Document:

EXHIBIT
10.1

 

 

THIRD
MODIFICATION TO BUSINESS LOAN AGREEMENT

 

This Third
Modification to Business Loan Agreement 
(this “Modification”) is entered into by and between OVERLAND STORAGE, INC. (“Borrower”) and COMERICA BANK (“Bank”)
as of this 25TH Day of October, 2004,
at San Jose, California.

 

RECITALS

 

This Modification is
entered into upon the basis of the following facts and understandings of the
parties, which facts and understandings are acknowledged by the parties to be
true and accurate:

 

Bank and Borrower
previously entered into a Business Loan Agreement dated November 28, 2001,
which was subsequently modified pursuant to those certain modification
agreements dated August 13, 2002 and September 10, 2003.  The Business Loan Agreement as so modified, and
as such may be otherwise modified, amended, restated, supplemented, revised or
replaced from time to time prior to the date hereof shall collectively be
referred to herein as the “Agreement.”

 

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as set forth below.

 

AGREEMENT

 

1.                                       Incorporation
by Reference. The Recitals and the documents referred to therein are
incorporated herein by this reference. 
Except as otherwise noted, the terms not defined herein shall have the
meaning set forth in the Agreement.

 

2.                                       Modification
to the Agreement. Subject to the satisfaction of the conditions precedent
as set forth in Section 3 hereof, the Agreement is hereby modified as set forth
below.

 

A.                                   Section
2(a) of Addendum A to the Agreement is hereby deleted in its entirety and
replaced with the following:

 

“(a)                            A
ratio of Quick Assets to Current Liabilities of not less than 1.50:1.00”

 

B.                                     Section
2(b) of Addendum A to the Agreement is hereby deleted in its entirety and
replaced with the following:

 

“(b)                           A ratio
of Total Liabilities to Tangible Net Worth of less than 1.00:1.00”

 

C.                                     “Section
2(c) of Addendum A to the Agreement hereby is deleted in its entirety and
replaced with the following:”

 

“(c)
Intentionally Omitted”

 

D.                                    Section 2(d)
of Addendum A to the Agreement is hereby deleted in its entirety and replaced
with the following:

 

“(d)                           Minimum annual Net Income, before taxes, of at
least $1.00, provided, however, that Borrower may not incur a negative Net
Income, before taxes, in any two consecutive fiscal quarters.  For purposes of this Agreement, Net Income
shall be defined as the net income (or loss) of a Person for any applicable
period of determination, determined in accordance with GAAP, but excluding, in
any event (i) any gains or losses on the sale or other disposition, not in the
ordinary course of business, of investments or fixed or capital assets, and any
taxes on the excluded gains and any tax deductions or credits on account of any
excluded losses; and (ii) in the case of Borrower, net earnings of any Person
in which Borrower has an ownership interest, unless such net earnings shall
have actually been received by Borrower in the form of cash distributions.

 

3.                                       Legal
Effect.

 

a.                                       Except as
specifically set forth in this Modification, all of the terms and conditions of
the Agreement remain in full force and effect. 
Except as expressly set forth herein, the execution, delivery, and
performance of this Modification shall not operate as a waiver of, or as an
amendment of, any right, power, or remedy of Bank under the Agreement, as in
effect prior to the date hereof. 
Borrower ratifies and reaffirms the continuing effectiveness of all
promissory notes, guaranties, security agreements, mortgages, deeds of trust,
environmental agreements, and all other instruments, documents and agreements
entered into in connection with the Agreement.

 

1

 

b.                                      Borrower
represents and warrants that each of the representations and warranties
contained in the Agreement are true and correct as of the date of this
Modification, and that no Event of Default has occurred and is continuing.

 

c.                                       The
effectiveness of this Modification and each of the documents, instruments and
agreements entered into in connection with this Modification is conditioned
upon receipt by Bank of this Modification and any other documents which Bank
may require to carry out the terms hereof.

 

d.                                      In
consideration for Bank’s willingness to enter into this Modification, Borrower
shall pay to Bank a non-refundable fee in the sum of Seven Hundred Fifty and
no/100 Dollars ($750.00), which shall be deemed earned by Bank as of the date
of this Modification and shall be payable by Borrower concurrently with
Borrower’s execution of this Modification.

 

4.                                       Miscellaneous
Provisions.

 

a.                                       This is an
integrated Modification and supersedes all prior negotiations and agreements
regarding the subject matter hereof.  All
amendments hereto must be in writing and signed by the parties.

 

b.                                      This
Modification may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one
instrument.

 

IN WITNESS WHEREOF, the
parties have agreed as of the date first set forth above.

 

	
  OVERLAND STORAGE, INC.

  	
  COMERICA BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ V.A. LoForti

  	
   

  	
  By:

  	
   

  	
  /s/ RC Boyce

  	
   

  
	
   

  	
   

  	
  Richmond C. Boyce

  
	
  Title:

  	
  VP
  & CFO

  	
   

  	
   

  	
  Vice President-Western
  Division

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
								

 

2EXHIBIT 10.2

 

	
  

  	
   

  	
  BORROWER

  	
   

  	
   

  
	
   

  	
   

  	
  Overland
  Storage, Inc.

  	
   

  	
  LOAN

  REVISION/EXTENSION

  AGREEMENT

  
	
  Comerica Bank — California

  	
   

  	
  4820
  Overland Avenue

  San Diego, CA 92123-1599

  

  	
   

  	
   

  
	
  (Herein called “Bank”)

  	
   

  	
  (Herein called “Borrower”)

  	
   

  	
   

  

 

	
   

  	
   

  	
  

  INTEREST RATE

  	
   

  	
  AMOUNT

  	
   

  	
  NOTE DATE

  	
   

  	
  MATURITY DATE

  	
   

  	
  OBLIGATOR #

  	
   

  	
  NOTE #

  
	
  ORIGINAL NOTE INFORMATION

  	
   

  	
  

  B-0.25 OR *%

  	
   

  	
  $

  	
  10,000,000.00

  	
   

  	
  11/28/01

  	
   

  	
  11/30/03

  	
   

  	
  5820359795

  	
   

  	
  26

  
														

 

This Agreement is effective as
of: October 22, 2004

 

ORIGINAL OBLIGATION:

This Loan
Revision Agreement refers to the loan evidenced by the above Note dated November
28, 2001 in favor of Bank executed by Overland Storage, Inc. in the amount of $10,000,000.00
payable in full on November 30, 2003.  {   }
Said Note is secured by a Deed of Trust dated N/A (hereinafter referred to as
the “Encumbrance”), recorded on N/A as Instrument No. N/A in the Office of
County Recorder of N/A County California.

 

CURRENT OBLIGATION:

The unpaid
principal balance of said Note as of October 22, 2004 is $0.00 on which
interest is paid to October 31, 2004, with a maturity of November 30, 2004.  {X} As modified by previous Loan
Revision/Extension Agreement dated September 10, 2003.

 

REVISION:

The
undersigned Borrower hereby requests Bank to revise the terms of said Note, and
said Bank to accept payment thereof at the time, or times, in the following
manner:

 

The maturity date is hereby
amended from November 30, 2004 to November 30, 2006.

 

*Libor  +2.25%

 

In
consideration of Bank’s acceptance of the revision of said Note, including the
time for payment thereof, all as set forth above, the Borrower does hereby
acknowledge and admit to such indebtedness, and further does unconditionally
agree to pay such indebtedness together with interest thereon within the time
and in the manner as revised in accordance with the foregoing, together with
any and all attorney’s fees, cost of collection, and any other sums secured by
the Encumbrance.

 

Any and all
security for said Note including but not limited to the Encumbrance, if any,
may be enforced by Bank concurrently or Independently of each other and in such
order as Bank may determine; and with reference to any such security in
addition to the Encumbrance Bank may, without consent of or notice to Borrower,
exchange, substitute or release such security without affecting the liability
of the Borrower, and Bank may release any one or more parties hereto or to the
above obligation or permit the liability of said party or parties to terminate
without affecting the liability of any other party or parties liable thereon.

 

This
Agreement is a revision only, and not a novation; and except as herein
provided, all of the terms and conditions of said Note, said Encumbrance and
all related documents shall remain unchanged and in full force and effect.

 

When one or more Borrowers signs this Agreement, all agree:

 

a. That where in this Agreement the word “Borrower” appears, it shall
read “each Borrower”;

b. That breach of any covenant by any Borrower may at the Bank’s option
be treated as breach by all Borrowers;

c. That the liability and obligations of each Borrower are joint and
several.

 

 

	
  Dated this 22nd
  day of October, 2004.

  	
  Overland
  Storage, Inc.

  
	
   

  	
  /s/ V.A.
  LoForti, VP & CFO

  
	
   

  	
   

  
	
  The
  foregoing agreement is accepted this 22nd day of October, 2004.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ RC Boyce

  	
   

  	
   

  
	
   

  	
  Richmond C.
  Boyce

  	
   

  
	
   

  	
  Vice
  President-Western Division

  	
   

  
				

 

Each of the undersigned agree
and consent to the foregoing revisions to this Agreement and the Encumbrance,
if any.

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