Exhibit 10.1
SECURED PROMISSORY
NOTE
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$2,386,000
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San Diego, California
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1. Fundamental Provisions .
The following terms will be used as defined terms in this Secured
Promissory Note (“Note”):
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Date of this
Note:
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April 6,
2009
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Maker:
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Overland
Storage, Inc., a California corporation
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Holder:
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Anacomp, Inc.,
an Indiana corporation, or assignee
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Principal
Amount:
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$2,386,000
United States Currency, subject to reconciliation as provided in
Section 6.16 of that certain Security Agreement entered into as of
April 6, 2009 between Maker and Holder (the “Security
Agreement”)
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Interest
Rate:
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12% per annum
(simple interest)
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Default
Interest Rate:
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14% per annum
(simple interest)
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Maturity
Date:
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July 9,
2010
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Security:
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This Note is
secured by the Security Agreement
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2. Promise to Pay . For good
and valuable consideration, Maker promises to pay to Holder, or
order, the principal amount of Two Million Three Hundred Eighty-Six
Thousand Dollars ($2,386,000) (“Principal Amount”),
subject to reconciliation as provided in Section 6.16 of the
Security Agreement, with interest at the Interest Rate (or the
Default Interest Rate while an Event of Default exists). On
October 9, 2009, Maker shall pay to Holder the principal
reduction payment of $477,200 plus the then accrued and unpaid
interest. On January 8, 2010, Maker shall pay to Holder the
principal reduction payment of $596,500 plus the then accrued and
unpaid interest. On April 9, 2010, Maker shall pay to Holder
the principal reduction payment of $596,500 plus the then accrued
and unpaid interest. On July 9, 2010, Maker shall pay to
Holder the principal reduction payment of $715,800 plus the then
accrued and unpaid interest, in final payment and satisfaction of
the Note. The entire unpaid principal balance plus accrued and
unpaid interest, late charges and other fees and charges or
expenses then owing shall be due and payable on the Maturity Date.
Payment shall be in lawful money of the United States via wire
transfer to Anacomp, Inc. pursuant to the wire instructions
attached hereto as Exhibit A , or such other method as
Holder may from time to time designate.
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3. Default Interest . If any
scheduled payment of principal and interest due under this Note is
not received by Holder within five (5) calendar days after the
date such payment is due, the outstanding principal of the Note
shall begin accruing interest at the Default Interest Rate until
the overdue payment has been made. The five (5) calendar day
period provided in the preceding sentence is not a grace period or
cure period and Holder shall be entitled to exercise all of
Holder’s rights and remedies upon the occurrence of an Event
of Default.
4. Prepayments . This Note
may be prepaid at any time in whole or in part before due without
prepayment penalty or premium. In the event that the full amount
owed by Maker under this Note is paid to Holder such that no
indebtedness under this Note remains unpaid, then the Holder shall
return to Maker the original Note marked “paid in
full”.
5. Event of Default . At the
option of Holder, it shall be an “Event of Default”
hereunder if:
(a) Maker fails to pay when due any
payment of principal or any other sum payable under the Note;
provided that Holder provides Maker (with a copy to Marquette
Commercial Finance, a division of Marquette Business Credit, Inc.
(“Marquette”), Faunus Group International, Inc.
(“FGI”) and Adaptec, Inc. (“Adaptec”) as
provided in Section 6.7 of the Security Agreement) five
(5) calendar days written notice of such failure and such
failure is not cured within such five (5) day
period.
(b) Maker defaults in the
performance of any of its obligations under any provision of the
Loan Documents (as defined in the Security Agreement); provided
that Holder provides Maker (with a copy to Marquette, FGI and
Adaptec as provided in Section 6.7 of the Security Agreement)
thirty (30) calendar days written notice of such default and
such default is not cured within such thirty (30) day
period.
(c) Maker fails to pay any fees or
payments under that certain Authorized Service Provider Agreement
dated July 1, 2001, including Amendments No. 1 through
No. 15 (collectively referred to as the “ Service
Agreement ”), in a total amount that equals or exceeds
the most recent two (2) months’ worth of aggregate fees
and payments under the Service Agreement; provided that failure to
pay will only be deemed to occur after the lapse of any grace
period and cure period set forth in the Service
Agreement.
(d) The Service Agreement is
terminated on account of a breach of such agreement by
Maker.
(e) Any warranty or representation
made by Maker in the Security Agreement, or any of the Loan
Documents, is untrue in any material respect, in any case on any
date as of which the facts set forth are stated or
certified.
(f) Maker institutes a voluntary
case seeking liquidation or reorganization under Chapter 7 or
Chapter 11 of the United States Bankruptcy Code, or consents to the
institution of an involuntary case thereunder against it; or Maker
files a petition initiating or otherwise institutes any similar
proceeding under any other applicable federal or state law, or
consents thereto; or Maker applies for, or by consent or by failure
to object there is an appointment of or order entered by a court of
competent jurisdiction appointing a receiver, liquidator,
sequestrator, trustee or other officer with similar powers; or
Maker makes an assignment for the benefit of creditors; or Maker
admits in writing its inability to pay its debts generally as they
become
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due; or, if an involuntary case is
commenced seeking the liquidation or reorganization of Maker under
Chapter 7 or Chapter 11, respectively, of the United States
Bankruptcy Code, or any similar proceeding is commenced against
Maker under any other applicable federal or state law, and
(1) the petition commencing the involuntary case is not timely
controverted within sixty (60) calendar days; or (2) the
petition commencing the involuntary case is not stayed or dismissed
within sixty (60) calendar days of its filing; or (3) a
trustee (interim or otherwise) is appointed to take possession of
all or a portion of the Maker’s assets, or to operate all or
any part of the business of Maker; or (4) an order for relief
is issued or entered therein.
(g) Holder does not have or ceases
to have a valid and perfected lien on and security interest in all
of the collateral as provided in the Security Agreement, junior in
priority only to the lien in favor or Marquette, the lien in favor
of FGI and the lien in favor of Adaptec, other than as a result of
action or inaction of Holder or Holder’s agent.
Notwithstanding anything to the contrary in this Agreement, Maker
may not seek or obtain any Consent-Required Indebtedness without
the consent of Holder, which consent shall not be unreasonably
withheld. Maker shall promptly provide written notice to Holder of
its intent to seek or obtain Consent-Required Indebtedness, which
reasonably specifi