form of Advance Request Form
	
		
	Net Cash
	Actual

	 
	 

	A.  Liquidity
	 

	1.  Unrestricted cash and Cash Equivalents
	$____________

	2.  Net Eligible Accounts
	$____________

	3.  Total Liquidity (sum 1 and 2)
	$____________

	 
	 

	B.  Outstandings
	 

	1.  Dollar Equivalent of Letters of Credit (including drawn but unreimbursed L/Cs, but 
excluding, any L/Cs to the extent cash collateralized)
	$____________

	2.  Outstanding principal balance of Advances
	$____________

	3.  Total Outstandings (sum of 1 and 2)
	$____________

	 
	 

	C.  Net Cash
	 

	1.  Total Liquidity (A.3)
	$____________

	2.  Total Outstandings (B.3)
	$____________

	3.  Actual Net Cash (C.1 minus C.2)
	$____________

	
		
	OVERLAND STORAGE, INC.
By:___________________________
Name:
Title:
	BANK USE ONLY
Received by: _____________________
authorized signer
Date: _________________________
Verified: ________________________
authorized signer
Date: _________________________
Compliance Status:Yes  NoEX 10.2 9.30.2013

Exhibit 10.2

September 4, 2013

Ms. Jillian Mansolf

Re:      Amendment to Offer Letter

Dear Jillian;

Reference is made to that certain employment offer letter (the “Offer Letter”) dated as of June 29, 2009 by and between you and Overland Storage, Inc. (the “Company”).  This letter agreement (this “Agreement”) amends the Offer Letter as and to the extent set forth herein, and shall be effective on the eighth day after you sign and deliver both this Agreement and the Release (as defined below) to the Company (the “Effective Date”), provided that you do not revoke the Release before such date pursuant to its terms, and provided further that you sign and deliver this Agreement to the Company on or before September 14, 2013.  

1.     Amendments. The Offer Letter is hereby amended as follows:    

(a)    Position.  Effective as of August 19, 2013, you will serve as the Senior Vice President of Marketing, and will continue to report to the Company’s Chief Executive Officer.

(b)    Compensation.  You will continue to be paid a base salary at your current rate of $250,000 per year, less applicable withholdings and authorized deductions (“Base Salary”) in accordance with the Company’s regularly scheduled payroll schedule.  Through September 30, 2013, you will continue to be eligible for quarterly commission earnings of $25,500, less applicable withholdings and authorized deductions, at 100% of quota and payable on the last pay period of each month.  You will cease to be eligible for commission earnings commencing on October 1, 2013.  Commencing on October 1, 2013, you will be eligible to receive a quarterly bonus (the “Bonus”) under the Company’s Executive Bonus Plan based upon the achievement of financial and management objectives reasonably established by the Company’s Board of Directors (the “Board”) or an authorized committee of the Board of Directors.  Your target bonus for each quarter will be $25,500 per quarter.  In order to be eligible to earn the Bonus, you must be actively and continuously employed through the end of the applicable fiscal quarter.  Any Bonus will be paid to you on the date that the Board awards bonuses for such fiscal quarter to similarly situated executives of the Company, but in no event later than March 15th of the calendar year after the year in which such Bonus is earned.

(c)    Termination without Cause. If your employment is terminated by the Company without Cause (as defined in the agreement evidencing RSU Award), the Company shall pay you the Accrued Obligations (as defined below) and, provided that you comply with the Conditions (as defined below):

(i)    the Company shall pay you an amount equal to three (3) months of your Base Salary in effect as of the termination date, payable in equal installments, less standard withholdings and authorized deductions, during the three (3) month period that commences with the first calendar day of the calendar month following your “separation from service” with the Company, in accordance with the Company’s standard payroll schedule and policies then in effect, provided that any such payments scheduled to be made prior to the date the Release becomes effective shall be made in a lump sum not later than 10 days after the effective date of the Release; and

(ii)    the Company will reimburse you for your monthly health insurance coverage payments for you and your eligible dependents for a period commencing on the Termination Date and ending on the earlier to occur of (a) the six (6) month anniversary of the Termination Date, and (b) the date you become eligible to receive health insurance coverage from a subsequent employer, in each case, provided that you timely exercise your right to continue your health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”).

(d)    Resignation.  If you resign from employment prior to January 10, 2014 or after June 30, 2014, the Company shall only be obligated to pay you the Accrued Obligations.  If you resign from your employment during the period of January 3, 2014 through June 30, 2014, you shall be entitled to receive the same benefits set forth in subsections (c)(i) and (c)(ii) above (to be paid in the same manner set forth therein), subject to you complying with the Conditions.  

(e)    RSUs.  If you timely sign and deliver (and do not revoke) this Agreement as provided above, then the portion of the restricted stock unit award granted June 29, 2011 (the “RSU Award”) that is scheduled to vest on January 15, 2014 will instead vest on January 3, 2014 (subject to your continued employment with the Company through such date). 

(f)    Definitions.  For purposes of this Agreement:

(i)    “Accrued Obligations” shall mean (i) amounts that have been earned as Base Salary, commissions or Bonus pursuant to this Agreement but have not yet been paid as of the last day of your employment, (ii) any accrued but unused vacation earned through the last day of your employment, and (iii) any expenses incurred prior to the last day of your employment  which have not been reimbursed as of the last day of your employment.

(ii)    “Conditions” shall mean your signing and not revoking the general release of claims in a form substantially similar to the form attached hereto as Exhibit A (the “Release”) within twenty-one (21) days 

of the date the Company provides the final form of Release to you (or such longer period as may be required by applicable law to obtain a release of all claims) (which the Company shall provide you within seven (7) days following the termination date), and your compliance with your continuing obligations to the Company under this Agreement, the Release and the Proprietary Information and Inventions Assignment Agreement that you previously signed with the Company.

(iii)    “Separation from service” shall be determined within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended by the rules and regulations issued thereunder by the Department of Treasury and the Internal Revenue Service (“409A”).

2.    Section 409A.  It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A so as not to subject you to payment of any additional tax, penalty or interest imposed under Section 409A.  The provisions of this Agreement shall be construed and interpreted to avoid the imputation of any such additional tax, penalty or interest under Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to you.  If you are a “specified employee” within the meaning of Section 409A as of the date of your “separation from service” (as defined above), you shall not be entitled to any Severance Benefits until the earlier of (a) the date which is six (6) months after your separation from service for any reason other than death, or (b) the date of your death.  The provisions of this Section 2 shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A.  Any amounts otherwise payable to your upon or during the six (6) month period following the your separation from service that are not so paid by reason of this Section 2 shall be paid (without interest) as soon as practicable (and in all events within thirty (30) days) after the date that is six (6) months after your separation from service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of your death).  To the extent that any reimbursements pursuant to Section 1(c)(ii) are taxable to you, any such reimbursement payment due to you shall be paid to you on or before the last day of the taxable year following the taxable year in which the related expense was incurred.  Such reimbursements are not subject to liquidation or exchange for another benefit and the amount of such reimbursements that you receive in one taxable year shall not affect the amount of such benefits or reimbursements that you receive in any other taxable year.

3.     Status of Other Agreements.  Except as modified by this Agreement, the Offer Letter remains in full force and effect.  Notwithstanding the foregoing, your Retention Agreement with the Company, dated July 13, 2009 shall hereby terminate and be of no further force or effect as of the Effective Date.  For the avoidance of doubt, nothing in this Agreement alters your “at will” employment status with the Company, and either the Company or you may terminate your employment at any time for any reason without advance notice (subject to any payment obligations contained herein).
3.    Miscellaneous.  The Offer Letter (as modified by this Agreement) constitutes the entire agreement between the Company and you concerning the matters set forth herein. and supersedes any prior agreements, understandings, promises or negotiations.  This Agreement will be binding upon each of the parties and upon their respective heirs, administrators, representatives, executors, successors and assigns, and will inure to the benefit of all such persons.  This Agreement may be assigned by the Company without restriction (including but not limited to, in connection with 

any merger, reorganization, sale of assets or securities of the Company, or otherwise).  The laws of the State of California govern this Agreement, regardless of the laws that might otherwise govern under applicable principles of conflict of law thereof.  In the event that any portion of this Agreement or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such portion to other persons or circumstances will be interpreted so as reasonable to effect the intent of the parties hereto.  This Agreement may be executed in counterparts, and each counterpart, when executed, shall have the efficacy of a signed original.  

Sincerely,

OVERLAND STORAGE, INC.

/s/ Eric Kelly
                    
By: Eric Kelly, CEO
Date:     September 4      , 2013

ACCEPTED AND AGREED

/s/ Jillian Mansolf
                        
By: Jillian Mansolf
Date:    September 4      , 2013

EXHIBIT A

GENERAL RELEASE

Pursuant to the terms of the Amendment to Offer Letter dated as of September __, 2013 (by and between Overland Storage, Inc. (the “Company”) and the undersigned (the “Agreement”), the undersigned herby executes this general release (this “Release”).

1.    Release of Claims.  On behalf of myself, and my heirs, family members, executors and assigns, I hereby fully and forever release, waive, discharge and covenant not to sue Overland Storage, Inc. (the “Company”) and its Affiliates and each of its and their past, present and future officers, agents, directors, employees, partners, joint venturers, investors, equity holders, administrators, affiliates, divisions, subsidiaries, parents, predecessors, successor corporations, and assigns (the “Releasees”), from, and agree not to sue concerning, or in any manner to institute, prosecute or pursue, or cause to be instituted, prosecuted, or pursued, any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that I may possess against any of the Releasees arising from any omissions, acts or facts that have occurred up until and including the date that I sign this Release (collectively, the “Claims”), including without limitation, (a) any and all Claims relating to or arising from my employment relationship with the Company or any of its affiliates and the termination of that relationship; (b) any and all Claims for wrongful discharge of employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract (including but not limited to any claims arising out of the Offer Letter (as defined in the Agreement) or any other agreement with the Company, both express and implied; breach of a covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; and conversion; (c) any and all Claims for violation of any federal, state or municipal statute, regulation, ordinance, constitution or common law, including, but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967; the Americans with Disabilities Act of 1990; the Fair Credit Reporting Act; the Fair Labor Standards Act; the Employee Retirement Income Security Act of 1974; The Worker Adjustment and Retraining Notification Act; the Sarbanes-Oxley Act, the California Fair Employment and Housing Act; the California Labor Code; the California Business and Professions Code; and any amendment to any such statute or regulation; (d) except as expressly provided in the Agreement, any and all Claims for any severance pay, bonus, wages, commissions, sick leave, holiday pay, vacation pay, paid time off, life insurance, health and/or medical insurance or any other fringe benefit, or any other form of compensation allegedly earned during my employment with the Company; and (e) any and all Claims for penalties, attorneys' fees and/or costs.  Notwithstanding the foregoing, the Claims released under this Agreement by me does not include any Claim that cannot be released as a matter of applicable law, any Claims arising under this Release or the Agreement or arising after the date of this Agreement, or any Claims or rights I may have to indemnification under applicable law or the Company’s bylaws or articles of incorporation.

2.    Waiver of Unknown Claims.  I understand and agree that the release of Claims set forth above shall be effective as a full and final release by me of each and every released Claim described above, including but not limited to any known or unknown claims and any suspected or unsuspected claims.  In furtherance of this intention, I expressly waive any and all rights under any state, federal or local law, regulation, or common law that prohibit the release of unknown or unsuspected claims, including but not limited to Section 1542 of the California Civil Code (“Section 1542”) or any similar or analogous law, regulation, or common law.  For your understanding, the text of Section 1542 states:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”  
3.    Acknowledgment of Waiver of ADEA Claims.  I acknowledge that I am waiving and releasing any rights I may have under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”) and that this waiver and release is knowing and voluntary. The Company and I agree that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the date I sign this Agreement.  I acknowledge that the consideration given for this Agreement is beyond that which I was previously entitled.  I further acknowledge that you have been advised by this writing that: 
(a)    I should consult with an attorney prior to executing this Agreement;
(b)    I was given a copy of this Agreement on August 23, 2013 and informed that I have 21 days within which to consider the Agreement; if I sign this Agreement before the end of such 21-day period, I will have done so voluntarily and with full knowledge that I am waiving this right to have 21 days to consider this Agreement, and changes made to this Agreement, whether material or immaterial, will not extend or re-start the 21-day period for me to consider this Agreement;
(c)    I have the right to revoke this Agreement at any time within the seven (7) day period after I sign this Agreement, provided, however, that any such revocation must be in writing and delivered to Eric Kelly (the Company’s Chief Executive Officer) by the close of business on or before the seventh day from the date that I sign this Agreement;
(d)    this Agreement shall not be effective until the eighth day after I execute and do not revoke this Agreement; and
(e)    nothing in this Agreement prevents or precludes me from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by federal law.

4.    No Pending or Future Lawsuits Relating To Released Claims.  I hereby acknowledge and agree that no charge, complaint, action, application, petition, or grievance brought by me or on my behalf regarding any of the released Claims is currently open or presently exists against the Company and/or any other Releasee in any forum or form.  I hereby promise to opt out of any class or representative action and to take such other steps as I have the power to take to disassociate myself from and waive any rights or remedies that might be received from any class or representative action seeking relief against the Company and/or any other Releasee regarding any of the released Claims.  Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement shall cause me to relinquish any protected rights I may have under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Older Workers Benefits Protection Act, the Age Discrimination in Employment Act or any analogous state laws to file a charge, testify, assist or participate in any manner in an investigation, hearing, or proceeding conducted by the Equal Employment Opportunity Commission or the Office of Federal Contract Compliance or any analogous state agencies; provided, however, that I hereby waive any right to receive any remedies, benefits or other compensation as a result of any such participation.

5.    Confidentiality Agreement.  I shall comply with my continuing obligations to the Company under the terms of the Proprietary Information and Inventions Agreement that was entered into by and between the Company and you (the “Confidentiality Agreement”), which Confidentiality Agreement is hereby expressly incorporated into this Agreement.

6.    Return of Company Property.  Upon my termination of employment for any reason, on or before the effective date of such termination, I shall return to the Company (and not retain any copies of):  all Company property issued to or obtained by me, including but not limited to computers (and any software, power cords, manuals, computer bag and other equipment that was provided to me with any such computers), card keys, security cards, mobile telephones, personal digital assistants, electronic storage devices, and all original and copies of any documents that contain the Company’s Confidential Information (as such term is defined in the Confidentiality Agreement) in any paper or electronic format (including but not limited to emails, Power Point presentations, Excel spreadsheets, Word documents, pdfs, and other electronically stored information).  

7.    Indemnification Agreement.  The parties acknowledge and agree that the parties’ Indemnification Agreement, dated July 13, 2009 (the “Indemnification Agreement”), shall remain in full force and effect in accordance with its terms and conditions.

8.    No Admission of Liability.  This Agreement constitutes a compromise and settlement of any and all potential disputed claims.  No action taken by the Company hereto, either previously or in connection with this Agreement, shall be deemed or construed to be: (a) an admission of the truth or falsity of any potential claims; or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to you or to any third party.

9.    Voluntary Execution of Agreement.  This Agreement is executed voluntarily and without any duress or undue influence on the part or behalf of the parties hereto, with the full intent of releasing all claims.  The parties acknowledge that (a) they have read this Agreement; (b) they have had the opportunity to seek legal counsel of their own choice; (c) they understand the terms and consequences of this Agreement and of the releases it contains; and (d) they are fully aware of the legal and binding effect of this Agreement.  

I, Jillian Mansolf, hereby accept and agree to the foregoing terms, conditions and releases set forth above in this Release.

____________________________                Date:    ______________________
  Jillian Mansolf

ACCEPTED, AGREED AND ACKNOWLEDGED

OVERLAND STORAGE, INC.

Date:      ______________________
By: Eric Kelly, CEO

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