UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August, 2015
Commission File Number: 001-36532
Sphere 3D Corp.
240 Matheson Blvd. East
Mississauga, Ontario, Canada, L4Z
1X1
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will
file annual reports under cover Form 20-F or Form 40-F.
[ ] Form
20-F [X] Form 40-F
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
Indicate by check mark whether by furnishing the information
contained in this Form, the registrant is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b):
With the exception of Exhibit 99.8, the information contained
in this Form 6-K is incorporated by reference into, or as additional exhibits
to, as applicable, the registrants outstanding registration statements.
Acquisition of Imation Assets
On August 10, 2015, a wholly-owned subsidiary of Sphere 3D
Corp. (the Company), Overland Storage, Inc., a California corporation
(Overland) acquired certain assets relating to RDX removable disk
product lines and existing inventory from Imation. Corp., a Delaware corporation
(Imation) pursuant to that certain Asset Purchase Agreement, dated as
of August 10, 2015, by and among the Company, Overland and Imation (the
Asset Purchase Agreement), for 1,529,126 common shares of the Company
(common shares) and a warrant to purchase up to a maximum of 250,000
shares exercisable in connection with purchase price adjustments under the Asset
Purchase Agreement. The warrant expires within six months of registration of the
shares, or earlier in certain circumstances. The purchase price was determined
based on the closing price for Sphere common shares on August 6, 2015, assuming
an aggregate value of $4.9 million for the purchased assets plus the net value
of existing inventory, which was valued at approximately $1.4 million (subject
to final confirmation of net inventory after closing).
If the net value of proceeds from the sale of shares by Imation
exceeds or falls below certain thresholds, then certain inventory-based
adjustments may be triggered. If Imation receives aggregate consideration in
excess of a designated threshold of approximately $7 million (subject to
adjustment based on final confirmation of net inventory at closing) from the
sale of the common shares issued to it, Imation is required to deliver to the
Company an amount of inventory acquired by Imation after the closing date that
is equal in value to such excess amount. If Imation receives aggregate
consideration from the sale of such common shares that is less than a designated
threshold of approximately $6.3 million (subject to adjustment based on final
confirmation of net inventory at closing) prior to the expiration of the
warrant, then Imation may be entitled to receive proceeds from the sale of the
inventory in an amount equal to such shortfall, but not to exceed the value of
the inventory. If, after aggregating this adjustment together with all other
gross proceeds received by Imation from the sale of the common shares issued to
it at the closing, the gross amount received by Imation is less than $4.9
million, Imation can exercise the warrant for up to 250,000 common shares for an
exercise price of $0.01 per common share such that upon the sale of such common
shares issuable upon the exercise of the warrant, Imation has received, together
with the above adjustment and the gross proceeds received by Imation for the
sale of the common shares issued to it at closing, equals $4.9 million.
Otherwise, the warrant may not be exercised.
In addition, the Company and Imation entered into that certain
Lock-Up Agreement, dated as of August 10, 2015 (the Lock-Up Agreement),
which imposes limitations on the transfer and sale of the common shares issued
to Imation at closing and requires that Imation vote its shares in accordance
with any recommendation of the Companys board of directors for a designated
period of time. The Company and Imation also entered into that certain
Registration Rights Agreement, dated August 10, 2015 (the Imation
Registration Rights Agreement), pursuant to which the Company has agreed to
register the resale of the common shares issued to Imation and any shares
issuable upon the exercise of the Warrant.
Each of the foregoing descriptions of the Asset Purchase
Agreement, Warrant, Lock-Up Agreement and Imation Registration Rights Agreement
is qualified in its entirety by reference to the full text of the form of Asset
Purchase Agreement, Warrant, Lock-Up Agreement and Imation Registration Rights
Agreement (each a Transaction Document and collectively, the
Transaction Documents), a copy of each such form Transaction Document is
attached as Exhibit 99.1, Exhibit 99.2, Exhibit 99.3 and Exhibit 99.4,
respectively, to this Form 6-K and is incorporated in this Form 6-K by
reference. The form of each Transaction Document has been attached to provide
investors with information regarding its terms and is not intended to provide
any other factual information about the Company, Overland or Imation. The
representations, warranties, covenants and agreements in each Transaction
Document were made solely for the benefit of the parties thereto as of specific
dates. These representations, warranties, covenants and agreements may be
subject to important limitations and qualifications Accordingly, you should not
rely on the representations and warranties contained in the Transaction
Documents as statements of factual information.
Private Placement
The Company has entered into a purchase agreement (the
Purchase Agreement) with an investor (the Investor) pursuant
to which the Company agreed to issue to the Investor, in the aggregate, 606,060
of the Companys common shares, and warrants (the Warrants) exercisable
to purchase up to 606,060 common shares, for an aggregate offering price of approximately U.S.$2 million
(the Offering). Pursuant to the Purchase Agreement, the purchase price
for one common share (a Purchased Common Shares) and a Warrant to
purchase one common share (the Warrant Shares) is U.S.$3.30 (the
Purchase Price). Each Warrant has an initial exercise price of
U.S.$3.30 per Warrant Share. The Warrants are immediately exercisable and have a
five year term. The Purchase Agreement was signed on August 10, 2015. The
issuance and sale of the Purchased Common Shares and Warrants to purchase
Warrant Shares closed on August 13, 2015. The Company intends to use the
proceeds from the Offering for general corporate purposes and working
capital.
Pursuant to the Purchase Agreement and the Warrants, subject to
certain conditions, the Company has agreed to give the Investor additional
common shares and adjust the exercise price for the Warrants if, in connection
with an equity capital raise for cash on or before September 24, 2015 (an
Additional Raise), the Company sells common shares at a price per share
that is lower than $3.30 per share or sells new warrants to purchase common
shares with an exercise price per share that is lower than $3.30. The number of
additional common shares the Investor would receive would equal the difference
between (x) the number of shares that the Investor would have received had the
Purchase Price been equal to the per share purchase price at which common shares
were issued in the Additional Raise and (y) the aggregate number of common
shares purchased by the Investor in the Offering. The exercise price of the
Warrant would be adjusted to equal the exercise price per share of the warrants
issued in the Additional Raise (if lower) as of the date of the consummation of
the Additional Raise. Further, if, in connection with such Additional Raise, the
Company sells additional common shares or warrants to purchase common shares on
terms that are different from those set forth in the Purchase Agreements and the
Warrants and an Investor reasonably determines that the terms of such Additional
Raise are senior or superior to the terms of the Offering, the Company has
agreed to amend the terms of the Offering to provide the Investor with
equivalent rights to the Additional Raise.
The Company also entered into a Registration Rights Agreement
(the Private Placement Registration Rights Agreement), dated as of
August 13, 2015, with the Investor. Pursuant to the Private Placement
Registration Rights Agreement, the Company has agreed to file a registration
statement (the Registration Statement) with the U.S. Securities and
Exchange Commission (the SEC) by November 8, 2015 (the Filing
Deadline) to register the resale of the Purchased Common Shares and the
Warrant Shares of the Investor (the Registrable Securities) and use its
commercially reasonable efforts to have the Registration Statement declared
effective by the SEC as soon as practicable.
The foregoing descriptions of the Warrants, the Purchase
Agreement and the Private Placement Registration Rights Agreement do not purport
to be complete and are qualified in their entirety by reference to each of the
Warrants, the Purchase Agreement and the Private Placement Registration Rights
Agreement, the forms of which are attached hereto as Exhibits 99.5, 99.6 and
99.7, respectively, and incorporated herein by reference.
All common shares, Purchased Common Shares, Warrants and
Warrant Shares in the Offering were offered and sold by the Company pursuant to
an exemption from the registration requirements of the Securities Act of 1933,
as amended, provided by Regulation D promulgated thereunder.
SUBMITTED HEREWITH
Exhibits
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
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SPHERE 3D CORP. |
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Date: August 13, 2015 |
/s/
Kurt Kalbfleisch |
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Name: Kurt Kalbfleisch |
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Title: Chief Financial Officer
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EXHIBIT 99.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of August 10, 2015, is
entered into by and among Imation Corp., a Delaware corporation (the
Seller), on the one hand, and Overland Storage, Inc., a California
corporation and wholly-owned subsidiary of Parent (Buyer), and Sphere
3D Corp., an Ontario corporation (Parent), on the other hand.
Capitalized terms used but not otherwise defined herein have the meanings
ascribed to such terms in Article VI.
RECITALS
WHEREAS, the parties and certain of their Affiliates are
parties to an RDX License Agreement, as amended (the RDX License),
pursuant to which Seller and its Affiliates hold a license from Parent and Buyer
and certain of their Affiliates to sell RDX products;
WHEREAS, Seller and Tandberg Data Holdings S.a.r.L. are parties
to an RDX License Agreement dated May 12, 2011 (the Infinivault
License), which ProStor Systems, Inc. assigned to Seller in connection with
Sellers acquisition of ProStors Infinivault assets;
WHEREAS, on or about April 9, 2015, Seller filed an action
against Buyer, Parent, Tandberg Data Corp. and Tandberg Data Holdings S.a.r.l.
in Second Judicial District Court for the State of Minnesota captioned
Imation Corp. vs. Tandberg Data Corp. et al (the Action)
relating to the RDX License;
WHEREAS, the parties desire to terminate the RDX License and
the licenses granted to Seller and its Affiliates thereunder;
WHEREAS, the parties desire to dismiss the Action and to
completely resolve their disputes and resolve all issues between them pursuant
to the terms and conditions and the warranties and representations set forth in
this Agreement, and to avoid additional disputes, as well as any claims that
could have been brought by any party hereto or their respective Affiliates and
other related parties;
WHEREAS, Seller is engaged in the business of selling removable
disk backup solutions based on technology licensed to Seller by Buyer and
publicly known as RDX (the Business); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, the Purchased Assets and to assume the Assumed
Liabilities, each as more particularly set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and undertakings contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE I
PURCHASE AND SALE
OF THE BUSINESS
Section 1.01 Purchase
and Sale of Assets. Subject to the terms and conditions set forth herein,
Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer
shall purchase from Seller, all of Seller's right, title and interest in (a) the
assets of Seller and its Affiliates set forth on Section 1.01 of the
disclosure schedules (Disclosure Schedules) attached hereto, (b) any other
assets exclusively used or held for use in the Business, and (c) the Existing
Inventory (collectively, the Purchased Assets), free and clear of any
mortgage, pledge, lien, charge, security interest, claim or other encumbrance
(each, an Encumbrance).
Anything in this Agreement to the contrary notwithstanding,
this Agreement will not constitute an agreement to assign any Purchased Asset or
any right thereunder if an attempted assignment, without the consent of a third
party, would constitute a breach thereunder (an Outstanding Third Party
Consent). If an Outstanding Third Party Consent is not obtained prior to
the Closing, Seller and Buyer shall cooperate to provide Buyer with the benefits
and obligations thereunder in a mutually agreeable arrangement in accordance
with this Agreement; provided, however, that the parties hereto
acknowledge that any such obligations would be performed at Buyers sole cost
and expense; provided, further, that if such third party does not
consent to the assignment of its agreement by October 31, 2015 (other than with
respect to the third party set forth in Section 1.01(b) of the Disclosure
Schedule, which shall be within one hundred twenty (120) days after the Closing)
and the third party has not communicated to Seller, Buyer or Parent its
intention to provide such consent, then Seller will have the right to terminate
such agreement in accordance with the terms thereof or applicable law.
Section 1.02 Excluded
Assets. From and after the Closing, Seller and its Affiliates shall retain
all of their respective existing right, title and interest in and to, and there
shall be excluded from the sale, conveyance, assignment or transfer to Buyer
hereunder, all assets of Seller other than the Purchased Assets, including any
assets set forth on Section 1.02 of the Disclosure Schedules
(collectively, the Excluded Assets).
Section 1.03 Assumed
Liabilities. Subject to the terms and conditions set forth herein, Buyer
shall assume and agree to pay, perform and discharge the liabilities and
obligations set forth on Section 1.03 of the Disclosure Schedules
(collectively, the Assumed Liabilities). Buyer will not assume or have
any responsibility with respect to any liability relating to the Business or the
Purchased Assets that exists, or arises out of the operation or ownership of the
Purchased Assets or the Business on or prior to the Closing and that is not an
Assumed Liability, whether any such liability is known or unknown, contingent,
matured or otherwise, whether currently existing or hereinafter created.
Section 1.04 RDX
License Termination. Buyer, Parent and Seller, on behalf of themselves and
their respective Affiliates, hereby agree that the RDX License shall be
terminated and shall be of no further force and effect effective as of the
Closing. Neither party has any further obligations of any kind to the other
party arising out of the RDX License.
Section 1.05 Purchase
Price. Subject to adjustment as set forth in Section 1.08, on the
terms and subject to the conditions set forth herein, in consideration of the
sale of the Purchased Assets and the termination of the RDX License, in addition
to the assumption of the Assumed Liabilities, on the Closing Date, Parent shall
issue to Seller:
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(a) |
the Issued Shares; and |
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(b) |
the Warrant. |
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Section 1.06
Restricted Shares. The Shares will not initially be registered under
the Securities Act of 1933, as amended (the Securities Act) and will
accordingly bear applicable restricted securities legends, but Parent has agreed
to register the Shares pursuant to the terms of the Registration Rights
Agreement, to be executed and delivered on the Closing Date. The Shares will be
subject to the Lock-Up Agreement. Notwithstanding any other provision of this
Agreement to the contrary, Parent shall in no event be required to issue any
Shares to Seller (pursuant to the Warrant or otherwise) in connection with the
transaction to the extent that such issuance (i) in the aggregate constitutes
Parent Common Shares that constitutes greater than 19.9% of the common shares or
voting power of Parent outstanding as of the date of this Agreement prior to the
issuance of the Shares, (ii) would constitute a change of control under Nasdaq
rules, (iii) would otherwise trigger a shareholder approval requirement under
Nasdaq rules or (iv) would cause Seller together with its Affiliates to become a
beneficial owner of 20% or more of Parents outstanding common shares, except in
the case of the foregoing clauses (i), (ii) and (iii), with the prior approval
of Parents shareholders. All Shares shall, upon issue thereof by Parent, be
duly authorized, validly issued, fully paid and non-assessable.
Section 1.07
Allocation of Purchase Price. As soon as practicable but in no event
more than sixty (60) days following the Closing, Buyer shall prepare, or cause
to be prepared, and deliver to Seller an allocation (the Allocation) of
the purchase price (as determined for U.S. federal income tax purposes), which
Allocation shall be prepared in accordance with the rules under Section 1060 of
the Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder. The Allocation shall be deemed final unless Seller notifies Buyer in
writing that Seller objects to one or more items reflected in the Allocation
within thirty (30) days after delivery of the Allocation to Seller. In the event
of any such objection, Seller and Buyer shall negotiate in good faith to resolve
such dispute; provided, however, that if Seller and Buyer are
unable to resolve any dispute with respect to the Allocation within sixty (60)
days after the delivery of the Allocation to Seller, such dispute shall be
resolved by Ernst & Young LLP or, if Ernst & Young LLP is unable to
serve, another impartial nationally recognized firm of independent certified
public accountants mutually appointed by Buyer and Seller. The fees and expenses
of such accounting firm shall be borne equally by Seller and Buyer. Seller and
Buyer agree to report the transactions contemplated by this Agreement for all
Tax purposes in a manner consistent with the Allocation (except to the extent
otherwise required by Law) and will provide the other promptly with any other
information reasonably required to complete Internal Revenue Service Form 8594.
Each of Buyer and Seller shall promptly notify the other, and will provide the
other with reasonably requested cooperation, at the requesting partys expense,
in the event of an examination, audit, or other proceeding regarding any of the
allocations set forth in the Allocation. In any Proceeding related to the
determination of any Tax, neither Buyer nor Seller shall contend or represent
that such Allocation is not a correct allocation.
Section 1.08 Purchase
Price Adjustment. For purposes of this Section 1.08, the term Seller shall
include any Affiliate of Seller that has acquired any Issued Shares.
(a) Upon the time that Seller has Sold
any portion (or all, to the extent applicable) of the Issued Shares to any
Person or Persons (other than an Affiliate of Seller) in one or more Acceptable
Transactions and the aggregate amount of consideration (in any form) received in
connection with or as a result of such Sale exceeds the Maximum Sales Price
(such event, the Upside Triggering Event), Seller shall then within
five (5) business days after such Upside Triggering Event (x) deliver a written
notice (the Upside Triggering Notice) to Buyer stating (i) that an
Upside Triggering Event has occurred as of a date specified in such notice, (ii)
the number of Issued Shares Sold by Seller in any Acceptable Transaction
prior to and as of the date of the Upside Triggering Event, (iii) the aggregate
amount of consideration (in any form) received by Seller as of the date of the
Upside Triggering Event in connection with or as a result of the Sale of such
Issued Shares and (iv) the amount by which as of the date of the Upside
Triggering Event the amount set forth in clause (iii) immediately above exceeds
the Maximum Sales Price (the Excess) and (y) to the extent the Excess
cannot be offset against amounts owed by Parent or Buyer to Seller under the
Transition Services Agreement, deliver to Buyer, in consideration for Seller
retaining the Excess, an amount of Contingent After Acquired Inventory equal in
value (based on the fair market value) to the Excess. To the extent that Seller
owns, of record or beneficially, any Issued Shares as of the day immediately
following the date of the Upside Triggering Event, then within five (5) business
days of the first day of each calendar month after the date of the Upside
Triggering Event until the date that is two months following the day on which
the last Issued Share is Sold in an Acceptable Transaction, Seller shall (x)
deliver a written notice to Buyer (an Upside Notice) stating (i) the
aggregate number of Issued Shares Sold in an Acceptable Transaction during the
period since the date of the Upside Triggering Notice or the last Upside Notice
(whichever was delivered more recently in accordance herewith) (such period, the
Upside Period) and (ii) the aggregate amount of consideration (in any
form) received by Seller as of the date of such Upside Notice in connection with
or as a result of the Sale of such Issued Shares (such amount, the Monthly
Upside Sale Amount) and (y) to the extent the Excess cannot be offset
against amounts owed by Parent or Buyer to Seller under the Transition Services
Agreement, deliver to Buyer, in consideration for Seller retaining such Monthly
Upside Sale Amount, an amount of Contingent After Acquired Inventory equal in
value (based on the fair market value) equal to such Monthly Upside Sale Amount.
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(b) Until the Expiration Date (as
defined in the Warrant), upon the time that Seller has Sold all of the Issued
Shares in one or more Acceptable Transactions and the aggregate amount of
consideration (in any form) received in connection with or as a result of such
Sale is less than the Minimum Sales Price (such event, the Downside
Triggering Event), Seller shall then within five (5) business days after
such Downside Triggering Event (x) deliver a written notice (the Downside
Triggering Notice) to Buyer stating (i) that a Downside Triggering Event
has occurred as of a date specified in such notice, (ii) the aggregate amount of
consideration (in any form) received by Seller as of the date of the Downside
Triggering Event in connection with or as a result of the Sale of all of the
Issued Shares (the Aggregate Consideration) and (iii) the amount by
which the Aggregate Consideration is less than the Minimum Sales Price (the
Difference). Until the Expiration Date, upon the valid delivery of a
Downside Triggering Notice, Seller shall have the right to retain all amounts
received in consideration for any Existing Inventory that is Sold in an
Acceptable Transaction in an amount up to, but not exceeding, an amount equal to
the Difference.
(c) The parties agree to treat any
adjustment pursuant to this Section 1.08 as an adjustment to the Purchase Price
for tax purposes.
ARTICLE II
CLOSING
Section 2.01 Closing. The closing of the
transactions contemplated by this Agreement (the Closing) shall take
place simultaneously with the execution of this Agreement on the date of this
Agreement (the Closing Date) at the offices of OMelveny & Myers
LLP, 2765 Sand Hill Road, Menlo Park, California. The consummation of the transactions contemplated by this Agreement
shall be deemed to occur at 12:01 a.m. on the Closing Date.
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Section 2.02 Closing
Deliverables.
(a) At the Closing, Seller shall
deliver to Buyer duly executed counterparts of (i) the Lock-Up Agreement, (ii)
the Registration Rights Agreement, (iii) the Transition Services Agreement and
(iv) the Trademark License Agreement.
(b) At the Closing, Buyer shall
deliver, or cause to be delivered, to Seller the following:
(i) the Issued Shares, as well as a
share certificate representing the Issued Shares in the name of Seller;
(ii) the Warrant; and
(iii) duly executed
counterparts of (A) the Lock-Up Agreement, (B) the Registration Rights
Agreement, (C) the Transition Services Agreement and (D) the Trademark License
Agreement.
Section 2.03 Affiliate
Sellers. Notwithstanding anything to the contrary contained in this
Agreement, if it is determined before, at, or after the Closing that any
Affiliate of Seller (each an Affiliate Seller) owns or possesses any
Purchased Assets (or any assets or properties that would constitute Purchased
Assets if such Affiliate of Seller were deemed to be Seller under this Agreement
(such assets and properties, the Affiliate Purchased Assets)), then
Seller shall promptly cause such Affiliate of Seller to transfer, assign, convey
and deliver to Buyer such Affiliate Purchased Assets in accordance with the
terms and conditions of this Agreement; provided, however, that
neither Buyer nor Parent shall be obligated to pay any amounts to Seller or any
of its Affiliates in consideration for the transfer of such Affiliate Purchased
Assets to Buyer other than those amounts that Buyer is obligated to pay to
Seller pursuant to this Agreement.
Section 2.04 Affiliate
Acquisitions. Notwithstanding anything to the contrary contained in this
Agreement, Buyer may elect to have any or all of the Purchased Assets conveyed
or transferred to, or any of the Assumed Liabilities assumed by, one or more of
its Affiliates; provided, however, that such conveyance or
transfer shall not relieve Buyer of its obligations and Liabilities to Seller
hereunder.
Section 2.05
Inventory. Within ten (10) business days following the
Closing Date, Seller shall deliver to Buyer a written notice (the Final
Inventory Statement) setting forth the determination of the amount of the
Net Inventory Value of the Existing Inventory as of the Closing Date (the
Closing Net Inventory Value), using the same valuation methodology used
in determining the Initial Net Inventory Value, in addition to a physical count
of the Existing Inventory (if requested by Buyer). If, within ten (10) business
days of the date the Final Inventory Statement is delivered to Buyer, Buyer does
not deliver to Seller a written notice stating that Buyer disputes the
determination of the Closing Net Inventory Value set forth in the Final
Inventory Statement and a reasonable description of the basis for such dispute
(the Dispute Notice), the calculation of the Closing Net Inventory
Value set forth in the Final Inventory Statement shall be deemed the Final
Net Inventory Value. Seller shall reasonably cooperate with Buyer in its
evaluation of the Final Inventory Statement, including by providing access to,
and participation in, the physical count of, the Existing Inventory. If Buyer timely delivers a Dispute Notice, Buyer and Seller shall
negotiate in good faith for a period of ten (10) days to resolve all disputes
set forth in the Dispute Notice (the Resolution Period). If during the
Resolution Period all disputes set forth in the Dispute Notice are resolved by
Buyer and Seller, the determination of the Closing Net Inventory Value by Buyer
and Seller shall be deemed the Final Net Inventory Value. If any
disputes set forth in the Dispute Notice are not resolved prior to the
expiration of the Resolution Period, Seller and Buyer shall submit the dispute
to a mutually agreed upon independent third party (the Independent
Firm) to resolve the dispute. Seller and Buyer shall in good faith
cooperate with the Independent Firm in providing information to the Independent
Firm to make its determination. The decision of the Independent Firm shall be
final and binding, absent manifest error. If an Independent Firm is engaged
pursuant hereto to resolve any disputes in the Dispute Notice, the final
determination of the Closing Net Inventory Value by the Independent Firm shall
be deemed the Final Net Inventory Value.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLER
Seller represents and warrants to Buyer and Parent that the
statements contained in this Section 2.05 are true and correct as of the
date hereof. For purposes of this Section 2.05, Seller's knowledge,
knowledge of Seller and any similar phrases shall mean the actual knowledge of
Jim Ellis, Eric Nealy, Mike Morin, John Breedlove, Dan Egan, John Yarusso,
Michael Mader and John Wilebski.
Section 3.01
Organization and Authority of Seller; Enforceability. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Delaware. Seller has full corporate power and authority to enter
into this Agreement and the documents to be delivered hereunder, to carry out
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance by Seller of this Agreement and
the documents to be delivered hereunder and the consummation of the transactions
contemplated hereby have been duly authorized by all requisite corporate action
on the part of Seller. This Agreement and the documents to be delivered
hereunder have been duly executed and delivered by Seller, and (assuming due
authorization, execution and delivery by Buyer and Parent) this Agreement and
the documents to be delivered hereunder constitute legal, valid and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms.
Section 3.02 No
Conflicts; Consents. The execution, delivery and performance by Seller of
this Agreement and the documents to be delivered hereunder, and the consummation
of the transactions contemplated hereby, do not and will not: (a) violate or
conflict with the certificate of incorporation, by-laws or other organizational
documents of Seller; (b) violate or conflict with any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Seller or the
Purchased Assets; (c) conflict with, or result in (with or without notice or
lapse of time or both) any violation of, or default under, or give rise to a
right of termination, acceleration or modification of any obligation or loss of
any benefit under any material contract or other instrument to which Seller is a
party or to which any of the Purchased Assets are subject; or (d) result in the
creation or imposition of any Encumbrance on the Purchased Assets. Except as set
forth in Section 3.02 of the Disclosure Schedules, no consent, approval,
waiver or authorization is required to be obtained by Seller from any person or
entity (including any governmental authority) in connection with the execution,
delivery and performance by Seller of this Agreement and the consummation of the
transactions contemplated hereby.
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Section 3.03 Title to
Purchased Assets. Seller owns and has good title to the tangible Purchased
Assets, free and clear of all Encumbrances. To Sellers knowledge, except as set
forth on Section 3.03 of the Disclosure Schedules, the Purchased Assets
are sufficient for the conduct of the Business immediately following the Closing
in substantially the same manner as currently conducted. The tangible Purchased
Assets are in good working condition and repair, ordinary wear and tear excepted
and taking into account their estimated useful life, and are suitable for use in
connection with the Business as it is currently.
Section 3.04 Existing
Inventory. Except for Existing Inventory subject to reserves set forth in
Section 3.04 of the Disclosure Schedules, all Existing Inventory included
in the Purchased Assets consist of a quality and quantity usable and salable in
the ordinary course of business. Section 3.04 of the Disclosure Schedules
lists all Existing Inventory included in the Purchased Assets.
Section 3.05
Intellectual Property. Section 3.05 of the Disclosure
Schedules lists all Intellectual Property included in the Purchased Assets
(Purchased IP). Seller owns or has adequate, valid and enforceable
rights to use all the Purchased IP, free and clear of all Encumbrances. Seller
is not bound by any outstanding judgment, injunction, order or decree
restricting the use of the Purchased IP, or restricting the licensing thereof to
any person or entity. Seller represents and warrants that it does not hold any
trade secret rights in the Purchased Assets.
Section 3.06 Assigned
Contracts. Section 3.06 of the Disclosure Schedules includes each contract
included in the Purchased Assets and being assigned to and assumed by Buyer (the
Assigned Contracts). Each Assigned Contract is valid and binding on
Seller in accordance with its terms and is in full force and effect. None of
Seller or, to Seller's knowledge, any other party thereto is in material breach
of or default under (or is alleged to be in breach of or default under), or has
provided or received any written notice of any intention to terminate, any
Assigned Contract. Except as set forth in Section 3.06 of the Disclosure
Schedules, no event or circumstance has occurred that, with or without notice or
lapse of time or both, would constitute an event of default under any Assigned
Contract or result in a termination thereof or would cause or permit the
acceleration or other changes of any right or obligation or the loss of benefit
thereunder. Complete and correct copies of each Assigned Contract have been made
available to Buyer. There are no disputes pending or, to the knowledge of
Seller, threatened under any Assigned Contract.
Section 3.07
Relationships with Customers, Distributors and Suppliers.
(a) Except as set forth in Section
3.07(a) of the Disclosure Schedules, between January 1, 2015 and the date
hereof, no customer, distributor or supplier of Seller that is material to the
Business has canceled or otherwise terminated, or provided written notice to
Seller of its intent, or, to the knowledge of Seller, threatened, to terminate
its relationship with Seller, or, between January 1, 2015 and the date hereof,
decreased or limited in any material respect, or provided written notice to
Seller of its intent, or, to the knowledge of Seller, threatened, to limit in
any material respect, its purchases from or sales to Seller.
(b) Section 3.07(b) of the
Disclosure Schedules lists the top thirty (30) customers of the Business for
each of the years 2015 and 2014 (the Significant Customers), and the
amount of sales (in GAAP revenue) recognized by Seller with respect to each such
customer related to the Business for each of those years. To Sellers knowledge, none of such customers has informed Seller
that in writing it intends to terminate its purchases from Seller in 2015 or
thereafter.
7
(c) Section 3.07(c) of the
Disclosure Schedules lists the top ten suppliers of the Business for each of the
years 2015 and 2014 (the Significant Suppliers), and the amount of
expenses paid or accrued with respect to each of such suppliers (in accordance
with GAAP) related to the Business for each of those years. To Sellers
knowledge, except as set forth in Section 3.07(c) of the Disclosure
Schedules, none of such suppliers has informed Seller that it intends to
decrease or terminate its manufacture of products for Seller in 2015 or
thereafter.
Section 3.08
Compliance With Laws. Since January 1, 2010, Seller has
complied, and is now complying, in all material respects with all applicable
federal, state and local laws and regulations applicable to ownership and use of
the Purchased Assets.
Section 3.09 Legal
Proceedings. Except as set forth in Section 3.09 of the Disclosure
Schedules, other than the Action, there is no claim, action, suit,
proceeding or governmental investigation (Proceeding) of any nature
pending or, to Seller's knowledge, threatened against or by Seller (a) relating
to or affecting the Purchased Assets or the Assumed Liabilities; or (b) that
challenges or seeks to prevent, enjoin or otherwise delay the transactions
contemplated by this Agreement.
Section 3.10 Brokers.
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Seller.
Section 3.11
Accredited Investor. Seller is an accredited investor within the
meaning of Rule 501 of Regulation D under the Securities Exchange Act of 1934,
as amended, as presently in effect and is not an entity formed for the sole
purpose of acquiring the Shares.
Section 3.12
Sophisticated Party. Seller has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Shares, has had access
to such information as it deemed necessary in order to conduct any due diligence
it has determined is necessary or appropriate in connection with the purchase
and sale of the Shares and its decision to participate in such purchase and sale
and is able to bear the economic risk of an investment in the Shares and, at the
present time, is able to afford a complete loss of such investment.
Section 3.13
Investment Advice. Seller understands that nothing in the Agreement
or any other materials presented to Seller in connection with the transactions
contemplated hereby constitutes legal, tax or investment advice, and
acknowledges that it must rely on legal, tax and investment advisors of its own
choosing in connection with its purchase of the Shares.
Section 3.14
Investment Decision. Sellers decision to purchase the Shares
pursuant to this Agreement was based solely upon the representations and
warranties set forth herein, and Seller has not relied upon any other
information or representations made by or on behalf of the Shares.
Section 3.15 Share
Ownership. Immediately prior to the execution of this Agreement, neither
Seller nor any of its Affiliates beneficially own any Parent equity securities
or any securities convertible into Parent equity securities, and Seller has no present actual intent to
seek to effect, or to assist others in effecting, a hostile acquisition of
Parent.
8
Section 3.16
Restricted Securities. Seller understands that any Shares issued
hereunder shall be characterized as restricted securities under the federal
securities laws inasmuch as they are being acquired from Parent in a transaction
not involving a public offering and that under such laws and applicable
regulations such securities may be resold with registration under the Securities
Act, only in certain limited circumstances. Seller understands that any Shares
issued may bear the following or similar legend: THE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
In addition, Seller understands that Shares may bear the
following or similar legend in compliance with applicable Canadian securities
laws (and, in the event that no physical certificates are issued, the below
constitutes written notice of the legend restriction under applicable Canadian
securities laws):
UNLESS PERMITTED UNDER APPLICABLE
SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THIS SECURITY
TO OR FOR THE BENEFIT OF A CANADIAN PURCHASER UNTIL THE DATE THAT IS FOUR MONTHS
AND A DAY AFTER AUGUST 7, 2015.
Section 3.17
Disclaimer of Other Representations and Warranties. Except as
expressly set forth in this Article III, Seller does not make any
representation or warranty, express or implied, at law or in equity, with
respect to Seller, its Affiliates, the Business or their respective financial
conditions, assets, liabilities or operations, or their past, current or future
profitability or performance or any other matter, and Seller specifically
disclaims any such other representations or warranties.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BUYER
Each of Buyer and Parent represents and warrants to Seller that
the statements contained in this Article IV are true and correct as of
the date hereof. For purposes of this Article IV, Buyer's knowledge,
knowledge of Buyer and any similar phrases shall mean the actual knowledge of
Eric Kelly, Kurt Kalbfleisch or Dan Camarda.
Section 4.01 Organization and Authority of
Parent and Buyer; Enforceability. Parent is a corporation duly organized,
validly existing and in good standing under the laws of the province of Ontario.
Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the State of California. Each of Parent and Buyer has all
requisite corporate power and authority to own and operate its respective
properties and assets and to carry on its respective business as currently
conducted. The execution, delivery and performance by each of Buyer and Parent
of this Agreement and the documents to be delivered hereunder and the consummation of the transactions contemplated
hereby have been duly authorized by all requisite corporate action on the part
of Buyer and Parent. This Agreement and the documents to be delivered hereunder
have been duly executed and delivered by each of Parent and Buyer, and (assuming
due authorization, execution and delivery by Seller) this Agreement and the
documents to be delivered hereunder constitute legal, valid and binding
obligations of Parent and Buyer enforceable against Parent and Buyer in
accordance with their respective terms.
9
Section 4.02 No
Conflicts; Consents. The execution, delivery and performance by each of
Parent and Buyer of this Agreement and the documents to be delivered hereunder,
and the consummation of the transactions contemplated hereby, do not and will
not: (a) violate or conflict with the certificate of incorporation, by-laws or
other organizational documents of Parent or Buyer; (b) violate or conflict with
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Parent or Buyer; (c) conflict with, or result in (with or without
notice or lapse of time or both) any violation of, or default under, or give
rise to a right of termination, acceleration or modification of any obligation
or loss of any benefit under any material contract or other instrument to which
Parent or Buyer is a party. No consent, approval, waiver or authorization is
required to be obtained by Parent or Buyer from any person or entity (including
any governmental authority) in connection with the execution, delivery and
performance by Parent and Buyer of this Agreement and the consummation of the
transactions contemplated hereby.
Section 4.03 Legal
Proceedings. There is no Proceeding of any nature pending or, to Buyer's
knowledge, threatened against or by Parent or Buyer that challenges or seeks to
prevent, enjoin or otherwise delay the transactions contemplated by this
Agreement.
Section 4.04 Brokers.
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Buyer or Parent.
Section 4.05 SEC
Filings. Parent has made available to Seller through the EDGAR system, true
and complete copies of Parents most recent Annual Report on Form 40-F for the
fiscal year ended December 31, 2014 (as amended prior to the date of this
Agreement, the 40-F), and all other reports filed by Parent pursuant to
Sections 13(a), 13(e), 14 and 15(d) of the Exchange Act since the filing of the
40-F (collectively, the SEC Filings). The SEC Filings are the only
filings required of Parent pursuant to the Exchange Act for such period. Parent
and its subsidiaries are engaged in all material respects only in the business
described in the SEC Filings and the SEC Filings contain a complete and accurate
description in all material respects of the business of Parent and its
Subsidiaries, taken as a whole. There are no outstanding or unresolved comments
in comment letters received from the SEC staff with respect to any SEC Filings
and, to the knowledge of Parent, none of the SEC Filings is the subject of any
ongoing SEC review. Parent is eligible to register securities on Form F-3 under
the Securities Act.
Section 4.06 Full
Disclosure. At the time of filing thereof, each of the SEC Filings complied
as to form in all material respects with the requirements of the Exchange Act
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. The representations and warranties of Parent and Buyer in this
Agreement, when read in connection with the SEC Filings, do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements contained herein, in light of the circumstances
under which such statements were made, not misleading.
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Section 4.07
Registration Exemption. Subject in part to the truth and accuracy of
Sellers representations in this Agreement, the offer, sale and issuance of the
Shares as contemplated by this Agreement are exempt from the registration
requirements of the Securities Act.
Section 4.08 Parent
Shares. The Parent Common Shares is registered pursuant to Section 12(b) of
the Exchange Act and is listed on the NASDAQ Global Market (NASDAQ).
Parent is in compliance with all applicable listing and corporate governance
rules and regulations of NASDAQ. Parent has taken no action designed to, or
reasonably likely to have the effect of, terminating the registration of the
Parent Common Shares under the Exchange Act or delisting the Parent Common Share
from NASDAQ, nor has Parent received any notification that the SEC or NASDAQ is
contemplating terminating such registration or such delisting.
ARTICLE V
COVENANTS
Section 5.01 Transfer
Taxes. All transfer, documentary, sales, use, stamp, registration, value
added and other such taxes and fees (including any penalties and interest)
incurred in connection with this Agreement and the documents to be delivered
hereunder shall be borne equally by Buyer and Seller and paid by Buyer when due.
Buyer shall, at its own expense, timely file any tax return or other document
with respect to such taxes or fees (and Seller shall cooperate with respect
thereto as reasonably necessary).
Section 5.02
Non-Competition; Customer Relations. Seller agrees that for the
period commencing on the Closing Date and expiring on the fifth (5th)
anniversary of the Closing Date neither it nor any of its Affiliates shall
engage, either directly or indirectly, alone or with others, as stockholders or
otherwise in a business that develops, designs, manufactures, markets or sells
any product that infringes any patents reading on, or copyrights in, products
sold by the Business as of the Closing Date. Notwithstanding the foregoing,
Buyer and Parent agree and acknowledge that they shall not enforce this Section
5.02 with respect to the manufacture, marketing or sale of any product that is
sold by Seller of its Affiliates as of the Closing Date. After the Closing,
Seller will cooperate with Buyer in its efforts to continue and maintain for the
benefit of Buyer those business relationships of Seller existing prior to the
Closing and relating to the Business to be operated by Buyer after the Closing,
including relationships with customers, suppliers and others. Seller will refer
to Buyer all inquiries relating to the Business after the Closing and will not
solicit any customers of the Business away from the Business operated by Buyer.
For a period of six months after the Closing Date, neither Seller nor any of its
Affiliates shall take any action that would materially interfere with the
business of Buyer to be engaged in after the Closing, including disparaging the
name or business of Buyer. Notwithstanding anything in this Section 5.02 to the
contrary, any action taken by Seller under and in accordance with any OEM
agreement entered into with Buyer (or any of its Affiliates) shall not
constitute a breach of this Agreement.
Section 5.03
Intellectual Property Non-Assertion. Seller agrees that it shall not
assert against the Buyer or any of its Affiliates or any of their employees,
contractors or successor or assigns any Intellectual Property owned or controlled by it or any of its Affiliates as
of the Closing Date in connection with the operation of the Business by Parent,
Buyer or any of their Affiliates.
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Section 5.04 Dismissal
of Action and Release.
(a) Seller shall dismiss the Action in
its entirety, with prejudice, within one (1) business day of the date hereof.
Defendants and their respective counsel shall effectuate such dismissal with
prejudice by executing and causing to be filed the request for dismissal in
substantially the form attached hereto as Exhibit A.
(b) Except for those obligations
created by or arising out of this Agreement, the Lock-Up Agreement, the
Registration Rights Agreement, the Transition Services Agreement and the
Trademark License Agreement, Seller, on its own behalf and on behalf of its
Affiliates, partners, directors, officers, consultants, agents, employees,
licensees, controlling persons, successors in interest, creditors and security
holders and other legal representatives (each, a Seller Releasing
Party), does hereby covenant not to sue and acknowledges complete
satisfaction of and hereby absolutely, unconditionally and irrevocably releases,
remises, absolves and forever discharges Buyer and Parent and each of their
respective successors and assigns, Affiliates (which, for this purpose,
specifically includes Tandberg Data Holdings S.a.r.L and Tandberg Data Corp),
members, directors, officers, shareholders, agents, attorneys, insurers,
employees and licensees, in each case past and present, and each of them
(hereinafter collectively referred to as Buyer Released Parties), with
respect to, from and of any and all claims, demands, liens, agreements,
contracts, covenants, actions, suits, causes of action, obligations, debts,
expenses, attorneys fees, damages, judgments, orders and liabilities of
whatever kind or nature in law, equity or otherwise, whether now known or
unknown, pending, suspected or unsuspected, and whether or not concealed or
hidden (individually, a Claim and collectively, Claims), which
such Seller Releasing Party owns or holds as of such date or has at any time
theretofore owned or held as against said Buyer Released Parties, or any of them
for, upon, or by reason of any circumstance, action, cause or thing whatsoever
which arises at any time relating in any way to events that occurred from the
beginning of time through the date hereof, regardless of whether the Claims are
accrued or unaccrued, known or unknown, and including any Claims directly or
indirectly arising out of or pertaining to the Action, the RDX License or the
Infinivault License (collectively, the Seller Released
Matters).
(c) Except for those obligations created by
or arising out of this Agreement, the Lock-Up Agreement, the Registration Rights
Agreement, the Transition Services Agreement and the Trademark License
Agreement, each of Parent and Buyer, on its own behalf and on behalf of its
Affiliates (which, for this purpose, specifically includes Tandberg Data
Holdings S.a.r.L and Tandberg Data Corp), partners, directors, officers,
consultants, agents, employees, licensees, controlling persons, successors in
interest, creditors and security holders and other legal representatives (each,
a Buyer Releasing Party and, together with the Seller Releasing
Parties, the Releasing Parties), does hereby covenant not to sue and
acknowledges complete satisfaction of and hereby absolutely, unconditionally and
irrevocably releases, remises, absolves and forever discharges Seller and each
of its successors and assigns, Affiliates, members, directors, officers,
shareholders, agents, attorneys, insurers, employees and licensees, in each case
past and present, and each of them (hereinafter collectively referred to as
Seller Released Parties and, together with the Buyer Released Parties,
the Released Parties), with respect to, from and of any and all Claims
which such Buyer Releasing Party owns or holds as of such date or has at any
time theretofore owned or held as against said Seller Released Parties, or any
of them for, upon, or by reason of any circumstance, action, cause or thing
whatsoever which arises at any time relating in any way to events that occurred from the beginning of time through the
date hereof, regardless of whether the Claims are accrued or unaccrued, known or
unknown, and including any Claims directly or indirectly arising out of or
pertaining to the Action, the RDX License or the Infinivault License
(collectively, the Buyer Released Matters and, together with the
Seller Released Matters, the Released Matters).
12
(d) It is the intention of each
Releasing Party in executing this instrument that the same shall be effective as
a bar as to each and every claim, demand and cause of action hereinabove
specified and, in furtherance of this intention, such Releasing Party hereby
expressly waives, on its own behalf and on behalf of the other Releasing
Parties, any and all rights or benefits conferred by any provision of law that
prevents the release of unknown claims and expressly consents that this
Agreement shall be given full force and effect according to each and all of its
express terms and conditions, including, without, limitation those relating to
unknown and unsuspected claims, demands and causes of actions, if any, as well
as those relating to any other claims, demands and causes of actions hereinabove
specified. The Releasing Parties each expressly waive the benefit of California
Civil Code § 1542 (and any other statutory or common law provisions of similar
effect in any applicable jurisdiction), which is set forth below, and
specifically agree that the releases contained in this Agreement shall extend to
all claims arising out of actions, events, or transactions prior to the date of
this Agreement which such parties do not know or suspect to exist in their favor
at this time and which arise out of or are related or connected to the subject
matter delineated in Paragraph (b) above, and with the same limitations in scope
set forth in such paragraph. Civil Code § 1542 provides:
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.
The Releasing Parties understand and acknowledge the
significance and consequences of this Agreement and of such specific waiver of
Civil Code §1542 and expressly consent that this Agreement shall be given full
force and effect according to each and all of its express terms and provisions,
including those relating to unknown and unsuspected claims, demands, obligations
and causes of action, if any, as well as those relating to any other claims,
demands, obligations or causes of action hereinabove specified. Each Releasing
Party hereto acknowledges that the Releasing Party or its attorneys may
hereafter discover facts different from or in addition to those which they now
know or believe to be true with respect to the claims, demands, debts,
liabilities, accounts, obligations, and causes of action of every kind so
released, and agrees that the release so given shall be and remain in effect as
a full and complete release of the persons and entities released thereby
notwithstanding any such different or additional facts.
(e) Each Releasing Party hereby agrees,
on its own behalf and on behalf of the other Releasing Parties, that this
Agreement may be pleaded as a full and complete defense and may be used as a
basis for an injunction against any action, suit or other proceeding which may
be instituted, prosecuted or attempted in breach of the provisions of such
release. Each Releasing Party hereby agrees, on its own behalf and on behalf of
the other Releasing Parties, that no fact, event, circumstance, evidence or
transaction that could now be asserted or that may hereafter be discovered shall
affect in any manner the final, absolute and unconditional nature of this
Agreement.
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Section 5.05
Confidentiality.
(a) Seller and its Affiliates shall
treat as confidential and shall safeguard any and all information, knowledge and
data included in the Purchased Assets or exclusively related to the Business, in
each case by using the same degree of care, but no less than a reasonable
standard of care, to prevent the unauthorized use, dissemination or disclosure
of such information, knowledge and data as Seller or its Affiliates used with
respect thereto prior to the execution of this Agreement.
(b) Buyer shall treat as confidential
and shall safeguard any and all information, knowledge or data relating to the
business of Seller and its Affiliates other than the Business that becomes known
to Buyer as a result of the transactions contemplated by this Agreement except
as otherwise agreed to by Seller in writing; provided, however,
that nothing in this Section 5.05(b) shall prevent the disclosure of any
such information, knowledge or data to any directors, officers or employees of
Buyer to whom such disclosure is necessary or desirable in the conduct of the
Business if such Persons are informed by Buyer of the confidential nature of
such information and are directed by Buyer to comply with the provisions of this
Section 5.05(b) .
(c) Buyer and Seller acknowledge that
the confidentiality obligations set forth herein shall not extend to
information, knowledge and data that is publicly available or becomes publicly
available through no act or omission of the party owing a duty of
confidentiality, or becomes available on a non-confidential basis from a source
other than the party owing a duty of confidentiality so long as such source is
not known by such party to be bound by a confidentiality agreement with or other
obligations of secrecy to the other party.
(d) In the event of a breach of the
obligations hereunder by Buyer or Seller, the other party, in addition to all
other available remedies, will be entitled to injunctive relief to enforce the
provisions of this Section 5.05 in any court of competent jurisdiction.
(e) Nothing in this Section 5.05
shall prevent the disclosure of any information, knowledge or data to the extent
required by applicable Law or and the rules and regulations of any stock
exchange upon which the securities of one of the parties is listed.
Section 5.06 Japan OEM Agreement. As soon
as reasonably practicable after the Closing, but in any event within sixty (60)
days after the Closing, Buyer and Sellers Affiliate, Imation Corporation Japan,
will enter into a RDX OEM supply agreement on terms and conditions agreed to by
the parties and as set forth in Section 5.06 of the Disclosure Schedules.
Section 5.07 Survival of Representations and
Warranties; Limitations on Liability.
(a) The representations and warranties
of the parties contained in Articles III and IV will, subject to
the proviso to this sentence, terminate on the date that is 12 months after the
Closing; provided, however, that the representations and
warranties contained in Section 3.01 (Organization and Authority of
Seller; Enforceability), Section 3.03 (Title to Purchased Assets),
Section 3.05 (Intellectual Property), Section 3.09 (Legal
Proceedings), Section 3.10 (Brokers) and Section 3.11 (Accredited
Investor) (collectively, the Seller Fundamental Representations) and
Section 4.01 (Organization and Authority of Parent and Buyer;
Enforceability), Section 4.04 (Brokers), Section 4.05 (SEC
Filings), Section 4.06 (Full Disclosure), Section 4.07 (Registration Exemption) and Section 4.08 (Parent Shares) will survive
indefinitely following the Closing.
14
(b) In no event will Seller be liable
to Buyer or Parent for any Losses arising out of or related to this Agreement or
the transactions contemplated hereby, including as a result of a breach of this
Agreement, unless and until the aggregate amount of all such Losses exceeds
$50,000, in which case Buyer or Parent will be entitled to seek recovery for all
Losses from dollar one; provided, however, that the limitation set
forth in this sentence will not apply with respect to any claim in respect of
any breach of any of the Seller Fundamental Representations. Notwithstanding the
foregoing, Seller will not be liable to Buyer or Parent for any Losses arising
out of or related to this Agreement or the transactions contemplated hereby,
including as a result of a breach of this Agreement, in an aggregate amount in
excess of $1,000,000; provided, however, that the limitations set
forth in this sentence will not apply with respect to any claim in respect of
any breach of any of the Seller Fundamental Representations.
Section 5.08 Third
Party Consents. Following the Closing, Seller will use commercially
reasonable efforts, and Buyer and Parent will reasonably cooperate with Seller,
to obtain the consent of each of the Consenting Parties to the assignment to
Buyer of their respective contracts included in the Assigned Contracts. Anything
in this Agreement to the contrary notwithstanding, the failure of Seller to
obtain any third-party consent under any Assigned Contract, or any circumstances
arising out of or related to such failure, other than Sellers failure to use
commercially reasonable efforts as contemplated by this Section 5.08,
will not, individually or in the aggregate, constitute a breach by Seller of any
representation, warranty, condition, covenant or agreement contained in this
Agreement.
Section 5.09
Significant Customers and Significant Suppliers. Seller shall use
commercially reasonable efforts to provide to Buyer the contact information of,
and arrange for Buyer an introduction (including by way of remote communication)
with, each of the Significant Customers and Significant Suppliers, by August 17,
2015.
Section 5.10 Further
Assurances. Following the Closing, each of the parties hereto shall execute
and deliver such additional documents, instruments, conveyances and assurances
and take such further actions as may be reasonably required to carry out the
provisions hereof and give effect to the transactions contemplated by this
Agreement and the documents to be delivered hereunder.
Section 5.11
License. Seller hereby grants, on its own behalf and on behalf of its
Affiliates, to Buyer and its Affiliates, effective as of the Closing Date, a
non-exclusive, worldwide, perpetual, fully paid, royalty free license to use,
reproduce and modify the EncryptX Encryption Software as necessary or desirable
to incorporate it into RDX cartridges made, used, sold or otherwise distributed
by Buyer and its Affiliates and to distribute the EncryptX Encryption Software
as incorporated into such RDX cartridges. Notwithstanding anything to the
contrary set forth herein, this Section 5.11 shall survive the Closing.
ARTICLE VI
DEFINITIONS
Section 6.01 Certain
Definitions. As used in this Agreement, the following terms have the
meanings set forth below:
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Acceptable Transaction means any Sale in an arms
length transaction or series of arms length transactions to any Person or
Persons (other than an Affiliate of Seller).
Affiliate means, with respect to any Person, any
Person directly or indirectly controlling, controlled by, or under common
control with, such other Person as of the date on which, or at any time during
the period for which, the determination of affiliation is being made. For
purposes of this definition, the term control (including the correlative
meanings of the terms controlled by and under common control with), as used
with respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management policies of such
Person, whether through the ownership of voting securities or by contract or
otherwise.
Consenting Parties means each Person set forth on
Section 6.01 of the Disclosure Schedules, and any other Person that is
party to an Assigned Contract if an attempted assignment of such Assigned
Contract, without the consent of such Person, would constitute a breach
thereunder.
Contingent After Acquired Inventory means all saleable
inventory related to the Business acquired by Seller or any of its Affiliates
after the Closing in connection with Section 1.08(a) .
EncryptX Encryption Software means the EncryptX
encryption software used in RDX Secure as sold by Seller prior to the Closing
Date.
Exchange Act means the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder.
Existing Inventory means all inventory related
to the Business existing as of the date hereof and owned by Seller immediately
prior to the Closing, wherever located, including all finished goods, work in
process, raw materials, spare parts, and all other materials and supplies to be
used or consumed by Seller in the production of finished goods whether held at
any location or facility of Seller and of its Affiliates or in transit to Seller
or any of its Affiliates, in each case as of the Closing Date.
Intellectual Property means any and all of the
following in any jurisdiction throughout the world: (i) trademarks and service
marks, including all applications and registrations and the goodwill connected
with the use of and symbolized by the foregoing; (ii) copyrights, including all
applications and registrations related to the foregoing; (iii) trade secrets and
confidential know-how; (iv) patents and patent applications; (v) websites and
internet domain name registrations; and (vi) other intellectual property and
related proprietary rights, interests and protections (including all rights to
sue and recover and retain damages, costs and attorneys' fees for past, present
and future infringement and any other rights relating to any of the foregoing).
Issued Shares means 1,529,126 Parent Common Shares,
having a market value equal to $6,300,000 based on the closing market
price of the Parent Common Shares on August 6, 2015.
Lock-Up Agreement means the Lock-Up Agreement with
respect to the Shares to be entered into on the Closing Date by Parent and
Seller simultaneously with the execution of this Agreement.
Losses means, subject to Section 5.07(b), any losses,
costs or expenses (including reasonable attorneys fees and expenses),
judgments, fines, claims, damages and assessments.
Maximum Sales Price means the Minimum Sales Price plus
$600,000.
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Minimum Sales Price means $4,900,000 plus an amount
equal to the Net Inventory Value set forth on Section 3.04 of the
Disclosure Schedules (the Initial Net Inventory Value), which such
Initial Net Inventory Value be shall adjusted after the Closing to be the Final
Net Inventory Value. After the determination of the Final Net Inventory Value,
the Minimum Sales Price shall mean $4,900,000 plus an amount equal to the
Final Net Inventory Value.
Parent Common Shares means the common shares (no par
value) in the capital of Parent.
Person means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization,
entity or group.
Registration Rights Agreement means the
Registration Rights Agreement with respect to the Shares to be entered into by
Parent and Seller simultaneously with the execution of this Agreement.
Sale or Sold means any sale, transfer or
assignment.
SEC means the United States Securities and Exchange
Commission.
Shares means the Issued Shares and the Warrant Shares
issued or that may become issuable by Parent to Seller upon the exercise of the
Warrant.
Trademark License Agreement means the Trademark
License Agreement to be entered into on the Closing Date by Parent and Seller
simultaneously with the execution of this Agreement.
Transition Services Agreement means the Transition
Services Agreement to be entered into on the Closing Date by Parent and Seller
simultaneously with the execution of this Agreement.
Warrant means the Warrant to be issued by
Parent in favor of Seller simultaneously with the execution of this Agreement.
Warrant Shares means shares of Parent Common
Share issued or issuable by Parent to Seller upon the exercise of the Warrant.
Section 6.02 Other Terms. Other terms may
be defined elsewhere in the text of this Agreement and, unless otherwise
indicated, shall have such meaning throughout this Agreement.
Section 6.03 Other Definitional Provisions.
Unless the express context otherwise requires:
(a) the recitals hereto shall be
construed with, and as an integral part of, this Agreement to the same extent as
if they were set forth verbatim herein;
(b) the words hereof, herein, and
hereunder and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement;
(c) the terms defined in the singular
have a comparable meaning when used in the plural, and vice versa;
(d) the terms Dollars and $ mean
United States Dollars;
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(e) references herein to a specific
Section, Subsection or Schedule shall refer, respectively, to Sections,
Subsections or Schedules of this Agreement;
(f) wherever the word include,
includes, or including is used in this Agreement, it shall be deemed to be
followed by the words without limitation; and
(g) references herein to any
gender includes each other gender.
ARTICLE VII
MISCELLANEOUS
Section
7.01 Expenses. All costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
Section 7.02 Notices.
All notices, requests, consents, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
given (a) when delivered by hand (with written confirmation of receipt); (b)
when received by the addressee if sent by a nationally recognized overnight
courier (receipt requested); (c) on the date sent by e-mail of a PDF document
(with confirmation of transmission) if sent during normal business hours of the
recipient, and on the next business day if sent after normal business hours of
the recipient; or (d) on the third day after the date mailed, by certified or
registered mail, return receipt requested, postage prepaid. Such communications
must be sent to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 7.02):
To Parent or Buyer:
Sphere 3D Corp.
240 Matheson Blvd.
East
Mississauga, Ontario L4Z 1X1
Attention: Kurt L.
Kalbfleisch
Email: kkalbfleisch@overlandstorage.com
With a copy to counsel, provided that
such copy shall not constitute legal notice to Parent or Buyer:
OMelveny & Myers LLP
2765
Sand Hill Road
Menlo Park, CA 94025
Attention: Paul L. Sieben, Esq.
Email: psieben@omm.com
To Seller:
Imation Corp.
1 Imation Way
Oakdale, Minnesota 55128
Attention: General Counsel
Email: jpbreedlove@imation.com
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With a copy to counsel, provided that
such copy shall not constitute legal notice to Seller:
Oppenheimer Wolff & Donnelly LLP
Campbell Mithun Tower Suite 2000
222 South Ninth Street
Minneapolis, MN 55402-3338
Attention: Brett Hanson, Esq.
Email:
BHanson@oppenheimer.com
Section 7.03
Publicity. Prior to issuing any press release or making
any public announcement concerning this Agreement or the transactions
contemplated hereby, Seller, on the one hand, and Buyer and Parent, on the other
hand, will, and will cause their respective Affiliates to, use commercially
reasonable efforts to consult with the other party with respect to the text or
content thereof.
Section 7.04 Headings.
The headings in this Agreement are for reference only and shall not affect
the interpretation of this Agreement.
Section 7.05
Severability. If any term or provision of this Agreement is invalid,
illegal or unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of this Agreement
or invalidate or render unenforceable such term or provision in any other
jurisdiction, but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which
renders any provisions hereof prohibited or unenforceable in any respect.
Section 7.06 Entire
Agreement. This Agreement and the documents to be delivered hereunder
constitute the sole and entire agreement of the parties to this Agreement with
respect to the subject matter contained herein, and supersede all prior and
contemporaneous understandings and agreements, both written and oral, with
respect to such subject matter. In the event of any inconsistency between the
statements in the body of this Agreement and the documents to be delivered
hereunder, the Exhibits and Disclosure Schedules (other than an exception
expressly set forth as such in the Disclosure Schedules), the statements in the
body of this Agreement will control.
Section 7.07
Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Neither party may assign its rights or obligations
hereunder without the prior written consent of the other party, which consent
shall not be unreasonably withheld or delayed. No assignment shall relieve the
assigning party of any of its obligations hereunder.
Section 7.08 No
Third-party Beneficiaries. Except as provided in Section 5.04, this
Agreement is for the sole benefit of the parties hereto and their respective
successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any
other person or entity any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
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Section 7.09 Amendment
and Modification. This Agreement may only be amended, modified or
supplemented by an agreement in writing signed by each party hereto.
Section 7.10 Waiver. No
waiver by any party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and signed by the party so waiving. No waiver by
any party shall operate or be construed as a waiver in respect of any failure,
breach or default not expressly identified by such written waiver, whether of a
similar or different character, and whether occurring before or after that
waiver. No failure to exercise, or delay in exercising, any right, remedy, power
or privilege arising from this Agreement shall operate or be construed as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.
Section 7.11 Governing Law.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Delaware without giving effect to any choice or
conflict of law provision or rule (whether of the State of Delaware or any other
jurisdiction).
Section 7.12 Mediation.
(a) In the event of any dispute,
controversy or claim between the parties hereto in any way arising out of or
based upon this Agreement or the transactions contemplated hereby (but excluding
any dispute that is addressed in Section 2.05) (a Dispute), upon
the written notice of any party hereto, the parties hereto will attempt to
negotiate a resolution of the Dispute. If the parties hereto are unable for any
reason to resolve a Dispute within thirty (30) days after the receipt of such
notice (or within such longer period as the parties may mutually agree to in
writing), the Dispute will be submitted to mediation in accordance with
Section 7.12(b) hereof.
(b) Any Dispute not resolved pursuant
to Section 7.12(a) hereof will, at the request of any party hereto (a
Mediation Request), be submitted to non-binding mediation in accordance
with the then current CPR Mediation Procedure (the Procedure), except
as modified herein. The mediation will be held in the State of Delaware. The
parties will have twenty (20) days from receipt by a party of a Mediation
Request to agree on a mediator. If no mediator has been agreed upon by the
parties within twenty (20) days of receipt by a party (or parties) of a
Mediation Request, then any party may request (on written notice to the other
parties), that the CPR appoint a mediator in accordance with the Procedure. All
mediation pursuant to this clause will be confidential and will be treated as
compromise and settlement negotiations, and no oral or documentary
representations made by the parties during such mediation will be admissible for
any purpose in any subsequent proceedings. No party hereto will disclose or
permit the disclosure of any information about the evidence adduced or the
documents produced by the other parties in the mediation proceedings or about
the existence, contents or results of the mediation without the prior written
consent of such other parties except in the course of a judicial or regulatory
proceeding or as may be required by law or requested by a governmental authority
or securities exchange. Before making any disclosure permitted by the preceding
sentence, the party intending to make such disclosure will give the other party
reasonable written notice of the intended disclosure and afford the other party
a reasonable opportunity to protect its interests. If the Dispute has not
been resolved within sixty (60) days of the appointment of a mediator, or within
ninety (90) days of receipt by a party of a Mediation Request (whichever occurs
sooner), or within such longer period as the parties may mutually agree to in
writing, then any party may file an action on the Dispute in any court having
jurisdiction in accordance with Section 7.13.
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Section 7.13
Submission to Jurisdiction. Any Dispute may be instituted only in the
courts of the State of Delaware (or, only if the courts of the State of Delaware
decline to accept jurisdiction over a particular matter, any federal courts of
the United States of America located in the State of Delaware), and each party
irrevocably submits to the exclusive jurisdiction of such courts in any such
Dispute.
Section 7.14 Waiver of
Jury Trial. Each party acknowledges and agrees that any controversy which
may arise under this Agreement is likely to involve complicated and difficult
issues and, therefore, each such party irrevocably and unconditionally waives
any right it may have to a trial by jury in respect of any legal action arising
out of or relating to this Agreement or the transactions contemplated hereby.
Section 7.15 Specific
Performance. The parties agree that irreparable damage would occur if any
provision of this Agreement were not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy to which they are entitled at law
or in equity.
Section 7.16
Ambiguities. Inasmuch as this Agreement is the product of joint
drafting and negotiation among the parties, it is agreed and understood that the
general rule that ambiguities are to be construed against the drafter shall not
apply to this Agreement. In the event that any language of this Agreement is
found to be ambiguous, each party shall have an opportunity to present evidence
as to the actual intent of the parties with respect to any such ambiguous
language.
Section 7.17
Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall be deemed to be one and the same agreement. A signed copy of this
Agreement delivered by facsimile, e-mail or other means of electronic
transmission shall be deemed to have the same legal effect as delivery of an
original signed copy of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed or caused this
Agreement to be executed as of the date first written above.
IMATION CORP. |
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OVERLAND STORAGE, INC.
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SPHERE 3D CORP. |
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22
EXHIBIT 99.2
EXECUTION VERSION
UNLESS PERMITTED UNDER APPLICABLE SECURITIES LEGISLATION, THE
HOLDER OF THIS SECURITY MUST NOT TRADE THIS SECURITY TO OR FOR THE BENEFIT OF A
CANADIAN PURCHASER UNTIL THE DATE THAT IS FOUR MONTHS AND A DAY AFTER AUGUST 10,
2015.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT), OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED EXCEPT
PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR (II) AN APPLICABLE EXEMPTION
FROM REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS.
SPHERE 3D CORP.
WARRANT TO PURCHASE COMMON SHARES
Warrant No.: WC-1
Number of Common Shares: See Definition
of Warrant Shares
Date of Issuance: August 10, 2015 (Issuance
Date)
Sphere 3D Corp., an Ontario corporation (together with its
successors, the Company), hereby certifies that, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Imation Corp., a Delaware corporation (the registered holder hereof, the
Holder), is entitled, subject to the terms set forth below, to purchase
from the Company, at the Exercise Price (as defined below) then in effect, upon
surrender of this Warrant to Purchase Common Shares (the Warrant), at
any time on or after the Liquidation Date (as defined below), but not after
11:59 p.m., New York Time, on the Expiration Date (as defined below), the number
of fully paid and nonassessable Common Shares (as defined below) equal in number
to the Warrant Shares (as defined below). This Warrant is issued in connection
with that certain Asset Purchase Agreement dated as of the date hereof (the
APA), by and among the Company, Overland Storage, Inc. and the Holder.
1. EXERCISE OF WARRANT.
(a) Mechanics of Exercise.
Subject to the terms and conditions hereof, this Warrant may be exercised by the
Holder on any day on or after the Liquidation Date (but prior to the Expiration
Date) in whole (but in no event in part), by (i) delivery of a written notice,
in the form attached hereto as Exhibit A (the Exercise Notice),
of the Holders election to exercise this Warrant, (ii) delivery of this Warrant
(provided that the Holder shall not be required to deliver the original Warrant
in order to effect an exercise hereunder if the Holder delivers a copy of this
Warrant, together with a lost document affidavit and other documentation
required by Section 4(b) below), and (iii) payment to the Company of an
amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to
which this Warrant is being exercised (the Aggregate Exercise Price) in
cash or wire transfer of immediately available funds. On or before the first
(1st) Trading Day following the date on which the Company has
received the Exercise Notice, the Warrant and the Aggregate Exercise Price (the
Exercise Delivery Documents), the Company shall transmit by
facsimile an acknowledgment of confirmation of receipt of the Exercise Delivery
Documents to the Holder and the Companys transfer agent (the Transfer
Agent). On or before the third (3rd) Trading Day following the
date on which the Company has received all of the Exercise Delivery Documents
(the Share Delivery Date), the Company shall (X) provided that
the Transfer Agent is participating in The Depository Trust Company
(DTC) Fast Automated Securities Transfer Program, upon the request of
the Holder, credit such aggregate number of Common Shares to which the Holder is
entitled pursuant to such exercise to the Holders or its designees balance
account with DTC through its Deposit Withdrawal Agent Commission system which
balance account shall be specified in the Exercise Notice, or (Y) if the
Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, issue and dispatch by overnight courier to the address as
specified in the Exercise Notice, a certificate, or a non-transferable written
acknowledgement of the right to obtain a certificate, registered in the
Companys share register in the name of the Holder or its designee, for the
number of Common Shares to which the Holder is entitled pursuant to such
exercise. Upon delivery of the Exercise Delivery Documents, the Holder shall be
deemed for all corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date of delivery of the certificates evidencing such Warrant
Shares. No fractional Common Shares are to be issued upon the exercise of this
Warrant, but rather the number of Common Shares to be issued shall be rounded up
to the nearest whole number. The Company shall pay any and all taxes which may
be payable with respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant. Notwithstanding anything in this Warrant to the
contrary, if the Holder has not sold, transferred or assigned all of the Initial
Shares prior to the Expiration Date, this Warrant shall have no value and the
Warrant Shares shall equal zero (0) Common Shares.
(b) Exercise Price. For purposes
of this Warrant, Exercise Price means $0.01 per Warrant Share, subject
to adjustment as provided herein.
(c) Liquidation Notice. Holder
shall deliver the Liquidation Notice to the Company within ten (10) Trading Days
after the Liquidation Date. Within ten (10) Trading Days after the end of each
calendar month after the date hereof and prior to the Liquidation Date, Holder
shall deliver to the Company a report setting forth the number of Initial Shares
sold by Holder during such calendar month and the aggregate gross proceeds
received by Holder for such sales.
(d) Disputes. In the case of a
dispute as to the determination of the Exercise Price or the arithmetic
calculation of the Warrant Shares, the Company shall promptly issue to the
Holder the number of Warrant Shares that are not disputed and resolve such
dispute thereafter.
(e) Certificates. Any
certificate representing Common Shares issued upon the exercise of this Warrant
may bear the following legends:
"UNLESS PERMITTED UNDER APPLICABLE
SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THIS SECURITY TO OR FOR
THE BENEFIT OF A CANADIAN PURCHASER UNTIL THE DATE THAT IS FOUR MONTHS AND A DAY
AFTER AUGUST 10, 2015. (In the event that no physical certificates are issued,
the above constitutes written notice of the legend restriction under applicable
Canadian securities laws.)
"THE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SUCH ACT."
2. ADJUSTMENT OF EXERCISE PRICE AND
NUMBER OF WARRANT SHARES.The Exercise Price and the number of Warrant Shares shall be
adjusted from time to time as follows:
(a) Stock Dividends and Stock
Splits. If the Company, at any time after the Issuance Date: (i) pays a
stock dividend or otherwise makes a distribution or distributions, payable on
Common Shares in Common Shares or in any securities of the Company or any of its
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Shares, including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Shares; (ii) subdivides outstanding Common Shares into a larger
number of shares; (iii) combines (including by way of a reverse stock split)
outstanding Common Shares into a smaller number of shares; or (iv) issues, in
the event of a reclassification of Common Shares, any shares of capital stock of
the Company, then the Exercise Price shall be multiplied by a fraction of which
the numerator shall be the number of Common Shares (excluding any treasury
shares of the Company) outstanding immediately prior to such event and of which
the denominator shall be the number of Common Shares outstanding immediately
after such event. Any adjustment made pursuant to this Section 2(a) shall
become effective immediately after the distribution date of any such dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or re-classification.
(b) Subsequent Rights Offerings.
If the Company, at any time after the Issuance Date, issues rights, options or
warrants to all holders of Common Shares, such issuance will also be granted to
the Holder on an as-exercised, to the extent permitted by applicable laws, basis
without the Holder having to exercise this Warrant in order to be entitled to
such issuance.
(c) Other Dividends. If the
Company, at any time after the Issuance Date, pays a dividend or otherwise makes
a distribution or distributions of cash or other assets (other than any dividend
or distribution described in Section 2(a) or Section 2(d)), such
dividend will also be granted to the Holder on an as-exercised basis (without
regard to any limitations) without the Holder having to exercise this Warrant in order to be entitled
to such issuance.
(d) Fundamental Transactions.
If, at any time prior to the Expiration Date, (i) the Company effects any
merger, amalgamation or consolidation of the Company with or into another
Person, (ii) the Company effects any sale of all or substantially all of its
assets in one transaction or a series of related transactions to any Person
other than a direct or indirect Subsidiary, or (iii) the Company effects any
reclassification of Common Shares or any compulsory share exchange, in each case
as a result of which Common Shares are effectively converted into or exchanged
for other securities, cash or property (in any such case, a Fundamental
Transaction), then, at the election of the Company (in its sole
discretion), this Warrant shall immediately terminate and be of no further force
or effect and the Holder shall be entitled to receive, and shall receive
promptly following the consummation of the Fundamental Transaction, an amount
(if any) equal to the amount by which (1) the Minimum Sales Price exceeds (2)
the sum of (A) the aggregate amount of consideration (in any form) received by
the Holder prior to the consummation of the Fundamental Transaction in
connection with or as a result of the sale of the Initial Shares to any Person
or Persons (other than an Affiliate of Holder) in an arms length transaction or
series of arms length transactions (the Sold Shares), before taking
into account any sales commissions, taxes, fees, offsets or deductions relating
thereto, plus (B) the aggregate consideration (in any form) to which the Holder
is entitled in connection with the Initial Shares (other than the Sold Shares)
pursuant to the Fundamental Transaction. The amount for purposes of the
foregoing shall be in the same form of consideration that is paid to the Company
or its securityholders, and shall be valued in the same manner as provided for,
in the Fundamental Transaction; provided however, that if any portion of the
consideration that is paid to the Company or its securityholders is in the form
of shares of stock or other equity securities that are not listed on a national
securities exchange (Private Company Stock), then Holder will be
entitled to receive cash in lieu of Private Company Stock valued in the same
manner as provided for in the Fundamental Transaction.
(e) Calculations. All
calculations under this Section 2 shall be made to the nearest cent or
the nearest 1/100th of a share, as the case may be. No adjustment shall be made
to the Exercise Price unless such adjustment would require a change of at least
1% in the Exercise Price. Any adjustment that would otherwise be required to be
made shall be carried forward and taken into account in any subsequent
adjustment or in connection with the exercise of this Warrant. For purposes of
this Section 2, the number of Common Shares deemed to be issued and
outstanding as of a given date shall be the sum of the number of Common Shares
issued and outstanding.
3. WARRANT HOLDER NOT DEEMED A
SHAREHOLDER. Except as otherwise specifically provided herein, the Holder,
solely in such Persons capacity as a holder of this Warrant, shall not be
entitled to vote or receive dividends or be deemed the holder of share capital
of the Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the Holder, solely in such Persons capacity as the
Holder of this Warrant, any of the rights of a shareholder of the Company or any
right to vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior to the issuance to the Holder of the
Warrant Shares which such Person is then entitled to receive upon the due
exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed
as imposing any liabilities on the Holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a shareholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company.
4. REISSUANCE OF WARRANT.
(a) No Transfer of Warrant. The
Holder shall not offer, sell, contract to sell, assign, transfer, hypothecate,
pledge or grant a security interest in, or otherwise dispose of this Warrant, or
enter into any transaction which is designed to, or might reasonably be expected
to, have any such effect, directly or indirectly, or enter into any swap, hedge
or other arrangement that transfers, in whole or in part, any of the economic
consequences of ownership of this Warrant (any of the foregoing, a
Transfer); provided, that, prior to the Expiration Date, the
Holder shall be permitted to Transfer the entirety of the Warrant to a
controlled affiliate of the Holder in accordance with this Section 4(a)
and Section 4(c) (a Permitted Transferee). If this Warrant is to
be Transferred to a Permitted Transferee, the Holder shall surrender this
Warrant to the Company, whereupon the Company will forthwith issue and deliver
upon the order of the Holder a new Warrant (in accordance with Section
4(c)) to the Permitted Transferee, representing the right to purchase the
Warrant Shares.
(b) Lost, Stolen or Mutilated
Warrant. Upon receipt by the Company of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant, and,
in the case of loss, theft or destruction, of any indemnification undertaking by
the Holder to the Company in customary form and, in the case of mutilation, upon
surrender and cancellation of this Warrant, the Company shall execute and
deliver to the Holder a new Warrant (in accordance with Section 4(c))
representing the right to purchase the Warrant Shares then underlying this
Warrant.
(c) Issuance of New Warrants.
Whenever the Company is required to issue a new Warrant pursuant to the terms of
this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
(ii) shall represent, as indicated on the face of such new Warrant, the right to
purchase the Warrant Shares then underlying this Warrant (or in the case of a
new Warrant being issued pursuant to Section 4(a), the Warrant Shares
designated by the Holder which, when added to the number of Common Shares
underlying the other new Warrants issued in connection with such issuance, does
not exceed the number of Warrant Shares then underlying this Warrant), (iii)
shall have an issuance date, as indicated on the face of such new Warrant which
is the same as the Issuance Date, and (iv) shall have the same rights and
conditions as this Warrant.
5. NOTICES. All notices,
requests, consents, claims, demands, waivers and other communications hereunder
shall be in writing and shall be deemed to have been given (a) when delivered by
hand (with written confirmation of receipt); (b) when received by the addressee
if sent by a nationally recognized overnight courier (receipt requested); (c) on
the date sent by e-mail of a PDF document (with confirmation of transmission) if
sent during normal business hours of the recipient, and on the next business day
if sent after normal business hours of the recipient; or (d) on the third day
after the date mailed, by certified or registered mail, return receipt
requested, postage prepaid. Such communications must be sent to the respective
parties at the following addresses (or at such other address for a party
as shall be specified in a notice given in accordance with this Section 5):
If to the Company:
Sphere 3D Corp.
240 Matheson Blvd.
East
Mississauga, Ontario L4A 1X1
Attention: Kurt L. Kalbfleisch
Fax: Email: kkalbfleisch@overlandstorage.com
With a copy to counsel, provided that
such copy shall not constitute legal notice to the Company:
OMelveny & Myers LLP
2765
Sand Hill Road
Menlo Park, CA 94025
Attention: Paul L. Sieben, Esq.
Email: psieben@omm.com
If to the Holder:
Imation Corp.
1 Imation Way
Oakdale, Minnesota 55128
Attention: General Counsel
Email: jpbreedlove@imation.com
With a copy to counsel, provided that
such copy shall not constitute legal notice to Holder:
Oppenheimer Wolff & Donnelly LLP
Campbell Mithun Tower Suite 2000
222 South Ninth Street
Minneapolis, MN 55402-3338
Attention: Brett Hanson, Esq.
Email: BHanson@oppenheimer.com
Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) promptly upon
any adjustment of the Exercise Price, setting forth in reasonable detail, and
certifying, the calculation of such adjustment and (ii) at least ten (10) days
prior to the date on which the Company closes its books or takes a record (A)
with respect to any dividend or distribution upon the Common Shares, (B) with
respect to any pro rata subscription offer to holders of Common Shares or (C)
for determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall be
made known to the public prior to or in conjunction with such notice being
provided to the Holder.
6. AMENDMENT AND WAIVER. Except
as otherwise provided herein, the provisions of this Warrant may be amended and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company has obtained the
written consent of the Holder; provided that no such action may increase
the exercise price of any Warrant or decrease the number of shares or class of
stock obtainable upon exercise of any Warrant without the written consent of the
Holder.
7. GOVERNING LAW. This Warrant
shall be governed by and construed in accordance with the internal laws of the
State of Delaware without giving effect to any choice or conflict of law
provision or rule (whether of the State of Delaware or any other
jurisdiction).
8. CONSTRUCTION; HEADINGS. This
Warrant shall be deemed to be jointly drafted by the Company and the Holder and
shall not be construed against any person as the drafter hereof. The headings of
this Warrant are for convenience of reference and shall not form part of, or
affect the interpretation of, this Warrant.
9. CERTAIN DEFINITIONS. For
purposes of this Warrant, the following terms shall have the following meanings:
(a) Affiliate means, with
respect to any Person, any other Person directly or indirectly controlling,
controlled by or under common control with such Person
(b) Actual Sales Price means
(i) the aggregate amount of consideration (in any form) received in connection
with or as a result of the sale of all of the Initial Shares to any Person or
Persons (other than an Affiliate of Holder) in an arms length transaction or
series of arms length transactions, before taking into account any sales
commissions, taxes, fees, offsets or deductions relating thereto, plus (ii) if
the Downside Triggering Event (as defined in the APA) occurs, an amount equal to
the amount received by the Holder (or any of its Affiliates) in consideration
for any Existing Inventory (as defined in the APA) sold, transferred or assigned
to any Person or Persons (other than an Affiliate of Holder) in an arms length
transaction or a series of arms length transactions up to, but not exceeding,
an amount equal to the Difference (as defined in the APA) in accordance with
Section 1.08(b) of the APA.
(c) Common Shares means (i)
the Companys common shares, no par value, and (ii) any share capital into which
such Common Shares shall have been changed or any share capital resulting from a
reclassification of such Common Shares.
(d) Expiration Date means the
earliest to occur of (i) if the Actual Sales Price is less than the Minimum
Sales Price (A) if Holder timely delivers the Liquidation Notice to the Company,
ten (10) Trading Days after the Liquidation Date and (B) if Holder fails to
timely deliver the Liquidation Notice to the Company, the Liquidation Date, (ii)
if the Actual Sales Price is equal to or greater than the Minimum Sales Price,
the Liquidation Date, (iii) the occurrence of a Fundamental Transaction and (iv)
the date that is six (6) months after the date the registration statement under
the Securities Act of 1933 covering the Initial Shares is effective.
(e) Initial Shares means
1,529,126 Common Shares.
(f) Liquidation Date means the
date on which Holder has sold, transferred or assigned all of the Initial Shares
to any Person or Persons (other than an Affiliate of Holder) in an arms length
transaction or series of arms length transactions.
(g) Liquidation Notice the
notice to be delivered to the Company by Holder within ten (10) Trading Days
after the Liquidation Date, which Liquidation Notice shall include the amount of
the Actual Sales Price.
(h) Minimum Sales Price means
US$4,900,000.
(i) Per Common Share
Consideration means an amount equal to the average of the closing prices
for the Common Shares on the Principal Market, as reported on Bloomberg Page
ANY US<equity>, or, if not reported thereby, as reported by any other
authoritative source, for each of the five (5) consecutive complete Trading Days
ending with the third complete Trading Day prior to the Liquidation Date.
(j) Person means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other entity and a
government or any department or agency thereof.
(k) Principal Market means the
Nasdaq Global Select Market.
(l) Subsidiaries of any Person
means another Person, an amount of the voting securities, other voting rights or
voting partnership interests of which is sufficient to elect at least a majority
of its board of directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first Person.
(m) Trading Day means any day
on which the Common Shares are traded on the Principal Market, or, if the
Principal Market is not the principal trading market for the Common Shares, then
on the principal securities exchange or securities market on which the Common
Shares are then traded; provided that Trading Day shall not include any
day on which the Common Shares are scheduled to trade on such exchange or market
for less than four hours or any day that the Common Shares are suspended from
trading during the final hour of trading on such exchange or market (or if such
exchange or market does not designate in advance the closing time of trading on
such exchange or market, then during the hour ending at 4:00:00 p.m., New York
Time, or such other time as such exchange or market publicly announces shall be
the closing time of trading).
(n) Warrant Shares means (i)
if the Actual Sales Price is less than the Minimum Sales Price, the number of
Common Shares (rounded up to the nearest whole Common Share) equal to the
quotient of (1) the amount by which the Minimum Sales Price exceeds the Actual
Sales Price, divided by (2) the Per Common Share Consideration or (ii) if the
Actual Sales Price is equal to or greater than the Minimum Sales Price, zero (0)
Common Shares; provided, however, that notwithstanding anything in this Warrant
to the contrary, in no event shall the number of Warrant Shares exceed 250,000 Common
Shares.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed as of the Issuance Date set out above.
SPHERE 3D CORP. |
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EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON SHARES
SPHERE 3D CORP.
TO: CHIEF FINANCIAL OFFICER
The undersigned holder hereby exercises the right to purchase
of Common Shares (Warrant Shares) of Sphere 3D Corp., an Ontario
corporation (the Company), evidenced by the attached Warrant to
Purchase Common Shares (the Warrant). Capitalized terms used herein and
not otherwise defined shall have the respective meanings set forth in the
Warrant.
1. Form of Exercise Price. The
Holder intends that payment of the Exercise Price shall be paid in cash with
respect to all of the Warrant Shares, which is equal to
___________Common Shares.
2. Payment of Exercise Price.
The Holder shall pay the Aggregate Exercise Price in the sum of $_____________ to the Company
in accordance with the terms of the Warrant.
3. Delivery of Warrant Shares.
The Company shall deliver to the Holder all of the Warrant Shares in accordance
with the terms of the Warrant, which is equal to ____________Common
Shares.
4. Accredited Investor. The
undersigned certifies to the Company that as of the date hereof, it is an
accredited investor as that term is defined in Rule 501(a) of Regulation D.
Date: _______________,_____
Name of Registered
Holder |
Exhibit A-1
ACKNOWLEDGMENT
The Company hereby acknowledges this Exercise Notice and hereby
directs [TRANSFER AGENT] to issue the above indicated number of Common Shares in
accordance with the Transfer Agent Instructions dated [_________] [__], 20[_]
from the Company and acknowledged and agreed to by [TRANSFER AGENT].
SPHERE 3D CORP. |
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Exhibit A-2
EXHIBIT 99.3
EXECUTION VERSION
LOCK-UP AGREEMENT
THIS AGREEMENT (this Agreement) is dated as of August
10, 2015 by and between Sphere 3D Corp., an Ontario company (the
Company), and Imation Corp., a Delaware corporation
(Shareholder).
WHEREAS, the Company has entered into an asset purchase
agreement dated as of the date hereof with Shareholder and Overland Storage,
Inc. (the Asset Purchase Agreement), whereby, among other things, the
Company has agreed to issue to Shareholder 1,529,126 common shares, no par
value, of the Company (collectively, and together with any common shares of the
Company issued or issuable to Shareholder pursuant to the Warrant to Purchase
Common Shares (the Warrant), issued as of the date hereof, the Lock-Up
Shares).
WHEREAS, pursuant to a registration rights agreement dated the
date hereof, by and between the Company and Shareholder (the Registration
Rights Agreement), the Company has agreed to register the resale of the
Lock-Up Shares pursuant to a Registration Statement to be filed by the Company
with the United States Securities and Exchange Commission (the Registration
Statement).
WHEREAS, in connection with the Asset Purchase Agreement and
Registration Rights Agreement, Shareholder has agreed, among other things, not
to undertake certain actions with respect to the Lock-Up Shares, except in
accordance with the terms and conditions set forth herein. Capitalized terms
used herein without definition shall have the meanings assigned to such terms in
the Registration Rights Agreement.
NOW, THEREFORE, in consideration of the covenants and
conditions hereinafter contained, the parties hereto agree as follows:
1. Restriction on Transfer;
Term. Shareholder hereby agrees with the Company that such Shareholder will
not offer, sell, contract to sell, assign, transfer, hypothecate, pledge or
grant a security interest in, or otherwise dispose of any Lock-up Shares, or
enter into any transaction which is designed to, or might reasonably be expected
to, have any such effect, directly or indirectly, or enter into any swap, hedge
or other arrangement that transfers, in whole or in part, any of the economic
consequences of ownership of the Lock-Up Shares (any of the foregoing actions, a
transfer), or publicly disclose any intention to make any such
transfer; provided, however, that the Shareholder shall be
entitled to transfer the Lock-Up Shares either (a) after the date that the
Registration Statement is declared effective (and only so long as such
Registration Statement remains effective) on the open market or pursuant to
block trades or (b) if the Registration Statement has not been declared
effective within 30 days after the date hereof (or does not remain effective
after such date), pursuant to any available exemption from registration under
the Securities Act of 1933, as amended (the Securities Act); provided,
further, that, without the prior written consent of the Company (which
consent may be provided via e-mail from the Companys Chief Executive Officer or
Chief Financial Officer), sales of the Lock-Up Shares in the aggregate on any
given trading day shall not exceed 17.5% of the average daily trading volume of
the common shares of the Company on the Nasdaq Global Select Market for the 30
trading days ending on the trading day immediately preceding such date (and Shareholder shall not solicit any such transfer that is not an
open market sale), except that this limitation will not apply to block trades by
the Shareholder; provided, however, that, notwithstanding anything
in this Agreement to the contrary, without the prior written consent of the
Company (which consent may be provided via e-mail from the Companys Chief
Executive Officer or Chief Financial Officer), no transfer that is not on the
open market (including, without limitation, any block trades or trades pursuant
to an exemption under the Securities Act) shall be permitted pursuant to this
Agreement unless the amount per share of Common Shares (as defined below)
received by the Shareholder in such transfer, prior to taking into account any
fees, expenses or selling discounts, concessions or commissions, equals at least
95% of the average of the closing prices for the common shares, no par value, of
the Company (the Common Shares) on the Nasdaq Global Select Market
(NASDAQ) as reported on Bloomberg Page ANY US<equity>, or, if
not reported thereby, as reported by any other authoritative source, for each of
the ten (10) consecutive complete Trading Days ending with the third complete
Trading Day prior to such transfer. For purposes of this Agreement, Trading
Day means any day on which the Common Shares are traded on NASDAQ, or, if
NASDAQ is not the principal trading market for the Common Shares, then on the
principal securities exchange or securities market on which the Common Shares
are then traded; provided that Trading Day shall not include any
day on which the Common Shares are scheduled to trade on such exchange or market
for less than four hours or any day that the Common Shares are suspended from
trading during the final hour of trading on such exchange or market (or if such
exchange or market does not designate in advance the closing time of trading on
such exchange or market, then during the hour ending at 4:00:00 p.m., New York
Time, or such other time as such exchange or market publicly announces shall be
the closing time of trading). Notwithstanding anything in this Agreement to the
contrary, Shareholder shall not transfer any of the Lock-Up Shares to any
Affiliate (as defined in the Asset Purchase Agreement) of Shareholder, or
transfer the Warrant to any Permitted Transferee (as defined in the Warrant),
unless and until such Affiliate or Permitted Transferee, as applicable, shall
have signed a joinder agreement to this Agreement, in a form reasonably
satisfactory to the Company.
2. Company and Transfer Agent.
The Company and its transfer agent are hereby authorized by Shareholder to
decline to make any transfer of the Lock-Up Shares if such transfer would
constitute a violation or breach of this Agreement.
3. Agreement to Vote Shares.
A. Until the earlier of (i) the date on
which Shareholder exercises the Warrant and (ii) the Expiration Date (as defined
in the Warrant), at every meeting of the shareholders of the Company, and at
ever adjournment or postponement thereof, and on every action or approval by
written consent of the shareholders of the Company, Shareholder agrees to
unconditionally and irrevocably, or to cause the holder of record on any
applicable record date to, vote the Lock-Up Shares and all other Common Shares
owned, of record or beneficially by Shareholder (collectively, with the Lock-Up
Shares, the Shares), or execute a written consent or consents if
shareholders of the Company are requested to vote their shares through the
execution of an action by written consent in lieu of any such annual or special
meeting of shareholders of the Company, (x) in accordance with the
recommendation of the Companys board of directors (the Board)
(including in favor of any nominee to the Board nominated by the Board) and (y)
against any other actions or agreement not recommended by the Board and against
any nominee to the Board not recommended or nominated by the Board;
provided, that nothing contained in this Section 3 will require Shareholder to
take any action (or refrain from taking any action) if Shareholder reasonably
believes that the taking of such action (or the failure to take such action, as
applicable) would be reasonably likely to be a breach of the fiduciary duties of
Shareholders board of directors or violate law applicable to Shareholder.
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B. To secure the obligations to vote
the Shares in accordance with the provisions of this Agreement, Shareholder does
hereby constitute and appoint the then current Chief Executive Officer of the
Company and the then current Chief Financial Officer of the Company, and either
of them, as each of its true and lawful proxy and attorney-in-fact, with full
power of substitution in its name, place and stead to vote all of Shareholders
Shares in the manner provided in Section 3(A), but only to the extent provided
in this Section 3, and to make, execute, sign, deliver and file all instruments,
documents and certificates which may from time to time be required by the laws
of Ontario, Canada or any other applicable jurisdiction, or any applicable
political subdivision or agency thereof, to effectuate, implement and/or
continue the provisions of Section 3(A), but only to the extent provided herein.
It is expressly intended by Shareholder that the foregoing power of attorney is
coupled with an interest, is irrevocable, and shall survive the death,
incapacity, dissolution, bankruptcy or insolvency of Shareholder or the transfer
of any portion of Shareholders Shares.
C. Until the earlier of (i) the date on
which Shareholder exercises the Warrant and (ii) Expiration Date, except as
otherwise specifically permitted by this Agreement or as specifically approved
in advance by the Board, Shareholder will not, directly or indirectly, through
one or more intermediaries or otherwise, and will cause its Affiliates not to,
directly or indirectly, singly or as part of a partnership, limited partnership,
syndicate (as those terms are used within the meaning of Section 13(d)(3) of the
Exchange Act of 1934, as amended (the Exchange Act), which meanings
shall apply for all purposes of this Agreement) or other Group (each of the
actions referred to in the following provisions of this Section 3(C) being
referred to as Prohibited Actions):
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make, or in any way participate in, any solicitation of
proxies (as such terms are defined or used in Regulation 14A under the
Exchange Act) with respect to any voting securities of the Company
(including by the execution of actions by written consent), become a
participant in any election contest (as such terms are defined or used
in Rule 14a-11 under the Exchange Act) with respect to the Company or seek
to advise, encourage or influence any person or entity (other than any
Affiliate of Shareholder, including for this purpose its officers and
directors) with respect to the voting of any voting securities of the
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solicit, or participate or join with any person in the
solicitation of, any proxies (as such terms are defined in the
Securities Act (Ontario)) to vote, to seek to advise or to influence any
person with voting of any voting securities of the Company, whether or not
such solicitation is exempt under any provision of the Securities Act
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initiate, propose or otherwise solicit, or participate in
the solicitation of shareholders for the approval of, one or more
shareholders proposals with respect to the Company as described in Rule
14a-8 under the Exchange Act or knowingly induce any other individual or
entity to initiate any shareholders proposal relating to the
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form, join, or in any way participate in a group to
attempt to influence the conduct of the holders of voting securities of
the Company or take any other action to seek to control or influence the
directors, management or policies of the Company or to obtain
representation on the board of directors of the Company; or |
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publicly disclose any proposal regarding any of the
actions enumerated in this Section 3(C). |
4. Notices. All notices,
requests, consents, claims, demands, waivers and other communications hereunder
shall be in writing and shall be deemed to have been given (a) when delivered by
hand (with written confirmation of receipt); (b) when received by the addressee
if sent by a nationally recognized overnight courier (receipt requested); (c) on
the date sent by e-mail of a PDF document (with confirmation of transmission) if
sent during normal business hours of the recipient, and on the next business day
if sent after normal business hours of the recipient; or (d) on the third day
after the date mailed, by certified or registered mail, return receipt
requested, postage prepaid. Such communications must be sent to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 4):
If to the Company:
Sphere 3D Corp.
240 Matheson Blvd.
East
Mississauga, Ontario L4A 1X1
Attention: Kurt L. Kalbfleisch
Email: kkalbfleisch@overlandstorage.com
with a copy (which such copy shall not
constitute notice) to:
OMelveny & Myers LLP
2765 Sand
Hill Road
Menlo Park, CA 94025
Attention: Paul L. Sieben, Esq.
Email: psieben@omm.com
If to Shareholder,
Imation Corp.
1 Imation Way
Oakdale, Minnesota
Attention:
General Counsel
Email: jpbreedlove@imation.com
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with a copy (which such copy shall not
constitute notice) to:
Oppenheimer Wolff & Donnelly LLP
Campbell Mithun Tower Suite 2000
222 South Ninth Street
Minneapolis, MN 55402-3338
Attention: Brett Hanson, Esq.
Email:
BHanson@oppenheimer.com
5. Amendment. This Agreement may
not be amended, modified or terminated, and no rights or provisions may be
waived, except with the written consent of Shareholder and the Company.
6. Entire Agreement. This
Agreement constitutes and contains the entire agreement and understanding of the
parties with respect to the subject matter hereof, and it also supersedes any
and all prior negotiations, correspondence, agreements or understandings with
respect to the subject matter hereof.
7. Governing Law. This Agreement
shall be governed by and construed in accordance with the internal laws of the
State of Delaware without giving effect to any choice or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdiction).
8. Waiver of Jury Trial. EACH OF THE
PARTIES HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES
UNCONDITIONALLY AND IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE
STATE OR FEDERAL COURTS OF THE STATE OF DELAWARE RESPECT TO ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, AND EACH OF THE PARTIES HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY OBJECTION TO VENUE IN THE STATE OF DELAWARE, AND AGREES
THAT SERVICE OF ANY SUMMONS, COMPLAINT, NOTICE OR OTHER PROCESS RELATING TO SUCH
SUIT, ACTION OR OTHER PROCEEDING MAY BE EFFECTED IN THE MANNER PROVIDED IN
SECTION 3.
9. Severability. The parties
agree that if any provision of this Agreement be held to be invalid, illegal or
unenforceable in any jurisdiction, that holding shall be effective only to the
extent of such invalidity, illegally or unenforceability without invalidating or
rendering illegal or unenforceable the remaining provisions hereof, and any such
invalidity, illegally or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. It is the intent of the parties that
this Agreement be fully enforced to the fullest extent permitted by applicable
law.
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10. Binding Effect; Assignment.
This Agreement and the rights and obligations hereunder may not be assigned by
any party hereto without the prior written consent of the other parties hereby.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
11. Headings. The section headings
contained in this Agreement (including, without limitation, section headings and
headings in the exhibits and schedules) are inserted for reference purposes only
and shall not affect in any way the meaning, construction or interpretation of
this Agreement. Any reference to the masculine, feminine, or neuter gender shall
be a reference to such other gender as is appropriate. References to the
singular shall include the plural and vice versa.
12. Counterparts. This Agreement
may be executed in a number of counterparts, including by electronic
transmission, any of which together shall for all purposes constitute one
Agreement, binding on all the parties hereto notwithstanding that all such
parties have not signed the same counterpart.
13. Specific Performance; Injunctive
Relief. The parties acknowledge and agree that in the event of any breach of
this Agreement, remedies at law may be inadequate, and each of the parties
hereto shall be entitled to seek specific performance of the obligations of the
other parties hereto and such appropriate injunctive relief as may be granted by
a court of competent jurisdiction, without the necessity of showing economic
loss and without any bond or other security being required.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above herein.
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SPHERE 3D CORP. |
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IMATION CORP. |
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[Signature Page to Lock-up Agreement]
EXHIBIT 99.4
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the Agreement) is made
and entered into as of this 10th day of August, 2015, by and among Sphere 3D
Corp., an Ontario corporation (the Company), and Imation Corp., a
Delaware corporation (the Initial Holder). Capitalized terms used but
not otherwise defined herein have the respective meanings ascribed to such terms
in that certain Asset Purchase Agreement, dated as of the date hereof, by and
among the Initial Holder, on the one hand, and Overland Storage, Inc., a
California corporation and wholly-owned subsidiary of the Company, and the
Company, on the other hand.
The parties hereby agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
Common Shares means the Companys common shares, no
par value, and any securities into which such shares may hereinafter be
reclassified.
Holders means the Initial Holder and any Affiliate or
permitted transferee of the Initial Holder who is a subsequent holder of the
Warrant or Registrable Securities.
Prospectus means (i) the prospectus included in any
Registration Statement, as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and by all other amendments
and supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus, and (ii) any free
writing prospectus as defined in Rule 405 under the 1933 Act.
Register, registered and
registration refer to a registration made by preparing and filing a
Registration Statement or similar document in compliance with the 1933 Act (as
defined below), and the declaration or ordering of effectiveness of such
Registration Statement or document.
Registrable Securities means (i) the Issued Shares,
(ii) the Warrant Shares, (iii) any other securities issued or issuable with
respect to or in exchange for Registrable Securities, whether by merger, charter
amendment or otherwise; provided, that a security shall cease to be a
Registrable Security upon (a) sale pursuant to a Registration Statement or Rule
144 under the 1933 Act, or (b) such security becoming eligible for sale in the
United States without restriction by the holder thereof pursuant to Rule 144.
Registration Statement means any registration
statement of the Company filed under the 1933 Act that covers the resale of any
of the Registrable Securities in the United States pursuant to the provisions of
this Agreement, amendments and supplements to such Registration Statement,
including post-effective amendments, all exhibits and all material incorporated
by reference in such Registration Statement.
Required Holders means the Holders holding a majority
of the Registrable Securities.
SEC means the U.S. Securities and Exchange Commission.
SEC Filings means the Companys most recent Annual
Report on Form 40-F for the fiscal year ended December 31, 2014, and all other
reports filed or furnished by the Company pursuant to Sections 13(a), 13(e), 14
and 15(d) of the 1934 Act since July 7, 2014.
1933 Act means the U.S. Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
1934 Act means the U.S. Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
2. Registration.
(a) Registration Statements.
Promptly following the date hereof (the Closing Date) but no later than
seven (7) business days after the Closing Date (the Filing
Deadline), the Company shall prepare and file with the SEC one
Registration Statement on Form F-3 (or, if Form F-3 is not then available to the
Company, on such form of registration statement as is then available to effect a
registration for resale of the Registrable Securities), covering the resale of
the Registrable Securities in the United States. Subject to any SEC comments,
such Registration Statement shall include the plan of distribution attached
hereto as Exhibit A; provided, however, that no Holder
shall be named as an underwriter in the Registration Statement without the
consent of the Holder unless required in the Companys reasonable judgment after
compliance with the applicable provisions of Section 2(d). Such
Registration Statement also shall cover, to the extent allowable under the 1933
Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional Common Shares resulting from stock splits,
stock dividends or similar transactions with respect to the Registrable
Securities. Such Registration Statement shall not include any Common Shares or
other securities for the account of any other holder without the prior written
consent of the Required Holders. The Registration Statement (and each amendment
or supplement thereto, and each request for acceleration of effectiveness
thereof) shall be provided in accordance with Section 3(c) to the Holders
and their counsel prior to its filing or other submission. If a Registration
Statement covering the Registrable Securities is not filed with the SEC on or
prior to the Filing Deadline, the Company will make a payment to the Holder, as
liquidated damages and not as a penalty, in an amount equal to 1.0% of the
product of $4,900,000 for each 30-day period or pro rata for any portion thereof
following the Filing Deadline for which no Registration Statement is filed with
respect to the Registrable Securities. Such payments shall constitute the
Holders exclusive monetary remedy for such events, but shall not affect the
right of the Holders to seek injunctive relief. Such payments shall be made to
Holder in cash no later than ten (10) business days after the end of each such
30-day period.
(b) Expenses. The Company will
pay all expenses associated with each registration, including filing and
printing fees, the Companys counsel and accounting fees and expenses, costs
associated with clearing the Registrable Securities for sale under applicable
United States federal and state securities laws, listing fees, reasonable
incurred fees and expenses of one counsel to the Holders in connection with
clearing the Registrable Securities for sale under applicable United States
federal and state securities laws, which amount shall be limited to $10,000 for
each such registration, filing or qualification without the prior written
consent of the Company, and the Holders other reasonable incurred expenses in
connection with the registration, but excluding discounts, commissions, fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals with respect to the Registrable Securities being sold.
-2-
(c) Effectiveness.
(i) The Company shall use commercially
reasonable efforts to have the Registration Statement declared effective as soon
as practicable. The Company shall notify the Holders by facsimile or e-mail as
promptly as practicable, and in any event, within twenty-four (24) hours, after
any Registration Statement is declared effective and shall simultaneously
provide the Holders with copies of any related Prospectus to be used in
connection with the sale or other disposition of the securities covered thereby.
If a Registration Statement covering the Registrable Securities has not been
declared effective by the SEC on or prior to the date that is sixty (60) days
after the Filing Deadline (the Effectiveness Deadline), the Company
will make a payment to the Holder, as liquidated damages and not as a penalty,
in an amount equal to 1.0% of the product of $4,900,000 for each 30-day period
or pro rata for any portion thereof following the Effectiveness Deadline for
which the Registration Statement has not been declared effective by the SEC with
respect to the Registrable Securities. Such payments shall constitute the
Holders exclusive monetary remedy for such events, but shall not affect the
right of the Holders to seek injunctive relief. Such payments shall be made to
Holder in cash no later than ten (10) business days after the end of each such
30-day period
(ii) For not more than twenty (20)
consecutive days or for a total of not more than forty-five (45) days in any
twelve (12) month period, the Company may suspend the use of any Prospectus
included in any Registration Statement contemplated by this Section in the event
that the Company determines in good faith that such suspension is necessary to
(A) delay the disclosure of material non-public information concerning the
Company, the disclosure of which at the time is not, in the good faith opinion
of the Company, in the best interests of the Company or (B) amend or supplement
the affected Registration Statement or the related Prospectus so that such
Registration Statement or Prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the case of the Prospectus in light
of the circumstances under which they were made, not misleading (an Allowed
Delay); provided, that the Company shall promptly (a) notify each
Holder in writing of the commencement of and the reasons for an Allowed Delay,
but shall not (without the prior written consent of a Holder) disclose to such
Holder any material non-public information giving rise to an Allowed Delay,
(b) advise the Holders in writing to cease all sales under the Registration
Statement until the end of the Allowed Delay and (c) use commercially reasonable
efforts to terminate the Allowed Delay as promptly as practicable.
(d) Rule 415; Cutback If at any
time the SEC takes the position that the offering of some or all of the
Registrable Securities in a Registration Statement is not eligible to be made on
a delayed or continuous basis under the provisions of Rule 415 under the 1933
Act or requires any Holder to be named as an underwriter, the Company shall
use its commercially reasonable efforts to persuade the SEC that the offering
contemplated by the Registration Statement is a valid secondary offering and not
an offering by or on behalf of the issuer as defined in Rule 415 and that none
of the Holders is an underwriter. The Holders shall have the right to have
their counsel participate in any meetings or discussions with the SEC regarding the SECs position and to comment or have their
counsel comment on any written submission made to the SEC with respect thereto.
No such written submission shall be made to the SEC to which the Holders
counsel reasonably objects. In the event that, despite the Companys
commercially reasonable best efforts and compliance with the terms of this Section 2(d), the SEC refuses to alter its position, the Company
shall (i) remove from the Registration Statement such portion of the Registrable
Securities (the Cut Back Shares) and/or (ii) agree to such restrictions
and limitations on the registration and resale of the Registrable Securities as
the SEC may require to assure the Companys compliance with the requirements of
Rule 415 (collectively, the SEC Restrictions). Any cut-back imposed on
the Holders pursuant to this Section 2(d) shall be allocated among the
Holders on a pro rata basis, unless the SEC Restrictions otherwise require or
provide or the Holders otherwise agree. No liquidated damages shall accrue as to
any Cut Back Shares until such date as the Company is able to effect the
registration of such Cut Back Shares in accordance with any SEC Restrictions
(such date, the Restriction Termination Date of such Cut Back Shares),
subject to the following sentence. From and after the Restriction Termination
Date applicable to any Cut Back Shares, all of the provisions of this Section
2 (including the liquidated damages provisions) shall again be applicable to
such Cut Back Shares; provided, however, that (i) the Filing
Deadline for the Registration Statement including such Cut Back Shares shall be
ten (10) business days after such Restriction Termination Date, and (ii) the
Effectiveness Deadline for the Registration Statement including such Cut Back
Shares shall be the sixtieth (60th) day after the Restriction
Termination Date.
-3-
3. Company Obligations. The
Company will use commercially reasonable efforts to effect the registration of
the Registrable Securities in accordance with the terms hereof, and pursuant
thereto the Company will, as expeditiously as possible:
(a) use commercially reasonable efforts
to cause such Registration Statement to become effective and to remain
continuously effective for a period that will terminate upon the earlier of (i)
the date on which all Registrable Securities covered by such Registration
Statement as amended from time to time, have been sold, and (ii) the date on
which all Registrable Securities covered by such Registration Statement may be
sold without restriction pursuant to Rule 144 (the Effectiveness
Period) and advise the Holders in writing when the Effectiveness Period has
expired;
(b) prepare and file with the SEC such
amendments and post-effective amendments to the Registration Statement and the
Prospectus as may be necessary to keep the Registration Statement effective for
the Effectiveness Period and to comply with the provisions of the 1933 Act and
the 1934 Act with respect to the distribution of all of the Registrable
Securities covered thereby;
(c) provide copies to and permit
counsel designated by the Holders to review each Registration Statement and all
amendments and supplements thereto no fewer than three (3) business days prior
to their filing with the SEC and not file any document to which such counsel
reasonably objects;
(d) furnish to the Holders and their
legal counsel (i) promptly after the same is prepared and publicly distributed,
filed with the SEC, or received by the Company (but not later than two (2) business days after the filing date,
receipt date or sending date, as the case may be) one (1) copy of any
Registration Statement and any amendment thereto, each preliminary prospectus
and Prospectus and each amendment or supplement thereto, and each letter written
by or on behalf of the Company to the SEC or the staff of the SEC, and each item
of correspondence from the SEC or the staff of the SEC, in each case relating to
such Registration Statement (other than any portion of any thereof which
contains information for which the Company has sought confidential treatment),
and (ii) such number of copies of a Prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents
as each Holder may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by such Holder that are covered by the related
Registration Statement;
-4-
(e) use commercially reasonable efforts
to (i) prevent the issuance of any stop order or other suspension of
effectiveness and, (ii) if such order is issued, obtain the withdrawal of any
such order at the earliest possible moment;
(f) prior to any public offering of
Registrable Securities, use commercially reasonable efforts to register or
qualify or cooperate with the Holders and their counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the U.S. state securities or blue sky laws of such jurisdictions requested
by the Holders and do any and all other commercially reasonable acts or things
necessary or advisable to enable the distribution in such jurisdictions of the
Registrable Securities covered by the Registration Statement; provided, however,
that the Company shall not be required in connection therewith or as a condition
thereto to (i) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(f), (ii) subject
itself to general taxation in any jurisdiction where it would not otherwise be
so subject but for this Section 3(f), or (iii) file a general consent to
service of process in any such jurisdiction;
(g) use commercially reasonable
efforts to cause all Registrable Securities covered by a Registration Statement
to be listed on each securities exchange, interdealer quotation system or other
market on which similar securities issued by the Company are then listed;
(h) immediately notify the Holders, at
any time prior to the end of the Effectiveness Period, upon discovery that, or
upon the happening of any event as a result of which, the Prospectus includes an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing, and promptly prepare, file with the
SEC and furnish to such holder a supplement to or an amendment of such
Prospectus as may be necessary so that such Prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing; and
(i) otherwise use commercially
reasonable efforts to comply with all applicable rules and regulations of the
SEC under the 1933 Act and the 1934 Act, including, without limitation, Rule 172
under the 1933 Act, file any final Prospectus, including any supplement or
amendment thereof, with the SEC pursuant to Rule 424 under the 1933 Act, promptly inform the Holders in writing if, at any time during
the Effectiveness Period, the Company does not satisfy the conditions specified
in Rule 172 and, as a result thereof, the Holders are required to deliver a
Prospectus in connection with any disposition of Registrable Securities and take
such other actions as may be reasonably necessary to facilitate the registration
of the Registrable Securities hereunder; and make available to its security
holders, as soon as reasonably practicable, but not later than the Availability
Date (as defined below), an earnings statement covering a period of at least
twelve (12) months, beginning after the effective date of each Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the 1933 Act, including Rule 158 promulgated thereunder (for the
purpose of this subsection 3(i), Availability Date means the
45th day following the end of the fourth fiscal quarter that includes the
effective date of such Registration Statement, except that, if such fourth
fiscal quarter is the last quarter of the Companys fiscal year, Availability
Date means the ninetieth (90th) day after the end of such fourth
fiscal quarter).
-5-
(j) With a view to making available to
the Holders the benefits of Rule 144 (or its successor rule) and any other rule
or regulation of the SEC that may at any time permit the Holders to sell Common
Shares to the public without registration, the Company covenants and agrees to:
(i) make and keep public information available, as those terms are understood
and defined in Rule 144, until the earlier of (A) six months after such date as
all of the Registrable Securities may be sold without restriction by the holders
thereof pursuant to Rule 144 or any other rule of similar effect or (B) such
date as all of the Registrable Securities shall have been resold; (ii) file with
the SEC in a timely manner all reports and other documents required of the
Company under the 1934 Act; and (iii) furnish to each Holder upon request, as
long as such Holder owns any Registrable Securities, (A) a written statement by
the Company that it has complied with the reporting requirements of the 1934
Act, (B) a copy of the Companys most recent Annual Report on Form 40-F, and (C)
such other information as may be reasonably requested in order to avail such
Holder of any rule or regulation of the SEC that permits the selling of any such
Registrable Securities without registration.
4. Due Diligence Review;
Information. The Company shall make available, during normal business hours
and upon prior written notice, for inspection and review by the Holders,
advisors to and representatives of the Holders (who may or may not be affiliated
with the Holders and who are reasonably acceptable to the Company), all SEC
Filings and other filings with the SEC, and all other corporate documents and
properties of the Company as may be reasonably necessary for the purpose of such
review, and cause the Companys officers, directors and employees, within a
reasonable time period, to supply all such information reasonably requested by
the Holders or any such representative, advisor or underwriter in connection
with such Registration Statement (including, without limitation, in response to
all questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling the Holders and such
representatives, advisors and underwriters and their respective accountants and
attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of such Registration Statement.
Notwithstanding the foregoing, the Company shall not (and shall
not be required to) disclose or provide any access to material nonpublic
information to the Holders, or to advisors to or representatives of the Holders,
in connection with the registration of the Registrable Securities unless prior to disclosure of such
information the Company identifies such information as being material nonpublic
information and provides the Holders, such advisors and representatives with the
opportunity to accept or refuse to accept such material nonpublic information
for review and any Holder wishing to obtain such information enters into an
appropriate confidentiality agreement with the Company with respect thereto.
-6-
5. Obligations of the Holders.
(a) Each Holder shall furnish in
writing to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request. At
least three (3) business days prior to the first anticipated filing date of any
Registration Statement, the Company shall notify each Holder of the information
the Company requires from such Holder if such Holder elects to have any of the
Registrable Securities included in the Registration Statement. A Holder shall
provide such information to the Company at least two (2) business days prior to
the first anticipated filing date of such Registration Statement if such Holder
elects to have any of the Registrable Securities included in the Registration
Statement.
(b) Each Holder, by its acceptance of
the Registrable Securities agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of a
Registration Statement hereunder, unless such Holder has notified the Company in
writing of its election to exclude all of its Registrable Securities from such
Registration Statement.
(c) Each Holder agrees that, upon
receipt of any notice from the Company of either (i) the commencement of an
Allowed Delay pursuant to Section 2(c)(ii) or (ii) the happening of an
event pursuant to Section 3(h) hereof, such Holder will immediately
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities, until the Holder is advised by
the Company that such dispositions may again be made.
6. Indemnification.
(a) Indemnification by the
Company. The Company will indemnify and hold harmless each Holder and its
officers, directors, members, employees and agents, successors and assigns, and
each other person, if any, who controls such Holder within the meaning of the
1933 Act, against any losses, claims, damages or liabilities, joint or several,
to which they may become subject under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement or omission or alleged omission of any material fact contained in any
Registration Statement, any preliminary Prospectus or final Prospectus, or any
amendment or supplement thereof; (ii) any blue sky application or other document
executed by the Company specifically for that purpose or based upon written
information furnished by the Company filed in any state or other jurisdiction in
order to qualify any or all of the Registrable Securities under the securities
laws thereof (any such application, document or information herein called a
Blue Sky Application); (iii) the omission or alleged omission to state
in a Blue Sky Application a material fact required to be stated therein
or necessary to make the statements therein not misleading; (iv) any violation
by the Company or its agents of any rule or regulation promulgated under the
1933 Act applicable to the Company or its agents and relating to action or
inaction required of the Company in connection with such registration; or (v)
any failure to register or qualify the Registrable Securities included in any
such Registration Statement in any state where the Company or its agents has
affirmatively undertaken or agreed in writing that the Company will undertake
such registration or qualification on a Holders behalf and will reimburse such
Holder, and each such officer, director or member and each such controlling
person for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in
any such case if and to the extent that any such loss, claim, damage or
liability (i) arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by such Holder or any such controlling person in writing
specifically for use in such Registration Statement, Prospectus or Blue Sky
Application or any amendment or supplement thereto or (ii) results from the
failure of the Holder to comply with its obligations hereunder.
-7-
(b) Indemnification by the
Holders. Each Holder agrees, severally but not jointly, to indemnify and
hold harmless, to the fullest extent permitted by law, the Company, its
directors, officers, employees, shareholders and each person who controls the
Company (within the meaning of the 1933 Act) against any losses, claims,
damages, liabilities and expense (including reasonable attorney fees) resulting
from any untrue statement of a material fact or any omission of a material fact
required to be stated in the Registration Statement, a Prospectus or a
preliminary Prospectus or a Blue Sky Application or amendment or supplement
thereto or necessary to make the statements therein not misleading, to the
extent, but only to the extent that such untrue statement or omission is
contained in any information furnished in writing by such Holder to the Company
specifically for inclusion in such Registration Statement or Prospectus or
amendment or supplement thereto, provided, however, that such Holder will not be
liable in any such case if and to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by Company to such Holder in writing in connection with
such Registration Statement, Prospectus or Blue Sky Application or any amendment
or supplement thereto. In no event shall the liability of a Holder be greater in
amount than the dollar amount of the proceeds (net of all expenses paid by such
Holder in connection with any claim relating to this Section 6 and the
amount of any damages such Holder has otherwise been required to pay by reason
of such untrue statement or omission) received by such Holder upon the sale of
the Registrable Securities included in the Registration Statement giving rise to
such indemnification obligation.
(c) Conduct of Indemnification
Proceedings. Any person entitled to indemnification hereunder shall (i) give
prompt notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party; provided that any person entitled to indemnification hereunder
shall have the right to employ separate counsel and to participate in the
defense of such claim, but the fees and expenses of such counsel shall be at the
expense of such person unless (a) the indemnifying party has agreed to pay such
fees or expenses, or (b) the indemnifying party shall have failed to assume the
defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of any such
person, based upon written advice of its counsel, a conflict of interest exists
between such person and the indemnifying party with respect to such claims (in
which case, if the person notifies the indemnifying party in writing that such
person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such person); and provided, further, that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection with any
proceeding in the same jurisdiction, be liable for fees or expenses of more than
one separate firm of attorneys at any time for all such indemnified parties. No
indemnifying party will, except with the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation. No indemnifying party will be liable to any indemnified
party under this Agreement for any settlement by such indemnified party effected
without the indemnifying partys prior written consent, which shall not be
unreasonably withheld, conditioned or delayed.
-8-
(d) Contribution. If for any
reason the indemnification provided for in the preceding paragraphs (a)
and (b) is unavailable to an indemnified party or insufficient to hold it
harmless, other than as expressly specified therein, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable considerations. No
person guilty of fraudulent misrepresentation within the meaning of Section
11(f) of the 1933 Act shall be entitled to contribution from any person not
guilty of such fraudulent misrepresentation. In no event shall the contribution
obligation of a holder of Registrable Securities be greater in amount than the
dollar amount of the proceeds (net of all expenses paid by such holder in
connection with any claim relating to this Section 6 and the amount of
any damages such holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission) received by
it upon the sale of the Registrable Securities giving rise to such contribution
obligation.
7. Miscellaneous.
(a) Amendments and Waivers. This
Agreement may be amended only by a writing signed by the Company and the
Required Holders. The Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company shall
have obtained the written consent to such amendment, action or omission to act,
of the Required Holders.
(b) Notices. All notices,
requests, consents, claims, demands, waivers and other communications hereunder
shall be in writing and shall be deemed to have been given (i) when delivered by
hand (with written confirmation of receipt); (ii) when received by the addressee
if sent by a nationally recognized overnight courier (receipt requested); (iii)
on the date sent by e-mail of a PDF document (with confirmation of transmission)
if sent during normal business hours of the recipient, and on the next business day
if sent after normal business hours of the recipient; or (iv) on the third day
after the date mailed, by certified or registered mail, return receipt
requested, postage prepaid. Such communications must be sent to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section
7(b)):
-9-
To the Company:
Sphere 3D Corp.
240 Matheson Blvd.
East
Mississauga, Ontario L4Z 1X1
Attention: Kurt L.
Kalbfleisch
Email: kkalbfleisch@overlandstorage.com
With a copy to counsel, provided that
such copy shall not constitute legal notice to the Company:
OMelveny & Myers LLP
2765
Sand Hill Road
Menlo Park, CA 94025
Attention: Paul L. Sieben, Esq.
Email: psieben@omm.com
To the Initial Holder:
Imation Corp.
1 Imation Way
Oakdale, Minnesota 55128
Attention: General Counsel
Email: jpbreedlove@imation.com
With a copy to counsel, provided that
such copy shall not constitute legal notice to the
Initial Holder:
Oppenheimer Wolff & Donnelly LLP
Campbell Mithun Tower Suite 2000
222 South Ninth Street
Minneapolis, MN 55402-3338
Attention: Brett Hanson, Esq.
Email: BHanson@oppenheimer.com
(c)
Assignments and Transfers by Holders. The provisions of this Agreement
shall be binding upon and inure to the benefit of the Holders and their
respective successors and assigns. A Holder may transfer or assign, in whole or
from time to time in part, to one or more persons its rights hereunder in
connection with the transfer of Registrable Securities by such Holder to such
person, provided that such Holder complies with all laws applicable thereto and provides written notice of assignment to
the Company promptly after such assignment is effected.
-10-
(d) Assignments and Transfers by the
Company. This Agreement may not be assigned by the Company (whether by
operation of law or otherwise) without the prior written consent of the Required
Holders, provided, however, that in the event that the Company is a party to a
merger, amalgamation, consolidation, share exchange or similar business
combination transaction in which the Common Shares is converted into the equity
securities of another Person, from and after the effective time of such
transaction, such Person shall, by virtue of such transaction, be deemed to have
assumed the obligations of the Company hereunder, the term Company shall be
deemed to refer to such Person and the term Registrable Securities shall be
deemed to include the securities received by the Holders in connection with such
transaction unless such securities are otherwise freely tradable by the Holders
after giving effect to such transaction.
(e) Benefits of the Agreement.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
(f) Counterparts; Faxes. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. This Agreement may also be executed via facsimile, which shall be
deemed an original.
(g) Titles and Subtitles. The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this Agreement.
(h) Severability. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof but shall
be interpreted as if it were written so as to be enforceable to the maximum
extent permitted by applicable law, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. To the extent permitted by applicable law, the
parties hereby waive any provision of law which renders any provisions hereof
prohibited or unenforceable in any respect.
(i) Further Assurances. The
parties shall execute and deliver all such further instruments and documents and
take all such other actions as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained.
(j) Entire Agreement. This
Agreement is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
-11-
(k) Governing Law; Consent to
Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction). TO THE EXTENT ALLOWABLE UNDER
APPLICABLE LAW, EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL
BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT
COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
[Signature page follows.]
-12-
IN WITNESS WHEREOF, the parties have executed this Agreement or
caused their duly authorized officers to execute this Agreement as of the date
first above written.
The Company: |
SPHERE 3D CORP. |
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The Initial Holder: |
IMATION CORP. |
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EXHIBIT 99.5
UNLESS PERMITTED UNDER APPLICABLE SECURITIES LEGISLATION,
THE HOLDER OF THIS SECURITY MUST NOT TRADE THIS SECURITY TO OR FOR THE BENEFIT
OF A CANADIAN PURCHASER UNTIL THE DATE THAT IS FOUR MONTHS AND A DAY AFTER
[INSERT DISTRIBUTION DATE].
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE 1933 ACT), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED UNLESS REGISTERED
UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE, AND THE CORPORATION AND ITS
TRANSFER AGENT HAS RECEIVED AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THEM TO SUCH EFFECT.
Void after 5:00 p.m. (New York City time) on the Expiry Date.
WARRANT
For the purchase of Common Shares of
SPHERE 3D CORP.
(Organized
under the laws of the Province of Ontario, Canada)
Number of Warrants: [] |
Warrant Certificate No. []
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This is to certify that, for value received, [____________],
[address of holder] (the "Holder"), shall have the right to
purchase from Sphere 3D Corp. (the "Corporation"), at any time and from
time to time up to 5:00 p.m. (New York City time) (the "Expiry Time") on
[]1 (the "Expiry Date"), as amended herein, one fully paid
and non-assessable common share in the capital of the Corporation (a "Common
Share") for each Warrant (individually, a "Warrant") represented
hereby at a price of US$[] per Common Share (the "Exercise Price"), upon
and subject to the terms and conditions set forth herein. This Warrant is one of
the Warrants to purchase Common Shares issued pursuant to that certain Purchase
Agreement, dated as of [], by and among the Company and the investors (the
"Investors") referred to therein (the "Purchase Agreement").
1. For the purposes of this Warrant
Certificate, the term "Common Shares" means common shares without par
value in the capital of the Corporation as constituted as of the date hereof,
provided that in the event of a subdivision, redivision, reduction, combination
or consolidation thereof or any other adjustment under section 8 hereof, or
successive such subdivisions, redivisions, reductions, combinations,
consolidations or other adjustments, then subject to the adjustments, if any,
having been made in accordance with the provisions of this Warrant Certificate,
"Common Shares" shall thereafter mean the shares, other securities or other property resulting from such
subdivision, redivision, reduction, combination or consolidation or other
adjustment.
_________________________________
1 5 year term from the date of issuing the warrant.
- 2 -
2. All Warrant Certificates shall be
signed by an officer of the Corporation holding office at the time of signing,
or any successor or replacement of such person and notwithstanding any change in
any of the persons holding said offices between the time of actual signing and
the delivery of the Warrant Certificate, the Warrant Certificate so signed shall
be valid and binding upon the Corporation.
3. All rights under any of the Warrants
in respect of which the right of subscription and purchase therein provided for
shall not theretofore have been exercised shall wholly cease and such Warrants
shall be wholly void and of no valid or binding effect after the Expiry Time.
4. The right to purchase Common Shares
of the Corporation pursuant to the Warrants may only be exercised by the Holder
at or before the Expiry Time by:
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(a) |
duly completing and executing a subscription
substantially in the form attached as Schedule "A" (the "Subscription
Form"), in the manner therein indicated; and |
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(b) |
surrendering this Warrant Certificate and the duly
completed and executed Subscription Form to the Corporation prior to the
Expiry Time at 9112 Spectrum Center Boulevard, San Diego, California,
92123, together with payment of the purchase price for the Common Shares
subscribed for in the form of certified cheque, money order or bank draft
payable to the Corporation in an amount equal to the then applicable
Exercise Price multiplied by the number of Common Shares subscribed for
(Aggregate Exercise Price). |
5. Upon delivery and payment as set
forth in section 4, the Corporation shall cause to be issued to the Holder the
number of Common Shares subscribed for by the Holder and the Holder shall become
a shareholder of the Corporation in respect of such Common Shares with effect
from the date of such delivery and payment and shall be entitled to delivery of
a certificate or certificates evidencing such shares, or to a non-transferable
written acknowledgement of the right to obtain a certificate. The Corporation
shall cause such certificate or certificates to be mailed to the Holder at the
address or addresses specified in the Subscription Form within five (5) Business
Days (as defined below) of such delivery and payment as set forth in section 4
or, if so instructed by the Holder, held for pick-up by the Holder at the
principal office of the Corporation; provided, however, if the transfer agent
for the Common Shares is participating in DTC Fast Automated Securities Transfer
Program (the DTC Program) and the Common Shares to be delivered to the
Holder pursuant to this Section 5 are eligible to participate in the DTC
Program, the Corporation will cause the transfer agent to credit such aggregate
number of Common Shares to which the Holder is entitled pursuant to this Section
5 to the Holders or its designees balance account with DTC through its Deposit
/ Withdrawal At Custodian system. Notwithstanding any adjustment provided for in
section 8 hereof, the Corporation shall not be required upon the exercise of any
Warrants to issue fractional Common Shares in satisfaction of its obligations
hereunder and the Holder understands and agrees that it will not be entitled to
any cash payment or other form of compensation in respect of a fractional Common
Share that might otherwise have been issued. As used in this Warrant
Certificate, Business Day means a day, other than a Saturday or Sunday,
on which banks in New York City and Toronto (Ontario) are open for the general
transaction of business.
6. The holding of a Warrant shall not
constitute the Holder a shareholder of the Corporation nor entitle him to any
right or interest in respect thereof except as herein expressly provided.
- 3 -
7. The Corporation covenants and agrees
that until the Expiry Time, while any of the Warrants shall be outstanding, it
shall reserve and there shall remain unissued out of its authorized capital a
sufficient number of Common Shares to satisfy the right of purchase herein
provided, as such right of purchase may be adjusted pursuant to sections 8 and 9
hereof. The Corporation further covenants and agrees that while any of the
Warrants shall be outstanding, the Corporation shall (a) comply with the
securities legislation applicable to it; and (b) use its commercially reasonable
efforts to do or cause to be done all things necessary to preserve and maintain
its corporate existence. All Common Shares which shall be issued upon the
exercise of the right to purchase herein provided for, upon payment therefor of
the amount at which such Common Shares may at the time be purchased pursuant to
the provisions hereof, shall be issued as fully paid and non-assessable shares
and the holders thereof shall not be liable to the Corporation or its creditors
in respect thereof.
8. |
(a) |
For the purpose of this section 8, unless there is
something in the subject matter or context inconsistent therewith, the
words and terms defined below shall have the respective meanings specified
therefor: |
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"Current Market Price" of the Common Shares at any
date means the price per share equal to the Weighted Average Price (as
defined below) of the Common Shares have traded on the Nasdaq Global
Market or, if the Common Shares are not then listed on the Nasdaq, on such
other stock exchange on which the shares trade as may be selected by the
directors of the Corporation for such purpose (collectively,
Nasdaq); and |
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"director" means a director of the Corporation for
the time being and, unless otherwise specified herein, a reference to
action "by the directors" means action by the directors of the Corporation
as a board or, whenever empowered, action by the executive committee of
such board; and |
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(b) |
If and whenever at any time after the date hereof and
prior to the Expiry Time the Corporation shall (i) subdivide or redivide
its then outstanding Common Shares into a greater number of Common Shares,
(ii) reduce, combine or consolidate its then outstanding Common Shares
into a lesser number of Common Shares or (iii) issue Common Shares (or
securities exchangeable for or convertible into Common Shares) to the
holders of all or substantially all of its then outstanding Common Shares
by way of a stock dividend or other distribution (any of such events
herein called a "Common Share Reorganization"), then the
Exercise Price shall be adjusted effective immediately after the effective
date of any such event in (i) or (ii) above or the record date at which
the holders of Common Shares are determined for the purpose of any such
dividend or distribution in (iii) above, as the case may be, by
multiplying the Exercise Price in effect on such effective date or record
date, as the case may be, by a fraction, the numerator of which shall be
the number of Common Shares outstanding on such effective date or record
date, as the case may be, before giving effect to such Common Share
Reorganization and the denominator of which shall be the number of Common
Shares outstanding immediately after giving effect to such Common Share
Reorganization including, in the case where securities exchangeable for or
convertible into Common Shares are distributed, the number of Common
Shares that would be outstanding if such securities were exchanged for or
converted into Common Shares. |
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(c) |
If and whenever at any time after the date hereof and
prior to the Expiry Time there is a capital reorganization of the
Corporation or a reclassification or other change in the Common Shares
(other than a Common Share Reorganization) or a consolidation or merger or
amalgamation of the Corporation with or into any other corporation or
other entity (other than a consolidation, merger or amalgamation
which does not result in any reclassification of the outstanding Common Shares
or a change of the Common Shares into other securities), or a transfer of all or
substantially all of the Corporation's undertaking and assets to another
corporation or other entity in which the holders of Common Shares are entitled
to receive shares, other securities or other property) (any of such events,
excluding, however, a transaction effected solely to change the domicile of the
Corporation, being called a "Capital Reorganization"), after the
effective date of the Capital Reorganization the Holder shall be entitled to
receive, and shall accept, for the same aggregate consideration, upon exercise
of the Warrants, in lieu of the number of Common Shares to which the Holder was
theretofore entitled upon the exercise of the Warrants, the kind and aggregate
number of Common Shares and other securities or property resulting from the
Capital Reorganization which the Holder would have been entitled to receive as a
result of the Capital Reorganization if, on the effective date thereof, the
Holder has been the registered holder of the number of Common Shares to which
the Holder was theretofore entitled to purchase or receive upon the exercise of
the Warrants. If necessary, as a result of any Capital Reorganization,
appropriate adjustments shall be made in the application of the provisions of
this Warrant Certificate with respect to the rights and interest thereafter of
the Holder such that the provisions of this Warrant Certificate shall thereafter
correspondingly be made applicable as nearly as may reasonably be possible in
relation to any shares or other securities or property thereafter deliverable
upon the exercise of this Warrant Certificate. |
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(d) |
If and whenever at any time after the date hereof and
prior to the Expiry Time, any of the events set out in sections 8 (b) or
(c) shall occur and the occurrence of such event results in an adjustment
of the Exercise Price pursuant to the provisions of this section 8, then
the number of Common Shares purchasable pursuant to this Warrant shall be
adjusted contemporaneously with the adjustment of the Exercise Price by
multiplying the number of Common Shares then otherwise purchasable on the
exercise thereof by a fraction, the numerator of which shall be the
Exercise Price in effect immediately prior to the adjustment and the
denominator of which shall be the Exercise Price resulting from such
adjustment. |
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(e) |
If the Corporation takes any action affecting its Common
Shares to which the foregoing provisions of this section 8, in the opinion
of the board of directors of the Corporation, acting in good faith, are
not strictly applicable, or if strictly applicable would not fairly adjust
the rights of the Holder against dilution in accordance with the intent
and purposes hereof, or would otherwise materially affect the rights of
the Holder hereunder, then the Corporation shall, subject to the approval
of the Nasdaq (or such other stock exchange or quotation system on which
the Common Shares are then listed and posted (or quoted) for trading, as
applicable), execute and deliver to the Holder an amendment hereto
providing for an adjustment in the application of such provisions so as to
adjust such rights as aforesaid in such manner as the board of directors
of the Corporation may determine to be equitable in the circumstances,
acting in good faith. The failure of the taking of action by the board of
directors of the Corporation to so provide for any adjustment on or prior
to the effective date of any action or occurrence giving rise to such
state of facts will be conclusive evidence that the board of directors has
determined that it is equitable to make no adjustment in the
circumstances. |
9. The following rules and procedures
shall be applicable to the adjustments made pursuant to section 8:
- 5 -
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(a) |
any Common Shares owned or held by or for the account of
the Corporation shall be deemed not be to outstanding except that, for the
purposes of section 8, any Common Shares owned by a pension plan or profit
sharing plan for employees of the Corporation or any of its subsidiaries
shall not be considered to be owned or held by or for the account of the
Corporation; |
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(b) |
no adjustment in the Exercise Price (unless pursuant to
section 19) or the number of Common Shares purchasable pursuant to this
Warrant shall be required unless a change of at least 1% of the prevailing
Exercise Price or the number of Common Shares purchasable pursuant to this
Warrant would result, provided, however, that any adjustment which, except
for the provisions of this section 9(b), would otherwise have been
required to be made, shall be carried forward and taken into account in
any subsequent adjustment; |
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(c) |
the adjustments provided for in section 8 are cumulative
and shall apply to successive subdivisions, consolidations, dividends,
distributions and other events resulting in any adjustment under the
provisions of such section; |
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(d) |
if the Corporation sets a record date to take any action
and thereafter and before the taking of such action abandons its plan to
take such action, then no adjustment to the Exercise Price will be
required by reason of the setting of such record date; |
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(e) |
as a condition precedent to the taking of any action
which would require any adjustment to the Warrants evidenced hereby,
including the Exercise Price, the Corporation must take any corporate
action which may be necessary in order that the Corporation shall have
unissued and reserved in its authorized capital and may validly and
legally issue as fully paid and non-assessable all of the shares or other
securities which the Holder is entitled to receive on the full exercise
thereof in accordance with the provisions hereof; |
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(f) |
forthwith, but no later than fourteen (14) days, after
any adjustment to the Exercise Price or the number of Common Shares
purchasable pursuant to the Warrants, the Corporation shall provide to the
Holder a certificate of an officer of the Corporation certifying as to the
amount of such adjustment and, in reasonable detail, describing the event
requiring and the manner of computing or determining such
adjustment; |
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(g) |
any question that at any time or from time to time arises
with respect to the amount of any adjustment to the Exercise Price or
other adjustment pursuant to section 8 shall be conclusively determined by
a firm of independent chartered accountants (who may be the Corporation's
auditors) and shall be binding upon the Corporation and the
Holder; |
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(h) |
any adjustment to the Exercise Price or the number of
Common Shares purchasable pursuant to the Warrants under the terms of this
Warrant Certificate shall be subject to the prior approval of the Nasdaq
(or such other stock exchange or quotation system on which the Common
Shares are then listed and posted (or quoted) for trading, as applicable);
and |
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(i) |
in case the Corporation, after the date of issue of this
Warrant Certificate, takes any action affecting the Common Shares, other
than an action described in Section 8, which in the opinion of the
directors of the Corporation would materially affect the rights of the
Holder, the Exercise Price will be adjusted in such manner, if any, and at
such time, by action by the directors of the Corporation but subject in
all cases to any necessary regulatory approval, including approval of the Nasdaq (or such
other stock exchange or quotation system on which the Common Shares are then
listed and posted (or quoted) for trading, as applicable). Failure of the taking
of action by the directors of the Corporation so as to provide for an adjustment
on or prior to the effective date of any action by the Corporation affecting the
Common Shares will be conclusive evidence that the board of directors of the
Corporation has determined that it is equitable to make no adjustment in the
circumstances. |
- 6 -
10. At least 21 days prior to the
effective date or record date, as the case may be, of any event referred to in
section 8 herein, the Corporation shall notify the Holder of the particulars of
such event and the estimated amount of any adjustment required as a result
thereof.
11. On the happening of each and every
such event set out in section 8 and section 19, the applicable provisions of
this Warrant Certificate, including the Exercise Price, shall, ipso
facto, be deemed to be amended accordingly and the Corporation shall take
all necessary action so as to comply with such provisions as so amended.
12. The Corporation shall not be
required to deliver certificates for Common Shares while the share transfer
books of the Corporation are properly closed, having regard to the provisions of
sections 8 and 9 hereof, prior to any meeting of shareholders or for the payment
of dividends or for any other purpose and in the event of the surrender of any
Warrant in accordance with the provisions hereof and the making of any
subscription and payment for the Common Shares called for thereby during any
such period, delivery of certificates for Common Shares may be postponed for not
more than five (5) Business Days after the date of the re-opening of said share
transfer books; provided, however, that any such postponement of delivery of
certificates shall be without prejudice to the right of the Holder so
surrendering the same and making payment during such period to receive after the
share transfer books shall have been re-opened such certificates for the Common
Shares called for, as the same may be adjusted pursuant to sections 8 and 9
hereof as a result of the completion of the event in respect of which the
transfer books were closed. 13. Subject as hereinafter provided, all or any of
the rights conferred upon the Holder by the terms hereof may be enforced by the
Holder by appropriate legal proceedings. No recourse under or upon any
obligation, covenant or agreement contained herein shall be had against any
shareholder, director or officer of the Corporation either directly or through
the Corporation, it being expressly agreed and declared that the obligations
under the Warrants are solely corporate obligations and that no personal
liability whatever shall attach to or be incurred by the shareholders, directors
or officers of the Corporation or any of them in respect thereof, any and all
rights and claims against every such shareholder, officer or director being
hereby expressly waived as a condition of and as a consideration for the issue
of the Warrants.
14. The Holder may subscribe for and
purchase any lesser number of Common Shares than the number of Common Shares
expressed in any Warrant Certificate. In the case of any subscription for a
lesser number of Common Shares than expressed in any Warrant Certificate, the
Holder hereof shall be entitled to receive, at no cost to the Holder, a new
Warrant Certificate in respect of the balance of Warrants not then exercised.
Such new Warrant Certificate shall be mailed to the Holder by the Corporation
or, at its direction, the transfer agent of the Corporation, contemporaneously
with the mailing of the certificate or certificates representing the Common
Shares issued pursuant to section 5.
15. If any Warrant Certificate becomes
stolen, lost, mutilated or destroyed, the Corporation shall, on such terms as it
may in its discretion impose, acting reasonably, issue and sign a new Warrant
Certificate of like denomination, tenor and date as the Warrant Certificate so
stolen, lost, mutilated or destroyed for delivery to the Holder. The applicant
for the issue of a new Warrant Certificate pursuant to this section shall bear the cost of the issue thereof and in the case of
mutilation shall as a condition precedent to the issue thereof, deliver to the
Corporation the mutilated Warrant Certificate, and in case of loss, destruction
or theft shall, as a condition precedent to the issue thereof, furnish to the
Corporation such evidence of ownership and of the loss, destruction or theft of
the Warrant Certificate so lost, destroyed or stolen as shall be satisfactory to
the Corporation in its discretion and the applicant shall also be required to
furnish an indemnity and surety bond in amount and form satisfactory to the
Corporation in its discretion and shall pay the reasonable charges of the
Corporation in connection therewith.
- 7 -
16. The Holder may transfer the
Warrants represented hereby by:
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(a) |
duly completing and executing the transfer form attached
as Schedule "B" ("Transfer Form"); and |
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(b) |
surrendering this Warrant Certificate and the completed
Transfer Form, together with such other documents as the Corporation may
reasonably request, to the Corporation at the address set forth on the
Transfer Form or such other office as may be specified by the Corporation,
in a written notice to the Holder, from time to
time, |
provided that all such transfers shall
be effected in accordance with all applicable securities laws, and provided
that, after such transfer, the term "Holder" shall mean and include any
transferee or assignee of the current or any future Holder. If only part of the
Warrants evidenced hereby is transferred, the Corporation will deliver to the
Holder and the transferee replacement Warrant Certificates substantially in the
form of this Warrant Certificate.
17. Neither the issuance and sale of
the securities represented by this Warrant Certificate nor the Common Shares
into which these securities are exercisable have been registered under the
United States Securities Act of 1933, as amended (the U.S. Securities
Act) or applicable state securities laws. These securities may not be
offered for sale, sold, transferred or assigned unless registered under the U.S.
Securities Act and any applicable state securities laws or unless an exemption
from such registration is available, and the Corporation and its transfer agent
has received an opinion of counsel of recognized standing in form and substance
reasonably satisfactory to them to such effect.
18. |
(a) |
If at any time (the Forced Conversion Date) (i)
the arithmetic average of the Weighted Average Price of the Common Shares
for the ten (10) consecutive prior Trading Days (as defined below) is
equal to or greater than four hundred percent (400%) of US$[insert:
Current Market Price immediately prior to first signing of the Initial
Purchase Agreement] (as such price may be adjusted in a manner to
correspond with the adjustment of the Exercise Price pursuant to this
Warrant) and (ii) a registration statement covering all of the Common
Shares for which this Warrant is exercisable has been declared effective
by the U.S. Securities and Exchange Commission and remains effective, then
the Corporation, at its sole discretion, may, no later than fifteen (15)
days following the Forced Conversion Date force the exercise of the
Warrant, in whole or in part by notifying the Holder (in the manner set
out in Section 22 hereunder) of the amount of the Warrant that it must
exercise and the amount due hereunder (a Forced Exercise
Notice). Within ten (10) Business Days of the delivery of the Forced
Exercise Notice, the Holder shall deliver the amount due as set out in the
Forced Exercise Notice, provided that if condition (ii) in this 18(a) is
no longer met, the forced exercise under this Section 18(a) is no longer
valid and such payment need not be made. Failure to provide such funds by
the eleventh (11th) Business Day after delivery of the Forced Exercise
Notice shall result in an immediate two percent (2%) increase in the
applicable Aggregate Exercise Price, and if such funds remain unpaid,
there shall be an additional two percent (2%) increase each month thereafter. If the
Corporation has not received payments due under this Section 18(a) after the
tenth (10th) Business Day after the delivery of the Forced Exercise Notice and
any of the conditions (i) or (ii) in this Section 18(a) ceases to be true, the
forced exercise under this Section 18(a) shall remain in full force. Upon
payment under this Section 18, the Corporation shall provide the Holder with the
the Common Shares for which this Warrant is exercisable pursuant to Section
18(b). As used in this Warrant, Weighted Average Price" means, for the
Common Shares as of any date, the dollar volume-weighted average price for the
Common Shares on Nasdaq during the period beginning at 9:30:01 a.m., New York
time (or such other time as Nasdaq publicly announces is the official open of
trading), and ending at 4:00:00 p.m., New York time (or such other time as
Nasdaq publicly announces is the official close of trading), as reported by
Bloomberg through its Volume at Price function or, if the foregoing does not
apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York time (or such other time
as such market publicly announces is the official open of trading), and ending
at 4:00:00 p.m., New York time (or such other time as such market publicly
announces is the official close of trading), as reported by Bloomberg, or, if no
dollar volume-weighted average price is reported for such security by Bloomberg
for such hours, the average of the highest closing bid price and the lowest
closing ask price of any of the market makers for such security as reported in
the OTC Link or "pink sheets" by OTC Markets Group Inc. (formerly Pink OTC
Markets Inc.). If the Weighted Average Price cannot be calculated for a security
on a particular date on any of the foregoing bases, the Weighted Average Price
of the Common Shares on such date shall be the fair market value as mutually
determined by the Corporation and the Holder. If the Corporation and the Holder
are unable to agree upon the fair market value of such security, then such
dispute shall be resolved pursuant to Section 28 with the term Weighted Average
Price As used in this Warrant, Trading Day means any day on which the
Common Shares are traded on Nasdaq, or, if Nasdaq is not the principal trading
market for the Common Shares, then on the principal securities exchange or
securities market on which the Common Shares are then traded; provided that
Trading Day shall not include any day on which the Common Shares are scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Shares are suspended from trading during the final hour of trading on
such exchange or market (or if such exchange or market does not designate in
advance the closing time of trading on such exchange or market, then during the
hour ending at 4:00:00 p.m., New York time). |
- 8 -
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(b) |
Upon payment as set forth in Section 18(a), the
Corporation shall cause to be issued to the Holder the number of Common
Shares subscribed for by the Holder and the Holder shall become a
shareholder of the Corporation in respect of such Common Shares with
effect from the date of such payment and shall be entitled to delivery of
a certificate or certificates evidencing such shares. The Corporation
shall cause such certificate or certificates to be mailed to the Holder at
the address or addresses provided by the Holder within five (5) Business
Days (as defined below) of such payment as set forth in Section 18(a) or,
if so instructed by the Holder, held for pick-up by the Holder at the
principal office of the Corporation; provided, however, if the transfer
agent for the Common Shares is participating in DTC Fast Automated
Securities Transfer Program (the DTC Program) and the Common
Shares to be delivered to the Holder pursuant to this Section 18 are
eligible to participate in the DTC Program, the Corporation will cause the
transfer agent to credit such aggregate number of Common Shares to which
the Holder is entitled pursuant to this Section 18 to the Holders or its
designees balance account with DTC through its Deposit / Withdrawal At Custodian system.
Notwithstanding any adjustment provided for in section 8 hereof, the Corporation
shall not be required upon the exercise of any Warrants to issue fractional
Common Shares in satisfaction of its obligations hereunder and the Holder
understands and agrees that it will not be entitled to any cash payment or other
form of compensation in respect of a fractional Common Share that might
otherwise have been issued. As used in this Warrant Certificate. |
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19. If pursuant to an Additional Raise
(as defined in the Purchase Agreement), any Additional Investor (as defined in
the Purchase Agreement) is sold Common Shares and related Additional Warrants
(as defined in the Purchase Agreement) at a price per Common Share and related
Additional Warrants that is lower than the Purchase Price (as defined in the
Purchase Agreement), then the Exercise Price of this Warrant will be adjusted to
equal the exercise price of such Additional Warrants (if lower) as of the date
of the consummation of the Additional Raise.
20. Any certificate representing Common
Shares issued upon the exercise of this Warrant may bear the following legends:
"UNLESS PERMITTED UNDER APPLICABLE SECURITIES LEGISLATION, THE
HOLDER OF THIS SECURITY MUST NOT TRADE
THIS SECURITY TO OR FOR THE BENEFIT OF A CANADIAN PURCHASER UNTIL THE DATE THAT
IS FOUR MONTHS AND A DAY AFTER [INSERT WARRANT DISTRIBUTION DATE]. (In
the event that no physical certificates are issued, the above constitutes
written notice of the legend restriction under applicable Canadian securities
laws.)
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE 1933 ACT), OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED UNLESS
REGISTERED UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE, AND THE CORPORATION AND ITS
TRANSFER AGENT HAS RECEIVED AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THEM TO SUCH EFFECT."
21. The Corporation will maintain a
register of holders of Warrants at its principal office. The Corporation may
deem and treat the registered holder of any Warrant Certificate as the absolute
owner of the Warrants represented thereby for all purposes, and the Corporation
shall not be affected by any notice or knowledge to the contrary except where
the Corporation is required to take notice by statute or by order of a court of
competent jurisdiction. A Holder shall be entitled to the rights evidenced by
such Warrant free from all equities or rights of set-off or counterclaim between
the Corporation and the original or any intermediate holder thereof and all
persons may act accordingly and the receipt by any such Holder of the Common
Shares purchasable pursuant to such Warrant shall be a good discharge to the
Corporation for the same and the Corporation shall not be bound to inquire into
the title of any such Holder except where the Corporation is required to take
notice by statute or by order of a court of competent jurisdiction.
22. The Corporation shall notify the
Holder forthwith of any change of the Corporations address.
23. All notices to be sent hereunder
shall be deemed to be validly given to the registered holders of the Warrants if
delivered personally or if sent by registered letter through the post addressed
to such holders at their post office addresses appearing in the register of
Warrant holders caused to be maintained by the Corporation, and such notice
shall be deemed to have been given, if delivered personally when so delivered,
and if sent by post on the fifth Business Day next following the post thereof.
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24. If for any reason, other than the failure or default of the
Holder, the Corporation is unable to issue and deliver the Common Shares or
other securities as contemplated herein to the Holder upon the proper exercise
by the Holder of the right to purchase any of the Common Shares purchasable upon
exercise of the Warrants represented hereby, the Corporation may pay, at its
option and in complete satisfaction of its obligations and the rights of the
Holder hereunder, to the Holder, in cash, an amount equal to the difference
between the Exercise Price and the Current Market Price of such Common Shares on
the date of exercise by the Holder, and upon such payment the Corporation shall
have no liability or other obligation to the Holder relating to or in respect of
the Warrants or this Warrant Certificate.
25. This Warrant Certificate shall be governed by the internal
laws of the State of New York , without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York.
26. If one or more of the provisions contained herein shall,
for any reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Warrant Certificate, but this Warrant Certificate shall be
construed as if such invalid, illegal or unenforceable provision or provisions
had never been contained herein.
27. This Warrant Certificate shall enure to the benefit of and
shall be binding upon the Holder and the Corporation and their respective
successors and assigns.
28. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Common Shares for which this
Warrant is exercisable, the Corporation shall submit the disputed determinations
or arithmetic calculations via facsimile or electronic mail to the Holder. If
the Holder and the Corporation are unable to agree upon such determination or
calculation of the Exercise Price or of the Common Shares for which this Warrant
is exercisable within three (3) Business Days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Corporation shall
submit via facsimile or electronic mail (a) the disputed determination of the
Exercise Price to an independent, reputable investment bank selected by the
Corporation and approved by the Holder or (b) the disputed arithmetic
calculation of the Common Shares for which this Warrant is exercisable to the
Corporation's independent, outside accountant. The Corporation shall cause the
investment bank or the accountant, as the case may be, to perform the
determinations or calculations and notify the Corporation and the Holder of the
results. Such investment bank's or accountant's determination or calculation, as
the case may be, shall be binding upon all parties absent demonstrable error.
IN WITNESS WHEREOF the Corporation has caused this
Warrant Certificate to signed by its duly authorized officer.
DATED as of the [] day of [].
SPHERE 3D CORP. |
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Per: |
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Kurt Kalbfleisch, Chief Financial Officer
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Schedule "A"
SUBSCRIPTION FORM
TO BE COMPLETED IF WARRANTS ARE TO BE EXERCISED:
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TO: |
SPHERE 3D CORPORATION |
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9112 Spectrum Center Boulevard, San Diego,
California, 92123 |
The undersigned hereby subscribes for
_______________ Common Shares of Sphere 3D Corp. according to the terms and
conditions set forth in the annexed Warrant Certificate (or such number of other
securities or property to which such Warrant Certificate entitles the
undersigned to acquire under the terms and conditions set forth in such Warrant
Certificate).
Registered Name: |
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Address for Delivery of Common Shares: |
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Exercise Price Tendered (US$[] per Common Share or as
adjusted) US$
____________________
Capitalized terms not defined herein shall have the meanings
assigned to them in the Warrant Certificate to which this subscription form is
attached.
Dated at ____________________, this _____ day of
_______________, 20 .
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WITNESS: |
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HOLDER'S NAME |
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AUTHORIZED SIGNATURE |
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TITLE (IF APPLICABLE)
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Signature guaranteed1:
___________________________________________________________________________
1.
If the Common Shares are to be registered in a name other than the name of the
registered Warrant Holder, the signature of the Warrant Holder must be medallion
guaranteed by a bank, trust Corporation or a member of a stock exchange in the
United States.
Schedule "B"
WARRANT TRANSFER FORM
FOR VALUE RECEIVED, subject to receipt of prior written
approval of SPHERE 3D CORP. (the "Corporation"), the undersigned (the
"Transferor") hereby sells, assigns and transfers unto (name)
__________________________________________________________ (the "Transferee") of (residential
address)__________________________________________________________________________________________________________
Warrants of the Corporation registered in the name of the undersigned
represented by the within certificate, and irrevocably appoints the Corporation
as the attorney of the undersigned to transfer the said securities on the
register of transfers for the said Warrants, with full power of substitution.
NOTICE: |
The signature of this assignment must
correspond with the name as written upon the face of the certificate, in
every particular, without alteration or enlargement or any change
whatever, and must be guaranteed by a bank, trust Corporation or a member
of a recognized stock exchange. The guarantor must affix a stamp bearing
the actual words "Signature Guaranteed". |
DATED this _____ day of _______________, 20____.
Signature Guaranteed
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TRANSFEREE ACKNOWLEDGMENT
In connection with this transfer the undersigned transferee is
delivering a written opinion of U.S. Counsel acceptable to the Corporation to
the effect that this transfer of Warrants has been registered under the 1933 Act
or is exempt from registration thereunder.
(Signature of
Transferee) |
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Name of Transferee (please print)
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The Warrants and the common shares issuable upon exercise of
the Warrants shall only be transferable in accordance with applicable laws. The
Warrants may only be exercised in the manner required by the certificate
representing the Warrants and the Warrant Exercise Form attached thereto. Any
common shares acquired pursuant to this Warrant shall be subject to applicable
hold periods and any certificate representing such common shares will bear
restrictive legends.
EXHIBIT 99.6
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (Agreement) is made as of the
[] day of [] 2015 by and among Sphere 3D Corp., an Ontario corporation (the
Company), and the Investors set forth on the signature pages affixed hereto
(each an Investor and collectively the Investors).
A. The
Company and the Investors are executing and delivering this Agreement in
reliance upon (i) the exemption from securities registration afforded by the
provisions of Regulation D (Regulation D), as promulgated by the U.S.
Securities and Exchange Commission (the SEC) under the Securities Act
of 1933, as amended, or (ii) the prospectus exemption provided by Section 2.3 of
National Instrument 45-106 Prospectus Exemptions (NI 45 106),
in accordance with Schedule IV hereto; and
B. The
Investors wish to purchase from the Company, and the Company wishes to sell and
issue to the Investors, upon the terms and conditions stated in this Agreement,
(i) up to an aggregate of [] Common Shares (as defined below)
(Shares), and (ii) the Warrants (as defined below) to purchase an
aggregate of [] Common Shares (subject to adjustment) at an exercise price of
$[] per share (subject to adjustment) (together, the Transaction); and
C.
Contemporaneous with the sale of the Shares and the Warrants, the parties hereto
will execute and deliver a Registration Rights Agreement, in the form attached
hereto as Exhibit A (the Registration Rights Agreement),
pursuant to which the Company will agree to provide certain registration rights
under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, and applicable state securities laws.
In consideration of the mutual promises made herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. In addition to
those terms defined above and elsewhere in this Agreement, for the purposes of
this Agreement, the following terms shall have the meanings set forth below:
Affiliate means, with respect to any Person, any other
Person which directly or indirectly through one or more intermediaries Controls,
is controlled by, or is under common control with, such Person.
Business Day means a day, other than a Saturday or
Sunday, on which banks in New York City are open for the general transaction of
business.
Canadian Investor means an Investor that is resident
in or otherwise subject to the securities laws of a jurisdiction of Canada.
Canadian Securities Laws means the securities laws,
regulations and rules, and the blanket rulings, policies and written
interpretations of and multilateral or national instruments adopted by the
securities regulators in each of the provinces and territories of Canada.
Common Share Equivalents means any securities of the
Company or the Subsidiaries which would entitle the holder thereof to acquire at
any time Common Shares, including without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Shares.
Common Shares means the common shares in the capital
of the Company (no par value).
Companys Knowledge means the actual knowledge of the
executive officers (as defined in Rule 405 under the 1933 Act) of the Company,
after due inquiry.
Confidential Information means trade secrets,
confidential information and know-how (including but not limited to ideas,
formulae, compositions, processes, procedures and techniques, research and
development information, computer program code, performance specifications,
support documentation, drawings, specifications, designs, business and marketing
plans, and customer and supplier lists and related information).
Control (including the terms controlling,
controlled by or under common control with) means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
Effective Date means the date on which the initial
Registration Statement is declared effective by the SEC.
Effectiveness Deadline means the date on which the
initial Registration Statement is required to be declared effective by the SEC
under the terms of the Registration Rights Agreement.
Intellectual Property means all of the following: (i)
patents, patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); (ii) trademarks, service
marks, trade dress, trade names, corporate names, logos, slogans and Internet
domain names, together with all goodwill associated with each of the foregoing;
(iii) copyrights and copyrightable works; (iv) registrations, applications and
renewals for any of the foregoing; and (v) proprietary computer software
(including but not limited to data, data bases and documentation).
Material Adverse Effect means a material adverse
effect on (i) the assets, liabilities, results of operations, condition
(financial or otherwise), business or prospects of the Company and its
Subsidiaries taken as a whole, or (ii) the ability of the Company to perform its
obligations under the Transaction Documents.
Material Contract means any contract, instrument or
other agreement to which the Company or any Subsidiary is a party or by which it
is bound which has been listed on Schedule II.
Nasdaq means The Nasdaq Global Market.
OSC means the Ontario Securities Commission.
Person means an individual, corporation, partnership,
limited liability company, trust, business trust, association, joint stock
company, joint venture, sole proprietorship, unincorporated organization,
governmental authority or any other form of entity not specifically listed
herein.
Purchase Price means [] ($[]).
-2-
Registration Statement has the meaning set forth in
the Registration Rights Agreement.
Required Investors has the meaning set forth in the
Registration Rights Agreement.
SEC Filings has the meaning set forth in Section
4.6.
Securities means the Shares, the Warrants and the
Warrant Shares.
Shares means the Common Shares to be purchased by the
Investors hereunder.
Subsidiary of any Person means another Person, an
amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly by
such first Person.
Transaction Documents means this Agreement, the
Warrants and the Registration Rights Agreement.
Warrants means, as to each Investor, a warrant to
purchase Common Shares in the form attached hereto as Exhibit B.
Warrant Shares means the Common Shares issuable upon
the exercise of the Warrants.
1933 Act means the Securities Act of 1933, as amended,
or any successor statute, and the rules and regulations promulgated thereunder.
1934 Act means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations promulgated
thereunder.
2. Purchase and Sale of the Shares
and Warrants. Subject to the terms and conditions of this Agreement, on the
Closing Date (as defined below), each of the Investors shall severally, and not
jointly, purchase, and the Company shall sell and issue to the Investors, the
Shares and the Warrants representing the right to purchase Warrant Shares in the
respective amounts set forth on Schedule I attached hereto.
3. Closing.
3.1 Closing. Unless other arrangements have been
made with a particular Investor, upon confirmation that the other conditions to
closing specified herein have been satisfied or duly waived by the Investors,
the Company shall deliver to OMelveny & Myers LLP (OMM), in trust,
a certificate or certificates, registered in such name or names as the Investors
may designate, representing the Shares and the Warrants, with instructions that
such certificates are to be held for release to the Investors only upon payment
in full of the Purchase Price to the Company by the Investors. Unless other
arrangements have been made with a particular Investor, upon such receipt by OMM
of the certificates issuable to an Investor, such Investor shall promptly, but
no more than one (1) Business Day thereafter, cause a wire transfer in same day
funds to be sent to the account of the Company as instructed in writing by the
Company, in an amount representing such Investors aggregate Purchase Price as
set forth on the signature pages to this Agreement. On the date (the Closing
Date) the Company receives the aggregate Purchase Price, the certificates
evidencing the Shares and Warrants shall be released to the Investors (the
Closing). The Closing of the purchase and sale of the Shares and
Warrants shall take place at the offices of OMM, Two Embarcadero Center,
28th Floor, San Francisco, CA 94111, or at such other location and on
such other date as the Company and the Investors shall mutually agree.
-3-
3.2 Additional Investors.
(i) Any sale for cash of Common Shares
and/or warrants to purchase Common Shares (Additional Warrants) for
equity capital raise purposes to one or more investors (each an Additional
Investor) on or after the date of this Agreement until the date that is
forty-five (45) days after the date of the Initial Purchase Agreement (as
defined in the Registration Rights Agreement) (each sale, an Additional
Raise) shall be subject to Sections 3.2(ii) through (iv) of this Agreement.
(ii) If, in connection with such Additional
Raise, the Company proposes to sell Additional Warrants or Common Shares on
terms that are different from those set forth in the Transaction Documents, the
Company will promptly provide each Investor with written notice thereof,
together with a copy of all documentation relating to such Additional Raise and,
upon written request of an Investor, any additional information related to such
Additional Raise or the Additional Investor(s) as may be reasonably requested by
such Investor. In the event an Investor reasonably determines that the terms of
such Additional Raise and any related agreements, including without limitation
the rights in any purchase agreement, warrant agreement or registration right
agreement, are senior or superior to the terms of this Agreement or any of the
Transaction Documents, such Investor will notify the Company in writing.
Promptly after receipt of such written notice from such Investor, the Company
agrees to amend the applicable Transaction Document or enter into a side
agreement with such Investor to provide the Investor with equivalent rights to
the documents in the Additional Raise, each upon terms that shall be reasonably
acceptable to the Investors.
(iii) If, pursuant to an Additional Raise, the
Company issues and sells to any Additional Investor Common Shares at a price per
Common Share that is lower than the Purchase Price or Additional Warrants with a
per share exercise price lower than the exercise price per share than the
Warrants issued hereunder then: (a) the per share exercise price of the Warrants
will be adjusted to equal the exercise price per share of such Additional
Warrants (if lower) as of the date of the consummation of the Additional Raise,
(b) promptly following the consummation of the Additional Raise, the Investor
will receive a number of additional Common Shares from the Company equal to the
difference between (x) the number of shares that Investor would have received
had the Purchase Price been equal to the per share purchase price at which
Common Shares were issued in the Additional Raise and (y) the aggregate number
of Common Shares purchased by the Investor as of the Closing Date, and (c) the
Company will use its commercially reasonable efforts to cause such additional
Common Shares issued pursuant to Section 3.2(iii)(b) above to be listed on
Nasdaq (if the Common Shares are listed thereon) and (d) the provisions of
Section 7.8 of this Agreement shall apply to the additional Common Shares issued
pursuant to this 3.2(iii)(b) .
(iv) Notwithstanding any other provisions in
this Agreement or the Warrant to the contrary, (a) the Company shall in no event
be required to issue any additional Common Shares to the Investor pursuant to
Sections 3.2(ii) or 3.2(iii) to the extent that any such issuance pursuant to
this Agreement together with any issuance of Common Shares or Additional
Warrants pursuant to any of Additional Raises and, in the event NASDAQ
determines to aggregate (Aggregate) such issuances and the issuances by the
Company disclosed on its Current Report on Form 6-K dated June 2, 2015 (the
Prior Issuances) pursuant to NASDAQ rules, the Prior Issuances (z) in the
aggregate may constitute, or is convertible into Common Shares that constitutes,
greater than 19.999% of Common Shares or voting power of the Company outstanding
immediately prior to (I) entry into this Agreement or, (II) in the event NASDAQ
determines to Aggregate, May 19, 2015, (y) would constitute a change of control
under NASDAQ rules, or (x) would otherwise trigger a shareholder approval
requirement under NASDAQ rules, except with the prior approval of the Companys
shareholders, and (b) the Company shall in no event be required to issue any
additional Common Shares to the Investor pursuant to Sections 3.2(ii) and 3.2(iii), unless the Investor confirms (z) the representations
and warranties set forth in Section 5 hereof and, in the case of Canadian
Investors, Schedule IV hereto, as of the date of the issuance of
additional Common Shares, and the issuance is in compliance with applicable
securities laws and (y) that it understands that the certificates evidencing the
additional Common Shares and any record of a book entry or electronic issuance
evidencing the additional Common Shares issued pursuant to Section 3.2(ii) may
bear the legend in Section 5.8 or any similar legend.
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4. Representations and Warranties of
the Company. The Company hereby represents and warrants to each Investor
that:
4.1 Organization, Good
Standing and Qualification. Each of the Company and its Subsidiaries is a
corporation duly organized, validly existing and in good standing (where such
concept exists) under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to carry on its business as now
conducted and to own or lease its properties, in each case as described in the
SEC Filings. Each of the Company and its Subsidiaries is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
makes such qualification or leasing necessary unless the failure to so qualify
has not had and could not reasonably be expected to have a Material Adverse
Effect.
4.2 Authorization. The
Company has the corporate power and authority to enter into this Agreement and
has taken all requisite action on its part, its officers, directors and
shareholders necessary for (i) the authorization, execution and delivery of the
Transaction Documents, (ii) the authorization of the performance of all
obligations of the Company hereunder or thereunder, and (iii) the authorization,
issuance (or reservation for issuance) and delivery of the Securities. The
Transaction Documents constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors
rights generally and to general equitable principles.
4.3 Capitalization. The
authorized capital of the Company consists of an unlimited number of Common
Shares, as set forth in the SEC Filings and in the Articles of Amalgamation of
the Company, as amended and as in effect as of the date of this Agreement (the
Articles of Amalgamation). All of the issued and outstanding Common Shares
have been duly authorized and validly issued and are fully paid, nonassessable
and free of pre-emptive rights and were issued in full compliance with
applicable provincial, state and federal securities law and any rights of third
parties. Except as described in the SEC Filings or described in Schedule
III, all of the issued and outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued and are fully paid,
nonassessable and free of pre-emptive rights, were issued in full compliance
with applicable provincial, state and federal securities law and any rights of
third parties and are owned by the Company, beneficially and of record, subject
to no lien, encumbrance or other adverse claim. Except as described in the SEC
Filings, no Person is entitled to pre-emptive or similar statutory or
contractual rights with respect to any securities of the Company. Except as
described in the SEC Filings or described in Schedule III, there are no
outstanding warrants, options, convertible securities or other rights,
agreements or arrangements of any character under which the Company or any of
its Subsidiaries is or may be obligated to issue any equity securities of any
kind. Except as described or listed in the SEC Filings and except for the
Registration Rights Agreement, and warrants, purchase agreements and
registration rights agreements with Additional Investors, there are no voting
agreements, buy-sell agreements, option or right of first purchase agreements or
other agreements of any kind among the Company and any of the securityholders of
the Company relating to the securities of the Company held by them. Except as
described in the SEC Filings and except as provided in the Registration Rights
Agreement or the registration rights agreement with Additional Investors, no
Person has the right to require the Company to register any securities of the
Company under the 1933 Act, whether on a demand basis or in
connection with the registration of securities of the Company for its own
account or for the account of any other Person.
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Except as described in the SEC Filings, the issuance and sale
of the Securities hereunder will not obligate the Company to issue Common Shares
or other securities to any other Person (other than the Investors) and will not
result in the adjustment of the exercise, conversion, exchange or reset price of
any outstanding security; provided, however, Additional Investors will have
similar rights of adjustment as such rights in Section 3.2 hereof.
Except as described in the SEC Filings, the Company does not
have outstanding shareholder purchase rights, a poison pill or any similar
arrangement in effect giving any Person the right to purchase any equity
interest in the Company upon the occurrence of certain events.
As of June 30, 2015 and prior to giving effect to the
Transaction, there were (i) 37,289,839 Common Shares issued and outstanding,
(ii) 3,182,569 Common Shares issuable upon exercise of outstanding warrants,
(iii) 3,030,357 Common Shares issuable upon exercise of outstanding options and
(iv) 169,880 outstanding restricted stock units.
4.4 Valid Issuance. The Shares
have been duly and validly authorized and, when issued and paid for pursuant to
this Agreement, will be validly issued, fully paid and nonassessable, and shall
be free and clear of all encumbrances and restrictions, except for restrictions
on transfer set forth in the Transaction Documents or imposed by applicable
securities laws. The Warrants have been duly and validly authorized. Upon the
due exercise of the Warrants and full payment for the exercise price thereof,
the Warrant Shares will be validly issued, fully paid and non-assessable free
and clear of all encumbrances and restrictions, except for restrictions on
transfer set forth in the Transaction Documents or imposed by applicable
securities laws. The Company has reserved a sufficient number of Common Shares
for issuance upon the exercise of the Warrants, free and clear of all
encumbrances and restrictions, except for restrictions on transfer set forth in
the Transaction Documents or imposed by applicable securities laws.
4.5 Consents. The execution,
delivery and performance by the Company of the Transaction Documents and the
offer, issuance and sale of the Securities require no consent of, action by or
in respect of, or filing with, any Person, governmental body, agency, or
official other than filings that have been made pursuant to applicable
provincial and state securities laws and post-sale filings pursuant to
applicable provincial, state and federal securities laws which the Company
undertakes to file within the applicable time periods. Subject to the accuracy
of the representations and warranties of each Investor set forth in Section
5 hereof, and, in the case of each Canadian Investor, Schedule IV
hereto, the Company has taken all action necessary to exempt (i) the issuance
and sale of the Securities, (ii) the issuance of the Warrant Shares upon due
exercise of the Warrants, and (iii) the other transactions contemplated by the
Transaction Documents from the provisions of any shareholder rights plan or
other poison pill arrangement, any anti-takeover, business combination or
control share law or statute binding on the Company or to which the Company or
any of its assets and properties may be subject and any provision of the
Articles of Amalgamation or the Companys Bylaw No. 1, as amended and as in
effect as of the date of this Agreement (the Bylaws), that is or could
reasonably be expected to become applicable to the Investors as a result of the
transactions contemplated hereby, including, without limitation, the issuance of
the Securities and the ownership, disposition or voting of the Securities by the
Investors or the exercise of any right granted to the Investors pursuant to this
Agreement or the other Transaction Documents.
4.6 Delivery of SEC Filings;
Business. The Company has made available to the Investors through the EDGAR
system, true and complete copies of the Companys most recent Annual Report on Form 40-F for the fiscal year ended December 31, 2014
(as amended prior to the date hereof, the 40-F), and all other reports
filed or furnished by the Company pursuant to Sections 13(a), 13(e), 14 and
15(d) of the 1934 Act since July 7, 2014 (collectively, the SEC
Filings). The SEC Filings are the only filings required of the Company
pursuant to the 1934 Act for such period. The Company and its Subsidiaries are
engaged in all material respects only in the business described in the SEC
Filings and the SEC Filings contain a complete and accurate description in all
material respects of the business of the Company and its Subsidiaries, taken as
a whole.
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4.7 Use of Proceeds. The net
proceeds of the sale of the Shares and the Warrants hereunder shall be used by
the Company for working capital and general corporate purposes.
4.8 No Material Adverse Change.
Since December 31, 2014, except as described in the SEC Filings, there has not
been:
(i) any change in the consolidated
assets, liabilities, financial condition or operating results of the Company
from that reflected in the financial statements included in the Company's Form
6-K dated May 14, 2015, except for changes in the ordinary course of business
which have not had and could not reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate;
(ii) any declaration or payment of any
dividend, or any authorization or payment of any distribution, on any of the
capital stock of the Company, or any redemption or repurchase of any securities
of the Company;
(iii) any material damage, destruction or
loss, whether or not covered by insurance to any assets or properties of the
Company or its Subsidiaries;
(iv) any waiver, not in the ordinary course of
business, by the Company or any Subsidiary of a material right or of a material
debt owed to it;
(v) any satisfaction or discharge of
any lien, claim or encumbrance or payment of any obligation by the Company or a
Subsidiary, except in the ordinary course of business and which is not material
to the assets, properties, financial condition, operating results or business of
the Company and its Subsidiaries taken as a whole (as such business is presently
conducted and as it is proposed to be conducted);
(vi) any change or amendment to the
Articles of Amalgamation (other than in connection with the transactions
contemplated hereby) or Bylaws, or material change to any material contract or
arrangement by which the Company or any Subsidiary is bound or to which any of
their respective assets or properties is subject;
(vii) any material labor difficulties or labor
union organizing activities with respect to employees of the Company or any
Subsidiary;
(viii) any material transaction entered into by the
Company or a Subsidiary other than in the ordinary course of business;
(ix) the loss of the services of any key
employee, or material change in the composition or duties of the senior
management of the Company or any Subsidiary;
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(x) the loss or, to the Companys
Knowledge, threatened loss of any customer which has had or could reasonably be
expected to have a Material Adverse Effect; or
(xi) any other event or condition of any
character that has had or could reasonably be expected to have a Material
Adverse Effect.
4.9 SEC Filings; F-3
Eligibility.
(a) At the time of filing thereof, the
SEC Filings complied as to form in all material respects with the requirements
of the 1934 Act and did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(b) Other than requirement I.A.2 of
Form F-3, the Company meets the issuer eligibility requirements of General
Instruction I.A of Form F-3 to register the Registrable Securities (as such term
is defined in the Registration Rights Agreement) for sale by the Investors as
contemplated by the Registration Rights Agreement.
4.10 No Conflict, Breach, Violation or
Default. The execution, delivery and performance of the Transaction
Documents by the Company and the issuance and sale of the Securities will not
(i) conflict with or result in a breach or violation of (a) any of the terms and
provisions of, or constitute a default under the Articles of Amalgamation or the
Bylaws (true and complete copies of which have been made available to the
Investors through the EDGAR system), or (b) any statute, rule, regulation or
order of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company, any Subsidiary or any of their respective
assets or properties, or (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
result in the creation of any lien, encumbrance or other adverse claim upon any
of the properties or assets of the Company or any Subsidiary or give to others
any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any Material Contract, except in the
case of clauses (i)(b) and (ii) above, such as could not
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate.
4.11 Tax Matters. The Company and
each Subsidiary has prepared and filed (or filed applicable extensions
therefore) all tax returns required to have been filed by the Company or such
Subsidiary with all appropriate governmental agencies and paid all taxes shown
thereon or otherwise owed by it, other than any such taxes which the Company or
any Subsidiary are contesting in good faith and for which adequate reserves have
been provided and reflected in the Companys financial statements included in
the SEC Filings. The charges, accruals and reserves on the books of the Company
in respect of taxes for all fiscal periods are adequate in all material
respects, and there are no material unpaid assessments against the Company or
any Subsidiary nor, to the Companys Knowledge, any basis for the assessment of
any additional taxes, penalties or interest for any fiscal period or audits by
any federal, state or local taxing authority except for any assessment which is
not material to the Company and its Subsidiaries, taken as a whole. All taxes
and other assessments and levies that the Company or any Subsidiary is required
to withhold or to collect for payment have been duly withheld and collected and
paid to the proper governmental entity or third party when due, other than any
such taxes which the Company or any Subsidiary are contesting in good faith and
for which adequate reserves have been provided and reflected in the Companys
financial statements included in the SEC Filings. There are no tax liens or
claims pending or, to the Companys Knowledge, threatened in writing against the
Company or any Subsidiary or any of their respective assets or property. Except
as described in the SEC Filings, there are no outstanding tax sharing agreements or other such
arrangements between the Company and any Subsidiary or other corporation or
entity.
-8-
4.12 Title to Properties. Except
as disclosed in the SEC Filings, the Company and each Subsidiary has good and
marketable title to all real properties and all other properties and assets
(excluding Intellectual Property assets which are the subject of Section
4.15 hereof) owned by it, in each case free from liens, encumbrances and
defects that would materially affect the value thereof or materially interfere
with the use made or currently planned to be made thereof by them; and except as
disclosed in the SEC Filings, the Company and each Subsidiary holds any leased
real or personal property under valid and enforceable leases with no exceptions
that would materially interfere with the use made or currently planned to be
made thereof by them.
4.13 Certificates, Authorities and
Permits. The Company and each Subsidiary possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by it, except to the extent
failure to possess such certificates, authorities or permits could not
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate, and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authority or permit that, if determined adversely to the Company or such
Subsidiary, could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.
4.14 Labor Matters.
(a) Except as set forth in the SEC
Filings, the Company is not a party to or bound by any collective bargaining
agreements or other agreements with labor organizations. The Company has not
violated in any material respect any laws, regulations, orders or contract
terms, affecting the collective bargaining rights of employees, labor
organizations or any laws, regulations or orders affecting employment
discrimination, equal opportunity employment, or employees health, safety,
welfare, wages and hours.
(b) (i) There are no labor complaint,
grievance, disputes or arbitration existing, or to the Companys Knowledge,
threatened, involving strikes, slow-downs, work stoppages, job actions,
disputes, lockouts or any other disruptions of or by the Companys employees,
(ii) there are no unfair labor practices or petitions for election pending or,
to the Companys Knowledge, threatened before the Ontario Labour Relations
Board, the National Labor Relations Board or any other federal, provincial,
state or local labor commission or tribunal relating to the Companys employees,
(iii) no demand for recognition or certification heretofore made by any labor
organization or group of employees is pending with respect to the Company and
(iv) to the Companys Knowledge, the Company enjoys good labor and employee
relations with its employees and labor organizations.
(c) The Company is, and at all times
has been, in compliance with all applicable laws respecting employment
(including laws relating to classification of employees and independent
contractors) and employment practices, terms and conditions of employment, wages
and hours, and immigration and naturalization, except where the failure to so
comply could not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate. There are no claims pending against the
Company before the Human Rights Code, the Equal Employment Opportunity
Commission or any other administrative body or in any court asserting any
violation of the Human Rights Code, Title VII of the Civil Rights Act of 1964,
the Age Discrimination Act of 1967, 42 U.S.C. §§ 1981 or 1983 or any other
federal, provincial, state or local Law, statute or ordinance barring
discrimination in employment.
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(d) To the Companys Knowledge, the
Company has no liability for the improper classification by the Company of its
employees as independent contractors or leased employees prior to the Closing.
4.15 Intellectual Property. The
Company and the Subsidiaries own, or have obtained valid and enforceable
licenses for, or other rights to use, the Intellectual Property necessary for
the conduct of the business of the Company and the Subsidiaries as currently
conducted and as described in the SEC Filings as being owned or licensed by
them, except where the failure to own, license or have such rights could not
reasonably be expected to result in a Material Adverse Effect, individually or
in the aggregate. Except as described in the SEC Filings, (i) to the Companys
Knowledge, there are no third parties who have or will be able to establish
rights to any Intellectual Property, except for the ownership rights of the
owners of the Intellectual Property which is licensed to the Company as
described in the SEC Filings or where such rights could not reasonably be
expected to result in a Material Adverse Effect, individually or in the
aggregate, (ii) there is no pending or, to the Companys Knowledge, threat of
any, action, suit, proceeding or claim by others challenging the Companys or
any Subsidiarys rights in or to, or the validity, enforceability, or scope of,
any Intellectual Property owned by or licensed to the Company or any Subsidiary
or claiming that the use of any Intellectual Property by the Company or any
Subsidiary in their respective businesses as currently conducted infringes,
violates or otherwise conflicts with the intellectual property rights of any
third party, and (iii) to the Companys Knowledge, the use by the Company or any
Subsidiary of any Intellectual Property by the Company or any Subsidiary in
their respective businesses as currently conducted does not infringe, violate or
otherwise conflict with the intellectual property rights of any third party.
4.16 Environmental Matters. To the
Companys Knowledge, neither the Company nor any Subsidiary is in violation of
any statute, rule, regulation, decision or order of any governmental agency or
body or any court, domestic or foreign, relating to the use, disposal or release
of hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, Environmental Laws), owns or operates any real property
contaminated with any substance that is subject to any Environmental Laws, is
liable for any off-site disposal or contamination pursuant to any Environmental
Laws, or is subject to any claim relating to any Environmental Laws, which
violation, contamination, liability or claim has had or could reasonably be
expected to have a Material Adverse Effect, individually or in the aggregate;
and there is no pending or, to the Companys Knowledge, threatened investigation
that might lead to such a claim.
4.17 Litigation. There are no
pending actions, suits or proceedings against or affecting the Company, its
Subsidiaries or any of its or their properties; and to the Companys Knowledge,
no such actions, suits or proceedings are threatened, except (i) as described in
the SEC Filings or (ii) any such proceeding, which if resolved adversely to the
Company or any Subsidiary, could not reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate. Neither the Company nor any
Subsidiary, nor any director or officer thereof, is or since January 1, 2014 has
been the subject of any action involving a claim of violation of or liability
under federal, provincial, or state securities laws or a claim of breach of
fiduciary duty. There has not been, and to the Companys Knowledge, there is not
pending or contemplated, any investigation by the OSC (or any other Canadian
securities regulatory authority) or SEC involving the Company or any current or
former director or officer of the Company. The SEC has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company or any Subsidiary under the 1933 Act or the 1934 Act.
4.18 Financial Statements. The
financial statements included in each SEC Filing comply in all material respects
with applicable accounting requirements and the rules and regulations of the SEC
with respect thereto as in effect at the time of filing (or to the extent
corrected by a subsequent restatement) and present fairly, in all material
respects, the consolidated financial position of the Company as of the dates shown and its consolidated results of
operations and cash flows for the periods shown, and such financial statements
have been prepared in conformity with United States generally accepted
accounting principles applied on a consistent basis (GAAP) (except as
may be disclosed therein or in the notes thereto). Except as set forth in the
SEC Filings filed prior to the date hereof, neither the Company nor any of its
Subsidiaries has incurred any liabilities, contingent or otherwise, except those
incurred in the ordinary course of business, consistent (as to amount and
nature) with past practices since the date of such financial statements, none of
which, individually or in the aggregate, have had or could reasonably be
expected to have a Material Adverse Effect.
-10-
4.19 Insurance Coverage. The
Company and each Subsidiary maintain in full force and effect insurance coverage
that is customary for comparably situated companies for the business being
conducted and properties owned or leased by the Company and each Subsidiary.
4.20 Compliance with Nasdaq Continued
Listing Requirements. Except as disclosed in the SEC Filings, (i) the
Company is in compliance with applicable Nasdaq continued listing requirements,
(ii) there are no proceedings pending or, to the Companys Knowledge, threatened
against the Company relating to the continued listing of the Common Shares on
Nasdaq, and (iii) the Company has not received any currently pending notice of
the delisting of the Common Shares from Nasdaq.
4.21 Brokers and Finders. No
Person, including, without limitation, any Investor or any current holder of
Common Shares, will have, as a result of the transactions contemplated by the
Transaction Documents, any valid right, interest or claim against or upon the
Company, any Subsidiary or an Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Company.
4.22 No Directed Selling Efforts or
General Solicitation. Neither the Company nor any Person acting on its
behalf has conducted any general solicitation or general advertising (as those
terms are used in Regulation D) in connection with the offer or sale of any of
the Securities.
4.23 No Integrated Offering. Assuming
the accuracy of the Investors representations and warranties set forth in
Section 5 hereof, neither the Company nor any of its Affiliates, nor any
Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any Company security or solicited any offers to buy any
security, which are or will be integrated with this offering of the Securities
hereunder in a manner that would adversely affect reliance by the Company on
Section 4(a)(2) for the exemption from registration for the transactions
contemplated hereby or would require registration of the Securities under the
1933 Act.
4.24 Private Placement. Assuming
the accuracy of the Investors representations and warranties set forth in
Section 5 hereof and, in the case of Canadian Investors, Schedule
IV hereto, the offer and sale of the Securities to the Investors as
contemplated hereby is exempt from the registration requirements of the 1933
Act, and, in the case of Canadian Investors, is exempt from the prospectus
requirement under applicable Canadian Securities Laws.
4.25 Questionable Payments.
Neither the Company nor any of its Subsidiaries nor, to the Companys
Knowledge, any of their respective current or former shareholders, directors,
officers, employees, agents or other Persons acting on behalf of the Company or
any Subsidiary, has, on behalf of the Company or any Subsidiary or in connection
with their respective businesses, (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any direct or indirect unlawful payments to any
governmental officials or employees from corporate funds, (iii) established or
maintained any unlawful or unrecorded fund of corporate monies or other assets,
(iv) made any false or fictitious entries on the books and records of the
Company or any Subsidiary, or (v) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment of any nature.
-11-
4.26 Transactions with
Affiliates. Except as disclosed in the SEC Filings and except as would not
be required to be disclosed in the SEC Filings, none of the officers or
directors of the Company and, to the Companys Knowledge, none of the employees
of the Company is presently a party to any transaction with the Company or any
Subsidiary (other than as holders of stock options and/or warrants, and for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
Companys Knowledge, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
4.27 Internal Controls. The
Company is in material compliance with the provisions of the Sarbanes-Oxley Act
of 2002 currently applicable to the Company. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
managements general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with managements general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures (as
defined in 1934 Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed
such disclosure controls and procedures to ensure that material information
relating to the Company, including the Subsidiaries, is made known to the
certifying officers by others within those entities, particularly during the
period in which the Companys most recently filed periodic report under the 1934
Act, as the case may be, is being prepared. The Companys certifying officers
have evaluated the effectiveness of the Companys disclosure controls and
procedures as of the end of the period covered by the most recently filed
periodic report under the 1934 Act (such date, the Evaluation Date).
The Company presented in its most recently filed periodic report under the 1934
Act the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant
changes in the Companys internal controls (as such term is defined in Item 308
of Regulation S-K) or, to the Companys Knowledge, in other factors that could
significantly affect the Companys internal controls. The Company maintains and
will continue to maintain a standard system of accounting established and
administered in accordance with GAAP and the applicable requirements of the 1934
Act.
4.28 Investment Company. The Company
is not required to be registered as, and is not an Affiliate of, and immediately
following the Closing will not be required to register as, an investment
company within the meaning of the Investment Company Act of 1940, as amended.
Each of the Investors acknowledges and agrees that the Company
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section
4. Each of the Investors further acknowledges and agrees that neither the
Company nor any other Person has made any representation or warranty, expressed
or implied, as to the accuracy or completeness of any information received by
any such Investor which constitutes or may be deemed to constitute a projection,
estimate or other forecast and certain business plan information, except that
such information was prepared in good faith and based upon assumptions that the
Company believes to have been reasonable at the time such information, if any,
was provided to the applicable Investor.
-12-
5. Representations and Warranties of
the Investors. Each of the Investors hereby severally, and not jointly,
represents and warrants to the Company that:
5.1 Organization and Existence.
Such Investor is a corporation, limited partnership or limited liability
company, it is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has all
requisite corporate, partnership or limited liability company power and
authority to enter into and to consummate the transactions contemplated by the
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder.
5.2 Authorization. The
execution, delivery and performance by such Investor of the Transaction
Documents to which such Investor is a party have been duly authorized and each
will constitute the legal, valid and binding obligation of such Investor,
enforceable against such Investor in accordance with their respective terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability, relating to or affecting
creditors rights generally.
5.3 Consents. All consents,
approvals, orders and authorizations required on the part of such Investor in
connection with the execution, delivery or performance of each Transaction
Document and the consummation of the transactions contemplated hereby and
thereby have been obtained and are effective as of the date hereof.
5.4 Purchase Entirely for Own
Account. The Securities to be received by such Investor hereunder will be
acquired for such Investors own account, not as nominee, trustee,
representative or agent, and not with a view to the resale or distribution of
any part thereof in violation of the 1933 Act, and such Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same and has no arrangement or understanding with any other Persons
regarding the distribution of such Securities in violation of the 1933 Act or
any applicable federal, provincial or state securities law without prejudice,
however, to such Investors right at all times to sell or otherwise dispose of
all or any part of such Securities in compliance with applicable federal,
provincial and state securities laws. Such Investor is acquiring the
Securities hereunder in the ordinary course of its business. Nothing contained
herein shall be deemed a representation or warranty by such Investor to hold the
Securities for any period of time. Such Investor is not a broker-dealer
registered with the SEC under the 1934 Act or an entity engaged in a business
that would require it to be so registered.
5.5 Investment Experience. Such
Investor acknowledges that it can bear the economic risk and complete loss of
its investment in the Securities and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment contemplated hereby.
5.6 Disclosure of Information.
Such Investor has had an opportunity to receive all information related to the
Company requested by it and to ask questions of and receive answers from the
Company regarding the Company, its business and the terms and conditions of the
offering of the Securities. Such Investor acknowledges receipt of copies of the
SEC Filings. Neither such inquiries nor any other due diligence investigation
conducted by such Investor shall modify, limit or otherwise affect such
Investors right to rely on the Companys representations and warranties
contained in this Agreement.
5.7 Restricted Securities. Such
Investor understands that the Securities are characterized as restricted
securities under the U.S. federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold without
registration under the 1933 Act only in certain limited circumstances.
-13-
5.8 Legends. It is understood
that, except as provided below, certificates evidencing the Securities and any
record of a book entry or electronic issuance evidencing the Securities may bear
the following or any similar legend:
(a) THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES
ACT), AND, ACCORDINGLY, MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE
BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT, (II) SUCH SECURITIES
MAY BE SOLD PURSUANT TO RULE 144, OR (III) THE COMPANY HAS RECEIVED AN OPINION
OF COUNSEL TO THE TRANSFEROR, THE SUBSTANCE OF WHICH OPINION SHALL BE REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT
REGISTRATION UNDER THE SECURITIES ACT.
(b) If required by the authorities of
any state in connection with the issuance of sale of the Securities, the legend
required by such state authority, including the legend set forth in Schedule
IV hereto.
5.9 Accredited Investor. (i) In
the case of a non-Canadian Investor, such Investor is an accredited investor as
defined in Rule 501(a) of Regulation D, as amended, under the 1933 Act, or (ii)
in the case of a Canadian investor, has completed, executed and delivered to the
Company the form attached hereto as Schedule IV. Such Investor was not
organized for the specific purpose of acquiring the Securities and is not
required to be registered as a broker-dealer under Section 15 of the Exchange
Act. Each Canadian Investor shall complete, execute and deliver to the Company
the form attached hereto as Schedule IV.
5.10 No General Solicitation.
Such Investor did not learn of the investment in the Securities as a result of
any general solicitation or general advertising.
5.11 Brokers and Finders. No
Person will have, as a result of the transactions contemplated by the
Transaction Documents, any valid right, interest or claim against or upon the
Company, any Subsidiary or an Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of such Investor.
5.12 Prohibited Transactions.
Since the such time as such Investor was first contacted by the Company or any
other Person acting on behalf of the Company regarding the transactions
contemplated hereby through the public announcement of the Transaction, neither
such Investor nor any Affiliate of such Investor which (a) had knowledge of the
transactions contemplated hereby, (b) has or shares discretion relating to such
Investors investments or trading or information concerning such Investors
investments, including in respect of the Securities, or (c) is subject to such
Investors review or input concerning such Affiliates investments or trading
(collectively, Trading Affiliates) has, directly or indirectly,
effected or agreed to effect, or will directly or indirectly effect, any short
sale, whether or not against the box, established any put equivalent position
(as defined in Rule 16a-1(h) under the 1934 Act) with respect to the Common
Shares, granted any other right (including, without limitation, any put or call
option) with respect to the Common Shares or with respect to any security that
includes, relates to or derived any significant part of its value from the
Common Shares or otherwise sought to hedge its position in the Securities (each,
a Prohibited Transaction). Such Investor acknowledges that the representations, warranties and covenants contained in this
Section 5.12 are being made for the benefit of the Investors as well as
the Company and that each of the other Investors shall have an independent right
to assert any claims against such Investor arising out of any breach or
violation of the provisions of this Section 5.12.
-14-
5.13 Beneficial Ownership.
Immediately following such Investors purchase of the Securities hereunder, such
Investor, together with its Affiliates, will not beneficially own or be deemed
the beneficial owner of more than 9.9999% of all such Common Shares and other
voting securities of the Company. For the purposes of this Section 5.13,
beneficial ownership shall be determined in accordance with Section 13(d) of the
1934 Act.
The Company acknowledges and agrees that each Investor has not
made any representations or warranties with respect to the transactions
contemplated by the Transaction Documents other than those specifically set
forth in this Section 5 and, in the case of each Canadian investor,
Schedule IV hereto.
6. Conditions to Closing.
6.1 Conditions to the Investors
Obligations. The obligation of each Investor to purchase the Shares and the
Warrants at the Closing is subject to the fulfillment to such Investors
satisfaction, on or prior to the Closing Date, of the following conditions, any
of which may be waived by such Investor (as to itself only):
(a) The representations and warranties
made by the Company in Section 4 hereof qualified as to materiality shall
be true and correct at all times prior to and on the Closing Date as so
qualified, except to the extent any such representation or warranty expressly
speaks as of an earlier date, in which case such representation or warranty
shall be true and correct as of such earlier date as so qualified, and, the
representations and warranties made by the Company in Section 4 hereof
not qualified as to materiality shall be true and correct in all material
respects at all times prior to and on the Closing Date, except to the extent any
such representation or warranty expressly speaks as of an earlier date, in which
case such representation or warranty shall be true and correct in all material
respects as of such earlier date. The Company shall have performed in all
material respects all obligations and covenants herein required to be performed
by it on or prior to the Closing Date.
(b) The Company shall have obtained any
and all consents, permits, approvals, registrations and waivers necessary or
appropriate for consummation of the purchase and sale of the Securities and the
consummation of the other transactions contemplated by the Transaction
Documents, all of which shall be in full force and effect.
(c) The Company shall have executed and
delivered the Registration Rights Agreement.
(d) The Company shall have filed with
Nasdaq a Notification Form: Listing of Additional Shares for the listing of the
Shares and the Warrant Shares on Nasdaq, a copy of which shall have been
provided to the Investors.
(e) No judgment, writ, order,
injunction, award or decree of or by any court, or judge, justice or magistrate,
including any bankruptcy court or judge, or any order of or by any governmental
authority, shall have been issued, and no action or proceeding shall have been
instituted by any governmental authority, enjoining or preventing the
consummation of the transactions contemplated hereby or in the other Transaction
Documents.
-15-
(f) The Company shall have delivered a
certificate, executed on behalf of the Company by its Chief Executive Officer or
its Chief Financial Officer, dated as of the Closing Date, certifying to the
fulfillment of the conditions specified in subsections (a), (b),
(e) and (i) of this Section 6.1.
(g) The Company shall have delivered a
certificate, executed on behalf of the Company by its Secretary, dated as of the
Closing Date, certifying the resolutions adopted by the Board of Directors of
the Company or any duly authorized committee thereof approving the transactions
contemplated by this Agreement and the other Transaction Documents and the
issuance of the Securities, certifying the current versions of the Articles of
Amalgamation and Bylaws and certifying as to the signatures and authority of
persons signing the Transaction Documents and related documents on behalf of the
Company.
(h) The Investors shall have received
an opinion from OMelveny & Myers LLP, U.S. special counsel to the Company,
and an opinion from Stikeman Elliott LLP, Canadian special counsel to the
Company, each dated as of the Closing Date, in form and substance reasonably
acceptable to the Investors and addressing such legal matters as the Investors
may reasonably request.
(i) No stop order or suspension of
trading shall have been imposed by Nasdaq, the SEC or any other governmental or
regulatory body with respect to public trading in the Common Shares.
6.2 Conditions to Obligations of the
Company. The Companys obligation to sell and issue the Shares and the
Warrants at Closing is subject to the fulfillment to the satisfaction of the
Company on or prior to the Closing Date of the following conditions, any of
which may be waived by the Company:
(a) The representations and warranties
made by the Investors in Section 5 hereof and, in the case of Canadian
Investors, Schedule IV hereto, other than the representations and
warranties contained in Sections 5.4, 5.5, 5.6, 5.7,
5.8, 5.9 and 5.10 (the Investment Representations), shall
be true and correct in all material respects when made, and shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date. The Investment
Representations shall be true and correct in all respects when made, and shall
be true and correct in all respects on the Closing Date with the same force and
effect as if they had been made on and as of said date. The Investors shall have
performed in all material respects all obligations and covenants herein required
to be performed by them on or prior to the Closing Date.
(b) The Investors have executed and
delivered the Registration Rights Agreement.
(c) The Investors shall have delivered
the Purchase Price to the Company.
6.3 Termination of Obligations to
Effect Closing; Effects.
(a) The obligations of the Company, on
the one hand, and the Investors, on the other hand, to effect the Closing shall
terminate as follows:
(i) Upon the mutual written consent of
the Company and the Investors;
-16-
(ii) By the Company if any of the conditions
set forth in Section 6.2 shall have become incapable of fulfillment, and
shall not have been waived by the Company;
(iii) By an Investor (with respect to itself only)
if any of the conditions set forth in Section 6.1 shall have become incapable of
fulfillment, and shall not have been waived by the Investor; or
(iv) By either the Company or any Investor
(with respect to itself only) if the Closing has not occurred on or prior to
August 15, 2015;
provided, however, that, except in the case of
clause (i) above, the party seeking to terminate its obligation to effect
the Closing shall not then be in breach of any of its representations,
warranties, covenants or agreements contained in this Agreement or the other
Transaction Documents if such breach has resulted in the circumstances giving
rise to such partys seeking to terminate its obligation to effect the Closing.
(b) In the event of termination by the
Company or any Investor of its obligations to effect the Closing pursuant to
this Section 6.3, written notice thereof shall forthwith be given to the
other Investors by the Company and the other Investors shall have the right to
terminate their obligations to effect the Closing upon written notice to the
Company and the other Investors. Nothing in this Section 6.3 shall be
deemed to release any party from any liability for any breach by such party of
the terms and provisions of this Agreement or the other Transaction Documents or
to impair the right of any party to compel specific performance by any other
party of its obligations under this Agreement or the other Transaction
Documents.
7. Covenants and Agreements.
7.1 Reservation of Common
Shares. The Company shall at all times reserve and keep available out of its
authorized but unissued Common Shares, solely for the purpose of providing for
the exercise of the Warrants, such number of Common Shares as shall from time to
time equal the Warrant Shares issuable from time to time.
7.2 Reports. The Company
will furnish to the Investors and/or their assignees such information relating
to the Company and its Subsidiaries as from time to time may reasonably be
requested by the Investors and/or their assignees; provided, however, that the
Company shall not disclose material nonpublic information to the Investors, or
to advisors to or representatives of the Investors, in connection with the
transactions contemplated by this Agreement unless prior to disclosure of such
information the Company identifies such information as being material nonpublic
information and provides the Investors, such advisors and representatives with
the opportunity to accept or refuse to accept such material nonpublic
information for review and any Investor wishing to obtain such information
enters into an appropriate confidentiality agreement with the Company with
respect thereto.
7.3 No Conflicting Agreements.
The Company will not take any action, enter into any agreement or make any
commitment that would conflict or interfere in any material respect with the
Companys obligations to the Investors under the Transaction Documents.
7.4 Insurance. The Company shall
not materially reduce the insurance coverages described in Section 4.19.
7.5 Compliance with Laws. The
Company will comply in all material respects with all applicable laws, rules,
regulations, orders and decrees of all governmental authorities.
-17-
7.6 Listing of Underlying Shares and
Related Matters. Promptly following the date hereof, the Company shall take
all necessary action to cause the Shares and the Warrant Shares to be listed on
Nasdaq no later than the Closing Date. Further, if the Company applies to have
its Common Shares or other securities traded on any other principal stock
exchange or market, it shall include in such application the Shares and the
Warrant Shares and will take such other action as is necessary to cause such
Common Shares to be so listed. The Company will use commercially reasonable
efforts to continue the listing and trading of its Common Shares on Nasdaq and,
in accordance, therewith, will use commercially reasonable efforts to comply in
all respects with the Companys reporting, filing and other obligations under
the bylaws or rules of such market or exchange, as applicable.
7.7 Termination of Covenants.
The provisions of Sections 7.2 through 7.5 shall terminate and be
of no further force and effect on the date on which the Companys obligations
under the Registration Rights Agreement to register or maintain the
effectiveness of any registration covering the Registrable Securities (as such
term is defined in the Registration Rights Agreement) shall terminate.
7.8 Removal of Legends. Upon the
earlier of (i) the sale or disposition of any Securities by an Investor pursuant
to Rule 144 or pursuant to any other exemption under the 1933 Act such that the
purchaser acquires freely tradable securities or (ii) any Securities of the
Investor becoming eligible to be sold without restriction pursuant to Rule 144,
upon the written request of such Investor, subject to any applicable Canadian
Securities Laws, the Company shall or, in the case of Common Shares, shall cause
the transfer agent for the Common Shares (the Transfer Agent) to issue
replacement certificates representing such Securities or updated or replacement
records of book entries or electronic issuances evidencing such Securities. From
and after the earlier of such dates, upon an Investors written request, the
Company shall promptly cause certificates or records of book-entries or
electronic issuances evidencing the Investors Securities to be replaced with
certificates or records of book-entries or electronic issuances, respectively,
which do not bear such restrictive legends, and Warrant Shares subsequently
issued upon due exercise of the Warrants shall not bear such restrictive legends
provided the provisions of either clauses (i) or (ii) above, as
applicable, are satisfied with respect thereto. In addition, upon the earlier of
(a) registration of the Shares and the Warrant Shares for resale pursuant to the
Registration Rights Agreement or (b) the Shares and/or the Warrant Shares
becoming eligible to be sold without restriction pursuant to Rule 144, the
Company shall (1) deliver to the Transfer Agent irrevocable instructions that
the Transfer Agent shall reissue a certificate or a record of book entry or
electronic issuance representing Common Shares without legends upon receipt by
such Transfer Agent of the legended certificates or the appropriate ownership
records of book-entry or electronically issued Common Shares bearing legends, as
applicable, for such Common Shares, together with either (A) a customary
representation by the Investor that Rule 144 applies to the Common Shares
represented thereby or (B) a statement by the Investor that such Investor has
sold the Common Shares represented thereby in accordance with the Plan of
Distribution contained in the Registration Statement, and (2) cause its counsel
to deliver to the Transfer Agent one or more blanket opinions to the effect that
the removal of such legends in such circumstances may be effected under the 1933
Act. When the Company is required to cause an unlegended certificate to replace
a previously issued legended certificate or an unlegended record of book-entry
or electronic issuance to replace a previously issued legended record of
book-entry or electronic issuance, if: (x) the unlegended certificate or
unlegended record of book-entry or electronic issuance is not delivered to an
Investor within three (3) Business Days of submission by that Investor of a
legended certificate or appropriate ownership records of book-entry or
electronically issued Common Shares bearing legends, as applicable, and
supporting documentation to the Transfer Agent as provided above and (y) prior
to the time such unlegended certificate or unlegended record of book-entry or
electronic issuance is received by the Investor after such three (3) Business
Day period, the Investor, or any third party on behalf of such Investor or for
the Investors account, purchases (in an open market transaction or otherwise)
Common Shares to deliver in satisfaction of a sale by the Investor of Common
Shares represented by such certificate or record of book-entry
or electronic issuance (a Buy-In), then the Company shall pay in cash
to the Investor (for costs incurred either directly by such Investor or on
behalf of a third party) the amount by which the total purchase price paid for
Common Shares as a result of the Buy-In (including brokerage commissions, if
any) exceeds the proceeds received by such Investor as a result of the sale to
which such Buy-In relates. The Investor shall provide the Company written notice
together with a reasonably detailed summary indicating the amounts payable to
the Investor in respect of the Buy-In.
-18-
7.9 Subsequent Equity Sales. The
Company shall not, and shall use its commercially reasonable efforts to ensure
that no Affiliate of the Company shall, sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in Section
2 of the 1933 Act) that will be integrated with the offer or sale of the
Securities in a manner that would require the registration under the 1933 Act of
the sale of the Securities to the Investors, or that will be integrated with the
offer or sale of the Securities for purposes of the rules and regulations of any
trading market such that it would require shareholder approval prior to the
closing of such other transaction unless shareholder approval is obtained before
the closing of such subsequent transaction.
7.10 Equal Treatment of Investors. No
consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of the Transaction Documents
unless the same consideration is also offered to all of the parties to the
Transaction Documents. For clarification purposes, this provision constitutes a
separate right granted to each Investor by the Company and negotiated separately
by each Investor, and is intended for the Company to treat the Investors as a
class and shall not in any way be construed as the Investors acting in concert
or as a group with respect to the purchase, disposition or voting of Securities
or otherwise.
8. Survival and Indemnification.
8.1 Survival. The
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Closing of the transactions contemplated by this
Agreement until the expiration of the applicable statute of limitations.
8.2 Indemnification. The Company agrees to indemnify and
hold harmless each Investor and its Affiliates and their respective directors,
officers, trustees, members, managers, employees and agents, and their
respective successors and assigns, from and against any and all losses, claims,
damages, liabilities and expenses (including, without limitation, reasonable
attorney fees and disbursements (subject to Section 8.3 below) and other
expenses incurred in connection with investigating, preparing or defending any
action, claim or proceeding, pending or threatened and the costs of enforcement
thereof) (collectively, Losses) to which such Person may become subject
as a result of any breach of any representation, warranty, covenant or agreement
made by or to be performed on the part of the Company under the Transaction
Documents, and will reimburse any such Person for all such amounts as they are
incurred by such Person.
8.3 Conduct of Indemnification Proceedings.
Any person entitled to indemnification hereunder shall (i) give prompt
notice to the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party;
provided that any person entitled to indemnification hereunder shall have
the right to employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the expense of such
person unless (a) the indemnifying party has agreed to pay such fees or
expenses, (b) the indemnifying party shall have failed to assume the defense of
such claim and employ counsel reasonably satisfactory to such person or (c) in
the reasonable judgment of any such person, based upon written advice of its
counsel, a conflict of interest exists between such person and the
indemnifying party with respect to such claims (in which case, if the person
notifies the indemnifying party in writing that such person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such person); and provided, further, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm of
attorneys at any time for all such indemnified parties. No indemnifying party
will, except with the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation. The
Company will not be liable to any indemnified party under this Agreement (x) for
any settlement by such indemnified party effected without the Companys prior
written consent, which shall not be unreasonably withheld, conditioned or
delayed, or (y) for any Losses incurred by such indemnified party which a court
of competent jurisdiction determines in a final judgment which is not subject to
further appeal are solely attributable to (A) a breach of any of the
representations, warranties, covenants or agreements made by such indemnified
party under this Agreement or in any other Transaction Document or (B) the
fraud, gross negligence or willful misconduct of such indemnified party.
-19-
9. Miscellaneous.
9.1 Successors and Assigns. This
Agreement may not be assigned by a party hereto without the prior written
consent of the Company or the Investors, as applicable, provided, however, that
an Investor may assign its rights and delegate its duties hereunder in whole or
in part to an Affiliate or to a third party acquiring some or all of its
Securities in a transaction complying with applicable securities laws without
the prior written consent of the Company or the other Investors. The provisions
of this Agreement shall inure to the benefit of and be binding upon the
respective permitted successors and assigns of the parties. Without limiting the
generality of the foregoing, in the event that the Company is a party to a
merger, amalgamation, consolidation, share exchange or similar business
combination transaction in which the Common Shares is converted into the equity
securities of another Person, from and after the effective time of such
transaction, such Person shall, by virtue of such transaction, be deemed to have
assumed the obligations of the Company hereunder, the term Company shall be
deemed to refer to such Person and the term Common Shares shall be deemed to
refer to the securities received by the Investors in connection with such
transaction. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
9.2 Counterparts; Faxes. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. This Agreement may also be executed via facsimile, which shall be
deemed an original.
9.3 Titles and Subtitles. The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this Agreement.
9.4 Notices. Unless otherwise
provided, any notice required or permitted under this Agreement shall be given
in writing and shall be deemed effectively given as hereinafter described (i) if
given by personal delivery, then such notice shall be deemed given upon such
delivery, (ii) if given by electronic mail, telex or telecopier, then such
notice shall be deemed given upon receipt of confirmation of complete transmittal, (iii) if given by mail, then such
notice shall be deemed given upon the earlier of (a) receipt of such notice by
the recipient or (b) three days after such notice is deposited in first class
mail, postage prepaid, and (iv) if given by an internationally recognized
overnight air courier, then such notice shall be deemed given one Business Day
after delivery to such carrier. All notices shall be addressed to the party to
be notified at the address as follows, or at such other address as such party
may designate by ten days advance written notice to the other party:
-20-
If to the Company:
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Sphere 3D Corp. |
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9112 Spectrum Center Boulevard |
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San Diego, California 92123 |
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Attention: |
Kurt Kalbfleisch, Chief Financial Officer
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Fax: |
(858) 495-4267 |
With a copy to:
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OMelveny & Myers LLP |
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2756 Sand Hill Road |
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Menlo Park, California 94025 |
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Attention: |
Warren T. Lazarow, Esq. |
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Paul L. Sieben, Esq. |
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Fax: |
(650) 473-2601 |
If to the Investors:
to the addresses set forth on the signature pages hereto.
9.5 Expenses. The parties hereto
shall pay their own costs and expenses in connection herewith, regardless of
whether the transactions contemplated hereby are consummated. In the event that
legal proceedings are commenced by any party to this Agreement against another
party to this Agreement in connection with this Agreement or the other
Transaction Documents, the party or parties which do not prevail in such
proceedings shall severally, but not jointly, pay their pro rata share of the
reasonable attorneys fees and other reasonable out-of-pocket costs and expenses
incurred by the prevailing party in such proceedings.
9.6 Amendments and Waivers. Any
term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Investors. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any Securities purchased under
this Agreement at the time outstanding, each future holder of all such
Securities, and the Company.
9.7 Publicity. Except as set
forth below, no public release or announcement concerning the transactions
contemplated hereby shall be issued by the Company or the Investors without the
prior consent of the Company (in the case of a release or announcement by the
Investors) or the Investors (in the case of a release or announcement by the
Company) (which consents shall not be unreasonably withheld), except as such
release or announcement may be required by law or the applicable rules or regulations of any securities exchange or securities
market, in which case the Company or the Investors, as the case may be, shall
allow the Investors or the Company, as applicable, to the extent reasonably
practicable in the circumstances, reasonable time to comment on the portion of
such release or announcement concerning the transactions contemplated hereby in
advance of such issuance. The Company will make such filings and notices in the
manner and time required by the OSC (or any other Canadian securities regulatory
authority), the SEC or Nasdaq. The Company will disclose the consummation of the
transactions contemplated by this Agreement no later than its next quarterly
earnings release issued after the consummation of the transactions contemplated
by this Agreement.
-21-
9.8 Severability. Any provision
of this Agreement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof but shall
be interpreted as if it were written so as to be enforceable to the maximum
extent permitted by applicable law, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. To the extent permitted by applicable law, the
parties hereby waive any provision of law which renders any provision hereof
prohibited or unenforceable in any respect.
9.9 Entire Agreement. This
Agreement, including the Exhibits and the Schedules, and the other Transaction
Documents constitute the entire agreement among the parties hereof with respect
to the subject matter hereof and thereof and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter hereof and thereof.
9.10 Further Assurances. The
parties shall execute and deliver all such further instruments and documents and
take all such other actions as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained.
9.11 Governing Law; Consent to
Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
applicable to agreements made and to be performed entirely within the State of
New York (except to the extent the provisions of the Business Corporations Act
(Ontario) would be mandatorily applicable to the issuance of the Shares, the
Warrants, the Warrant Shares or the additional Common Shares issued pursuant to
Section 3.2) . Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be served on
each party hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. TO THE EXTENT ALLOWABLE UNDER APPLICABLE LAW, EACH OF THE
PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION
WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED
SPECIFICALLY AS TO THIS WAIVER.
-22-
9.12 Independent Nature of Investors
Obligations and Rights. The obligations of each Investor under any
Transaction Document are several and not joint with the obligations of any other
Investor, and no Investor shall be responsible in any way for the performance of
the obligations of any other Investor under any Transaction Document. The
decision of each Investor to purchase Securities pursuant to the Transaction
Documents has been made by such Investor independently of any other Investor. Nothing contained herein or in any Transaction
Document, and no action taken by any Investor pursuant thereto, shall be deemed
to constitute the Investors as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Investors are in any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. Each Investor
acknowledges that no other Investor has acted as agent for such Investor in
connection with making its investment hereunder and that no Investor will be
acting as agent of such Investor in connection with monitoring its investment in
the Securities or enforcing its rights under the Transaction Documents. Each
Investor shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement or out
of the other Transaction Documents, and it shall not be necessary for any other
Investor to be joined as an additional party in any proceeding for such purpose.
Each Investor has been represented by its own separate legal counsel in their
review and negotiation of the Transaction Documents. The Company acknowledges
that each of the Investors has been provided with the same Transaction Documents
for the purpose of closing a transaction with multiple Investors and not because
it was required or requested to do so by any Investor.
[Signature page follows]
-23-
IN WITNESS WHEREOF, the parties have executed this Agreement or
caused their duly authorized officers to execute this Agreement as of the date
first above written.
The Company: |
SPHERE 3D CORP. |
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By:_______________________________________ |
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Name: |
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Title: |
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The Investors: |
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By:_______________________________________ |
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Name: |
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Title: |
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Address for Notice: |
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Fax:_______________________________________ |
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Investor Aggregate Purchase Price: |
US$_______________________________________ |
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Schedule I
Purchase and Sale of Shares and Warrants
Name |
Number of Shares
|
Number of Warrant
Shares |
Aggregate
Purchase Price |
|
|
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US$ |
Schedule II
Material Contracts
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Surplus Escrow Agreement dated December 20,
2012. |
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|
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Value Escrow Agreement dated December 20, 2012.
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Voting Agreements each dated July 15, 2013
between Eric L. Kelly and various shareholders of the Company. |
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|
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Board Nomination Right Agreement dated July 15,
2013 between Eric L. Kelly and the Company. |
|
|
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Warrant Indenture Agreement dated November 12,
2013 between Equity Financial Trust Company and the Company. |
|
|
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Asset Purchase Agreement dated February 11,
2014 by and among V3 Systems, V3 Systems Holdings, Inc. and Sphere 3D.
|
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Warrant Indenture dated June 5, 2014 between
the Company and Equity Financial Trust Company. |
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Convertible Debenture dated December 1, 2014
between the Company and FBC Holdings S.A.R.L. for $19.5 million. |
|
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Escrow Agreement dated December 1, 2014 between
the Company and Continental Stock Transfer and Trust Company. |
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Revolving Credit Agreement dated December 30,
2014 between the Company, Overland Storage, Inc. and FBC Holdings
S.A.R.L., as amended. |
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Amended and Restated Loan and Security
Agreement dated December 31, 2014 between Overland, Tandberg Data GmbH,
Sphere 3D, and Silicon Valley Bank, as amended. |
-27-
Schedule III
SVB Credit Facility
Pursuant to that certain Amended and Restated Loan and Security
Agreement, dated December 31, 2014, by and among Overland Storage, Inc.,
Tandberg Data GmbH, the Company, and Silicon Valley Bank, the stock of V3
Systems Holdings, Inc., Sphere 3D Inc., Frostcat Technologies Inc., Overland
Storage, Inc., Tandberg Data Corporation, Zetta Systems, Inc. and Tandberg Data
GmbH have been pledged as collateral.
FBC Facilities
Pursuant to the Revolving Credit Agreement dated as of December
31, 2014 among Sphere 3D Corp., Overland Storage, Inc. and Sphere 3D Corp., (i)
the stock of V3 Systems Holdings, Inc., Sphere 3D Inc., Frostcat Technologies
Inc., Overland Storage, Inc., Tandberg Data Corporation, and Zetta Systems, Inc.
and (ii) 65% of the stock of Overland Storage (Europe) Limited, Overland Storage
Sarl, Overland Storage GmbH, Overland Technologies Luxembourg Sarl have been
pledged as collateral.
Pursuant to the 8% Senior Secured Convertible Debenture due
March 31, 2018 by Sphere 3D Corp. in favor of Sphere 3D Corp., (i) the stock of
V3 Systems Holdings, Inc., Sphere 3D Inc., Frostcat Technologies Inc., Overland
Storage, Inc., Tandberg Data Corporation, and Zetta Systems, Inc. and (ii) 65%
of the stock of Overland Storage (Europe) Limited, Overland Storage Sarl,
Overland Storage GmbH, Overland Technologies Luxembourg Sarl have been pledged
as collateral.
Preferred Equity Certificates
Preferred Equity Certificates, dated June 30, 2014, issued by
Tandberg Data Holdings S.à r.l. to Overland Technologies Luxembourg S.à r.l., as
holder, having a par value of $17,000,000.
Preferred Equity Certificates, dated June 30, 2014, issued by
Overland Technologies Luxembourg S.à r.l. to Overland Storage, Inc., as holder,
having a par value of $17,000,000.
-28-
Schedule IV
Special Conditions for Canadian Investors
This Schedule IV, including Annex IV-1 annexed
hereto, are to be completed and executed by any Investor who is a Canadian
Investor, being an Investor resident in or otherwise subject to the securities
laws of a jurisdiction of Canada. This Schedule IV, including Annex
IV-1 annexed hereto, forms part of the Purchase Agreement to which it is
attached (the Agreement) and the Investor is otherwise subject to the
terms and conditions specified in such Agreement. Terms not otherwise defined
herein have the meanings attributed to them in the Agreement.
1. |
Acknowledgments of the
Investor |
The Investor acknowledges that:
(a) AN INVESTMENT IN THE SECURITIES IS
NOT WITHOUT RISK AND THE INVESTOR MAY LOSE ITS ENTIRE INVESTMENT;
(b) The Company may complete additional
financings in the future in order to develop the business of the Company and
fund its ongoing development, and such future financings may have a dilutive
effect on current securityholders of the Company, including the Investor;
(c) The offer, sale and issuance of the
Securities is exempt from the prospectus requirements of Canadian Securities
Laws and, as a result: (i) the Investor may not receive information that would
otherwise be required under Canadian Securities Laws or be contained in a
prospectus prepared in accordance with Canadian Securities Laws, (ii) the
Investor is restricted from using most of the protections, rights and remedies
available under Canadian Securities Laws, including statutory rights of
rescission or damages , and (iii) the Company is relieved from certain
obligations that would otherwise apply under Canadian Securities Laws;
(d) No prospectus has been filed with
any Regulator in connection with the Transaction and no Regulator has made any
finding or determination as to the merit for investment in, or made any
recommendation or endorsement with respect to, the Securities. As used in this
Schedule, Regulator means (i) any governmental or public entity
department, court, commission, board, bureau, agency or instrumentality, (ii)
any quasi-governmental, self-regulatory or private body exercising any
regulatory authority and (iii) any stock exchange;
(e) The Company is required to file a
report of trade with all applicable Regulators containing personal information
about Investors of the Securities. This report of trade will include the full
name, residential address and telephone number of each Investor, the number and
type of Securities purchased, the total purchase price paid for such Securities,
the date of the Closing and the prospectus exemption relied upon under Canadian
Securities Laws to complete such purchase. In Ontario, this information is
collected indirectly by the OSC (or any other Canadian securities regulatory
authority) under the authority granted to it under, and for the purposes of the
administration and enforcement of, the securities legislation in Ontario. Any
Investor may contact the Administrative Support Clerk at the OSC (or any other
Canadian securities regulatory authority) at Suite 1903, Box 55, 20 Queen Street
West, Toronto, Ontario, M5H 3S8 or by telephone at (416) 593-3684 for more
information regarding the indirect collection of such information by the OSC (or
any other Canadian securities regulatory authority). The Company may also be
required pursuant to Canadian Securities Laws to file this Agreement on SEDAR.
By completing this Agreement, the Investor authorizes the indirect collection of
the information described in this Section 1(e) by all applicable Regulators and
consents to the disclosure of such information to the public through (i) the filing of a
report of trade with all applicable Regulators and (ii) the filing of this
Agreement on SEDAR.
(f) The Securities are being offered on
a private placement basis and will be subject to resale restrictions under
Canadian Securities Laws, and the Company may make a notation on its records or
give instructions to any transfer agent of the Shares in order to implement such
resale restrictions;
(g) The physical certificates
representing the Securities (and any replacement certificate issued prior to the
expiration of the applicable hold periods), if any, will bear a legend in
accordance with Canadian Securities Laws in substantially the following form
and, in the event that no physical certificates are issued, the below
constitutes written notice of the legend restriction under applicable Canadian
Securities Laws:
UNLESS PERMITTED UNDER APPLICABLE SECURITIES LEGISLATION, THE
HOLDER OF THIS SECURITY MUST NOT TRADE THIS SECURITY TO OR FOR THE BENEFIT OF A
CANADIAN PURCHASER UNTIL THE DATE THAT IS FOUR MONTHS AND A DAY AFTER [INSERT
DISTRIBUTION DATE].
2. |
Representations and Warranties of the
Investor |
The Investor represents and warrants as follows to the Company
at the date of this Agreement and at the Closing Date and acknowledges and
confirms that the Company is relying on such representations and warranties in
connection with the offer, sale and issuance of the Securities to the Investor:
(a) THE INVESTOR HAS KNOWLEDGE IN
FINANCIAL AND BUSINESS AFFAIRS, IS CAPABLE OF EVALUATING THE MERITS AND RISKS OF
AN INVESTMENT IN THE SECURITIES, AND IS ABLE TO BEAR THE ECONOMIC RISK OF SUCH
INVESTMENT EVEN IF THE ENTIRE INVESTMENT IS LOST;
(b) The Investor has not been provided
with a prospectus, an offering memorandum or any other document in connection
with its subscription for Securities and the decision to subscribe for
Securities and execute this Agreement has not been based upon any verbal or
written representation made by or on behalf of the Company or any employee or
agent of the Company;
(c) The distribution of the Securities
has not been made through, or as a result of, and is not being accompanied by,
(i) a general solicitation, (ii) any advertisement including articles, notices
or other communications published in any newspaper, magazine or similar media or
broadcast over radio or television , or (iii) any seminar or meeting whose
attendees have been invited by general solicitation or general advertising;
(d) The Investor is eligible to
purchase the Securities pursuant to an exemption from the prospectus
requirements of Canadian Securities Laws. The Investor has completed and
delivered to the Company the Canadian Investor Certificate annexed to this
Schedule IV as Annex IV-1, evidencing the Investor's status and
criteria for reliance on the relevant prospectus exemption under Canadian
Securities Laws and: (i) confirms that it complies with the criteria for
reliance on the prospectus exemption and the truth and accuracy of all
statements made in such certificate as of the date of this Agreement and as of
the Closing Date; (ii) understands that the Company is required to verify that
the Investor satisfies the relevant criteria to qualify for the prospectus
exemption; and (iii) may be required to provide additional information or
documentation to evidence compliance with the prospectus exemption.
(e) The Investor is resident of a
province of territory of Canada, and, where required, is purchasing the
Securities as principal;
(f) The Investor has been independently
advised as to and is aware of the resale restrictions under Canadian Securities
Laws with respect to the Securities;
(g) The Investor has obtained such
legal and tax advice as it considers appropriate in connection with the offer,
sale and issuance of the Securities and the execution, delivery and performance
by it of this Agreement and the transactions contemplated by the Transaction
Documents. The Investor is not relying on the Company, its affiliates or its
counsel in this regard;
(h) None of the funds that the Investor
is using to purchase the Securities are to the knowledge of the Investor,
proceeds obtained or derived, directly or indirectly, as a result of illegal
activities; (i) No Person has made any oral or written representations to the
Investor:
(i) that any Person will resell or
repurchase; (ii) that any Person will refund the purchase price of the
Securities; or (iii) as to the future value or price of any of the Securities;
(j) The funds representing the
aggregate Purchase Price advanced by the Investor are not proceeds of crime as
defined in the Proceeds of Crime (Money Laundering) and Terrorist Financing
Act (Canada) (the PCMLTFA). To the Investor's knowledge none of the
subscription funds to be provided by the Investor (i) have been or will be
derived from or related to any activity that is deemed criminal under the laws
of Canada or any other applicable jurisdiction, or (ii) are being tendered on
behalf of a person or entity (A) with whom the Company would be prohibited from
dealing with under applicable money laundering, terrorist financing, economic
sanctions, criminal or other similar laws or regulations or (B) who has not been
identified to the Investor. The Investor acknowledges that the Company may in
the future be required by law to disclose the Investor's name and other
information relating to this Agreement and the Investor's subscription
hereunder, on a confidential basis pursuant to the PCMLTFA or other laws or
regulations and shall promptly notify the Company if the Investor discovers that
any of the foregoing representations ceases to be true, and to provide the
Company with appropriate information in connection therewith.
3. |
Covenants of the Investor |
(a) The Investor will comply with
Canadian Securities Laws concerning the subscription, purchase, holding and
resale of the Securities and will consult with its legal advisers with respect
to complying with resale restrictions under Canadian Securities Laws with
respect to the Securities. Resale restrictions may apply to resales of the
Securities outside of Canada.
(b) The Investor will execute, deliver,
file and otherwise assist the Company in filing any reports, undertakings and
other documents required under Canadian Securities Laws in connection with the
offer, sale and issuance of the Securities.
The Investor confirms its express wish that this Agreement
(including all Schedules and Annexes), the Transaction Documents and all related
documents be drafted in English. Lacquéreur confirme sa volonté expresse que
la présente convention (y compris toutes les annexes et tous les appendices),
les « Transaction Documents » décrits à la présente convention, ainsi que tous
les documents et contrats s'y rapportant directement ou indirectement soient
rédigés en anglais.
[Signature page follows]
The Investor: |
[___________________________] |
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By:_______________________________________ |
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Name: |
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Title: |
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[Annex IV-1 on next page]
Annex IV-1
Canadian Investor Certificate
(annex to Schedule
IV (Special Conditions for Canadian Investors))
TO: |
SPHERE 3D CORP. (THE ISSUER)
|
I. |
REPRESENTATIONS AND WARRANTIES |
Reference is made to the Purchase Agreement between, the Issuer
and the undersigned (referred to herein as the Investor) dated as of
the date hereof (the Agreement). Upon execution of this Canadian
Investor Certificate by the Investor, this Canadian Investor Certificate shall
be incorporated into and form a part of the Agreement with respect to such
Investor. Terms not otherwise defined herein have the meanings attributed to
them in the Agreement (including Schedule IV thereto) and in National Instrument
45-106 Prospectus and Registration Exemptions (NI 45-106). All
monetary references in this Annex IV-1 are in Canadian dollars.
In connection with the purchase of the Securities by the
Investor, the Investor hereby represents, warrants and certifies to the Issuer
that the Investor:
|
(i) |
is purchasing the Securities as principal; |
|
|
|
|
(ii) |
is resident in or is subject to the laws of the Province
or Territory of (check one): |
|
[ ] Alberta |
[ ] Northwest Territories |
[ ] Prince Edward Island |
|
[ ] British Columbia |
[ ] Nova Scotia |
[ ] Quebec |
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[ ] Manitoba |
[ ] Nunavut |
[ ] Saskatchewan |
|
[ ] Newfoundland and Labrador |
[ ] Ontario |
[ ] Yukon |
|
|
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|
|
[ ] New Brunswick |
|
|
|
(iii) |
has not been provided with any offering memorandum in
connection with the purchase of the Securities; and |
|
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|
(iv) |
is an accredited investor (as defined in NI 45-106),
and falls within the category(ies) of accredited investor (check all
applicable exemptions): |
|
[ ] |
1. |
a financial institution, |
|
[ ] |
2. |
the Business Development Bank of Canada incorporated
under the Business Development Bank of Canada Act (Canada),
|
|
[ ] |
3. |
a subsidiary of any person referred to in paragraphs (a)
or (b), if the person owns all of the voting securities of the subsidiary,
except the voting securities required by law to be owned by directors of
that subsidiary, |
|
[ ] |
4. |
a person registered under the securities legislation of a
jurisdiction of Canada as an adviser or dealer, |
|
[ ] |
5. |
an individual registered under the securities legislation
of a jurisdiction of Canada as a representative of a person referred to in
paragraph (d), |
|
[ ] |
6. |
an individual formerly registered under the securities
legislation of a jurisdiction of Canada, other than an individual formerly
registered solely as a representative of a limited market dealer under one
or both of the Securities Act (Ontario) or the Securities Act
(Newfoundland and Labrador), |
|
[ ] |
7. |
the Government of Canada or a jurisdiction of
Canada, or any crown corporation, agency or wholly owned entity of the
Government of Canada or a jurisdiction of Canada, |
|
[ ] |
8. |
a municipality, public board or commission in
Canada and a metropolitan community, school board, the Comité de gestion
de la taxe scolaire de l'île de Montréal or an intermunicipal management
board in Québec, |
|
[ ] |
9. |
any national, federal, state, provincial,
territorial or municipal government of or in any foreign jurisdiction, or
any agency of that government, |
|
[ ] |
10. |
a pension fund that is regulated by the Office
of the Superintendent of Financial Institutions (Canada), a pension
commission or similar regulatory authority of a jurisdiction of Canada,
|
|
[ ] |
11. |
an individual who, either alone or with a
spouse, beneficially owns financial assets having an aggregate realizable
value that, before taxes but net of any related liabilities, exceeds
$1,000,000, |
|
|
|
[ ] - Please mark to indicate that you
have returned an executed copy of Form 45-106F9 (attached to this
Certificate) |
|
[ ] |
12. |
an individual who beneficially owns financial
assets having an aggregate realizable value that, before taxes but net of
any related liabilities, exceeds $5,000,000, |
|
[ ] |
13. |
an individual whose net income before taxes
exceeded $200,000 in each of the 2 most recent calendar years or whose net
income before taxes combined with that of a spouse exceeded $300,000 in
each of the 2 most recent calendar years and who, in either case,
reasonably expects to exceed that net income level in the current calendar
year, |
|
|
|
[ ] - Please mark to indicate that you have returned an
executed copy of the Risk Acknowledgement Form 45-106F9 (attached
to this Certificate) |
|
[ ] |
14. |
an individual who, either alone or with a
spouse, has net assets of at least $5,000,000, |
|
|
|
[ ] - Please mark to indicate that you
have returned an executed copy of the Risk Acknowledgement Form
45-106F9 (attached to this Certificate) |
|
[ ] |
15. |
a person, other than an individual or
investment fund, that has net assets of at least $5,000,000 as shown on
its most recently prepared financial statements and that has not been
created or used solely to purchase or hold securities as an accredited
investor as defined in this paragraph (m), |
|
[ ] |
16. |
an investment fund that distributes or has
distributed its securities only to |
|
(i) |
a person that is or was an accredited investor at the
time of the distribution, |
|
(ii) |
a person that acquires or acquired securities in the
circumstances referred to in sections 2.10 (Minimum amount investment) of
NI 45-106, or 2.19 (Additional investment in investment funds) of NI
45-106, or |
|
(iii) |
a person described in paragraph (i) or (ii) that acquires
or acquired securities under section 2.18 (Investment fund reinvestment)
of NI 45-106, |
|
[ ] |
17. |
an investment fund that distributes or has distributed
securities under a prospectus in a jurisdiction of Canada for which the
regulator or, in Québec, the securities regulatory authority, has issued a
receipt, |
|
[ ] |
18. |
a trust company or trust corporation registered or
authorized to carry on business under the Trust and Loan Companies Act
(Canada) or under comparable legislation in a jurisdiction of Canada
or a foreign jurisdiction, acting on behalf of a fully managed account
managed by the trust company or trust corporation, as the case may be,
|
|
[ ] |
19. |
a person acting on behalf of a fully managed account
managed by that person, if that person is registered or authorized to
carry on business as an adviser or the equivalent under the securities
legislation of a jurisdiction of Canada or a foreign jurisdiction,
|
|
[ ] |
20. |
a registered charity under the Income Tax Act
(Canada) that, in regard to the trade, has obtained advice from an
eligibility adviser or an adviser registered under the securities
legislation of the jurisdiction of the registered charity to give advice
on the securities being traded, |
|
[ ] |
21. |
an entity organized in a foreign jurisdiction that is
analogous to any of the entities referred to in paragraphs (a) to (d) or
paragraph (i) in form and function, |
|
[ ] |
22. |
a person in respect of which all of the owners of
interests, direct, indirect or beneficial, except the voting securities
required by law to be owned by directors, are persons that are accredited
investors, |
|
[ ] |
23. |
an investment fund that is advised by a person registered
as an adviser or a person that is exempt from registration as an adviser,
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|
[ ] |
24. |
a person that is recognized or designated by the
securities regulatory authority or, except in Ontario and Québec, the
regulator as an accredited investor, |
|
[ ] |
25. |
a trust established by an accredited investor for the
benefit of the accredited investors family members of which a majority of
the trustees are accredited investors and all of the beneficiaries are the
accredited investors spouse, a former spouse of the accredited investor
or a parent, grandparent, brother, sister, child or grandchild of that
accredited investor, of that accredited investors spouse or of that
accredited investors former spouse. |
AS USED IN THIS ANNEX IV-1, THE FOLLOWING TERMS HAVE THE
FOLLOWING MEANINGS:
"control person" means
in Ontario, Alberta, Newfoundland and Labrador, Nova Scotia and
Saskatchewan:
|
(a) |
a person or company who holds a sufficient number of the
voting rights attached to all outstanding voting securities of an issuer
to affect materially the control of the issuer, and, if a person or
company holds more than 20 per cent of the voting rights attached to all
outstanding voting securities of an issuer, the person or company is
deemed, in the absence of evidence to the contrary, to hold a sufficient
number of the voting rights to affect materially the control of the
issuer, or |
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(b) |
each person or company in a combination of persons or
companies, acting in concert by virtue of an agreement, arrangement,
commitment or understanding, which holds in total a sufficient number of
the voting rights attached to all outstanding voting securities of an
issuer to affect materially the control of the issuer, and, if a
combination of persons or companies holds more than 20 per cent of the
voting rights attached to all outstanding voting securities of an issuer,
the combination of persons or companies is deemed, in the absence of
evidence to the contrary, to hold a sufficient number of the voting rights
to affect materially the control of the issuer; |
in British Columbia and New Brunswick:
|
(a) |
a person who holds a sufficient number of the voting
rights attached to all outstanding voting securities of an issuer to
affect materially the control of the issuer, or |
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(b) |
each person in a combination of persons, acting in
concert by virtue of an agreement, arrangement, commitment or
understanding, which holds in total a sufficient number of the voting
rights attached to all outstanding voting securities of an issuer to
affect materially the control of the issuer, |
and, if a person or combination of
persons holds more than 20% of the voting rights attached to all outstanding
voting securities of an issuer, the person or combination of persons is deemed,
in the absence of evidence to the contrary, to hold a sufficient number of the
voting rights to affect materially the control of the issuer;]
in Prince Edward Island, Northwest Territories, Nunavut and the
Yukon:
|
(a) |
a person who holds a sufficient number of the voting
rights attached to all outstanding voting securities of an issuer to
affect materially the control of the issuer, and if a person holds more
than 20% of the voting rights attached to all outstanding voting
securities of an issuer, the person is deemed, in the absence of evidence
to the contrary, to hold a sufficient number of the voting rights to
affect materially the control of the issuer, or |
|
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(b) |
each person in a combination of persons acting in concert
by virtue of an agreement, arrangement, commitment or understanding, who
holds in total a sufficient number of the voting rights attached to all
outstanding voting securities of an issuer to affect materially the
control of the issuer, and if a combination of persons holds more than 20%
of the voting rights attached to all outstanding voting securities of an
issuer, the combination of persons is deemed, in the absence of evidence
to the contrary, to hold a sufficient number of the voting rights to
affect materially the control of the issuer; |
in Quebec:
|
(a) |
a person that, alone or with other persons acting in
concert by virtue of an agreement, holds a sufficient number of the voting
rights attached to all outstanding voting securities of an issuer to
affect materially the control of the issuer. If the person, alone or with
other persons acting in concert by virtue of an agreement, holds more than
20% of those voting rights, the person is presumed to hold a sufficient
number of the voting rights to affect materially the control of the
issuer; and |
in Manitoba
|
(a) |
a person or company who holds a sufficient number of the
voting rights attached to all outstanding voting securities of an issuer
to affect materially the control of the issuer, |
|
|
|
|
(b) |
each person or company, or combination of persons or
companies acting in concert by virtue of an agreement, arrangement,
commitment or understanding, that holds in total a sufficient number of
the voting rights attached to all outstanding voting securities of an
issuer to affect materially the control of the issuer, or |
|
|
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(c) |
a person or company, or combination of persons or
companies, that holds more than 20% of the voting rights attached to all
outstanding voting securities of an issuer, unless there is evidence that
the holding does not affect materially the control of the
issuer; |
"director" means
|
(a) |
a member of the board of directors of a company or an
individual who performs similar functions for a company, and |
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(b) |
with respect to a person that is not a company, an
individual who performs functions similar to those of a director of a
company; |
"eligibility adviser" means
|
(a) |
a person that is registered as an investment dealer and
authorized to give advice with respect to the type of security being
distributed, and |
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(b) |
in Saskatchewan or Manitoba, also means a lawyer who is a
practicing member in good standing with a law society of a jurisdiction of
Canada or a public accountant who is a member in good standing of an
institute or association of chartered accountants, certified general
accountants or certified management accountants in a jurisdiction of
Canada provided that the lawyer or public accountant must
not |
|
(i) |
have a professional, business or personal relationship
with the issuer, or any of its directors, executive officers, founders, or
control persons (as such term is defined in applicable securities
legislation), and |
|
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(ii) |
have acted for or been retained personally or otherwise
as an employee, executive officer, director, associate or partner of a
person that has acted for or been retained by the issuer or any of its
directors, executive officers, founders or control persons (as such term
is defined in applicable securities legislation) within the previous 12
months; |
"executive officer" means, for an issuer, an individual
who is
|
(a) |
a chair, vice-chair or president, |
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(b) |
a vice-president in charge of a principal business unit,
division or function including sales, finance or production, or |
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(c) |
performing a policy-making function in respect of the
issuer; |
"financial assets" means
(a) |
cash, |
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|
(b) |
securities, or |
|
|
(c) |
a contract of insurance, a deposit or an evidence of a
deposit that is not a security for the purposes of securities
legislation; |
"financial institution" means,
|
(a) |
other than in Ontario, |
|
(i) |
an association governed by the Cooperative Credit
Associations Act (Canada) or a central cooperative credit society for
which an order has been made under section 473(1) of that Act, |
|
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(ii) |
a bank, loan corporation, trust company, trust
corporation, insurance company, treasury branch, credit union, caisse
populaire, financial services cooperative, or league that, in each case,
is authorized by an enactment of Canada or a jurisdiction of Canada to
carry on business in Canada or a jurisdiction of Canada; or |
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(iii) |
a Schedule III bank, |
|
(i) |
a bank listed in Schedule I, II or III to the Bank Act
(Canada); |
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|
(ii) |
an association to which the Cooperative Credit
Association Act (Canada) applies or a central cooperative credit
society for which an order has been made under subsection 473(1) of that
Act; or |
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|
(iii) |
a loan corporation, trust company, trust corporation,
insurance company, treasury branch, credit union, caisse populaire,
financial services cooperative or credit union league or federation that
is authorized by a statute of Canada or Ontario to carry on business in
Canada or Ontario, as the case may be. |
"founder" means, in respect of an issuer, a person who,
|
(a) |
acting alone, in conjunction, or in concert with one or
more persons, directly or indirectly, takes the initiative in founding,
organizing or substantially reorganizing the business of the issuer,
and |
|
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|
(b) |
at the time of the distribution or trade is actively
involved in the business of the issuer; |
"fully managed account" means an account of a client for
which a person makes the investment decisions if that person has full discretion
to trade in securities for the account without requiring the client's express
consent to a transaction;
"investment fund" has the same meaning as in National
Instrument 81-106 Investment Fund Continuous Disclosure;
"person" includes
|
(a) |
an individual, |
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(b) |
a corporation, |
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|
(c) |
a partnership, trust, fund and an association, syndicate,
organization or other organized group of persons, whether incorporated or
not, and |
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(d) |
an individual or other person in that person's capacity
as a trustee, executor, administrator or personal or other legal
representative; |
offering memorandum means a document, together with
any amendments to that document, purporting to describe the business and affairs
of an issuer that has been prepared primarily for delivery to and review by a
prospective purchaser so as to assist the prospective purchaser to make an
investment decision in respect of securities being sold in a distribution to
which section 53 of the Securities Act (Ontario) would apply but for the
availability of one or more exemptions contained in Ontario securities laws, but
does not include a document setting out current information about an issuer for
the benefit of a prospective purchaser familiar with the issuer through prior
investment or business contacts,
"related liabilities" means
|
(a) |
liabilities incurred or assumed for the purpose of
financing the acquisition or ownership of financial assets, or |
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(b) |
liabilities that are secured by financial
assets; |
"Schedule III bank" means an authorized foreign bank
named in Schedule III of the Bank Act (Canada);
"spouse" means, an individual who,
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(a) |
is married to another individual and is not living
separate and apart within the meaning of the Divorce Act (Canada), from
the other individual, |
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(b) |
is living with another individual in a marriage-like
relationship, including a marriage-like relationship between individuals
of the same gender, or |
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(c) |
in Alberta, is an individual referred to in paragraph (a)
or (b), or is an adult interdependent partner within the meaning of the
Adult Interdependent Relationships Act
(Alberta); |
"subsidiary" means an issuer that is controlled
directly or indirectly by another issuer and includes a subsidiary of that
subsidiary.
Interpretation
In this Annex IV-1, a person (first person) is considered to
control another person (second person) if
|
(a) |
the first person, directly or indirectly, beneficially
owns or exercises control or direction over securities of the second
person carrying votes which, if exercised, would entitle the first person
to elect a majority of the directors of the second person, unless that
first person holds the voting securities only to secure an
obligation, |
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(b) |
the second person is a partnership, other than a limited
partnership, and the first person holds more than 50% of the interests of
the partnership, or |
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(c) |
the second person is a limited partnership and the
general partner of the limited partnership is the first
person. |
Certified at ________________________this,
____________________________.
|
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By:________________________________________________________________ |
Witness |
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Name: |
|
|
Title: |
Form 45-106F9
Form for Individual Accredited
Investors
WARNING! This investment is
risky. Dont invest unless you can afford to lose all the money you pay
for this investment. |
|
SECTION 1 TO BE COMPLETED BY THE
ISSUER OR SELLING SECURITYHOLDER |
1. |
About your
investment |
Type of securities: Common Shares,
Warrants |
Issuer: |
Purchased from: Sphere 3D Corp. |
SECTIONS 2 TO 4 TO BE COMPLETED BY THE
INVESTOR |
2. |
Risk
acknowledgement |
This investment is risky. Initial that you
understand that: |
Your initials |
Risk of loss You could lose your
entire investment of: ____________________ |
|
Liquidity risk You may not be
able to sell your investment quickly or at all. |
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Lack of information You may
receive little or no information about your investment. |
|
Lack of advice You will not
receive advice from the salesperson about whether this investment is
suitable for you unless the salesperson is registered. The salesperson is
the person who meets with, or provides information to, you about making
this investment. To check whether the salesperson is registered, go to
www.aretheyregistered.ca. |
|
3. |
Accredited investor
status |
You must meet at least one of the
following criteria to be able to make this investment. Initial the
statement that applies to you. (You may initial more than one statement).
The person identified in section 6 is responsible for ensuring that you
meet the definition of accredited investor. That person, or the
salesperson identified in section 5, can help you if you have questions
about whether you meet these criteria. |
Your initials |
|
Your net income before taxes
was more than C$200,000 in each of the 2 most recent calendar years, and
you expect it to be more than C$200,000 in the current calendar year. (You
can find your net income before taxes on your personal income tax return.)
|
|
|
Your net income before taxes
combined with your spouses was more than C$300,000 in each of the 2 most
recent calendar years, and you expect your combined net income before
taxes to be more than C$300,000 in the current calendar year. |
|
|
Either alone or with your
spouse, you own more than C$1 million in cash and securities, after
subtracting any debt related to the cash and securities. |
|
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Either alone or with your
spouse, you have net assets worth more than C$5 million. (Your net assets
are your total assets (including real estate) minus your total debt.) |
|
4. |
Your name and your
signature |
|
By signing this form, you confirm that you
have read this form and you understand the risks of making this investment
as identified in this form. |
First and last name (please print): |
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Signature: |
Date: |
SECTION 5 TO BE COMPLETED BY THE
SALESPERSON |
5. |
Salesperson
information |
|
First and last name of salesperson (please
print): |
Telephone: |
Email: |
Name of firm (if registered): |
SECTION 6 TO BE COMPLETED BY THE ISSUER
OR SELLING SECURITY |
6. |
For more information
about this investment, contact: |
Sphere 3D Corp. [Investor
Contact: MKR Group Inc. Todd Kehrli or Jim Byers
+1 323/468-2300]
For more
information about prospectus exemptions, contact your local securities
regulator.
You can find
contact information at
www.securities-administrators.ca. |
EXHIBIT 99.7
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the Agreement) is made
and entered into as of this [], by and among Sphere 3D Corp., an Ontario
corporation (the Company) and the Investors named in that certain
Purchase Agreement dated as of [], by and among the Company and [] (the
Initial Purchase Agreement); provided, that on or after the date
of this Agreement until the date that is forty-five (45) days after the date of
the Initial Purchase Agreement, the Company may (in its sole discretion) add
additional parties to this Agreement as Investors hereunder and additional
Registrable Securities, provided that on or after the date of this
Agreement until the date that is forty-five (45) days after the date of the
Initial Purchase Agreement, such additional Investors execute and deliver a
counterpart signature page to this Agreement and purchase Common Shares (as
defined below) (Additional Common Shares) and/or warrants to purchase
Common Shares (Additional Warrants) from the Company pursuant to a
purchase agreement (an Additional Purchase Agreement and, together with
the Initial Purchase Agreement, a Purchase Agreement). Any such
additional Investor shall be deemed an Investor for all purposes under this
Agreement. Any such Additional Common Shares and Common Shares issuable upon the
exercise of the Additional Warrants pursuant to a Purchase Agreement
(Additional Warrant Shares) shall be treated as Registrable Securities
for all purposes under this Agreement. Capitalized terms used herein have the
respective meanings ascribed thereto in the Purchase Agreement unless otherwise
defined herein.
The parties hereby agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
Common Shares means the Companys common shares, no
par value, and any securities into which such shares may hereinafter be
reclassified.
Investors means the Investors identified in a Purchase
Agreement, and any Affiliate or permitted transferee of any Investor who is a
subsequent holder of any Warrants or Registrable Securities.
Prospectus means (i) the prospectus included in any
Registration Statement, as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and by all other amendments
and supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus, and (ii) any free
writing prospectus as defined in Rule 405 under the 1933 Act.
Register, registered and
registration refer to a registration made by preparing and filing a
Registration Statement or similar document in compliance with the 1933 Act (as
defined below), and the declaration or ordering of effectiveness of such
Registration Statement or document.
Registrable Securities means (i) the Common Shares
purchased by the Investors pursuant to any Purchase Agreement, including
Additional Common Shares, (ii) the Warrant Shares, (iii) any additional Common
Shares or any Common Shares issuable upon the exercise of any of the additional warrants issued pursuant to Section 3.2
of the Initial Purchase Agreement or pursuant to substantially equivalent terms
to Section 3.2 of the Initial Purchase Agreement in any Additional Purchase
Agreement and (iv) any other securities issued or issuable with respect to or in
exchange for Registrable Securities, whether by merger, charter amendment or
otherwise; provided, that a security shall cease to be a Registrable
Security upon (a) sale pursuant to a Registration Statement or Rule 144 under
the 1933 Act, or (b) such security becoming eligible for sale in the United
States without restriction by the holder thereof pursuant to Rule 144.
Registration Statement means any registration
statement of the Company filed under the 1933 Act that covers the resale of any
of the Registrable Securities in the United States pursuant to the provisions of
this Agreement, amendments and supplements to such Registration Statement,
including post-effective amendments, all exhibits and all material incorporated
by reference in such Registration Statement.
Required Investors means the Investors holding a
majority of the Registrable Securities; provided, however, Required Investors
must include each Investor that purchased Registrable Securities pursuant to a
Purchase Agreement having an aggregate Purchase Price (as defined in the
applicable Purchase Agreement) of at least US$1,000,000.00.
SEC means the U.S. Securities and Exchange Commission.
Warrants means the warrants to purchase Common Shares
purchased by the Investors pursuant to any Purchase Agreement, including any
Additional Warrants and any additional warrants issued pursuant to Section 3.2
of the Initial Purchase Agreement or pursuant to substantially equivalent terms
to Section 3.2 of the Initial Purchase Agreement in any Additional Purchase
Agreement.
Warrant Shares means the Common Shares issuable upon
the exercise of the Warrants purchased by the Investors pursuant to any Purchase
Agreement, including any Additional Warrant Shares and any Common Shares
issuable upon the exercise of the additional warrants issued pursuant to Section
3.2 of the Initial Purchase Agreement or pursuant to substantially equivalent
terms to Section 3.2 of the Initial Purchase Agreement in any Additional
Purchase Agreement.
1933 Act means the U.S. Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
1934 Act means the U.S. Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
2. Registration.
(a) Registration Statements.
(i) Promptly following the closing of
the purchase and sale of the securities contemplated by the Initial Purchase
Agreement (the Closing Date) but no later than ninety days (90) days
after the Closing Date (the Filing Deadline), the Company shall prepare
and file with the SEC one Registration Statement on Form F-3 (or, if Form F-3 is
not then available to the Company, on such form of registration statement as is
then available to effect a registration for resale of the Registrable
Securities), covering the resale of the Registrable Securities in the United
States. Subject to any SEC comments, such Registration Statement shall include the plan of distribution attached hereto as Exhibit
A; provided, however, that no Investor shall be named as an
underwriter in the Registration Statement without the Investors prior written
consent. Such Registration Statement also shall cover, to the extent allowable
under the 1933 Act and the rules promulgated thereunder (including Rule 416),
such indeterminate number of additional Common Shares resulting from stock
splits, stock dividends or similar transactions with respect to the Registrable
Securities. Such Registration Statement shall not include any Common Shares or
other securities for the account of any other holder without the prior written
consent of the Required Investors. The Registration Statement (and each
amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided in accordance with Section 3(c) to the Investors and their counsel prior to its filing or other submission. If a
Registration Statement covering the Registrable Securities is not filed with the
SEC on or prior to the Filing Deadline, the Company will make pro rata payments
to each Investor, as liquidated damages and not as a penalty, in an amount equal
to 2.0% of the aggregate Purchase Price (as defined in the applicable Purchase
Agreement) paid by the Investor pursuant to the applicable Purchase Agreement
for the Registrable Securities by such Investor for each 30-day period or pro
rata for any portion thereof following the Filing Deadline for which no
Registration Statement is filed with respect to the Registrable Securities. Such
payments shall constitute the Investors exclusive monetary remedy for such
events, but shall not affect the right of the Investors to seek injunctive
relief. Such payments shall be made to each Investor in cash no later than three
(3) Business Days after the end of each such 30-day period.
-2-
(ii) Additional Registrable
Securities. Upon the written demand of any Investor and upon any change in
the Exercise Price (as defined in the applicable Warrant) such that additional
Common Shares become issuable upon exercise of the Warrants (the
Additional Shares), the Company shall prepare and file with the
SEC one or more Registration Statements on Form F-3 or amend the Registration
Statement filed pursuant to clause (i) above, if such Registration Statement has
not previously been declared effective (or, if Form F-3 is not then available to
the Company, on such form of registration statement as is then available to
effect a registration for resale of the Additional Shares) covering the resale
of the Additional Shares, but only to the extent the Additional Shares are not
at the time covered by an effective Registration Statement. Subject to any SEC
comments, such Registration Statement shall include the plan of distribution
attached hereto as Exhibit A; provided, however, that no
Investor shall be named as an underwriter in the Registration Statement
without the Investors prior written consent. Such Registration Statement also
shall cover, to the extent allowable under the 1933 Act and the rules
promulgated thereunder (including Rule 416), such indeterminate number of
additional Common Shares resulting from stock splits, stock dividends or similar
transactions with respect to the Additional Shares. Such Registration Statement
shall not include any Common Shares or other securities for the account of any
other holder without the prior written consent of the Required Investors. The
Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided in
accordance with Section 3(c) to the Investors and their counsel
prior to its filing or other submission. If a Registration Statement covering
the Additional Shares is required to be filed under this Section 2(a)(ii)
and is not filed with the SEC within ten (10) Business Days of the request of
any Investor or upon the occurrence of any of the events specified in this
Section 2(a)(ii) (the Additional Shares Filing Deadline),
the Company will make pro rata payments to each Investor, as liquidated damages
and not as a penalty, in an amount equal to 2.0% of the aggregate Purchase Price
paid by the Investor pursuant to the applicable Purchase Agreement for the
Registrable Securities for each 30-day period or pro rata for any portion thereof following the
Additional Shares Filing Deadline for which no Registration Statement is filed
with respect to the Additional Shares. Such payments shall constitute the
Investors exclusive monetary remedy for such events, but shall not affect the
right of the Investors to seek injunctive relief. Such payments shall be made to
each Investor in cash no later than three (3) Business Days after the end of
each such 30-day period.
-3-
(b) Expenses. The Company will
pay all expenses associated with each registration, including filing and
printing fees, the Companys counsel and accounting fees and expenses, costs
associated with clearing the Registrable Securities for sale under applicable
United States federal and state securities laws, listing fees, reasonable
incurred fees and expenses of one counsel to the Investors in connection with
clearing the Registrable Securities for sale under applicable United States
federal and state securities laws, and the Investors other reasonable incurred
expenses in connection with the registration, but excluding discounts,
commissions, fees of underwriters, selling brokers, dealer managers or similar
securities industry professionals with respect to the Registrable Securities
being sold.
(c) Effectiveness.
(i) The Company shall use commercially
reasonable efforts to have the Registration Statement declared effective as soon
as practicable. The Company shall notify the Investors by facsimile or e-mail as
promptly as practicable, and in any event, within twenty-four (24) hours, after
any Registration Statement is declared effective and shall simultaneously
provide the Investors with copies of any related Prospectus to be used in
connection with the sale or other disposition of the securities covered thereby.
If (A)(x) a Registration Statement covering the Registrable Securities is not
declared effective by the SEC prior to the earlier of (i) five (5) Business Days
after the SEC shall have informed the Company that no review of the Registration
Statement will be made or that the SEC has no further comments on the
Registration Statement or (ii) ninety (90) days after the Registration Statement
is first filed with the SEC or (y) a Registration Statement covering Additional
Shares is not declared effective by the SEC prior to the earlier of (i) five (5)
Business Days after the SEC shall have informed the Company that no review of
the Registration Statement will be made or that the SEC has no further comments
on the Registration Statement or (ii) the one hundred twentieth
(120th) day after the Additional Shares Filing Deadline, or (B) after
a Registration Statement has been declared effective by the SEC, sales cannot be
made pursuant to such Registration Statement for any reason (including, without
limitation, by reason of a stop order, or the Companys failure to update the
Registration Statement), but excluding any Allowed Delay (as defined below) or
the inability of any Investor to sell the Registrable Securities covered thereby
due to market conditions, then the Company will make pro rata payments to each
Investor, as liquidated damages and not as a penalty, in an amount equal to 2.0%
of the aggregate Purchase Price paid by the Investor pursuant to the applicable
Purchase Agreement for the Registrable Securities for each 30-day period or pro
rata for any portion thereof following the date by which such Registration
Statement should have been effective (the Blackout Period). Such
payments shall constitute the Investors exclusive monetary remedy for such
events, but shall not affect the right of the Investors to seek injunctive
relief. The amounts payable as liquidated damages pursuant to this paragraph
shall be paid monthly within three (3) Business Days of the last day of each
month following the commencement of the Blackout Period until the termination of
the Blackout Period. Such payments shall be made to each Investor in cash.
-4-
(ii) For not more than twenty (20)
consecutive days or for a total of not more than forty-five (45) days in any
twelve (12) month period, the Company may suspend the use of any Prospectus
included in any Registration Statement contemplated by this Section in the event
that the Company determines in good faith that such suspension is necessary to
(A) delay the disclosure of material non-public information concerning the
Company, the disclosure of which at the time is not, in the good faith opinion
of the Company, in the best interests of the Company or (B) amend or supplement
the affected Registration Statement or the related Prospectus so that such
Registration Statement or Prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the case of the Prospectus in light
of the circumstances under which they were made, not misleading (an Allowed
Delay); provided, that the Company shall promptly (a) notify each
Investor in writing of the commencement of and the reasons for an Allowed Delay,
but shall not (without the prior written consent of an Investor) disclose to
such Investor any material non-public information giving rise to an Allowed
Delay, (b) advise the Investors in writing to cease all sales under the
Registration Statement until the end of the Allowed Delay and (c) use
commercially reasonable efforts to terminate the Allowed Delay as promptly as
practicable.
(d) Rule 415; Cutback If at any
time the SEC takes the position that the offering of some or all of the
Registrable Securities in a Registration Statement is not eligible to be made on
a delayed or continuous basis under the provisions of Rule 415 under the 1933
Act or requires any Investor to be named as an underwriter, the Company shall
use its commercially reasonable efforts to persuade the SEC that the offering
contemplated by the Registration Statement is a valid secondary offering and not
an offering by or on behalf of the issuer as defined in Rule 415 and that none
of the Investors is an underwriter. The Investors shall have the right to have
their counsel participate in any meetings or discussions with the SEC regarding
the SECs position and to comment or have their counsel comment on any written
submission made to the SEC with respect thereto. No such written submission
shall be made to the SEC to which the Investors counsel reasonably objects. In
the event that, despite the Companys commercially reasonable best efforts and
compliance with the terms of this Section 2(d), the SEC refuses to
alter its position, the Company shall (i) remove from the Registration Statement
such portion of the Registrable Securities (the Cut Back Shares) and/or
(ii) agree to such restrictions and limitations on the registration and resale
of the Registrable Securities as the SEC may require to assure the Companys
compliance with the requirements of Rule 415 (collectively, the SEC
Restrictions); provided, however, that the Company shall not
agree to name any Investor as an underwriter in such Registration Statement
without the prior written consent of such Investor (and that the Company shall
not be required to do so even if such Investor consents to be named as an
underwriter). Any cut-back imposed on the Investors pursuant to this Section
2(d) shall be allocated among the Investors on a pro rata basis, unless the
SEC Restrictions otherwise require or provide or the Investors otherwise agree.
No liquidated damages shall accrue as to any Cut Back Shares until such date as
the Company is able to effect the registration of such Cut Back Shares in
accordance with any SEC Restrictions (such date, the Restriction Termination
Date of such Cut Back Shares), subject to the following sentence. From and
after the Restriction Termination Date applicable to any Cut Back Shares, all of
the provisions of this Section 2 (including the liquidated damages
provisions) shall again be applicable to such Cut Back Shares; provided,
however, that (i) the Filing Deadline and the Additional Shares Filing
Deadline, as applicable, for the Registration Statement including such Cut Back Shares shall be ten (10) Business Days after such
Restriction Termination Date, and (ii) the date by which the Company is required
to obtain effectiveness with respect to such Cut Back Shares under Section
2(c) shall be the ninetieth (90th) day immediately after the
Restriction Termination Date.
-5-
3. Company Obligations. The
Company will use commercially reasonable efforts to effect the registration of
the Registrable Securities in accordance with the terms hereof, and pursuant
thereto the Company will, as expeditiously as possible:
(a) use commercially reasonable efforts
to cause such Registration Statement to become effective and to remain
continuously effective for a period that will terminate upon the earlier of (i)
the date on which all Registrable Securities covered by such Registration
Statement as amended from time to time, have been sold, and (ii) the date on
which all Registrable Securities covered by such Registration Statement may be
sold without restriction pursuant to Rule 144 (the Effectiveness
Period) and advise the Investors in writing when the Effectiveness Period
has expired;
(b) prepare and file with the SEC such
amendments and post-effective amendments to the Registration Statement and the
Prospectus as may be necessary to keep the Registration Statement effective for
the Effectiveness Period and to comply with the provisions of the 1933 Act and
the 1934 Act with respect to the distribution of all of the Registrable
Securities covered thereby;
(c) provide copies to and permit
counsel designated by the Investors to review each Registration Statement and
all amendments and supplements thereto no fewer than five (5) days prior to
their filing with the SEC and not file any document to which such counsel
reasonably objects;
(d) furnish to the Investors and their
legal counsel (i) promptly after the same is prepared and publicly distributed,
filed with the SEC, or received by the Company (but not later than two (2)
Business Days after the filing date, receipt date or sending date, as the case
may be) one (1) copy of any Registration Statement and any amendment thereto,
each preliminary prospectus and Prospectus and each amendment or supplement
thereto, and each letter written by or on behalf of the Company to the SEC or
the staff of the SEC, and each item of correspondence from the SEC or the staff
of the SEC, in each case relating to such Registration Statement (other than any
portion of any thereof which contains information for which the Company has
sought confidential treatment), and (ii) such number of copies of a Prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents as each Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Investor
that are covered by the related Registration Statement;
(e) use commercially reasonable efforts
to (i) prevent the issuance of any stop order or other suspension of
effectiveness and, (ii) if such order is issued, obtain the withdrawal of any
such order at the earliest possible moment;
-6-
(f) prior to any public offering of
Registrable Securities, use commercially reasonable efforts to register or
qualify or cooperate with the Investors and their counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the U.S. state securities or blue sky laws of such jurisdictions requested
by the Investors and do any and all other commercially reasonable acts or things
necessary or advisable to enable the distribution in such jurisdictions of the
Registrable Securities covered by the Registration Statement; provided, however,
that the Company shall not be required in connection therewith or as a condition
thereto to (i) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(f), (ii) subject
itself to general taxation in any jurisdiction where it would not otherwise be
so subject but for this Section 3(f), or (iii) file a general consent to
service of process in any such jurisdiction;
(g) use commercially reasonable
efforts to cause all Registrable Securities covered by a Registration Statement
to be listed on each securities exchange, interdealer quotation system or other
market on which similar securities issued by the Company are then listed;
(h) immediately notify the Investors,
at any time prior to the end of the Effectiveness Period, upon discovery that,
or upon the happening of any event as a result of which, the Prospectus includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and promptly prepare,
file with the SEC and furnish to such holder a supplement to or an amendment of
such Prospectus as may be necessary so that such Prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing; and
(i) otherwise use commercially
reasonable efforts to comply with all applicable rules and regulations of the
SEC under the 1933 Act and the 1934 Act, including, without limitation, Rule 172
under the 1933 Act, file any final Prospectus, including any supplement or
amendment thereof, with the SEC pursuant to Rule 424 under the 1933 Act,
promptly inform the Investors in writing if, at any time during the
Effectiveness Period, the Company does not satisfy the conditions specified in
Rule 172 and, as a result thereof, the Investors are required to deliver a
Prospectus in connection with any disposition of Registrable Securities and take
such other actions as may be reasonably necessary to facilitate the registration
of the Registrable Securities hereunder; and make available to its security
holders, as soon as reasonably practicable, but not later than the Availability
Date (as defined below), an earnings statement covering a period of at least
twelve (12) months, beginning after the effective date of each Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the 1933 Act, including Rule 158 promulgated thereunder (for the
purpose of this subsection 3(i), Availability Date means the
45th day following the end of the fourth fiscal quarter that includes the
effective date of such Registration Statement, except that, if such fourth
fiscal quarter is the last quarter of the Companys fiscal year, Availability
Date means the ninetieth (90th) day after the end of such fourth
fiscal quarter).
(j) With a view to making available to
the Investors the benefits of Rule 144 (or its successor rule) and any other
rule or regulation of the SEC that may at any time permit the Investors to sell Common Shares to the public
without registration, the Company covenants and agrees to: (i) make and keep
public information available, as those terms are understood and defined in Rule
144, until the earlier of (A) six months after such date as all of the
Registrable Securities may be sold without restriction by the holders thereof
pursuant to Rule 144 or any other rule of similar effect or (B) such date as all
of the Registrable Securities shall have been resold; (ii) file with the SEC in
a timely manner all reports and other documents required of the Company under
the 1934 Act; and (iii) furnish to each Investor upon request, as long as such
Investor owns any Registrable Securities, (A) a written statement by the Company
that it has complied with the reporting requirements of the 1934 Act, (B) a copy
of the Companys most recent Annual Report on Form 40-F, and (C) such other
information as may be reasonably requested in order to avail such Investor of
any rule or regulation of the SEC that permits the selling of any such
Registrable Securities without registration.
-7-
4. Due Diligence Review;
Information. The Company shall make available, during normal business hours
and upon prior written notice, for inspection and review by the Investors,
advisors to and representatives of the Investors (who may or may not be
affiliated with the Investors and who are reasonably acceptable to the Company),
all financial and other records, all SEC Filings (as defined in the Initial
Purchase Agreement) and other filings with the SEC, and all other corporate
documents and properties of the Company as may be reasonably necessary for the
purpose of such review, and cause the Companys officers, directors and
employees, within a reasonable time period, to supply all such information
reasonably requested by the Investors or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose of enabling the
Investors and such representatives, advisors and underwriters and their
respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of such Registration
Statement.
Notwithstanding the foregoing, the Company shall not disclose
or provide any access to material nonpublic information to the Investors, or to
advisors to or representatives of the Investors, in connection with the
registration of the Registrable Securities unless prior to disclosure of such
information the Company identifies such information as being material nonpublic
information and provides the Investors, such advisors and representatives with
the opportunity to accept or refuse to accept such material nonpublic
information for review and any Investor wishing to obtain such information
enters into an appropriate confidentiality agreement with the Company with
respect thereto.
5. Obligations of the Investors.
(a) Each Investor shall furnish in
writing to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request. At
least five (5) Business Days prior to the first anticipated filing date of any
Registration Statement, the Company shall notify each Investor of the
information the Company requires from such Investor if such Investor elects to
have any of the Registrable Securities included in the
Registration Statement. An Investor shall provide such information to the
Company at least two (2) Business Days prior to the first anticipated filing
date of such Registration Statement if such Investor elects to have any of the
Registrable Securities included in the Registration Statement.
-8-
(b) Each Investor, by its acceptance of
the Registrable Securities agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of a
Registration Statement hereunder, unless such Investor has notified the Company
in writing of its election to exclude all of its Registrable Securities from
such Registration Statement.
(c) Each Investor agrees that, upon
receipt of any notice from the Company of either (i) the commencement of an
Allowed Delay pursuant to Section 2(c)(ii) or (ii) the happening of an
event pursuant to Section 3(h) hereof, such Investor will immediately
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities, until the Investor is advised by
the Company that such dispositions may again be made.
6. Indemnification.
(a) Indemnification by the
Company. The Company will indemnify and hold harmless each Investor and its
officers, directors, members, employees and agents, successors and assigns, and
each other person, if any, who controls such Investor within the meaning of the
1933 Act, against any losses, claims, damages or liabilities, joint or several,
to which they may become subject under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement or omission or alleged omission of any material fact contained in any
Registration Statement, any preliminary Prospectus or final Prospectus, or any
amendment or supplement thereof; (ii) any blue sky application or other document
executed by the Company specifically for that purpose or based upon written
information furnished by the Company filed in any state or other jurisdiction in
order to qualify any or all of the Registrable Securities under the securities
laws thereof (any such application, document or information herein called a
Blue Sky Application); (iii) the omission or alleged omission to state
in a Blue Sky Application a material fact required to be stated therein or
necessary to make the statements therein not misleading; (iv) any violation by
the Company or its agents of any rule or regulation promulgated under the 1933
Act applicable to the Company or its agents and relating to action or inaction
required of the Company in connection with such registration; or (v) any failure
to register or qualify the Registrable Securities included in any such
Registration Statement in any state where the Company or its agents has
affirmatively undertaken or agreed in writing that the Company will undertake
such registration or qualification on an Investors behalf and will reimburse
such Investor, and each such officer, director or member and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not
be liable in any such case if and to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by such Investor or any such controlling person in writing
specifically for use in such Registration Statement, Prospectus or Blue Sky
Application or any amendment or supplement thereto.
-9-
(b) Indemnification by the
Investors. Each Investor agrees, severally but not jointly, to indemnify and
hold harmless, to the fullest extent permitted by law, the Company, its
directors, officers, employees, shareholders and each person who controls the
Company (within the meaning of the 1933 Act) against any losses, claims,
damages, liabilities and expense (including reasonable attorney fees) resulting
from any untrue statement of a material fact or any omission of a material fact
required to be stated in the Registration Statement, a Prospectus or a
preliminary Prospectus or a Blue Sky Application or amendment or supplement
thereto or necessary to make the statements therein not misleading, to the
extent, but only to the extent that such untrue statement or omission is
contained in any information furnished in writing by such Investor to the
Company specifically for inclusion in such Registration Statement or Prospectus
or amendment or supplement thereto, provided, however, that such Investor will
not be liable in any such case if and to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by Company to such Investor in writing in connection
with such Registration Statement, Prospectus or Blue Sky Application or any
amendment or supplement thereto. In no event shall the liability of an Investor
be greater in amount than the dollar amount of the proceeds (net of all expenses
paid by such Investor in connection with any claim relating to this Section
6 and the amount of any damages such Investor has otherwise been required to
pay by reason of such untrue statement or omission) received by such Investor
upon the sale of the Registrable Securities included in the Registration
Statement giving rise to such indemnification obligation.
(c) Conduct of Indemnification
Proceedings. Any person entitled to indemnification hereunder shall (i) give
prompt notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party; provided that any person entitled to indemnification hereunder
shall have the right to employ separate counsel and to participate in the
defense of such claim, but the fees and expenses of such counsel shall be at the
expense of such person unless (a) the indemnifying party has agreed to pay such
fees or expenses, or (b) the indemnifying party shall have failed to assume the
defense of such claim and employ counsel reasonably satisfactory to such person
or (c) in the reasonable judgment of any such person, based upon written advice
of its counsel, a conflict of interest exists between such person and the
indemnifying party with respect to such claims (in which case, if the person
notifies the indemnifying party in writing that such person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such person); and provided, further, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm of
attorneys at any time for all such indemnified parties. No indemnifying party
will, except with the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. No indemnifying party will be
liable to any indemnified party under this Agreement for any settlement by such
indemnified party effected without the indemnifying partys prior written
consent, which shall not be unreasonably withheld, conditioned or delayed.
-10-
(d) Contribution. If for any
reason the indemnification provided for in the preceding paragraphs (a)
and (b) is unavailable to an indemnified party or insufficient to hold it
harmless, other than as expressly specified therein, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable considerations. No
person guilty of fraudulent misrepresentation within the meaning of Section
11(f) of the 1933 Act shall be entitled to contribution from any person not
guilty of such fraudulent misrepresentation. In no event shall the contribution
obligation of a holder of Registrable Securities be greater in amount than the
dollar amount of the proceeds (net of all expenses paid by such holder in
connection with any claim relating to this Section 6 and the amount of
any damages such holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission) received by
it upon the sale of the Registrable Securities giving rise to such contribution
obligation.
7. Miscellaneous.
(a) Amendments and Waivers. This
Agreement may be amended only by a writing signed by the Company and the
Required Investors; provided, however, notwithstanding anything in this
Agreement to the contrary, the Company is permitted to add additional Investors
and Registrable Securities in its sole discretion as set forth in the preamble
to this Agreement and Registrable Securities to the extent it is required to do
so pursuant to Section 3.2 of the Initial Purchase Agreement or pursuant to
substantially equivalent terms to Section 3.2 of the Initial Purchase Agreement
in any Additional Purchase Agreement. The Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company shall have obtained the written consent to such amendment,
action or omission to act, of the Required Investors.
(b) Notices. Unless otherwise
provided, any notice required or permitted under this Agreement shall be given
in writing and shall be deemed effectively given as hereinafter described (i) if
given by personal delivery, then such notice shall be deemed given upon such
delivery, (ii) if given by electronic mail, telex or telecopier, then such
notice shall be deemed given upon receipt of confirmation of complete
transmittal, (iii) if given by mail, then such notice shall be deemed given upon
the earlier of (a) receipt of such notice by the recipient or (b) three days
after such notice is deposited in first class mail, postage prepaid, and (iv) if
given by an internationally recognized overnight air courier, then such notice
shall be deemed given one business day after delivery to such carrier. All
notices shall be addressed to the party to be notified at the address as
follows, or at such other address as such party may designate by ten days
advance written notice to the other party:
-11-
If to the Company:
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Sphere 3D Corp. |
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9112 Spectrum Center Boulevard |
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San Diego, California 92123 |
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Attention: |
Kurt Kalbfleisch, Chief Financial Officer
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Fax: |
(858) 495-4267 |
With a copy to:
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OMelveny & Myers LLP |
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2756 Sand Hill Road |
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Menlo Park, California 94025 |
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Attention: |
Warren T. Lazarow, Esq. |
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Paul L. Sieben, Esq. |
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Fax: |
(650) 473-2601 |
If to the Investors:
to the addresses set forth on the
signature pages hereto.
(c) Assignments and Transfers by
Investors. The provisions of this Agreement shall be binding upon and inure
to the benefit of the Investors and their respective successors and assigns. An
Investor may transfer or assign, in whole or from time to time in part, to one
or more persons its rights hereunder in connection with the transfer of
Registrable Securities by such Investor to such person, provided that such
Investor complies with all laws applicable thereto and provides written notice
of assignment to the Company promptly after such assignment is effected.
(d) Assignments and Transfers by the
Company. This Agreement may not be assigned by the Company (whether by
operation of law or otherwise) without the prior written consent of the Required
Investors, provided, however, that in the event that the Company is a party to a
merger, amalgamation, consolidation, share exchange or similar business
combination transaction in which the Common Shares is converted into the equity
securities of another Person, from and after the effective time of such
transaction, such Person shall, by virtue of such transaction, be deemed to have
assumed the obligations of the Company hereunder, the term Company shall be
deemed to refer to such Person and the term Registrable Securities shall be
deemed to include the securities received by the Investors in connection with
such transaction unless such securities are otherwise freely tradable by the
Investors after giving effect to such transaction.
(e) Benefits of the Agreement.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
-12-
(f) Counterparts; Faxes. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. This Agreement may also be executed via facsimile, which shall be
deemed an original.
(g) Titles and Subtitles. The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this Agreement.
(h) Severability. Any provision
of this Agreement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof but shall
be interpreted as if it were written so as to be enforceable to the maximum
extent permitted by applicable law, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. To the extent permitted by applicable law, the
parties hereby waive any provision of law which renders any provisions hereof
prohibited or unenforceable in any respect.
(i) Further Assurances. The
parties shall execute and deliver all such further instruments and documents and
take all such other actions as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained.
(j) Entire Agreement. This
Agreement is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
(k) Governing Law; Consent to
Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York
applicable to agreements made and to be performed entirely within the State of
New York. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be served on
each party hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. TO THE EXTENT ALLOWABLE UNDER APPLICABLE LAW, EACH OF THE
PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION
WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED
SPECIFICALLY AS TO THIS WAIVER.
-13-
[Signature page follows.]
-14-
IN WITNESS WHEREOF, the parties have executed this Agreement or
caused their duly authorized officers to execute this Agreement as of the date
first above written.
The Company: |
SPHERE 3D CORP. |
Exhibit A
Plan of Distribution
We are registering the common shares previously issued and
issuable upon exercise of the warrants to permit the resale of the common shares
by the selling shareholders. We will not receive any of the proceeds from the
sale by the selling shareholders of the common shares. We will bear all fees and
expenses incident to our obligation to register the common shares.
The selling shareholders, which as used herein includes donees,
pledgees, transferees or other successors-in-interest selling common shares or
interests in common shares received after the date of this prospectus from a
selling shareholder as a gift, pledge, partnership distribution or other
transfer, may, from time to time, sell, transfer or otherwise dispose of any or
all of their common shares or interests in common shares on any stock exchange,
market or trading facility on which the shares are traded or in private
transactions. These dispositions may be at fixed prices, at prevailing market
prices at the time of sale, at prices related to the prevailing market price, at
varying prices determined at the time of sale, or at negotiated prices.
The selling shareholders may use any one or more of the
following methods when disposing of shares or interests therein:
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ordinary brokerage transactions and
transactions in which the broker-dealer solicits purchasers; |
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block trades in which the broker-dealer will
attempt to sell the shares as agent, but may position and resell a portion
of the block as principal to facilitate the transaction; |
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purchases by a broker-dealer as principal and
resale by the broker-dealer for its account; |
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an exchange distribution in accordance with the
rules of the applicable exchange; |
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privately negotiated transactions; |
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short sales effected after the date the
registration statement of which this prospectus is a part is declared
effective by the SEC; |
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through the writing or settlement of options or
other hedging transactions, whether through an options exchange or
otherwise; |
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broker-dealers may agree with the selling
shareholders to sell a specified number of such shares at a stipulated
price per share; |
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a combination of any such methods of sale; and
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any other method permitted by applicable law.
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-17-
If the selling shareholders effect such transactions by selling
common shares to or through underwriters, broker-dealers or agents, such
underwriters, broker-dealers or agents may receive commissions in the form of
discounts, concessions or commissions from the selling shareholders or
commissions from purchasers of the common shares for whom they may act as agent
or to whom they may sell as principal (which discounts, concessions or
commissions as to particular underwriters, broker-dealers or agents may be in
excess of those customary in the types of transactions involved). The selling
shareholders may, from time to time, pledge or grant a security interest in some
or all of the common shares owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell the common shares, from time to time, under this prospectus, or
under an amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act amending the list of selling shareholders to
include the pledgee, transferee or other successors in interest as selling
shareholders under this prospectus. The selling shareholders also may transfer
the common shares in other circumstances, in which case the transferees,
pledgees or other successors in interest will be the selling beneficial owners
for purposes of this prospectus.
In connection with the sale of our common shares or interests
therein, the selling shareholders may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn engage in
short sales of the common shares in the course of hedging the positions they
assume. The selling shareholders may also sell shares of our common shares short
and deliver these securities to close out their short positions, or loan or
pledge the common shares to broker-dealers that in turn may sell these
securities. The selling shareholders may also enter into option or other
transactions with broker-dealers or other financial institutions or the creation
of one or more derivative securities which require the delivery to such
broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).
The aggregate proceeds to the selling shareholders from the
sale of the common shares offered by them will be the aggregate purchase price
of the common shares less aggregate discounts or commissions, if any. Each of
the selling shareholders reserves the right to accept and, together with their
agents from time to time, to reject, in whole or in part, any proposed purchase
of common shares to be made directly or through agents. We will not receive any
of the proceeds from this offering. Upon any exercise of the warrants by payment
of cash, however, we will receive the exercise price of the warrants.
The selling shareholders also may resell all or a portion of
the shares in open market transactions in reliance upon Rule 144 under the
Securities Act, provided that they meet the criteria and conform to the
requirements of that rule.
The selling shareholders and any underwriters, broker-dealers
or agents that participate in the sale of the common shares or interests therein
may be, underwriters within the meaning of Section 2(11) of the Securities
Act. Any discounts, commissions, concessions or profit they earn on any resale
of the shares may be underwriting discounts and commissions under the Securities
Act. Selling shareholders who are underwriters within the
meaning of Section 2(11) of the Securities Act will be subject to the prospectus
delivery requirements of the Securities Act.
-18-
To the extent required, the common shares to be sold, the names
of the selling shareholders, the respective purchase prices and public offering
prices, the names of any agents, dealer or underwriter, any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if
applicable, the common shares may be sold in these jurisdictions only through
registered or licensed brokers or dealers. In addition, in some states the
common shares may not be sold unless it has been registered or qualified for
sale or an exemption from registration or qualification requirements is
available and is complied with.
We have advised the selling shareholders that the
anti-manipulation rules of Regulation M under the Exchange Act may apply to
sales of shares in the market and to the activities of the selling shareholders
and their affiliates. In addition, to the extent applicable we will make copies
of this prospectus (as it may be supplemented or amended from time to time)
available to the selling shareholders for the purpose of satisfying the
prospectus delivery requirements of the Securities Act. The selling shareholders
may indemnify any broker-dealer that participates in transactions involving the
sale of the shares against certain liabilities, including liabilities arising
under the Securities Act.
We have agreed to indemnify the selling shareholders against
liabilities, including liabilities under the Securities Act and state securities
laws, relating to the registration of the shares offered by this prospectus.
We have agreed with the selling shareholders to keep the
registration statement of which this prospectus constitutes a part effective
until the earlier of (1) such time as all of the shares covered by this
prospectus have been disposed of pursuant to and in accordance with the
registration statement or (2) the date on which the shares may be sold without
restriction pursuant to Rule 144 of the Securities Act.
-19-
EXHIBIT 99.8
Sphere 3D Consolidates Global Removable Disk Market through
Acquisition of
RDX® Product Lines from Imation
Transaction unifies the Global market for RDX Removable
Storage Backup Appliance
Offering
- Transaction will be accretive in this quarter for both revenue and gross
margin;
- Market will benefit from centralized introduction of new features and
capacity upgrades;
- Expands RDX market share in North America and Japan, to augment the
existing strength in Europe;
- Provides greater control over the backup appliance components that form a
key part of Sphere 3Ds strategy to deliver comprehensive virtualization,
storage and data management for on premise, cloud and hybrid infrastructures;
SAN JOSE, CA August 13, 2015 Sphere 3D Corp. (NASDAQ: ANY),
a virtualization and data management solutions provider, today announced that
its wholly owned subsidiary, Overland Storage, Inc., acquired the RDX removable
disk product lines and existing inventory assets from Imation Corp., (NYSE:IMN)
(Imation) pursuant to an Asset Purchase Agreement, dated as of August
10, 2015, by and among Sphere 3D, Overland Storage and Imation.
The Imation RDX product lines generated approximately $14.5
million of revenue for Imation in the trailing twelve months as of June 30, 2015
The completion of our acquisition of the RDX product lines
from Imation will accelerate our efforts to aggressively pursue the
purpose-built backup appliance market which is a valuable differentiator in our
reference architecture for our hyper converged infrastructure deployments. said
Eric Kelly, CEO of Sphere3D. With this transaction now complete, Sphere 3D can
expand the current strong presence of our Tandberg Data business in Europe,
while increasing sales in key geographies such as North America and Japan, as
well as simultaneously strengthening our Global Channel Partner Network for
backup appliance offerings.
According to the International Data Corporation (IDC) Worldwide
Quarterly Purpose-Built Backup Appliance Tracker, the worldwide PBBA market got
off to a strong start in 2015 with solid year-over-year revenue growth. Factory
revenues grew 6.9% year-over-year totaling $719.3 million and capacity shipped
reached 647 petabytes, an increase of 32.3% year-over-year in the first quarter
of 2015.
“Sphere 3D’s award winning and patented RDX removable disk technology, marketed and sold under our Tandberg Data brand, is the industry standard in enterprise-grade removable disk storage for backup, data protection and archiving, and is
characterized by its very rugged design that allows the disks to be handled and transported while safely retaining data” said Nilesh Patel, VP of Product Management and Marketing at Sphere 3D. “RDX-powered purpose-built backup
appliances, like our new RDX QuikStation™, are the ideal solution for Small-to-Medium sized businesses in highly regulated industries such as healthcare and financial services, where data must be secured, protected, archived and recoverable
per government regulations. This acquisition also now makes available to our global partners our groundbreaking RDX+ software technology which is designed to increase storage capacities by 50% and more, providing all QuickStation and
QuickStor™ appliance customers with future expansion to larger than 2TB capacity media”.
As part of the agreement and to ensure a seamless transition for customers, Imation has agreed to provide certain customer support services through October 31, 2015.
Transaction Highlights
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100% stock transaction valued at approximately $4.9 million plus the net value of existing inventory of approximately $1.4 million, based on the closing price of Sphere 3D common shares as of August 6, 2015.
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Acquisition of all RDX assets owned by Imation
Description of Transaction Documents
The Asset Purchase Agreement among Sphere 3D, Overland Storage and Imation provided for the purchase by Overland Storage of the assets of Imation’s removable disk product lines and existing inventory for 1,529,126 common shares of Sphere 3D
and a warrant to purchase up to a maximum of 250,000 shares exercisable at a nominal exercise price solely in connection with certain purchase price adjustments. The warrant expires within six months of registration of the shares, or earlier in
certain circumstances. The agreement also included settlement of all other disputes between the parties.
In addition, Sphere 3D and Imation entered into a Lock-Up Agreement, dated as of August 10, 2015, which imposes limitations on the transfer and sale of the common shares issued to Imation at closing and requires that Imation vote its shares in
accordance with any recommendation of Sphere 3D’s board of directors for a designated period of time. If the value of Imation’s common shares exceeds or falls below certain thresholds, then certain inventory-based [adjustments or
true-ups] may be triggered. Sphere 3D and Imation also entered into a Registration Rights Agreement, dated August 10, 2015, pursuant to which Sphere 3D has agreed to register the resale of the common shares issued to Imation and any shares issuable
upon the exercise of the warrant.
Investor Conference Call
Sphere 3D will host an investor conference call today, Thursday, August 13, at 5:00 pm ET (2:00 pm PT). To access the call dial 888-206-4893 (+1 913-981-5510 outside the United States and Canada) and when prompted provide the pass code "3735986" to
the operator. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. In addition, a live and archived webcast of the conference call will be available over the Internet at www.sphere3d.com in
the Investor Relations section. A replay of the conference call will also be available via telephone by dialing (888) 203-1112 (+1 (719) 457-0820 outside the United States and Canada) and entering access code, 3735986#, beginning 8:00 p.m. ET on
August 13, 2015 through 11:59 p.m. ET on August 20, 2015.
About Sphere 3D
Sphere 3D Corp. (NASDAQ: ANY) delivers virtualization technology and data management solutions that enable workload-optimized solutions. We achieve this through a combination of virtual applications, virtual desktops, virtual storage and physical
hyper-converged platforms. Sphere 3D’s value proposition is simple and direct — we allow organizations to deploy a combination of public, private or hybrid cloud strategies, while backing them up with state of the art storage solutions
at an affordable price. Sphere 3D, along with its wholly-owned subsidiaries Overland Storage and Tandberg Data, has a strong portfolio of brands including Glassware 2.0™, SnapCLOUD™, SnapScale®, SnapServer®, V3,
RDX®, and NEO®. For more information, visit www.sphere3d.com.
Safe Harbor Statement
This press release contains forward-looking statements relating to strategic goals, plans and other matters that involve risks, uncertainties, and assumptions that are difficult to predict. Actual results and the timing of events could differ
materially from those anticipated in such forward-looking statements as a result of risks and uncertainties including, without limitation, our ability to retain customers of and market share for the purchased assets, our ability to integrate the
purchased assets with our existing RDX business, continued market adoption of RDX technologies, unforeseen changes in the course of Sphere 3D’s business or the business of its wholly-owned subsidiaries, including, without limitation, Overland
Storage and Tandberg Data; any increase in Sphere 3D’s cash needs or our inability to obtain additional debt or equity financing; market adoption and performance of our products; possible actions by customers, suppliers, competitors or
regulatory authorities; and other risks detailed from time to time in Sphere 3D’s periodic reports contained in our Annual Information Form and other filings with Canadian securities regulators (www.sedar.com) and in prior periodic
reports filed with the United States Securities and Exchange Commission (www.sec.gov), and risks detailed in the Form 40-F filed by us with the SEC for the year ended December 31, 2014. Sphere 3D undertakes no obligation to update any
forward-looking statement, whether written or oral, that may be made from time to time,
whether as a result of new information, future developments or otherwise.
All product and company names herein may be trademarks of their
registered owners.
Investor Contact:
MKR Group, Inc.
Todd Kehrli or Jim Byers
any@mkr-group.com
323-468-2300
Media Contact:
Sphere 3D:
Tina Brown
Tina.brown@sphere3D.com
1-408.283.4731
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