Exhibit 10.25

RETENTION AGREEMENT

This Retention Agreement (this “ Agreement ”) is entered into on July 13, 2009 between Overland Storage Inc., a California corporation having its principal offices at 4820 Overland Avenue, San Diego, California 92123 (the “ Company ”), and Jillian Mansolf (“ 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;

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 50% 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.

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1.3 “ Cause ” shall mean

(a) Employee’s gross neglect of her duties to the Company, where Employee has been given a reasonable opportunity to cure her gross neglect (which reasonable opportunity must be granted during the thirty-day period preceding termination);

(b) any violation by Employee of Employee’s obligations under this Agreement or any employment agreement which Employee may have with the Company;

(c) Employee taking any role in any buy-out of the Company without the approval of the Company’s majority shareholder; or

(d) Employee’s commission of any act of fraud, theft or embezzlement against the Company.

1.4 “ Compensation ” shall mean Base Salary plus Target Commission.

1.5 “ Resignation For Good Reason ” shall mean the voluntary resignation by Employee of her employment with the Company within two years following a Change of Control and within three (3) months of the following Good Reasons:

(a) any reduction in Employee’s Base Salary or Target Bonus; or

(b) any reduction in Employee’s title; or

(c) any significant reduction in Employee’s responsibilities and authority;

(d) any failure by the Company to pay Employee’s Base Salary; or

(e) a relocation by the Company of Employee’s place of Employment outside a fifty (50) mile radius of Employee’s current place of employment.

An event described in Section 1.5(a) through (e) will not constitute Good Reason unless Employee provides written notice to the Company of her 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 twelve months following the Termination Date.

1.7 “ Target Commission ” shall mean the variable annual compensation represented by the sales commission Employee is eligible to receive, prior to a Change of Control, in the event targeted quotas are achieved during the year.

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.

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2. Title and Duties . Employee will hold the position of Vice President, an Executive Officer position. Employee’s primary duties will include such duties as are assigned or delegated to Employee by the Chief Executive Officer of the Company and/or the Board of Directors of the Company (the “ Board ”). Employee will: (i) devote her entire business time, attention, skill, and energy exclusively to the business of the Company; (ii) use her best efforts to promote the success of the Company’s business; and (iii) cooperate fully with the Board in the advancement of the best interests of the Company.

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. 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 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 a pro-rata share of Base Salary and accrued but unused vacation through the Termination Date, less applicable state and federal taxes or other payroll deductions;

(b) Subject to Section 9, Employee will be eligible for Severance under this Agreement in a lump-sum amount equal to Base Salary plus Target Commission, less applicable state and federal taxes or other payroll deductions; and

(c) Subject to Section 9, if Employee elects to continue insurance coverage as afforded to Employee according to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“ COBRA ”), Company will reimburse Employee the amount of the premiums incurred by Employee during the Severance Period. 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.

With the exception of COBRA reimbursements, all payments made pursuant to this Section 4.1 will be made within 60 days following the termination of the employment of Employee, subject to Section 9.

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