Document:

Amended and Restated Security Agreement

 Exhibit 10.18 
 Execution 
 AMENDED AND RESTATED SECURITY AGREEMENT 
 This AMENDED AND RESTATED SECURITY AGREEMENT dated as of November 28, 2008 (this “Security Agreement”), is made by OVERLAND STORAGE, INC.,
a California corporation (“Debtor”), in favor of ADAPTEC, INC., a Delaware corporation (“Creditor”), with reference to the following facts: 
 RECITALS 
 A. Pursuant to that certain Security Agreement dated June 27, 2008, made by Debtor in favor of
Creditor (the “Original Security Agreement”), Debtor granted to Creditor a security interest in certain assets of the Debtor to secure Debtor’s obligations under the Promissory Note dated June 27, 2008 executed by Debtor in favor
of Creditor in the original principal amount of One Million Four Hundred Thirty One Thousand Seven Hundred Eighteen Dollars and Forty Cents ($1,431,718.40) (as the same may be amended from time to time, the “Note”). 
 B. Pursuant to Section 9 of the Original Security Agreement, Debtor has requested that Creditor (i) terminate its lien on the collateral described in the
Original Security Agreement (the “Original Collateral”) and (ii) accept the replacement lien on the collateral described herein in substitution thereof. 
 C. Creditor has agreed to amend and restate the Original Security Agreement in full, terminate its lien on the Original Collateral and accept the replacement lien on the collateral described herein, all on the terms
set forth herein. 
 AGREEMENT 
 NOW,
THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Debtor and Creditor hereby agree as follows: 
 1. DEFINITIONS. As used in this Security Agreement, the following terms will have the meanings ascribed to them below: 
 “Asset Purchase Agreement” means the Asset Purchase Agreement dated as of June 27, 2008, made by Debtor, as buyer, and Creditor, as seller. 
 “Business” has the meaning set forth in the Asset Purchase Agreement. 
 “Copyrights” means worldwide (i) registered
copyrights in published or unpublished works, mask work rights and similar rights, mask work registrations, and copyright applications for registration, including any renewals thereof, and (ii) copyrightable works and other rights of authorship
in published or unpublished works. 
 “Creditor” has the meaning set forth in the first paragraph of this Security Agreement. 
 “Debtor” has the meaning set forth in the first paragraph of this Security Agreement. 
  

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 “Intellectual Property Rights” means Patents, Trademarks, Copyrights, Owned Rights, Software, and Proprietary
Information, and includes any rights to exclude others from using or appropriating any Intellectual Property Rights, including the rights to sue for and remedies against past, present or future infringements or misappropriations of any or all of the
foregoing and rights of priority and protection of interests therein, and any other proprietary, intellectual property or other rights relating to any or all of the foregoing anywhere in the world. 
 “Note” has the meaning set forth in the Recitals of this Security Agreement. 
 “Open Source Software” means (A) Software that requires as a condition of use, modification or distribution that such Software or other Software incorporated into, derived from or distributed with such
Software: (i) be disclosed or distributed in source code form; (ii) be licensed to other users for the purpose of making derivative works; or (iii) be redistributable at no charge; and (B) Software licensed or distributed under
any of the following licenses or distribution models, or licenses or distribution models similar to any of the following: (t) GNU’s General Public License (GPL) or Lesser/Library GPL (LGPL); (u) the Artistic License (e.g., PERL);
(v) the Mozilla Public License; (w) the Netscape Public License; (x) the Sun Community Source License (SCSL); (y) the Sun Industry Source License (SISL); and (z) the Apache Software License. 
 “Original Collateral” has the meaning set forth in the Recitals of this Security Agreement. 
 “Original Security Agreement” has the meaning set forth in the Recitals of this Security Agreement. 
 “Owned
Rights” means worldwide (i) Internet domain names; (ii) website content; (iii) toll-free telephone numbers; in each case purchased by Debtor from Creditor pursuant to the Asset Purchase Agreement; and (iv) moral rights and
publicity rights; in each case to the extent the same does not comprise or is not protected by Copyrights, Patents or Trademarks. 
 “Patents”
means worldwide patents, patent applications, invention disclosures and other rights of invention, filed with any Governmental Authority (as defined in the Asset Purchase Agreement), and all reissues, divisions, renewals, extensions, provisionals,
continuations and continuations-in-part thereof and all reexamined patents or other applications or patents claiming the benefit of the filing date of any of the foregoing. 
 “Proprietary Information” means worldwide confidential or proprietary trade secrets, technical information, inventions and discoveries (whether or not patentable and whether or not reduced to practice) and
improvements thereto, know-how, processes, developments, designs, techniques, marketing and purchasing strategies, plans, schematics, drawings, blue prints, formulae, formulas, patterns, compilations, databases, specifications, research and
development information, technical data, inventions, concepts, ideas, devices, methods, processes, and other proprietary or confidential information, whether business, technical or otherwise, customer and supplier lists and related information,
pricing and cost information, Product (as defined in the Asset Purchase Agreement) roadmaps and financial, business and marketing plans. 
 “Purchased
IP” means all Intellectual Property Rights specified on Exhibit A attached hereto, and all other Intellectual Property Rights purchased by Debtor from Creditor pursuant to the Asset Purchase Agreement related exclusively to the Business,
including 

  

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all Software related exclusively to the Business (and for such Software that was purchased by Debtor from Creditor pursuant to the Asset Purchase Agreement,
including the full source code with respect thereto and all versions and releases thereof and all back-up or archival copies in Debtor’s possession), but notwithstanding the above, excluding (A) non-transferable Open Source Software and
(B) generally available off-the-shelf microcomputer and work station software. 
 “Security Agreement” has the meaning set forth in the first
paragraph of this Security Agreement. 
 “Software” means any computer program or other software (irrespective of the type of hardware for which it
is intended), including firmware and other software embedded in hardware devices, whether in the form of source code, assembly code, script, interpreted language, instruction sets or binary or object code (including compiled and executable
programs), including any library, component or module of any of the foregoing. 
 “Trademarks” means worldwide (i) registered trademarks and
service marks and registrations and applications for such registrations, (ii) unregistered trademarks and service marks, trade names, fictitious business names, corporate names, trade dress, logos, Product (as defined in the Asset Purchase
Agreement) names and slogans, including any common law trademark rights; in each case together with the goodwill associated therewith. 
 2.
THE SECURITY. Debtor hereby grants to Creditor a security interest in all of the Debtor’s right, title and interest in, to and under the Purchased IP (such Purchased IP is hereinafter referred to as the “Collateral”). For the
avoidance of doubt and notwithstanding any other provision or term herein, the parties hereto hereby acknowledge and agree that the Collateral shall be limited to the Purchased IP. 
 3. THE INDEBTEDNESS. The Collateral secures and will secure the payment, performance and observance of all indebtedness, obligations and liabilities of
Debtor to Creditor under the Note. For the purposes of this Security Agreement, “Indebtedness” means the obligations and liabilities of Debtor under the Note. 
 4. TITLE; NO OTHER LIENS. Debtor represents and warrants to Creditor that (i) Debtor owns the Collateral to the extent and pursuant to the same exceptions as the same was sold to the Debtor by the Creditor
pursuant to the Asset Purchase Agreement, and (ii) the Collateral remains free and clear of any liens, security interests, encumbrances and restrictions on the transfer thereof, and to the Debtor’s actual knowledge, claims, except in each
case (A) to the extent the same existed as of the date the Collateral was purchased by Debtor from Creditor and (B) for the security interest of Creditor granted pursuant to this Security Agreement. 
 5. DEBTOR’S COVENANTS. Debtor covenants and warrants that unless compliance is waived by Creditor in writing: 
 A. Debtor will properly preserve the Collateral and defend the Collateral against any material adverse claims and demands. Debtor shall not fail to renew
and shall not otherwise abandon any material portion of the Collateral. Debtor shall maintain in effect all material, issued patents and will renew all material trademark and service mark registrations, in each case comprising the Collateral,
including payment of any maintenance and renewal fees relating thereto. 
  

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 B. Debtor shall enforce rights in the Collateral against any infringers of the Collateral actually known
to the Debtor, in each case to the extent the failure to enforce such rights in the Collateral would result in a material diminution to the value of the Collateral. 
 C. Debtor has notified Creditor in writing of, and will notify Creditor in writing prior to any change in, the locations of (i) Debtor’s place of business or Debtor’s chief executive office if Debtor
has more than one place of business and (ii) any Collateral. 
 D. Debtor will notify Creditor in writing prior to any change in
Debtor’s name, identity or business structure. 
 E. Debtor has not granted and will not grant any security interest in any of the
Collateral except to Creditor, and will keep the Collateral free of all liens, security interests, and encumbrances and restrictions on the transfer thereof except (i) to the extent the same existed as of the date the Collateral was purchased
by Debtor from Creditor and (B) for the security interest of Creditor granted pursuant to this Security Agreement. 
 F. Debtor will not
sell, lease, agree to sell or lease, or otherwise dispose of, or remove from Debtor’s place of business any Collateral except in the ordinary course of business as heretofore conducted by Debtor. Without waiving Creditor’s rights under
Section 7, it is agreed that such ordinary course sale shall be free and clear of Creditor’s liens under this Security Agreement. Debtor will not exclusively license any Collateral. 
 G. Debtor will promptly notify Creditor in writing of any event which affects the value of the Collateral, the ability of Debtor or Creditor to dispose
of the Collateral, or the rights and remedies of Creditor in relation thereto, including, but not limited to, the levy of any legal process against any Collateral. 
 6. ADDITIONAL REQUIREMENTS. Debtor agrees that Creditor may at its option at any time, whether or not Debtor is in default: 
 A. Require Debtor to deliver to Creditor information on matters affecting the Collateral. 
 B. Examine the
Collateral, including books and records directly relating thereto, and for such purposes enter at any reasonable time upon the property where any Collateral or such books or records are located. 
 7. DEFAULTS. Any one or more of the following shall be a default hereunder: 
 A. Debtor fails to pay any Indebtedness after the same becomes due, whether at stated maturity, by acceleration or otherwise, beyond any applicable grace
periods. 
  

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 B. Debtor fails to perform or observe (i) the covenant set forth in Section 5(F) or
(ii) any other covenant or agreement under this Security Agreement on its part to be performed or observed and such failure continues for 30 days. 
 C. Debtor becomes insolvent, or is generally not paying or admits in writing its inability to pay its debts as they become due, makes a general assignment for the benefit of creditors, or commences any case,
proceeding or other action under any bankruptcy or other law for the relief of debtors. 
 D. Any custodian, receiver or trustee is appointed
to take possession, custody or control of all or a substantial portion of the property of Debtor and the appointment continues undischarged or unstayed for 60 calendar days. 
 E. Any case, proceeding or other action is commenced against Debtor under any bankruptcy or other law for the relief of debtors and continues undismissed
or unstayed for 60 calendar days or an order for relief is entered in any such proceeding. 
 8. CREDITOR’S REMEDIES AFTER DEFAULT. In
the event of any default Creditor may do any one or more of the following: 
 A. Declare any Indebtedness immediately due and payable.

 B. Enforce the security interest given hereunder pursuant to the Uniform Commercial Code and any other applicable law. 
 C. Require Debtor to assemble the Collateral and make them available to Creditor at a place designated by Creditor. 
 D. Enter upon the property where any Collateral or any books or records directly related thereto are located and take possession of such Collateral or
books or records. 
 E. Grant extensions and compromise or settle claims with respect to the Collateral. 
 F. Have a receiver appointed by any court of competent jurisdiction to take possession of the Collateral. 
 G. Take such measures as Creditor may deem necessary or advisable to take possession of, hold, preserve, process, assemble, prepare for sale or lease,
market for sale or lease, sell or lease, or otherwise dispose of, any Collateral, and Debtor hereby irrevocably constitutes and appoints Creditor as Debtor’s attorney-in-fact to perform all acts and execute all documents in connection
therewith. Debtor acknowledges, consents and agrees that the power of attorney granted pursuant to this section is irrevocable and coupled with an interest. All or any part of the Collateral may be sold for cash or other value in any number of lots
at public or private sale, without demand, advertisement or notice; provided, however, that unless the Collateral to be sold threatens to decline speedily in value or is of a type customarily sold on a recognized market, Creditor shall give
Debtor 10 days’ prior written notice of the time and place of any public sale, or the time after which a private sale may be made, which notice each of Debtor and Creditor agrees to be 

  

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reasonable. At any sale or sales of Collateral, Creditor or any of its assigns may bid for and purchase all or any part of the property and rights so sold
and may use all or any portion of the Indebtedness owed to Creditor as payment for the property or rights so purchased, all without further accountability to the Company. 
 9. CUSTODY OF COLLATERAL. Except as provided by applicable law that cannot be waived, Creditor will have no duty as to the custody and protection of the Collateral, the collection of any part thereof or of any income
thereon or the preservation or exercise of any rights pertaining thereto, including rights against prior parties, except for the use of reasonable care in the custody and physical preservation of any Collateral in its possession. Creditor may
disclaim any and all warranties in disposing of any Collateral. 
 10. TERMINATION OF EXISTING LIEN ON ORIGINAL COLLATERAL. Upon the
effectiveness of this Security Agreement pursuant to Section 15 below, Creditor’s lien on the Original Collateral shall automatically terminate without further action of Creditor or Debtor, and Creditor does hereby agree to, and authorizes
Debtor to, take such actions and file such terminations and releases as the Debtor may find reasonably necessary or desirable to terminate, and evidence the termination of, Creditor’s liens and interests in the Original Collateral. 

11. TERMINATION. This Security Agreement shall be automatically released when all Indebtedness has been paid in full in cash. Upon such release,
Creditor shall return any pledged Collateral to Debtor and shall endorse, execute, deliver, record and file all instruments and documents, and do all other acts and things, reasonably required for the return of the Collateral to Debtor and to
evidence or document the release of Creditor’s interests arising under this Security Agreement, all as reasonably requested by, and at the sole expense of, Debtor. 
 12. REIMBURSEMENT OF EXPENSES. Debtor shall promptly pay on demand all reasonable expenses of Creditor (including reasonable attorneys fees and expenses) in connection with the enforcement of the Note and collection
hereof, whether before or after bankruptcy of similar proceedings (and whether or not allowed as a claim herein). 
 13. [Reserved.]

 14. MISCELLANEOUS. 
 A. Any
waiver, express or implied, of any provision hereunder and any delay or failure by Creditor to enforce any provision shall not preclude Creditor from enforcing any such provision thereafter. 
 B. Debtor shall, at the request of Creditor, execute such other agreements, documents, instruments, or financing statements in connection with this
Security Agreement as Creditor may reasonably deem necessary. Debtor hereby authorizes the Creditor to file or record Uniform Commercial Code financing statements in all jurisdictions and with all filing offices as Creditor may deem necessary or
advisable to perfect the security interests granted to Creditor hereunder. 
 C. This Security Agreement shall be governed by and construed
according to the laws of the State of California, to the jurisdiction of which the parties hereto submit. 
  

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 D. All rights and remedies herein provided are cumulative and not exclusive of any rights or remedies
otherwise provided by law. Any single or partial exercise of any right or remedy shall not preclude the further exercise thereof or the exercise of any other right or remedy. 
 E. All terms not defined herein are used as set forth in the Uniform Commercial Code. 
 F. In the event of any action by Creditor to enforce this Security Agreement or to protect the security interest of Creditor in the Collateral, or to
take possession of, hold, preserve, process, assemble, prepare for sale or lease, market for sale or lease, sell or lease, or otherwise dispose of, any Collateral, Debtor agrees to pay the costs and expenses thereof, together with reasonable
attorney’s fees. 
 G. Notices shall be furnished in writing to each party at its addresses appearing below or as it may otherwise
direct in writing actually received by the other party. 
 H. This Security Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns; provided that neither the Debtor nor the Creditor may assign its rights or obligations hereunder without the prior written consent of the other party. 
 I. If any term of this Security Agreement shall be held to be invalid, illegal or unenforceable, the validity of all other terms hereof shall in no way
be affected thereby. 
 J. For the convenience of the parties and to facilitate execution, this Security Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document. 
 K. As used herein,
“lease” includes lease or license. 
 15. RESTATEMENT. This Security Agreement shall be effective upon, or substantially
concurrently with, Debtor’s consummation of financing or factoring arrangement with Marquette Commercial Finance (or another lender or factoring company satisfactory to Debtor); at which time, Debtor will provide written notice to Creditor of
the effectiveness of this Security Agreement (it being agreed that written notice for this purpose may be given by facsimile). Upon its effectiveness, this Security Agreement shall amend and restate the Original Security Agreement in its entirety.

 [Remainder of Page Intentionally Left Blank] 
  

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 IN WITNESS WHEREOF, the parties hereto have executed this Security Agreement as of the date first written
above. 
  

			
	OVERLAND STORAGE, INC.
	a California corporation
		
	By:	 	 /s/    Vernon A. LoForti

		 	Vernon A. LoForti
		 	President and Chief Executive Officer
	
	 Address:

	
	 4820 Overland Avenue

	 San Diego, CA 92123

 Acknowledged and Agreed: 
  

			
	ADAPTEC, INC.
	a Delaware corporation
		
	By:	 	 /s/    Subramanian Sundaresh

		 	Subramanian Sundaresh
		 	President and Chief Executive Officer

 Address: 
 691 S.
Milpitas Blvd. 
 Milpitas, CA 95035 
 [Amended and
Restated Security Agreement – Signature Page] 

 EXHIBIT A 
 CERTAIN PURCHASED IP 
 [See Attached]Retention Agreement between Overland and Eric Kelly

 Exhibit 10.24 
 EXECUTION VERSION 
 RETENTION AGREEMENT 
 This Retention Agreement (this “Agreement”) is entered into on June 24, 2009 between Overland Storage Inc., a California
corporation having its principal offices at 4820 Overland Avenue, San Diego, California 92123 (the “Company”), and Eric Kelly (“Employee”). 
 AGREEMENT 
 WHEREAS, Employee is a key employee of the Company; 
 WHEREAS, the Company considers that providing Employee with certain employment termination benefits will operate as an incentive for Employee to remain
employed by the Company in the event of a Change of Control; 
 WHEREAS, in conjunction with the execution of this Agreement, the parties are
also entering into an Employment Agreement on the date hereof (the “Employment Agreement”). 
 NOW THEREFORE, for the
consideration stated above, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Employee agree as follows: 
 1. Definitions. 
 1.1. “Base Salary” shall mean the Employee’s gross annual
salary at the time of a Change of Control or the Termination Date, whichever is higher. 
 1.2. “Change of Control” is
defined to have occurred if, and only if, during Employee’s employment: 
 (a) any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity or person, or any syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange Act is or becomes the “Beneficial Owner” (as defined in Rule 13d-3 of
the General Rules and Regulations under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities entitled to vote in the election
of directors of the Company; 
 (b) there occurs a reorganization, merger, consolidation or other corporate transaction involving the Company
(“Transaction”), in each case, with respect to which the stockholders of the Company immediately prior to such Transaction do not, immediately after the Transaction, own more than fifty (50) percent of the combined voting power
of the Company or other corporation resulting from such Transaction; or 
 (c) all or substantially all of the assets of the Company are
sold, liquidated or distributed. 

 1.3. “Cause” shall mean 
 (a) Employee’s gross neglect of his duties to the Company, where Employee has been given a reasonable opportunity of not less than 30 days to cure
his gross neglect after receiving written notice from the Company’s Board of Directors (the “Board”) (which reasonable opportunity must be granted during the thirty-day period preceding termination); 
 (b) any material breach by Employee of Employee’s obligations under this Agreement or any employment agreement which Employee may have with the
Company ,which Employee fails to cure within 30 days after receiving written notice from the Board; or 
 (c) Employee’s commission of
any act of fraud, theft or embezzlement against the Company. 
 1.4. “Compensation” shall mean Base Salary plus Target
Bonus. 
 1.5. “Resignation For Good Reason” shall mean the voluntary resignation by Employee of his employment with the
Company within sixty (60) days before or two years following a Change of Control and within six (6) months of the occurrence of any of the following Good Reasons: 
 (a) any reduction in Employee’s Base Salary or Target Bonus by more than ten percent (10%); or 
 (b) any material reduction in Employee’s duties, responsibilities and authority; 
 (c) a relocation by the Company of Employee’s place of Employment outside a fifty (50) mile radius of Employee’s current place of
employment; provided, however, that “Good Reason” shall not include relocation of Executive’s principal place of work to Employer’s Milpitas, California location or to a location within thirty (30) miles of Executive’s
Danville, California residence; or 
 (d) a material breach of this Agreement or the Employment Agreement by the Company. 
 An event described in Section 1.5(a) through (f) will not constitute Good Reason unless Employee provides written notice to the Company within
60 days of the Good Reason event of his intention to resign for Good Reason and unless the Company does not cure or remedy the alleged Good Reason condition within thirty (30) days of the Company’s receipt of the written notice.

 1.6. “Severance Period” shall begin on the Termination Date and extend for eighteen (18) months following the
Termination Date. 
 1.7. “Target Bonus” shall mean the variable annual compensation represented by the percentage of Base
Salary Employee is eligible to receive, if any, prior to a Change of Control, in the event targeted goals are achieved for the year. Employee acknowledges that there is no Target Bonus established for Employee at the date of this Agreement, but that
he is eligible for a Target Bonus for Fiscal 2010 and thereafter in accordance with the terms and conditions of the Employment Agreement. 
  

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 1.8. “Termination Date” shall mean the date of termination of Employee’s employment
relationship with the Company. 
 1.9. “Termination Payments” shall mean any payment or distribution of Compensation or
benefits made pursuant to Section 4.1(a)-(c) of this Agreement. 
 2. Title and Duties. Employee will hold the position of Chief Executive
Officer in accordance with the terms and conditions of the Employment Agreement. 
 3. At-Will Employment. Employee reaffirms that Employee’s
employment relationship with the Company is at-will, terminable at any time and for any reason by either the Company or Employee, subject to the terms of the Employment Agreement. While certain paragraphs of this Agreement describe events that could
occur at a particular time in the future, nothing in this Agreement may be construed as a guarantee of employment of any length. 
 4. Termination
Payments. 
 4.1. If, within sixty (60) days before or within two (2) years immediately following a Change of Control,
Employee’s employment terminates as the result of (i) termination by the Company of Employee’s employment for a reason other than Cause; or (ii) Employee’s Resignation for Good Reason: 
 (a) Employee will receive the Standard Entitlements (as defined in the Employment Agreement); 
 (b) Subject to Section 9, Employee will be eligible for Severance under this Agreement in a lump-sum amount equal to 150% of the sum of Base Salary
plus Target Bonus, less applicable state and federal taxes or other payroll deductions, such amount to be paid (subject to Section 9) in the month following the month in which Employee’s Separation from Service (as defined below) occurs;
and 
 (c) Subject to Section 9, (i) if Employee elects to continue insurance coverage as afforded to Employee according to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), Company will reimburse Employee the amount of the premiums incurred by Employee during the Severance Period, and (ii) the Company will reimburse
Employee for the costs to continue life, accident, medical and dental insurance benefits for Employee and his eligible dependents during the Severance Period in amounts substantially similar to those which Employee was entitled to receive under the
Employment Agreement immediately prior to the Termination Date (which amount shall be reduced by the amount of any reimbursements made by the Company to Employee pursuant to clause (c)(i) above), the estimated costs of which shall be paid to
Executive in one lump sum payment on the Termination Date (and any actual costs in excess of such estimate shall be paid to Executive no later than ten (10) days following his submission of written evidence of the amount of such excess).
Nothing in this Agreement will extend Employee’s COBRA period beyond the period allowed under COBRA, nor is Company assuming any responsibility which Employee has for formally electing to continue coverage; and 
  

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 (d) Any portion of Employee’s then outstanding stock options and other equity-based awards granted
by the Company that are not vested shall immediately vest and, in the case of stock options and similar awards, may be exercised in whole or in part within one year of the date of Employee’s termination of employment, subject to earlier
termination upon the expiration of the maximum term of the applicable options or in connection with a corporate transaction involving the Company to the extent provided in the Plan and/or the award agreements that evidence such options. 

As used herein, a “Separation from Service” occurs when Executive dies, retires, or otherwise has a termination of employment with the Company that
constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder. 
 4.2. The payments set forth in Section 4.1(b) and (c) above are in exchange for, and contingent upon Employee’s execution and
non-revocation of a release of all claims as of the Termination Date, in substantially the form attached to this Agreement as Exhibit A. 
 4.3. If Employee’s employment terminates for any reason after the two year period immediately following a Change of Control or terminates during that two year period for any reason other than (i) termination by the Company of
Employee’s employment for a reason other than Cause; or (ii) Employee’s Resignation for Good Reason, the Company will pay Employee the Standard Entitlements (as defined in the Employment Agreement). 
 5. Retirement and Profit-Sharing Plans. Notwithstanding anything in this Agreement to the contrary, Employee’s rights in any retirement, pension or
profit-sharing plans offered by the Company shall be governed by the rules of such plans as well as by applicable law; provided, however, that on the Termination Date, Employee shall become fully vested in all pension and 401(k) account balances.

 6. Tax Consequences. The Company makes no representations regarding the tax consequence of any provision of this Agreement. Employee is advised to
consult with his own tax advisor with respect to the tax treatment of any payment contained in this Agreement. 
 7. Tax Adjustment. In recognition of
Employee’s unique circumstances (namely his prior service as a member of the Employer’s board of directors) that significantly increase the possibility that Section 280G of the Internal Revenue Code of 1986, as amended (the
“Code”) could apply during the first two years of this Agreement, Employer is willing to provide limited protection to Employee from the possible imposition of excise taxes under Section 4999 of the Code should an event
described in Section 280G(b)(2)(A)(i) of the Code (a “Triggering Event”) occur in 2009, 2010 or 2011. In the event any payment, distribution, transfer, benefit or other event with respect to Employer or a successor, direct or
indirect subsidiary or affiliate of Employer (or any successor or affiliate of any of them, and including any benefit plan of any of them), and arising in connection with a Triggering Event occurring after the Effective Date and on or before
December 31, 2011, to or for the benefit Employee or Employee’s dependents, heirs or beneficiaries (whether 

  

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such payment, distribution, transfer, benefit or other event occurs pursuant to the terms of this Agreement or otherwise, but determined without regard to
any additional payments required under this Section 7) (each a “Payment” and collectively the “Payments”) is or was subject to the excise tax imposed by Section 4999 of the Code, and any successor
provision or any comparable provision of state or local income tax law, or any interest, penalty or addition to tax is or was incurred by Employee with respect to such excise tax (such excise tax, together with any such interest, penalty, addition
to tax, and costs (including professional fees) hereinafter collectively referred to as the “Excise Tax”), then Employer shall pay to Employee (or to the applicable taxing authority on Employee’s behalf, at Employer’s
discretion) an additional cash payment (hereinafter referred to as the “Gross-Up Payment”) equal to an amount such that after payment by Employee of all taxes, interest, penalties, additions to tax and costs imposed or incurred with
respect to the Gross-Up Payment (including, without limitation, any income and excise taxes imposed upon the Gross-Up Payment), Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon such Payment or Payments. The
Gross-Up Payment, if triggered pursuant to this Section 7, is intended to put Employee in the same position as Employee would have been had no Excise Tax been imposed upon or incurred as a result of any Payment. The preceding provisions of this
Section 7 shall take precedence over the provisions of any other plan, arrangement or agreement governing Employee’s rights and entitlements to any benefits or compensation. Notwithstanding anything in this Section 7 to the contrary,
the amount of any Gross-Up Payment to Employee shall not exceed: (a) with respect to a Triggering Event that occurs in 2009, Two Million Five Hundred Thousand Dollars ($2,500,000); (b) with respect to a Triggering Event that occurs in
2010, One Million Dollars ($1,000,000); and (c) (b) with respect to a Triggering Event that occurs in 2011, Six Hundred Thousand Dollars ($600,000). No Gross-Up Payment shall be owed to Employee with respect to a Triggering Event that
occurs after December 31, 2011. 
 Employer shall make the Gross-Up Payment promptly after any determination that the Gross-Up Payment is due and in no
event later than the last day of the end of Employee’s taxable year following Employee’s taxable year in which Employee pays or remits the related taxes. Any reimbursement of expenses due to Employee pursuant to this Section 7 or
otherwise incurred due to a tax audit or litigation addressing the existence or amount of a tax liability, whether federal, state, local or foreign, shall be paid to Employee promptly after such expenses is incurred, and in all cases no later than
the end of Employee’s taxable year following Employee’s taxable year in which the taxes that are the subject of the audit or litigation are remitted to the taxing authority, or where as a result of such audit or litigation no taxes are
remitted, the end of Employee’s taxable year following Employee’s taxable year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation. Employee shall provide the Employer with
reasonable documentation of such expenses. 
 Effective with respect to a Triggering Event occurring on or after January 1, 2012, notwithstanding the
foregoing or any other provision of this Agreement to the contrary, if it is determined that any portion of any payment under this Agreement would constitute an “excess parachute payment” within the meaning of Section 280G of the
Code, the payments to be made to Employee under this Agreement shall be reduced (but not below zero) such that the value of the aggregate payments that Employee is entitled to receive under this Agreement and any other agreement or plan or program
of the Employer shall be one dollar ($1) less than the maximum amount of payments which Employee may receive without becoming subject to the tax imposed by Section 4999 of the Code; 

  

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provided that such reduction to the payments to be made to Employee under this Agreement shall be made only if the total after-tax benefit to Employee is
greater after giving effect to such reduction than if no such reduction had been made. The determination that a payment is (or, if no reduction were made pursuant to this paragraph, would be) an “excess parachute payment” shall be made in
writing by a nationally recognized accounting firm or executive compensation consulting firm selected by Employer and acceptable to Employee (the “Accounting Firm”). The Accounting Firm’s determination shall include detailed
computations thereof, including any assumptions used in such computations. Any determination by the Accounting Firm will be binding on Employer and Employee. 
 8. Agreement to Arbitrate. Employee and Company agree to arbitrate any claim or dispute (“Dispute”) arising out of or in any way related to this Agreement, the employment relationship between Company and Employee or
the termination of Employee’s employment, except as provided in paragraph 8.1 below, to the fullest extent permitted by law. Except as provided above, this method of resolving Disputes shall be the sole and exclusive remedy of the parties.
Accordingly, the parties understand that, except as provided herein, they are giving up their rights to have their disputes decided in a court of law and, if applicable, by a jury, and instead agree that their disputes shall be decided by an
arbitrator. 
 8.1. Scope of the Agreement. A Dispute shall include all disputes or claims between Employee and Company arising out
of, concerning or relating to Employee’s employment by Company, including, without limitation: claims for breach of contract, tort, discrimination, harassment, wrongful termination, demotion, discipline, failure to accommodate, compensation or
benefits claims, constitutional claims and claims for violation of any local, state or federal law, or common law, to the fullest extent permitted by law. A Dispute shall not include any dispute or claim, whether brought by either Employee or
Company, for: (a) workers’ compensation or unemployment insurance benefits; or (b) the exclusions from arbitration specified in the California Arbitration Act, California Code of Civil Procedure section 1281.8. For the purpose of this
paragraph 8, references to “Employer” include Company and all related or affiliated entities and their employees, supervisors, officers, directors, owners, stockholders, agents, pension or benefit plans, pension or benefit plan sponsors,
fiduciaries, administrators, and the successors and assigns of any of them, and this paragraph 8 shall apply to them to the extent that Employee’s claims arise out of or relate to their actions on behalf of Company. 
 8.2. Consideration. The parties agree that their mutual promise to arbitrate any and all disputes between them, except as provided in paragraph
8.1, rather than litigate them before the courts or other bodies, provides adequate consideration for this paragraph 8. 
 8.3. Initiation
of Arbitration. Either party may initiate an arbitration proceeding by providing the other party with written notice of any and all claims forming the basis of such proceeding in sufficient detail to inform the other party of the substance of
such claims. In no event shall the request for arbitration be made after the date when institution of legal or equitable proceedings based on such claims would be barred by the applicable statute of limitations. 
 8.4. Arbitration Procedure. The arbitration will be conducted by JAMS pursuant to its Rules for the Resolution of Employment Disputes in San
Diego, California by a single, neutral arbitrator. The parties are entitled to representation by an attorney or other representative of their choosing. The arbitrator shall have the power to enter any award that could be entered by a judge of the

  

 6 

 
Superior Court of the State of California, as applicable to the cause of action, and only such power. The arbitrator shall issue a written and signed
statement of the basis of the arbitrator’s decision, including findings of fact and conclusions of law. The parties agree to abide by and perform any award rendered by the arbitrator. Judgment on the award may be entered in any court having
jurisdiction thereof. 
 8.5. Costs of Arbitration. If Employee initiates arbitration against the Company, Employee must pay a filing
fee equal to the current filing fee in the appropriate court had Employee’s claim been brought there, and the Company shall bear the remaining filing fees and all other costs of the arbitration forum, including arbitrator fees, case management
fees, and forum hearing fees (the “Arbitration Fees”). If the Company initiates arbitration against Employee, the Company shall bear the entire cost of the arbitration forum, including arbitrator fees. (Such costs do not include
costs of attorneys, discovery, expert witnesses, or other costs which Employee would have been required to bear had the matter been filed in a court.) The arbitrator may award attorneys’ fees and costs to the prevailing party, except that
Employee shall have no obligation to pay any of the Arbitration Fees even if the Company is deemed the prevailing party. If there is any dispute as to whether the Company or Employee is the prevailing party, the arbitrator will decide that issue.
Any postponement or cancellation fee imposed by the arbitration service will be paid by the party requesting the postponement or cancellation, unless the arbitrator determines that such fee would cause undue hardship on the party. At the conclusion
of the arbitration, each party agrees to promptly pay any arbitration award imposed against that party. 
 8.6. Governing Law. All
Disputes between the parties shall be governed, determined and resolved by the internal laws of the State of California, including the California Arbitration Act, California Code of Civil Procedure 1280 et seq. 
 8.7. Discovery. The parties may obtain discovery in aid of the arbitration to the fullest extent permitted under law, including California Code of
Civil Procedure Section 1283.05. All discovery disputes shall be resolved by the arbitrator. 
 9. IRC Section 409A. Notwithstanding
anything to the contrary, if, at the time of his separation of service from the Company, Employee is a “specified employee” as defined pursuant to Internal Revenue Code Section 409A, and if the amounts that Employee is entitled to
receive pursuant to this Agreement are not otherwise exempt from Code Section 409A, then to the extent necessary to comply with Code Section 409A, no payments for such amounts may be made under this Agreement before the date which is six
(6) months after Employee’s separation of service from the Company or, if earlier, Employee’s date of death. All such amounts, which would have otherwise been required to be paid during such six (6) months after Employee’s
separation of service shall instead be paid to Employee in one lump sum payment on the first business day of the seventh month after Employee’s separation of service from the Company or, if earlier, Employee’s date of death. All such
remaining payments shall be made pursuant to their original terms and conditions. This Agreement is intended to comply with the applicable requirements of Code Section 409A and shall be construed and interpreted in accordance therewith. The
Company may at any time amend this Agreement, or any payments to be made hereunder, as necessary to be in compliance with Code Section 409A and avoid the imposition on Employee of any potential excise taxes relating to Code Section 409A.
Any reimbursements pursuant to the foregoing provisions of this Agreement shall be paid as soon as reasonably practicable and in all events not later than the end of Employee’s taxable year following the taxable year in 

  

 7 

 
which the related expense was incurred. Employee’s rights to reimbursement hereunder are not subject to liquidation or exchange for another benefit and
the amount of expenses eligible for reimbursement in one taxable year shall not affect the amount of expenses eligible for reimbursement in any other taxable year. 
 10. General Provisions. 
 10.1. Governing Law. This Agreement will be governed by and construed in accordance with the
laws of California. 
 10.2. Assignment. Employee may not assign, pledge or encumber his interest in this Agreement or any part
thereof. The Company shall require a purchaser of all or substantially all the assets of the Company to assume all of the Company’s liabilities under this Agreement, and the Company would thereby be relieved of all such liabilities, provided
that Employee accepts employment with such purchaser at the closing of the transaction. 
 10.3. No Waiver of Breach. The failure to
enforce any provision of this Agreement will not be construed as a waiver of any such provision, nor prevent a party from enforcing the provision or any other provision of this Agreement. The rights granted the parties are cumulative, and the
election of one will not constitute a waiver of such party’s right to assert all other legal and equitable remedies available under the circumstances. 
 10.4. Severability. The provisions of this Agreement are severable, and if any provision will be held to be invalid or otherwise unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts of this Agreement, will not be affected. 
 10.5. Entire Agreement. This Agreement, together with the Employment
Agreement, constitutes the entire agreement of the parties with respect to the subject matter of this Agreement, and supersedes all prior and contemporaneous negotiations, agreements and understandings between the parties, oral or written.

 10.6. Modification; Waivers. No modification, termination or attempted waiver of this Agreement will be valid unless in writing,
signed by the party against whom such modification, termination or waiver is sought to be enforced. 
 10.7. Amendment. This Agreement
may be amended or supplemented only by a writing signed by both of the parties hereto. 
 10.8. Duplicate Counterparts. This Agreement
may be executed in any number of original, facsimile or .PDF counterparts; each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 
 10.9. Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. 
 10.10. Drafting Ambiguities. Each party to this Agreement and its counsel have reviewed and
revised this Agreement. The rule of construction that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any of the amendments to this Agreement. 
  

 8 

 10.11. Recovery of Attorney’s Fees and Expenses. If any litigation shall occur between
Employee and Employer which arises out of or as a result of this Agreement, or which seeks an interpretation of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees and costs; provided, however, that,
regardless of whether Employee prevails with respect to any dispute or litigation between the parties, Employee shall in no event be required to pay any portion of the Arbitration Fees and the Employer shall pay up to Twenty-Five Thousand Dollars
($25,000) in legal fees and related expenses incurred by Employee as a result of (i) his termination following a Change of Control (including all such fees and expenses, if any, incurred in contesting or disputing such termination) or
(ii) Employee seeking to obtain or enforce any right or benefit provided by this Agreement following a Change of Control. 
  

	
	Company:
	
	OVERLAND STORAGE, INC.
	
	 /s/    Scott McClendon

	 Scott McClendon
 Chairman of the
Board

	
	Employee:
	
	 /s/    Eric Kelly

	 Eric Kelly
 Chief Executive Officer

  

 9 

 EXHIBIT A 
 GENERAL RELEASE 
 This General Release (“Release”) is entered into effective as of
                     (the “Effective Date”) between Overland Storage, Inc., a California corporation, having its principal offices
at 4820 Overland Avenue, San Diego, California 92123 (the “Company”) and Eric Kelly, an individual residing at                     
(“Employee”) with reference to the following facts: 
 RECITALS 
 A. The parties entered into a Retention Agreement effective as of January 27, 2009 (“the Agreement”) pursuant to which the parties
agreed that, upon the occurrence of certain conditions, Employee would become eligible for Termination Payments as defined in the Agreement in exchange for Employee’s release of the Company from all claims which Employee may have against the
Company as of the Termination Date. All capitalized terms that are not defined herein shall have the meaning set forth in the Agreement. 
 B. The parties desire to dispose of, fully and completely, all claims, which Employee may have against the Company in, the manner set forth in this Release. 
 AGREEMENT 
 1. Consideration. The Employer shall provide Employee those termination payments
and benefits provided in Section 4 of the Agreement and any Gross-Up Payment as required under Section 7 of the Employment Agreement. 
 2. Release. Employee, for himself and his heirs, successors and assigns, fully releases and discharges the Company, its officers, directors, employees, shareholders, attorneys, accountants, other professionals, insurers and agents
(collectively, “Agents”), and all entities related to each party, including, but not limited to, heirs, executors, administrators, personal representatives, assigns, parent, subsidiary and sister corporations, affiliates, partners
and co venturers (collectively, “Related Entities”), from all rights, claims, demands, actions, causes of action, liabilities and obligations of every kind, nature and description whatsoever, Employee now has, owns or holds or has
at anytime had, owned or held or may have against the Company, Agents or Related Entities from any source whatsoever, whether or not arising from or related to the facts recited in this Release. Employee specifically releases and waives any and all
claims arising under any express or implied contract, rule, regulation or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans with Disabilities Act, the California Fair
Employment and Housing Act, the California Labor Code and the Age Discrimination in Employment Act, as amended (“ADEA”). Employee acknowledges that the Company has paid Employee all wages, bonuses, accrued unused vacation pay,
options, benefits and monies owed by the Company to Employee. This release does not waive any claims for (a) indemnification and/or payment of related expenses under (i) any applicable law and/or (ii) the Company’s bylaws or
articles of incorporation; (b) Employee’s ownership of 

  

 A-1 

 
any Company stock, vested stock units or stock options, and/or Employee’s rights as an existing shareholder of the Company; (c) any rights Employee
has under any applicable stock option plan of the Company and/or any stock option, stock unit, stock purchase or other stockholder agreements with Company; (d) any vested rights or claims Employee may have under any Company-sponsored benefit
plans (including without limitation, any medical, dental, disability, life insurance or retirement plans); (e) any rights Employee may have to obtain continued health insurance coverage or other benefits pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended (“COBRA”), and/or any similar state law; (f) any claims Employee may have against the Company for reimbursement of business or other expenses incurred in connection with Employee’s
employment with Company; (g) any other claim which as a matter of law cannot be waived, or (h) any obligation of the Company to Employee pursuant to the Agreement. 
 3. Section 1542 Waiver. This Release is intended as a full and complete release and discharge of any and all claims that Employee may have
against the Company, Agents or Related Entities. In making this release, Employee intends to release each of the Company, Agents and Related Entities from liability of any nature whatsoever for any claim of damages or injury or for equitable or
declaratory relief of any kind, whether the claim, or any facts on which such claim might be based, is known or unknown to him. Employee expressly waives all rights under Section 1542 of the California Civil Code, which Employee understands
provides as follows: 
 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. 
 Employee
acknowledges that he may discover facts different from or in addition to those that he now believes to be true with respect to this Release. Employee agrees that this Release shall remain effective notwithstanding the discovery of any different or
additional facts. 
 4. Waiver of Certain Claims. Employee acknowledges that he has been advised in writing of his right to consult
with an attorney prior to executing the waivers set out in this Release, and that he has been given a 21 day period in which to consider entering into the release of ADEA claims, if any. If Employee does not consider this Release for the full 21-day
period, but instead signs and returns it earlier, Employee has done so voluntarily with the full understanding that Employee waived Employee’s right to the full 21-day period. In addition, Employee is hereby informed that Employee has seven
(7) days following the date of signing of this Agreement in which to revoke this Release. Employee can revoke the Release by sending notice of his revocation to the attention of the Chairman of the Board of the Company. If Employee does not
send such written notice of revocation via U.S. Mail postmarked within 7 days, this Release shall become effective and irrevocable at 12:01 a.m. on the eighth (8th) day after Employee signs it (the “Effective Date”).

 5. No Undue Influence. This Release is executed voluntarily and without any duress or undue influence. Employee acknowledges that
he has read this Release and executed it with his full and free consent. No provision of this Release shall be construed against any party by virtue of the fact that such party or its counsel drafted such provision or the entirety of this Release.

  

 A-2 

 6. Governing Law. This Release is made and entered into in the State of California and accordingly
the rights and obligations of the parties hereunder shall in all respects be construed, interpreted, enforced and governed in accordance with the laws of the State of California as applied to contracts entered into by and between residents of
California to be wholly performed within California. 
 7. Severability. If any provision of this Release is held to be invalid, void
or unenforceable, the balance of the provisions of this Release shall, nevertheless, remain in full force and effect and shall in no way be affected, impaired or invalidated. 
 8. Counterparts. This Release may be executed simultaneously in one or more original, facsimile, or .PDF counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument. This Release may be executed by facsimile, with originals to follow by overnight courier. 
 9. Dispute Resolution Procedures. Any dispute or claim arising out of this Release shall be subject to final and binding arbitration in accordance
with the procedures, terms and conditions set forth Section 8 of the Agreement, which terms are incorporated herein by reference. 
 10.
Entire Agreement. This Release constitutes the entire agreement of the parties with respect to the subject matter of this Release, and supersedes all prior and contemporaneous negotiations, agreements and understandings between the parties,
oral or written, including, without limitation, the Agreement, between the Company and Employee; provided, however, that this Release shall not terminate the Company’s obligations under Section 4, 7, 8, 9 and 10.11 of the Agreement.

 11. Modification; Waivers. No modification, termination or attempted waiver of this Release will be valid unless in writing, signed
by the party against whom such modification, termination or waiver is sought to be enforced. 
 12. Amendment. This Release may be
amended or supplemented only by a writing signed by Employee and the Company. 
  

											
	Dated:                     	 		 		 	  

						
		 		 		 		 	Printed Name:	 	  

  

 A-3

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