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SECURED PROMISSORY NOTE

Promissory Note

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This Promissory Note involves

OVERLAND STORAGE INC

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Title: SECURED PROMISSORY NOTE
Governing Law: California     Date: 4/10/2009
Industry: Computer Storage Devices     Sector: Technology

SECURED PROMISSORY NOTE, Parties: overland storage inc
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Exhibit 10.1

SECURED PROMISSORY NOTE

 

$2,386,000

  

San Diego, California

1. Fundamental Provisions . The following terms will be used as defined terms in this Secured Promissory Note (“Note”):

 

Date of this Note:

  

April 6, 2009

Maker:

  

Overland Storage, Inc., a California corporation

Holder:

  

Anacomp, Inc., an Indiana corporation, or assignee

Principal Amount:

  

$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”)

Interest Rate:

  

12% per annum (simple interest)

Default Interest Rate:

  

14% per annum (simple interest)

Maturity Date:

  

July 9, 2010

Security:

  

This Note is secured by the Security Agreement

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


 
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