On June 27, 2008, we entered into an asset purchase agreement with Adaptec, Inc. pursuant to which we acquired the SNAP Server NAS business of Adaptec. At the closing, we paid Adaptec $2.1 million in cash, and executed and delivered to Adaptec a secured promissory note in the original principal amount of $1.4 million.

Effective May 20, 2009, the payment terms of such promissory note were amended. The terms of the promissory note as initially issued required principal and accrued and unpaid interest be paid in one installment on June 27, 2009. As amended, the total amount will be payable over the next 11 months. The payment schedule takes into account all adjustments and offsets to the original principal amount and all accrued and unpaid interest through June 27, 2009, and no additional interest accrues during the payment period.

(d) Exhibits

Exhibit No.       Description
   10.1           Promissory Note dated June 27, 2008 issued by Overland Storage,
                  Inc. to Adaptec, Inc.

   10.2           Amendment No. 1 to Promissory Note entered into as of May 20,
                  2009 between Overland Storage, Inc. and Adaptec, Inc.