Title of each class | Name of exchange on which registered | |
Common Shares | NASDAQ Capital Market |
GENERAL PRESENTATION MATTERS | |||
FORWARD-LOOKING INFORMATION | |||
PART 1 | |||
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS | |||
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE | |||
ITEM 3. KEY INFORMATION | |||
A. Selected Financial Data | |||
B. Capitalization and Indebtedness | |||
C. Reasons for the Offer and Use of Proceeds | |||
D. Risk Factors | |||
ITEM 4 INFORMATION ON THE COMPANY | |||
A. History and Development of the Company | |||
B. Business Overview | |||
C. Organizational Structure | |||
D. Property, Plant and Equipment | |||
ITEM 4A. UNRESOLVED STAFF COMMENTS | |||
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS | |||
A. Operating Results | |||
B. Liquidity and Capital Resources | |||
C. Research and Development, Patents and Licenses, etc. | |||
D. Trend Information | |||
E. Off-Balance Sheet Information | |||
F. Tabular Disclosure of Contractual Obligations | |||
G. Safe Harbor | |||
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES | |||
A. Directors and Senior Management | |||
B. Compensation | |||
C. Board Practices | |||
D. Employees | |||
E. Share Ownership | |||
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS | |||
A. Major Shareholders | |||
B. Related Party Transactions | |||
C. Interests of Experts and Counsel | |||
ITEM 8. FINANCIAL INFORMATION | |||
A. Consolidated Statements and Other Financial Information | |||
B. Significant Changes | |||
ITEM 9. THE OFFERING AND LISTING | |||
A. Offer and Listing Details | |||
B. Plan of Distribution | |||
C. Markets |
D. Selling Shareholders | |||
E. Dilution | |||
F. Expenses of the Issue | |||
ITEM 10. ADDITIONAL INFORMATION | |||
A. Share Capital | |||
B. Memorandum and Articles of Association | |||
C. Material Contracts | |||
D. Exchange Controls | |||
E. Taxation | |||
F. Dividends and Paying Agents | |||
G. Statement By Experts | |||
H. Documents on Display | |||
I. Subsidiary Information | |||
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | |||
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES | |||
A. Debt Securities | |||
B. Warrants and Rights | |||
C. Other Securities | |||
D. American Depositary Shares | |||
PART II | |||
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES | |||
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | |||
ITEM 15. CONTROLS AND PROCEDURES | |||
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT | |||
ITEM 16B. CODE OF ETHICS | |||
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES | |||
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES | |||
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS | |||
ITEM 16F. CHANGES IN REGISTRANTS CERTIFYING ACCOUNTANT | |||
ITEM 16G. CORPORATE GOVERNANCE | |||
ITEM 16H. MINE SAFETY DISCLOSURE | |||
PART III | |||
ITEM 17. FINANCIAL STATEMENTS | |||
ITEM 18. FINANCIAL STATEMENTS | |||
ITEM 19. EXHIBITS |
2016 | 2015 | 2014 | 2013 | 2012 (1) | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Consolidated Statements of Operations Data | ||||||||||||||||||||
Net revenue | $ | 76,393 | $ | 76,165 | $ | 13,469 | $ | — | $ | 410 | ||||||||||
Impairment of goodwill and acquired intangible assets | $ | 34,398 | $ | 10,702 | $ | — | $ | — | $ | — | ||||||||||
Operating loss | $ | (63,824 | ) | $ | (44,839 | ) | $ | (12,039 | ) | $ | (3,296 | ) | $ | (2,443 | ) | |||||
Net loss | $ | (68,460 | ) | $ | (47,227 | ) | $ | (12,722 | ) | $ | (3,336 | ) | $ | (2,462 | ) | |||||
Net loss per share | ||||||||||||||||||||
Basic and diluted | $ | (1.38 | ) | $ | (1.24 | ) | $ | (0.53 | ) | $ | (0.19 | ) | $ | (0.21 | ) | |||||
Shares used in computing net loss per share: | ||||||||||||||||||||
Basic and diluted | 49,736 | 37,957 | 24,131 | 17,331 | 11,918 | |||||||||||||||
Consolidated Balance Sheets | ||||||||||||||||||||
Total assets | $ | 92,556 | $ | 139,111 | $ | 149,263 | $ | 8,361 | $ | 3,227 | ||||||||||
Net assets | $ | 20,446 | $ | 68,140 | $ | 85,140 | $ | 7,437 | $ | 2,922 | ||||||||||
Debt | $ | 43,995 | $ | 36,891 | $ | 24,390 | $ | — | $ | — | ||||||||||
Share capital | $ | 157,254 | $ | 136,058 | $ | 106,117 | $ | 14,407 | $ | 5,437 | ||||||||||
Period end number of shares outstanding | 66,565 | 45,198 | 34,554 | 21,098 | 16,114 |
(1) | Amounts are presented using International Financial Reporting Standards and converted to USD using the average and ending Canadian exchange rates of 1.0004 and 1.0051, respectively. |
• | build or leverage, as applicable, a network of channel partners to create an expanding presence in the evolving marketplace for our products and services; |
• | build or leverage, as applicable, a sales team to keep end-users and channel partners informed regarding the technical features, issues and key selling points of our products and services; |
• | attract and retain qualified technical personnel in order to continue to develop reliable and flexible products and provide services that respond to evolving customer needs; |
• | develop support capacity for end-users as sales increase, so that we can provide post-sales support without diverting resources from product development efforts; and |
• | expand our internal management and financial controls significantly, so that we can maintain control over our operations and provide support to other functional areas as the number of personnel and size increases. |
• | varying size, timing and contractual terms of orders for our products, which may delay the recognition of revenue; |
• | competitive conditions in the industry, including strategic initiatives by us or our competitors, new products or services, product or service announcements and changes in pricing policy by us or our competitors; |
• | market acceptance of our products and services; |
• | our ability to maintain existing relationships and to create new relationships with channel partners; |
• | the discretionary nature of purchase and budget cycles of our customers and end-users; |
• | the length and variability of the sales cycles for our products; |
• | general weakening of the economy resulting in a decrease in the overall demand for our products and services or otherwise affecting the capital investment levels of businesses with respect to our products or services; |
• | timing of product development and new product initiatives. |
• | changes in customer mix; |
• | increases in the cost of, or limitations on, the availability of materials; |
• | fluctuations in average selling prices; |
• | changes in product mix; |
• | increases in costs and expenses associated with the introduction of new products; and |
• | currency exchange fluctuations. |
• | a change in competitive strategy that adversely affects a distributor’s or reseller’s willingness or ability to stock and distribute our products; |
• | the reduction, delay or cancellation of orders or the return of a significant amount of our products; |
• | the loss of one or more of our distributors or resellers; and |
• | any financial difficulties of our distributors or resellers that result in their inability to pay amounts owed to us. |
• | cultural and language differences; |
• | increased costs of doing business in countries with limited infrastructure; |
• | possible difficulties in collecting accounts receivable; |
• | corporate and personal liability for violations of local laws; |
• | the worldwide impact of the recent global economic downturn and related market uncertainty, including the ongoing European economic and financial turmoil related to sovereign debt issues in certain countries; |
• | the imposition of governmental controls mandating compliance with various foreign and U.S. export laws; |
• | currency exchange fluctuations; |
• | weak economic conditions in foreign markets; |
• | political or social unrest; |
• | economic instability or weakness in a specific country or region; |
• | environmental and trade protection measures and other legal and regulatory requirements; |
• | health or similar issues, such as pandemic or epidemic or natural disasters; |
• | trade restrictions, tariffs and taxes; |
• | expropriation; |
• | longer payment cycles typically associated with international sales; and |
• | difficulties in staffing and managing international operations. |
• | diversion of management’s attention; |
• | disruption to our ongoing business; |
• | failure to retain key acquired personnel; |
• | difficulties in integrating acquired operations, technologies, products or personnel; |
• | unanticipated expenses, events or circumstances; |
• | assumption of disclosed and undisclosed liabilities; and |
• | inappropriate valuation of the acquired in-process research and development, or the entire acquired business. |
• | divert the attention of our management, cause significant delays, materially disrupt the conduct of our business or materially adversely affect our revenue, financial condition and results of operations; |
• | be time consuming to evaluate and defend; |
• | result in costly litigation and substantial expenses; |
• | cause product shipment delays or stoppages; |
• | subject us to significant liabilities; |
• | require us to enter into costly royalty or licensing agreements; |
• | require us to modify or stop using the infringing technology; or |
• | result in costs or other consequences that have a material adverse effect on our business, results of operations and financial condition. |
• | price and volume fluctuations in the overall stock market from time to time; |
• | volatility in the market prices and trading volumes of technology stocks; |
• | changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; |
• | future capital raising activities; |
• | sales of common shares by holders thereof or by us; |
• | failure of securities analysts to maintain coverage of Sphere 3D, changes in financial estimates by securities analysts who follow Sphere 3D, or our failure to meet these estimates or the expectations of investors; |
• | the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections; |
• | market acceptance of our products and technologies; |
• | announcements by us or our competitors of new products or services; |
• | the public’s reaction to our press releases, other public announcements and filings with the SEC and the applicable Canadian securities regulatory authorities; |
• | rumors and market speculation involving us or other companies in our industry; |
• | actual or anticipated changes in our operating results or fluctuations in our operating results; |
• | actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; |
• | litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; |
• | developments or disputes concerning our intellectual property or other proprietary rights; |
• | announced or completed acquisitions of businesses or technologies by us or our competitors; |
• | new laws or regulations or new interpretations of existing laws or regulations applicable to us and our business; |
• | changes in accounting standards, policies, guidelines, interpretations or principles; |
• | any significant change in our executive officers and other key personnel or Board of Directors; |
• | general economic conditions and slow or negative growth of our markets; |
• | release of transfer restrictions on certain outstanding common shares; |
• | news reports relating to trends, concerns or competitive developments, regulatory changes and other related issues in our industry or target markets. |
• | The RDX® QuikStor is a single cartridge purpose-built backup solution that combines the portability and reliability of tape-based backup with the speed and simplicity of hard disk drives in order to deliver reliable and convenient storage for backup, archive, data interchange and disaster recovery. RDX® QuikStor utilizes either hard disk drives or SSD drives, with either SATA or USB 3.0 connectivity, and provide up to three TB of data storage. |
• | The RDX® QuikStation™ is a network-attached removable disk purpose-built backup system designed to provide a platform for data protection and off-site disaster recovery for small and medium enterprise (“SME”) environments. The RDX® QuikStation™ can appear to a host as a tape library, a virtual RDX® drive, a stand-alone tape drive, generic disk drives or a combination of disk and tape, offering users versatility and expanded compatibility. |
• | The SnapServer® XSR40 is a 1U server that can be configured with up to four SATA II drives, and can scale to 320 TB of storage capacity by adding SnapExpansion enclosures. |
• | The SnapServer® XSR120 is a 2U server that can be configured with up to 12 SATA II drives, and can scale to 768 TB of storage capacity by adding up to seven SnapExpansion enclosures. |
• | The SnapScale X2® is a 2U rackmount, which can be configured with up to 12 Nearline SAS hard drives for a maximum capacity of 96 TB per node, and can scale out to over 512 petabytes (“PB”) with two-way or three-way redundancy. |
• | The SnapScale X4™ is a high-density 4U rackmount, which can be configured with up to 36 Nearline SAS hard drives for a maximum capacity of 288 TB per node, and can scale out to over 512 PB with two-way or three-way redundancy. |
• | NEO® XL-Series libraries are designed for mid-range and enterprise businesses, providing automated backup and archive that combines flexibility, density, high-performance and affordability to ensure that data is protected faster and more cost effectively. NEO® XL-Series tape libraries provide data storage capacity that ranges from 90 TB to 8.4 PB, enabling customers to expand their storage capability as their storage requirements changes. NEO® XL-Series significantly reduces backup windows and improves efficiency with high-performance data transfer rates that range from 504 GB per hour to over 114 TB per hour. The NEOxl 80 supports up to 80 cartridges (with capacity ranging from 120 TB to 1.2 PB) and six tape drives (for data transfer rates ranging from 504 GB per hour to 8.6 TB per hour) per module. Up to six 80-cartridge per six-drive NEOxl Expansion Modules can be added to provide a total of 560 cartridges (with capacity of 8.4 PB) and 42 tape drives (for data transfer rates of 114 TB per hour). |
• | NEO® S-Series libraries provide affordable tape backup and archive for small and medium businesses. NEO® S-Series libraries are available in compact rack-mount configurations with either SAS or FC connectivity. The NEOs StorageLoader is a 1U, eight-cartridge, single-drive autoloader that provides up to 120 TB of storage capacity. The NEOs T24 is a 2U tape library that supports up to 24 cartridge slots and two tape drives, and delivers up to 360 TB of storage capacity. The NEOs T48 is a 4U tape library that supports up to 48 cartridge slots and four tape drives, with a maximum storage capacity of 720 TB. |
• | NEO® E-Series provides scalable, high capacity, enterprise-class tape automation designed for large businesses. NEO® E-Series provides enterprise-level RAS (reliability, availability and serviceability) features, such as robotic and power redundancy, partitioning and scalability, to ensure corporate data is reliably protected. The NEO® 8000e is a 42U tape library that supports up to 500 cartridge slots (up to 7.5 PB) and 12 tape drives (up to 32.4 TB per hour) in a single module. For truly enterprise-class storage requirements, the NEO® 8000e is scalable up to 1,000 cartridge slots (15 PB) and 24 tape drives (64 TB per hour). |
• | Stand-alone LTO tape drives provide low-cost, compact affordable backup and archive abilities. Available either as internal drives to be integrated into server-based bundles or as eternal drives for desktop use, stand-alone tape drives deliver storage capacities ranging from 1.5 TB to 15 TB. |
• | LTO media (data cartridges and cleaning cartridges) allows our customers to purchase the media for their tape drives and libraries at the same time they purchase their NEO Series® solution, providing the ability to have their NEO Series® solution fully operational upon installation. With four generations of LTO tape media (LTO 4, 5, 6, and 7) in our portfolio, native capacities range from 800 GB per cartridge to 6 TB per cartridge. |
• | Americas, consisting of the U.S., Canada and Latin America; |
• | EMEA, consisting of Europe, the Middle East and Africa; and |
• | APAC, consisting of Asia Pacific countries. |
Year Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Disk systems | $ | 46,795 | $ | 39,836 | $ | 8,518 | ||||||
Tape automation systems | 10,297 | 12,764 | 1,868 | |||||||||
Tape drives and media | 10,973 | 12,914 | 1,815 | |||||||||
Service | 8,328 | 10,651 | 1,268 | |||||||||
$ | 76,393 | $ | 76,165 | $ | 13,469 |
Year Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
EMEA | $ | 39,719 | $ | 39,331 | $ | 7,172 | ||||||
Americas | 23,043 | 25,284 | 4,749 | |||||||||
APAC | 13,631 | 11,550 | 1,548 | |||||||||
$ | 76,393 | $ | 76,165 | $ | 13,469 |
• | Distribution channel — Our primary distribution partners in North America include Promark Technology, Inc., Ingram Micro Inc., Tech Data Corporation, and Synnex Corporation. We have over 50 distribution partners throughout Europe and Asia. We sell through a two-tier distribution model where distributors sell our products to system integrators, VARs or DMRs, who in turn sell to end users. We support these distribution partners through our dedicated field sales force and field engineers. In 2016, no distribution partner accounted for more than 10% of net revenue. |
• | Reseller channel — Our worldwide reseller channel includes systems integrators, VARs and DMRs. Our resellers may package our products as part of complete application and desktop virtualization solutions data processing systems or with other storage devices to deliver complete enterprise information technology infrastructure solutions. Our resellers also recommend our products as replacement solutions when systems are upgraded, or bundle our products with storage management software specific to the end user’s system. We support the reseller channel through its dedicated field sales representatives, field engineers and technical support organizations. |
• | Cloud Marketplace — In 2015, we added Microsoft Azure Cloud Marketplace as an additional channel for two of our cloud solutions to sell to end-users directly as well as to our traditional channel partners. With the pay per use model, supported through the Microsoft Azure Cloud, our customers now can accelerate their adoption of cloud based application and data delivery. |
Name of subsidiary | Jurisdiction of Incorporation or Organization | |
Sphere 3D Inc. | Ontario, Canada | |
V3 Systems Holdings, Inc. | Delaware, United States | |
Overland Storage, Inc. | California, United States | |
Overland Storage (Europe), Ltd. | United Kingdom | |
Overland Storage S.a.r.L. | France | |
Overland Storage GmbH | Germany | |
Overland Technologies Luxembourg S.a.r.L. | Luxembourg | |
Tandberg Data Holdings S.a.r.L. | Luxembourg | |
Tandberg Data SAS | France | |
Tandberg Data (Asia) Pte., Ltd. | Singapore | |
Tandberg Data (Japan), Inc. | Japan | |
Tandberg Data (Hong Kong), Ltd. | Hong Kong | |
Tandberg Data GmbH | Germany | |
Tandberg Data Norge AS | Norway | |
Guangzhou Tandberg Electronic Components Co. Ltd. | China |
• | We lease an 86,900 square foot facility in Guangzhou, China. This lease expires in July 2019. This facility houses manufacturing of the majority of our RDX product and repair services. |
• | We own a 25,600 square foot facility in Dortmund, Germany. This facility houses sales and marketing, repair services, technical support, and administrative functions. |
• | We lease a 20,515 square foot facility in a light industrial complex in San Diego, California. The lease expires in March 2020. This facility houses repair services, research and development, technical support, and administrative functions. |
• | We lease a 20,777 square foot facility in San Jose, California. In March 2017, the lease was amended to 10,282 square feet and expires in October 2022. The San Jose facility houses research and development, technical support, sales and marketing, and administrative functions. |
Year Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Net revenue | 100.0 | % | 100.0 | % | 100.0 | % | ||
Cost of revenue | 70.8 | 70.3 | 60.4 | |||||
Gross profit | 29.2 | 29.7 | 39.6 | |||||
Operating expenses: | ||||||||
Sales and marketing | 29.1 | 30.9 | 38.3 | |||||
Research and development | 11.5 | 13.0 | 4.9 | |||||
General and administrative | 27.1 | 30.6 | 85.9 | |||||
Impairment of goodwill and acquired intangible assets | 45.0 | 14.1 | — | |||||
112.7 | 88.6 | 129.1 | ||||||
Loss from operations | (83.5 | ) | (58.9 | ) | (89.5 | ) | ||
Interest expense | (6.7 | ) | (4.1 | ) | (3.3 | ) | ||
Other expense, net | 1.7 | (0.9 | ) | (1.4 | ) | |||
Loss before income taxes | (88.5 | ) | (63.9 | ) | (94.2 | ) | ||
(Benefit from) provision for income taxes | 1.1 | (1.8 | ) | 0.3 | ||||
Net loss | (89.6 | )% | (62.1 | )% | (94.5 | )% |
Year Ended December 31, | |||||||||||||||||
2016 | Change | 2015 | Change | 2014 | |||||||||||||
Disk systems | $ | 46,795 | 17.5 | % | $ | 39,836 | 367.7 | % | $ | 8,518 | |||||||
Tape automation systems | 10,297 | (19.3 | )% | 12,764 | 583.3 | % | 1,868 | ||||||||||
Tape drives and media | 10,973 | (15.0 | )% | 12,914 | 611.5 | % | 1,815 | ||||||||||
Service | 8,328 | (21.8 | )% | 10,651 | 740.0 | % | 1,268 | ||||||||||
Total | $ | 76,393 | 0.3 | % | $ | 76,165 | 465.5 | % | $ | 13,469 |
Year Ended December 31, | |||||||||||||||||
2016 | Change | 2015 | Change | 2014 | |||||||||||||
EMEA | $ | 39,719 | 1.0 | % | $ | 39,331 | 448.4 | % | $ | 7,172 | |||||||
Americas | 23,043 | (8.9 | )% | 25,284 | 432.4 | % | 4,749 | ||||||||||
APAC | 13,631 | 18.0 | % | 11,550 | 646.1 | % | 1,548 | ||||||||||
Total | $ | 76,393 | 0.3 | % | $ | 76,165 | 465.5 | % | $ | 13,469 |
2016 | Change | 2015 | Change | 2014 | ||||||||||||||
Gross profit | $ | 22,339 | (1.2 | )% | $ | 22,619 | 323.9 | % | $ | 5,336 | ||||||||
Gross margin | 29.2 | % | (0.5) pt | 29.7 | % | (9.9) pt | 39.6 | % | ||||||||||
Gross profit - product | $ | 17,631 | 5.6 | % | $ | 16,689 | 257.7 | % | $ | 4,665 | ||||||||
Gross margin - product | 25.9 | % | 0.4 pt | 25.5 | % | (12.7) pt | 38.2 | % | ||||||||||
Gross profit - service | $ | 4,708 | (20.6 | )% | $ | 5,930 | 783.8 | % | $ | 671 | ||||||||
Gross margin - service | 56.5 | % | 0.8 pt | 55.7 | % | 2.8 pt | 52.9 | % |
Maturity Date | Interest Rate | Amount Outstanding | ||||||
Term loan, net of unamortized debt discount of $0.9 million | 3/31/2017 | Prime + 2.75% | $ | 9,100 | ||||
Revolving loan | 3/31/2017 | Prime + 2.75% | $ | 8,195 | ||||
Term loan - related party | 1/31/2018 | 20.0% | $ | 2,500 | ||||
Convertible notes - related party, net of unamortized debt discount of $0.3 million | 3/31/2018 | 8.0% | $ | 24,200 |
2016 | 2015 | 2014 | ||||||||||
Net cash used in operating activities | $ | (17,473 | ) | $ | (23,157 | ) | $ | (8,545 | ) | |||
Net cash used in investing activities | $ | (237 | ) | $ | (583 | ) | $ | (8,937 | ) | |||
Net cash provided by financing activities | $ | 14,123 | $ | 28,298 | $ | 16,513 |
Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | After 5 years | |||||||||||||||
Long-term debt — related party, including interest(1) | $ | 29,738 | $ | 4,559 | $ | 25,179 | $ | — | $ | — | ||||||||||
Credit facility and term note, including interest(1) | 18,491 | 18,491 | — | — | — | |||||||||||||||
Operating lease obligations (2) | 3,272 | 1,331 | 1,718 | 223 | — | |||||||||||||||
Purchase obligations(3) | 2,208 | 2,208 | — | — | — | |||||||||||||||
Total contractual obligations | $ | 53,709 | $ | 26,589 | $ | 26,897 | $ | 223 | $ | — | ||||||||||
Other commercial commitments: | ||||||||||||||||||||
Letters of credit | $ | 400 | $ | 400 | $ | — | $ | — | $ | — |
(1) | Interest payments have been calculated using the amortization profile of the debt outstanding at December 31, 2016, taking into account the fixed rate paid at year end. |
(2) | Represents contractual lease obligations under non-cancelable operating leases. |
(3) | Represents purchase orders for inventory and non-inventory items entered into prior to December 31, 2016, with purchase dates extending beyond January 1, 2017. Some of these purchase obligations may be canceled. |
Name | Age | Director Since | Position with Sphere 3D | |||
Peter Ashkin(1)(2)(3)(4) | 65 | January 16, 2012 | (6) | Director | ||
Mario Biasini(7) | 56 | October 21, 2009 | (6) | Director | ||
Daniel Bordessa(8) | 43 | December 1, 2014 | Director | |||
Glenn M. Bowman(1)(2)(3)(4) | 59 | January 16, 2012 | (6) | Director | ||
Eric L. Kelly | 58 | July 15, 2013 | Chief Executive Officer, Chairman and Director | |||
Vivekanand Mahadevan(1)(3)(4)(5) | 63 | December 1, 2014 | Director | |||
Peter Tassiopoulos | 48 | March 7, 2014 | President, Vice Chairman and Director | |||
Kurt L. Kalbfleisch | 51 | N/A | Senior Vice President and Chief Financial Officer | |||
Randall T. Gast | 55 | N/A | Senior Vice President and Chief Operating Officer | |||
Jenny C. Yeh | 42 | N/A | Vice President, Legal and General Counsel |
(1) | Independent director. See “Audit Committee - Audit Committee Composition”. |
(2) | Member of Audit Committee. |
(3) | Member of Compensation Committee. |
(4) | Member of the Nominating and Governance Committee. |
(5) | Mr. Mahadevan was appointed to the Audit Committee effective December 20, 2016. |
(6) | Includes period as Director of the predecessor company, Sphere 3D Inc. |
(7) | Mr. Biasini resigned as a Director of the Company on May 11, 2016. |
(8) | Mr. Bordessa resigned as a Director of the Company on December 22, 2016. |
Name and Principal Position | Year | Salary ($) | Share- based Awards ($) | Non-equity Incentive Plan Compensation(1) ($) | All Other Compensation(2) ($) | Total Compensation ($) | ||||||
Eric L. Kelly Chief Executive Officer | 2016 | 400,000 | — | — | 17,674 | 417,674 | ||||||
Peter Tassiopoulos(3) President | 2016 | 214,480 | — | — | 3,417 | 217,897 | ||||||
Kurt L. Kalbfleisch Senior Vice President and Chief Financial Officer | 2016 | 300,000 | — | — | 23,593 | 323,593 | ||||||
Randall T. Gast Senior Vice President and Chief Operations Officer | 2016 | 285,000 | — | — | 9,609 | 294,609 | ||||||
Jenny C, Yeh Vice President, Legal and General Counsel | 2016 | 300,000 | 173,100 | (4) | — | 6,308 | 479,408 |
(1) | The amounts shown in the “Non-equity Incentive Plan Compensation” column represent bonuses awarded to the NEO for the applicable year under our bonus program in effect for that year. |
(2) | The amounts shown in the “All Other Compensation” column reflect amounts we paid on the NEOs’ behalf for health insurance and life insurance premiums and certain out-of-pocket medical expenses. For the amounts reported in this column for Mr. Tassiopoulos, see the applicable footnote below. |
(3) | The dollar amounts reported for Mr. Tassiopoulos in the table above are presented after conversion from Canadian dollars to U.S. dollars based on an exchange rate of 1.3275 U.S. dollars to one Canadian dollar, which is the average conversion rate in effect for 2016. |
(4) | This award is a restricted stock unit which was granted on August 9, 2016 and was valued at $0.87 per share on the grant date (the closing market price for a share of our common stock on that date). |
Name | Option-based Awards | Stock Awards | ||||||||||||||||||||
Grant Date | Number of securities underlying unexercised options (#) | Number of securities underlying unexercised options (#) | Option exercise price(1) ($) | Option expiration date | Number of units of stock that have not vested (#) | Market value of unites of stock that have not vested(2) ($) | ||||||||||||||||
exercisable | unexercisable | |||||||||||||||||||||
Eric L. Kelly | 7/9/2013 | 850,000 | — | 0.49 | 7/8/2023 | — | — | |||||||||||||||
9/16/2013 | 25,000 | — | 2.02 | 9/15/2023 | — | — | ||||||||||||||||
8/26/2015 | 93,332 | 46,668 | (3) | 2.71 | 8/26/2021 | — | — | |||||||||||||||
8/26/2015 | — | — | — | — | 280,000 | (3) | 84,000 | |||||||||||||||
Peter Tassiopoulos | 3/4/2013 | 100,000 | — | 0.64 | 3/3/2018 | — | — | |||||||||||||||
9/16/2013 | 100,000 | — | 2.02 | 9/15/2023 | — | — | ||||||||||||||||
Kurt L. Kalbfleisch | 8/26/2015 | 66,666 | 33,334 | (3) | 2.71 | 8/26/2021 | — | — | ||||||||||||||
8/26/2015 | — | — | — | — | 200,000 | (3) | 60,000 | |||||||||||||||
Randall T. Gast | 8/23/2012 | 4,638 | — | 20.48 | 8/23/2018 | — | — | |||||||||||||||
8/26/2015 | 66,666 | 33,334 | (3) | 2.71 | 8/26/2021 | — | — | |||||||||||||||
8/26/2015 | — | — | — | — | 207,407 | (5) | 62,222 | |||||||||||||||
Jenny C. Yeh | 11/10/2015 | — | — | — | — | 133,332 | (6) | 40,000 | ||||||||||||||
8/9/2016 | — | — | — | — | 200,000 | (7) | 60,000 |
(1) | The exercise prices reported for the options expiring in 2023 for Mr. Kelly, and for each of the options expiring in 2018 and 2023 for Mr. Tassiopoulos, in the table above are presented after conversion from Canadian dollars to U.S. dollars based on an exchange rate of 1.3275 U.S. dollars to one Canadian dollar, which is the average conversion rate in effect for 2016. |
(2) | Computed by multiplying the number of unvested shares by $0.30, the closing market price of our common shares on December 30, 2016 (the last trading day of December). |
(3) | These options are scheduled to vest in monthly installments beginning in January 2017 and ending in August 2018. |
(4) | This stock award is scheduled to vest in quarterly installments beginning in January 2017 and ending in February 2018. |
(5) | This stock award is scheduled to vest in monthly installments beginning in January 2017 and ending in February 2018. Subject to the vesting requirements, the entire award for 400,000 shares will be in paid in one installment on or promptly following February 19, 2018. |
(6) | This stock award is scheduled to vest in semi-annual installments beginning in January 2017 and ending in October 2018. |
(7) | This stock award is scheduled to vest in semi-annual installments beginning in January 2017 and ending in August 2019. |
Name | Number of Shares Acquired on Vesting | Valued Realized on Vesting(1) ($) | ||
Eric L. Kelly | 224,000 | 203,343 | ||
Kurt L. Kalbfleisch | 160,000 | 145,245 | ||
Randall T. Gast | 177,778 | 163,839 | ||
Jenny C. Yeh | 66,668 | 36,667 |
(1) | The value realized on vesting is determined by multiplying (x) the number of shares that vested during 2016, times (y) the closing price of our common shares on NASDAQ on the applicable vesting date. |
Name | Executive Contributions in Last Fiscal Year(1) ($) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year(2) ($) | Aggregate Withdrawals/ Distributions(3) ($) | Aggregate Balance at Last Fiscal Year End ($) | |||||
Randall T. Gast | 163,839 | — | (110,507) | — | 53,332 |
(1) | These entries reflect the aggregate market value of certain stock units that vested during 2016 (based on the stock price on their vest), but which had not been paid as of December 31, 2016. These stock units were awarded by the Company to Mr. Gast in August 2015. |
(2) | This entry reflects changes in the market value of the stock units between the applicable vest dates and the last day of fiscal 2016. |
Name | Fees Earned ($) | Share-based Awards(1) ($) | All Other Compensation ($) | Total ($) | ||||
Peter Ashkin | 40,000 | 78,754 | — | 118,754 | ||||
Mario Biasini(3) | 10,000 | — | 84,773 | (2) | 94,773 | |||
Daniel Bordessa(4) | 40,000 | — | — | 40,000 | ||||
Glenn Bowman | 40,000 | 78,754 | — | 118,754 | ||||
Vivekanand Mahadevan | 50,000 | 87,643 | — | 137,643 |
(1) | On February 26, 2016, Messrs. Ashkin, Bowman, and Mahadevan were each awarded a restricted stock unit (“RSU”) for 26,666 Shares for their service on a Special Committee of the Board. The RSUs were valued at $1.62 per share on the grant date (the closing market price on NASDAQ for one of our common shares on that date) and vested in full on the grant date. On November 8, 2016, Messrs. Ashkin and Bowman, were each awarded a restricted stock unit (“RSU”) for 63,492 Shares for their service on the Board. On the same date, Mr. Mahadevan was awarded a RSU for 79,365 shares for his service on the Board as Lead Board member. All of the RSUs awarded on November 8, 2016 were valued at $0.56 per share on the grant date (the closing market price on NASDAQ for one of our common shares on that date) and vest in full on September 13, 2017. |
(2) | All other compensation for Mr. Biasini includes consulting fees paid to Mr. Biasini and health insurance premiums paid on his behalf. Mr. Biasini’s consulting agreement with the Company was terminated effective April 30, 2016. In exchange for a general release agreement, he is being paid a monthly severance of CAD$9,750 and medical coverage through April 30, 2017. The amount reported is presented after conversion from Canadian dollars to U.S. dollars based on an exchange rate of 1.3275 U.S. dollars to one Canadian dollar, which was the average conversion rate in effect for 2016. |
(3) | Mr. Biasini resigned as a Director of the Company on May 10, 2016. |
(4) | Mr. Bordessa resigned as a Director of the Company on December 20, 2016. |
Glenn M. Bowman (Chair) | Independent(1) | Financially Literate(2) | |
Peter Ashkin | Independent(1) | Financially Literate(2) | |
Vivekanand Mahadevan(3) | Independent(1) | Financially Literate(2) |
(1) | A member of an audit committee is independent if the member has no direct or indirect material relationship with the Company, which could, in the view of the board of directors, reasonably interfere with the exercise of a member’s independent judgment. |
(2) | An individual is financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements. |
(3) | Mr. Mahadevan was appointed to the Audit Committee effective December 21, 2016. |
Year Ended December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Canada | 15 | 17 | 25 | ||||||
United States | 102 | 130 | 129 | ||||||
EMEA | 62 | 62 | 93 | ||||||
APAC | 208 | 220 | 257 | ||||||
387 | 429 | 504 |
Year Ended December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Cost of sales | 224 | 240 | 272 | ||||||
Sales and marketing | 92 | 104 | 136 | ||||||
Research and development | 29 | 40 | 46 | ||||||
General and administrative | 42 | 45 | 50 | ||||||
387 | 429 | 504 |
Name | Number of Common Shares | Beneficial Ownership | |||
Eric L. Kelly | 2,302,041 | (1) | 2.2% | ||
Peter Tassiopoulos | 300,000 | (2) | 0.3% | ||
Kurt L. Kalbfleisch | 359,656 | (3) | 0.3% | ||
Randall T. Gast | 422,441 | (4) | 0.4% | ||
Jenny C. Yeh | 104,051 | (5) | 0.1% | ||
Peter Ashkin | 67,777 | 0.1% | |||
Glenn M. Bowman | 87,777 | 0.1% | |||
Vivekanand Mahadevan | 51,763 | (6) | 0.1% | ||
All officers and directors as a group | 3,695,506 | (7) | 3.5% |
(1) | These shares include the right to acquire shares upon exercise of 983,888 stock options and the payment of 112,000 restricted stock units. |
(2) | These shares include the right to acquire shares upon exercise of 200,000 stock options. |
(3) | These shares include the right to acquire shares upon exercise of 77,777 stock options and the payment of 80,000 restricted stock units. |
(4) | These shares include the right to acquire shares upon exercise of 82,415 stock options and the payment of 266,667 restricted stock units. |
(5) | These shares include the right to acquire shares upon the payment of 66,667 restricted stock units. |
(6) | These shares include the right to acquire shares upon exercise of 2,783 stock options. |
(7) | These shares include the right to acquire shares upon exercise of 1,346,863 stock options and the payment of 525,334 restricted stock beneficially owned by our directors and NEOs. |
Name | Type of Ownership (direct, indirect) | Number of Common Shares(1) | Beneficial Ownership(2) | ||||
MF Ventures, LLC | Direct | 41,966,969 | (3) | 32.8% | |||
Cyrus Capital Partners, L.P. managed funds and affiliates | Direct | 20,289,192 | (4) | 18.1% | |||
Lynn Factor | Direct | 11,044,500 | (5) | 10.0% | |||
Sheldon Inwentash | Direct | 8,440,100 | (6) | 7.8% |
(1) | These amounts include common shares, which could be acquired upon exercise of outstanding convertible securities within 60 days. |
(2) | Based on 102,608,418 shares outstanding on March 29, 2017. |
(3) | Information was obtained from MF Ventures, LLC pursuant to Schedule 13D/A filed March 21, 2017 and Company records. These shares include the right to acquire 25,380,087 shares upon exercise of certain convertible securities. MF Ventures, LLC is a limited liability company formed to make one or more investments in business ventures or activities deemed appropriate by Victor B. MacFarlane, as Manager of MF Ventures, LLC. Mr. MacFarlane as Manager of MF Ventures, LLC and Thaderine D. MacFarlane as a controlling member of MF Ventures, LLC share voting power over the shares of common stock held by MF Ventures, LLC. |
(4) | Information was obtained from Cyrus Capital Partners, L.P. pursuant to Schedule 13D/A filed February 13, 2017. Certain funds and affiliates managed by Cyrus, directly and indirectly own these shares. These shares include 9,466,667 Shares upon exercise of certain convertible securities. shares (the “Cyrus Group”). These shares include 9,466,667 Shares upon exercise of certain convertible securities. The Cyrus Group is comprised of Cyrus Capital Partners, L.P., a Delaware limited partnership, (“Cyrus”), Crescent 1, L.P., a Delaware limited partnership (“Crescent”), CRS Master Fund, L.P., a Cayman Islands exempted limited partnership, (“CRS”), Cyrus Opportunities Master Fund II, Ltd., a Cayman Islands exempted limited company, (“Cyrus Opportunities)”, Cyrus Select Opportunities Master Fund, Ltd., a Cayman Islands exempted limited company, (“Cyrus Select”), Cyrus Capital Partners GP, L.L.C., a Delaware limited partnership, (“Cyrus GP”), Cyrus Capital Advisors, L.L.C., a Delaware limited liability company, (“Cyrus Advisors”), and Mr. Stephen C. Freidheim. Each of Crescent, CRS, Cyrus Opportunities and Cyrus Select, or collectively the Cyrus Funds, are private investment funds engaged in the business of acquiring, holding and disposing of investments in various companies. Cyrus is the investment manager of each of the Cyrus Funds. Cyrus GP is the general partner of Cyrus. Cyrus Advisors is the general partner of Crescent and CRS. Mr. Freidheim is the managing member of Cyrus GP and Cyrus Advisors and is the Chief Investment Officer of Cyrus. Crescent, CRS, Cyrus Opportunities, Cyrus Select and Mr. Freidheim have entered into an investment management agreement with Cyrus giving Cyrus full voting and disposition power over the shares of common stock held by the Cyrus Group. |
(5) | Information was obtained from Lynn Factor pursuant to a Schedule 13D filed February 23, 2017. Ms. Factor has sole rights to vote and dispose of the shares of common stock held in her name. These shares include the right to acquire 7,719,500 shares upon exercise of certain convertible securities. Excluded are 8,440,100 shares beneficially owned by Sheldon Inwentash. By virtue of Ms. Factor’s marriage to Mr. Inwentash, Ms. Factor may be deemed to have shared power to vote or dispose of the common shares owned by Mr. Inwentash and the common shares issuable upon exercise of the convertible securities owned by Mr. Inwentash (collectively, the “Inwentash Shares”). However, Ms. Factor does not have such power and therefore disclaims beneficial ownership of the Inwentash Shares. |
(6) | This information was obtained from Sheldon Inwentash pursuant to a Schedule 13D filed February 23, 2017. These shares include the right to acquire 4,328,100 shares upon exercise of certain convertible securities and 700,000 common shares owned by ThreeD Capital Inc. (“3D”) and the right to acquire 1,400,000 shares upon the exercise of certain convertible securities held by 3D. Mr. Inwentash is the Chief Executive Officer of 3D and has shared rights to vote and dispose of the shares held by 3D. Mr. Inwentash does not share rights to vote and dispose of the shares held in his name. Excluded are 11,044,500 shares beneficially owned by Lynn Factor. By virtue of Mr. Inwentash’s marriage to Ms. Factor, Mr. Inwentash may be deemed to have shared power to vote or dispose of the common shares owned by Ms. Factor and the common shares issuable upon exercise of the convertible securities owned by Ms. Factor (collectively, the “Factor Shares”). However, Mr. Inwentash does not have such power and therefore disclaims beneficial ownership of the Factor Shares. |
TSXV (CAD$) | ||||
Annual Highs and Lows | High | Low | ||
Fiscal 2012 (from December 28, 2012) | 0.95 | 0.74 | ||
Fiscal 2013 | 6.80 | 0.41 | ||
Fiscal 2014 (through December 10, 2014) | 11.20 | 5.35 |
NASDAQ (USD$) | ||||
Annual Highs and Lows | High | Low | ||
Fiscal 2014 (from July 8, 2014) | 11.00 | 4.87 | ||
Fiscal 2015 | 7.49 | 1.30 | ||
Fiscal 2016 | 2.00 | 0.18 |
NASDAQ (USD$) | ||||
Quarterly Highs and Lows for Fiscal 2015 and 2016 | High | Low | ||
First Quarter Fiscal 2015 | 7.49 | 3.35 | ||
Second Quarter Fiscal 2015 | 5.46 | 2.98 | ||
Third Quarter Fiscal 2015 | 5.73 | 1.66 | ||
Fourth Quarter Fiscal 2015 | 3.80 | 1.30 | ||
First Quarter Fiscal 2016 | 2.00 | 1.02 | ||
Second Quarter Fiscal 2016 | 1.38 | 0.66 | ||
Third Quarter Fiscal 2016 | 0.95 | 0.40 | ||
Fourth Quarter Fiscal 2016 | 0.92 | 0.18 |
NASDAQ (USD$) | ||||
Monthly Highs and Lows | High | Low | ||
September 2016 | 0.84 | 0.40 | ||
October 2016 | 0.68 | 0.45 | ||
November 2016 | 0.92 | 0.42 | ||
December 2016 | 0.85 | 0.18 | ||
January 2017 | 0.56 | 0.26 | ||
February 2017 | 0.36 | 0.26 | ||
March 2017 (through March 27, 2017) | 0.34 | 0.20 |
(1) | to vote on a proposal arrangement or contract in which the director is materially interested; |
(2) | in the absence of an independent quorum, to vote compensation to themselves or any member of their body; or |
(3) | with respect to borrowing powers exercisable by the directors or how such borrowing powers may be varied. |
1. | Subscription Agreement dated May 13, 2015 between the Company and Lynn Factor for the purchase of up to 500,000 common shares and warrants exercisable for the purchase of up to 500,000 common shares, for an aggregate purchase price of $1.6 million. The warrant has an exercise price of $4.00 and an expiration date of May 21, 2020. |
2. | Subscription Agreement dated October 6, 2015 between the Company and Lynn Factor for the purchase of up to 300,000 common shares and warrants exercisable for the purchase of up to 75,000 common shares, for an aggregate purchase price of $699,000. The warrant has an exercise price of $2.33 and an expiration date of October 14, 2020. |
3. | Subscription Agreement dated November 30, 2015 between the Company and Lynn Factor for the purchase of up to 220,000 common shares and warrants exercisable for the purchase of up to 220,500 common shares, for an aggregate purchase price of $440,000. The warrant has an exercise price of $2.50 and an expiration date of December 15, 2020. |
4. | Subscription Agreement dated November 30, 2015 between the Company and Sheldon Inwentash for the purchase of up to 220,000 common shares and warrants exercisable for the purchase of up to 220,500 common shares, for an aggregate purchase price of $440,000. The warrant has an exercise price of $2.50 and an expiration date of December 15, 2020. |
5. | Warrant to purchase 274,000 common shares for an exercise price of $2.33 per common share dated December 18, 2015 and expiring on October 14, 2020 issued by the Company to Lynn Factor issued pursuant to the price protection provisions of the Subscription Agreement described in 10C(2) above. |
6. | Asset Purchase Agreement dated August 10, 2015 between Imation Corp., Overland Storage, Inc. and Sphere 3D Corp. (see Note 3, Business Combinations, RDX Asset Acquisition in our Notes to Consolidated Financial Statements) |
7. | Lock-Up Agreement dated August 10, 2015 between Imation Corp. and Sphere 3D Corp. (see Note 3, Business Combinations, RDX Asset Acquisition in our Notes to Consolidated Financial Statements) |
8. | First Amendment to 8% Senior Secured Convertible Debenture dated November 30, 2015 between the Company and FBC Holdings S.A.R.L. (see ITEM 7.B. Related Party Transactions) |
9. | Warrant Exchange Agreement dated March 25, 2016 between Sphere 3D Corp. and MF Ventures, LLC (formerly MacFarlane Family Ventures, LLC) for the issuance of warrants to purchase up to 7,199,216 common shares of the Company at an exercise price of $1.22, in exchange for the surrender of previously issued warrants, in the aggregate, of 3,031,249. (see ITEM 7.B. Related Party Transactions) |
10. | Credit Agreement dated April 6, 2016 between the Company and Opus Bank for a term loan in the amount of $10.0 million and a credit facility in the amount of up to $10.0 million. (see Note 7, Debt, Opus Bank Credit Agreement in our Notes to Consolidated Financial Statements) |
11. | Second Amendment to 8% Senior Secured Convertible Debenture dated April 6, 2016 between the Company and FBC Holdings S.A.R.L. |
12. | Term Loan Agreement dated September 16, 2016 between Sphere 3D Corp. and FBC Holdings S.A.R.L. (see Note 7, Debt, Opus Bank Credit Agreement in our Notes to Consolidated Financial Statements) |
13. | Consent, Waiver, Reaffirmation and Amendment Number One to Credit Agreement dated December 30, 2016 between the Company and Opus Bank. (see Note 7, Debt, Opus Bank Credit Agreement in our Notes to Consolidated Financial Statements) |
14. | Warrant to Purchase 862,068 common shares for an exercise price of $0.01 per common share dated December 30, 2016 and expiring on December 30, 2022 issued by the Company to Opus Bank. (see Note 7, Debt, Opus Bank Credit Agreement in our Notes to Consolidated Financial Statements) |
15. | Purchase Agreement dated December 30, 2016 between the Company and MF Ventures, LLC for the purchase of up to 8,333,333 common shares and warrants exercisable for the purchase of up to 16,666,666 common shares, for an aggregate purchase price of $2.5 million. (see ITEM 7.B. Related Party Transactions) |
16. | Purchase Agreement dated December 30, 2016 between the Company and Lynn Factor for the purchase of up to 3,325,000 common shares and warrants exercisable for the purchase of up to 6,650,000 common shares, for an aggregate purchase price of $997,500. (see ITEM 7.B. Related Party Transactions) |
17. | Purchase Agreement dated December 29, 2016 between the Company and Sheldon Inwentash for the purchase of up to 2,000,000 common shares and warrants exercisable for the purchase of up to 4,000,000 common shares, for an aggregate purchase price of $600,000. (see ITEM 7.B. Related Party Transactions) |
18. | Purchase Agreement dated December 29, 2016 between the Company and ThreeD Capital Inc. for the purchase of up to 700,000 common shares and warrants exercisable for the purchase of up to 1,400,000 common shares, for an aggregate purchase price of $210,000. (see Item 7 (B) Related Party Transactions) |
19. | Amendment Number Two to Credit Agreement, Amendment Number One to Amendment Number 1, Waiver and Reaffirmation dated March 12, 2017 between Overland Storage, Inc., Tandberg Data Gmbh and Opus Bank. (see Note 7, Debt, Opus Bank Credit Agreement in our Notes to Consolidated Financial Statements) |
20. | Third Amendment to Credit Agreement dated March 21, 2017 between Overland Storage, Inc., Tandberg Data Gmbh and Opus Bank. (see Note 7, Debt, Opus Bank Credit Agreement in our Notes to Consolidated Financial Statements) |
21. | Securities Purchase Agreement dated March 24, 2017 between the Company and MF Ventures, LLC for the purchase of up to 4,545,454 common shares and warrants exercisable for the purchase of up to 4,545,454 common shares, for an aggregate purchase price of $1.0 million. (see ITEM 7.B. Related Party Transactions) |
22. | Securities Purchase Agreement dated March 24, 2017 between the Company and various investors for the purchase of up to 15,909,092 common shares and warrants exercisable for the purchase of up to 15,909,092 common shares, for an aggregate purchase price of $3.5 million. |
23. | Registration Rights Agreement between the Company and various investors, including MF Ventures, LLC., dated March 24, 2017 for the registration of up to 20,454,546 common shares issuable upon the exercise of warrants. |
2016 | 2015 | |||||||
Audit fees(1) | $ | 514 | $ | 553 | ||||
Audit related fees(2) | 10 | 61 | ||||||
Tax fees(3) | 9 | 51 | ||||||
All other fees(4) | — | — | ||||||
$ | 533 | $ | 665 |
(1) | Audit fees consist of fees billed for professional services rendered in connection with the audit of our annual consolidated financial statements, which were provided in connection with statutory and regulatory filings or engagements. |
(2) | Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements, and are not reported under audit fees. |
(3) | Tax fees consist of fees billed for professional services rendered for IRS Section 302 net operating loss limitation study. |
(4) | All other fees consist of fees for products and services other than the services reported above. There were no such services rendered to us. |
Sphere 3D Corp. |
/s/ Eric L. Kelly |
Eric L. Kelly |
Chief Executive Officer |
December 31, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 5,056 | $ | 8,661 | |||
Accounts receivable, net of allowance for doubtful accounts of $1,648 and $1,567, respectively | 11,591 | 13,401 | |||||
Inventories | 10,002 | 11,326 | |||||
Investment | 1,500 | — | |||||
Other current assets | 2,121 | 3,155 | |||||
Total current assets | 30,270 | 36,543 | |||||
Property and equipment, net | 3,058 | 3,972 | |||||
Intangible assets, net | 47,728 | 54,019 | |||||
Goodwill | 11,068 | 44,132 | |||||
Other assets | 432 | 445 | |||||
Total assets | $ | 92,556 | $ | 139,111 | |||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 10,561 | $ | 10,855 | |||
Accrued liabilities | 3,619 | 4,326 | |||||
Accrued payroll and employee compensation | 2,227 | 2,625 | |||||
Deferred revenue | 5,338 | 6,150 | |||||
Debt - related party | 2,294 | 10,000 | |||||
Debt | 17,300 | 7,391 | |||||
Other current liabilities | 1,515 | 5,050 | |||||
Total current liabilities | 42,854 | 46,397 | |||||
Deferred revenue, long-term | 1,051 | 1,675 | |||||
Long-term debt - related party | 24,401 | 19,500 | |||||
Long-term deferred tax liabilities | 3,100 | 2,755 | |||||
Other long-term liabilities | 704 | 644 | |||||
Total liabilities | 72,110 | 70,971 | |||||
Commitments and contingencies (Note 15) | |||||||
Shareholders’ equity: | |||||||
Common shares, no par value; 66,565 and 45,198 shares issued and outstanding as of December 31, 2016 and 2015, respectively | 157,254 | 136,058 | |||||
Accumulated other comprehensive loss | (1,565 | ) | (1,135 | ) | |||
Accumulated deficit | (135,243 | ) | (66,783 | ) | |||
Total shareholders’ equity | 20,446 | 68,140 | |||||
Total liabilities and shareholders’ equity | $ | 92,556 | $ | 139,111 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Net revenue: | |||||||||||
Product revenue | $ | 68,065 | $ | 65,514 | $ | 12,201 | |||||
Service revenue | 8,328 | 10,651 | 1,268 | ||||||||
76,393 | 76,165 | 13,469 | |||||||||
Cost of product revenue | 50,434 | 48,825 | 7,536 | ||||||||
Cost of service revenue | 3,620 | 4,721 | 597 | ||||||||
Gross profit | 22,339 | 22,619 | 5,336 | ||||||||
Operating expenses: | |||||||||||
Sales and marketing | 22,243 | 23,569 | 5,153 | ||||||||
Research and development | 8,794 | 9,916 | 655 | ||||||||
General and administrative | 20,728 | 23,271 | 11,567 | ||||||||
Impairment of goodwill and acquired intangible assets | 34,398 | 10,702 | — | ||||||||
86,163 | 67,458 | 17,375 | |||||||||
Loss from operations | (63,824 | ) | (44,839 | ) | (12,039 | ) | |||||
Other income (expense): | |||||||||||
Interest expense - related party | (3,106 | ) | (2,710 | ) | (207 | ) | |||||
Interest expense | (1,981 | ) | (355 | ) | (240 | ) | |||||
Other income (expense), net | 1,276 | (689 | ) | (194 | ) | ||||||
Loss before income taxes | (67,635 | ) | (48,593 | ) | (12,680 | ) | |||||
Provision for (benefit from) income taxes | 825 | (1,366 | ) | 42 | |||||||
Net loss | $ | (68,460 | ) | $ | (47,227 | ) | $ | (12,722 | ) | ||
Net loss per share: | |||||||||||
Basic and diluted | $ | (1.38 | ) | $ | (1.24 | ) | $ | (0.53 | ) | ||
Shares used in computing net loss per share: | |||||||||||
Basic and diluted | 49,736 | 37,957 | 24,131 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Net loss | $ | (68,460 | ) | $ | (47,227 | ) | $ | (12,722 | ) | ||
Other comprehensive (loss) income: | |||||||||||
Foreign currency translation adjustment | (430 | ) | 286 | (1,285 | ) | ||||||
Total other comprehensive (loss) income | (430 | ) | 286 | (1,285 | ) | ||||||
Comprehensive loss | $ | (68,890 | ) | $ | (46,941 | ) | $ | (14,007 | ) |
Common Shares | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Shareholders' Equity | |||||||||||||||
Shares | Amount | |||||||||||||||||
Balance at January 1, 2014 | 21,098 | $ | 14,407 | $ | (136 | ) | $ | (6,834 | ) | $ | 7,437 | |||||||
Issuance of common shares for acquisition | 8,557 | 68,627 | — | — | 68,627 | |||||||||||||
Issuance of common shares for cash | 3,423 | 11,901 | — | — | 11,901 | |||||||||||||
Issuance of common shares for technology | 1,090 | 6,454 | — | — | 6,454 | |||||||||||||
Issuance of common shares for conversion of convertible notes | 333 | 2,500 | — | — | 2,500 | |||||||||||||
Shares returned for related party loan payment | (194 | ) | (1,513 | ) | — | — | (1,513 | ) | ||||||||||
Issuance of common shares pursuant to the exercise of stock options | 247 | 148 | — | — | 148 | |||||||||||||
Share-based compensation | — | 3,593 | — | — | 3,593 | |||||||||||||
Other comprehensive loss | — | — | (1,285 | ) | — | (1,285 | ) | |||||||||||
Net loss | — | — | — | (12,722 | ) | (12,722 | ) | |||||||||||
Balance at December 31, 2014 | 34,554 | 106,117 | (1,421 | ) | (19,556 | ) | 85,140 | |||||||||||
Issuance of common shares for cash, net | 6,916 | 13,697 | — | — | 13,697 | |||||||||||||
Issuance of common shares for acquisition | 1,529 | 6,147 | — | — | 6,147 | |||||||||||||
Issuance of common shares for settlement of related party interest expense | 668 | 1,560 | — | — | 1,560 | |||||||||||||
Issuance of common shares pursuant to the exercise of stock options and vesting of restricted stock units, net | 1,531 | (6 | ) | — | — | (6 | ) | |||||||||||
Issuance of warrants in relation to related party debt | — | 1,380 | — | — | 1,380 | |||||||||||||
Share-based compensation | — | 7,163 | — | — | 7,163 | |||||||||||||
Other comprehensive income | — | — | 286 | — | 286 | |||||||||||||
Net loss | — | — | — | (47,227 | ) | (47,227 | ) | |||||||||||
Balance at December 31, 2015 | 45,198 | 136,058 | (1,135 | ) | (66,783 | ) | 68,140 | |||||||||||
Issuance of common shares for cash | 10,472 | 5,707 | — | — | 5,707 | |||||||||||||
Issuance of common shares for investment purchase | 3,947 | 1,500 | — | — | 1,500 | |||||||||||||
Issuance of common shares for settlement of related party interest expense | 4,215 | 1,859 | — | — | 1,859 | |||||||||||||
Issuance of warrants | — | 1,994 | — | — | 1,994 | |||||||||||||
Issuance of warrants in relation to related party debt | — | 485 | — | — | 485 | |||||||||||||
Issuance of common shares pursuant to the vesting of restricted stock units | 2,032 | (11 | ) | — | — | (11 | ) | |||||||||||
Issuance of restricted stock awards | 701 | 531 | — | — | 531 | |||||||||||||
Share-based compensation | — | 9,131 | — | — | 9,131 | |||||||||||||
Other comprehensive loss | — | — | (430 | ) | — | (430 | ) | |||||||||||
Net loss | — | — | — | (68,460 | ) | (68,460 | ) | |||||||||||
Balance at December 31, 2016 | 66,565 | $ | 157,254 | $ | (1,565 | ) | $ | (135,243 | ) | $ | 20,446 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Operating activities: | |||||||||||
Net loss | $ | (68,460 | ) | $ | (47,227 | ) | $ | (12,722 | ) | ||
Adjustments to reconcile net loss to cash used in operating activities: | |||||||||||
Impairment of goodwill and acquired intangible assets | 34,398 | 10,702 | — | ||||||||
Depreciation and amortization | 6,187 | 7,450 | 3,453 | ||||||||
Share-based compensation | 9,131 | 7,154 | 3,253 | ||||||||
Provision for losses on accounts receivable | 715 | 1,567 | — | ||||||||
Deferred tax provision (benefit) | 349 | (1,632 | ) | (3 | ) | ||||||
Amortization of debt issuance costs | 1,453 | 727 | 3 | ||||||||
Loss on extinguishment of debt | 502 | — | — | ||||||||
Fair value adjustment of warrants | (1,248 | ) | (478 | ) | — | ||||||
Changes in operating assets and liabilities (net of effects of acquisitions): | |||||||||||
Accounts receivable | (1,185 | ) | (1,499 | ) | (4,827 | ) | |||||
Inventories | 1,282 | 6 | (424 | ) | |||||||
Accounts payable and accrued liabilities | 1,066 | 1,984 | 3,311 | ||||||||
Accrued payroll and employee compensation | (377 | ) | (1,187 | ) | 951 | ||||||
Deferred revenue | (1,344 | ) | (1,901 | ) | 57 | ||||||
Other assets and liabilities, net | 58 | 1,177 | (1,597 | ) | |||||||
Net cash used in operating activities | (17,473 | ) | (23,157 | ) | (8,545 | ) | |||||
Investing activities: | |||||||||||
Purchase of fixed assets | (237 | ) | (415 | ) | (487 | ) | |||||
Development costs capitalized as intangible assets | — | (108 | ) | (1,499 | ) | ||||||
Purchase of intangible assets | — | (60 | ) | (4,013 | ) | ||||||
Loan to related party | — | — | (7,750 | ) | |||||||
Proceeds received from related party loan | — | — | 2,500 | ||||||||
Cash received from acquisition | — | — | 2,312 | ||||||||
Net cash used in investing activities | (237 | ) | (583 | ) | (8,937 | ) | |||||
Financing activities: | |||||||||||
Proceeds from debt | 18,195 | — | — | ||||||||
Payments on debt | (7,391 | ) | — | — | |||||||
Proceeds from issuance of common shares and warrants | 5,831 | 16,812 | 12,092 | ||||||||
Payment for issuance costs | — | (1,009 | ) | (868 | ) | ||||||
Proceeds from debt - related party | 2,500 | 10,000 | 5,000 | ||||||||
Payments on debt - related party | (5,000 | ) | — | — | |||||||
Proceeds from credit facility, net | — | 2,501 | 141 | ||||||||
Proceeds from exercise of stock options | — | 225 | 148 | ||||||||
Payment for restricted stock units tax liability on net settlement | (12 | ) | (231 | ) | — | ||||||
Net cash provided by financing activities | 14,123 | 28,298 | 16,513 | ||||||||
Effect of exchange rate changes on cash | (18 | ) | (155 | ) | 10 | ||||||
Net (decrease) increase in cash and cash equivalents | (3,605 | ) | 4,403 | (959 | ) | ||||||
Cash and cash equivalents, beginning of period | 8,661 | 4,258 | 5,217 | ||||||||
Cash and cash equivalents, end of period | $ | 5,056 | $ | 8,661 | $ | 4,258 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid for income taxes | $ | 228 | $ | 54 | $ | 30 | |||||
Cash paid for interest | $ | 946 | $ | 647 | $ | 23 | |||||
Supplemental disclosures of non-cash investing and financing activities: | |||||||||||
Issuance of common shares for cost-method investment | $ | 1,500 | $ | — | $ | — | |||||
Issuance of common shares for acquisition | $ | — | $ | 6,147 | $ | 68,627 | |||||
Issuance of common shares for related party interest expense | $ | 1,859 | $ | 1,560 | $ | — | |||||
Issuance of warrants in relation to related party credit facility | $ | 485 | $ | 1,380 | $ | — | |||||
Issuance of warrants | $ | 1,995 | $ | (1,925 | ) | $ | — | ||||
Contingent liability for the acquisition of intangible assets | $ | — | $ | (2,500 | ) | $ | 2,500 | ||||
Issuance of common shares for technology | $ | — | $ | — | $ | 6,454 | |||||
Issuance of common shares for conversion of convertible notes | $ | — | $ | — | $ | 2,500 | |||||
Issuance of common shares for settlement of liabilities | $ | 531 | $ | — | $ | 677 | |||||
Common shares received for settlement of related party debt | $ | — | $ | — | $ | (1,513 | ) |
1. | Organization and Business |
2. | Significant Accounting Policies |
Building | 40 years |
Machinery and equipment | 3-5 years |
Furniture and fixtures | 5 years |
Computer equipment and software | 1-5 years |
3. | Business Combinations |
Inventory | $ | 1,673 | ||
Other current assets | 100 | |||
Property and equipment | 789 | |||
Identifiable intangible assets | 670 | |||
Total identifiable assets acquired | 3,232 | |||
Contingent liability | (2,376 | ) | ||
Other liabilities | (20 | ) | ||
Net identifiable assets acquired | 836 | |||
Goodwill | 5,311 | |||
Net assets acquired | $ | 6,147 |
Estimated Fair Value | Weighted- Average Useful Life (years) | |||||
Developed technology | $ | 190 | 0.5 | |||
Customer relationships | 480 | 21.3 | ||||
Total identified intangible assets | $ | 670 | 15.4 |
Cash and cash equivalents | $ | 2,312 | ||
Accounts receivable | 10,558 | |||
Inventories | 9,387 | |||
Property and equipment | 4,117 | |||
Identifiable intangible assets | 60,376 | |||
Other assets | 2,364 | |||
Total identifiable assets acquired | 89,114 | |||
Current liabilities | (28,133 | ) | ||
Debt - current | (4,749 | ) | ||
Debt - long term | (17,000 | ) | ||
Other liabilities | (3,990 | ) | ||
Deferred tax liabilities | (4,412 | ) | ||
Total identifiable liabilities assumed | (58,284 | ) | ||
Net identifiable net assets acquired | 30,830 | |||
Goodwill | 38,821 | |||
Net assets acquired | $ | 69,651 |
Estimated Fair Value | Weighted- Average Useful Life (years) | |||||
Channel partner relationships | $ | 17,000 | 25.0 | |||
Developed technology | 15,590 | 7.9 | ||||
Customer relationships | 816 | 9.0 | ||||
Total finite lived intangible assets | 33,406 | 16.6 | ||||
Indefinite live intangible assets - trade names | 26,970 | n/a | ||||
Total identified intangible assets | $ | 60,376 |
Year Ended December 31, 2014 | ||||
Net revenue | $ | 93,591 | ||
Net loss | $ | (35,709 | ) | |
Net loss per share | $ | (1.12 | ) |
4. | Investment |
5. | Certain Balance Sheet Items |
December 31, | |||||||
2016 | 2015 | ||||||
Raw materials | $ | 1,697 | $ | 1,734 | |||
Work in process | 2,673 | 2,483 | |||||
Finished goods | 5,632 | 7,109 | |||||
$ | 10,002 | $ | 11,326 |
December 31, | |||||||
2016 | 2015 | ||||||
Building | $ | 1,646 | $ | 1,667 | |||
Computer equipment | 1,864 | 1,636 | |||||
Machinery and equipment | 1,062 | 1,116 | |||||
Leasehold improvements | 1,100 | 1,126 | |||||
Furniture and fixtures | 83 | 89 | |||||
5,755 | 5,634 | ||||||
Accumulated depreciation and amortization | (2,697 | ) | (1,662 | ) | |||
$ | 3,058 | $ | 3,972 |
6. | Intangible Assets and Goodwill |
December 31, | |||||||
2016 | 2015 | ||||||
Developed technology | $ | 23,685 | $ | 23,684 | |||
Channel partner relationships(1) | 11,989 | 12,039 | |||||
Capitalized development costs(1) | 2,937 | 2,856 | |||||
Customer relationships(1) | 1,171 | 1,194 | |||||
39,782 | 39,773 | ||||||
Accumulated amortization: | |||||||
Developed technology | (11,234 | ) | (7,078 | ) | |||
Channel partner relationships(1) | (565 | ) | (68 | ) | |||
Capitalized development costs(1) | (958 | ) | (589 | ) | |||
Customer relationships(1) | (207 | ) | (99 | ) | |||
(12,964 | ) | (7,834 | ) | ||||
Total finite-lived assets, net | 26,818 | 31,939 | |||||
Indefinite lived intangible assets - trade names | 20,910 | 22,080 | |||||
Total intangible assets, net | $ | 47,728 | $ | 54,019 |
(1) | Includes the impact of foreign currency exchange rate fluctuations. |
Balance as of January 1, 2015 | $ | 38,821 | ||
Goodwill acquired | 5,311 | |||
Balance as of December 31, 2015 | 44,132 | |||
Goodwill acquired | 164 | |||
Impairment loss | (33,228 | ) | ||
Balance as of December 31, 2016 | $ | 11,068 |
7. | Debt |
8. | Fair Value Measurements |
Warrant liability as of January 1, 2015 | $ | — | ||
Additions to warrant liability | 1,925 | |||
Change in fair value of warrants | (478 | ) | ||
Warrant liability as of December 31, 2015 | 1,447 | |||
Change in fair value of warrants | (1,248 | ) | ||
Reclassification to equity | 1 | |||
Warrant liability as of December 31, 2016 | $ | 200 |
9. | Share Capital |
Number of Shares | Amount | ||||||
Shares issued during the year ended December 31, 2014: | |||||||
Common shares issued | 11,108 | $ | 85,257 | ||||
Common shares issued for warrants exercised | 2,101 | $ | 2,712 | ||||
Shares issued under equity incentive plan | 247 | $ | 148 | ||||
Shares issued during the year ended December 31, 2015: | |||||||
Common shares issued | 8,764 | $ | 20,139 | ||||
Common shares issued for warrants exercised | 349 | $ | 1,265 | ||||
Shares issued under equity incentive plan | 1,531 | $ | (6 | ) | |||
Shares issued during the year ended December 31, 2016: | |||||||
Common shares issued | 15,126 | $ | 5,414 | ||||
Common shares issued for warrants exercised | 3,508 | $ | 3,652 | ||||
Shares issued under equity incentive plan | 2,733 | $ | 520 |
Date issued | Contractual life (years) | Exercise price | Number outstanding | Expiration | |||||
February 2015 | 3 | $4.50 | 100 | February 20, 2018 | |||||
March 2015 | 3 | $7.21 | 100 | March 6, 2018 | |||||
March 2015 | 3 | $5.02 | 100 | March 20, 2018 | |||||
May 2015 | 5 | $4.00 | 840 | May 31, 2020 | |||||
October 2015 | 5 | $2.33 | 402 | October 14, 2020 | |||||
December 2015 | 3 | $1.54 | 500 | December 21, 2018 | |||||
December 2015 | 5 | $2.50 | 1,028 | December 15, 2020 | |||||
December 2015 | 5 | $1.08 | (1) | 1,500 | (2) | December 4, 2020 | |||
February 2016 | 3 | $1.62 | 500 | February 26, 2019 | |||||
March 2016 | 5 | $2.50 | 30 | March 4, 2021 | |||||
March 2016 | 5 | $1.22 | 4,168 | March 25, 2021 | |||||
November 2016 | 3 | $2.00 | 25 | November 8, 2019 | |||||
January 2016 | 3 | $2.06 | 88 | November 30, 2018 | |||||
December 2016 | 6 | $0.01 | 862 | December 30, 2022 | |||||
10,243 | (3) |
(1) | These warrants to purchase common shares include a one-time adjustment provision, as defined in the agreement, which provided that the exercise price will be automatically adjusted, if the adjustment price as calculated on May 28, 2016, is less than $2.50. On May 28, 2016, the exercise price was adjusted to $1.08 for the one-time adjustment provision. |
(2) | If the Company or any subsidiary thereof, at any time while this warrant is outstanding, enters into a Variable Rate Transaction (“VRT”) (as defined in the purchase agreement) and the issue price, conversion price or exercise price per share applicable thereto is less than the warrant exercise price then in effect, the exercise price shall be reduced to equal the VRT price. |
(3) | Includes 6.8 million of warrants to purchase common shares, in the aggregate, issued to related parties. |
10. | Equity Incentive Plans |
Year Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Expected volatility | 93.0 | % | 93.0 | % | 97.0 | % | ||
Risk-free interest rate | 1.5 | % | 1.5 | % | 1.7 | % | ||
Dividend yield | — | — | — | |||||
Expected term (in years) | 4.7 | 4.7 | 3.0 |
Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (years) | Aggregate Intrinsic Value | ||||||||||
Options outstanding at January 1, 2014 | 2,810 | $ | 1.11 | ||||||||||
Granted | 735 | $ | 7.08 | ||||||||||
Options assumed from acquisition | 168 | $ | 17.19 | ||||||||||
Exercised | (246 | ) | $ | 0.58 | |||||||||
Forfeited | (74 | ) | $ | 4.51 | |||||||||
Options outstanding at December 31, 2014 | 3,393 | $ | 3.08 | ||||||||||
Granted | 770 | $ | 2.71 | ||||||||||
Exercised | (293 | ) | $ | 0.77 | |||||||||
Forfeited | (156 | ) | $ | 13.26 | |||||||||
Options outstanding at December 31, 2015 | 3,714 | $ | 2.43 | ||||||||||
Granted | 12 | $ | 1.39 | ||||||||||
Exercised | — | $ | — | ||||||||||
Forfeited | (471 | ) | $ | 4.52 | |||||||||
Options outstanding at December 31, 2016 | 3,255 | $ | 2.17 | 5.9 | $ | — | |||||||
Vested and expected to vest at December 31, 2016 | 3,225 | $ | 2.16 | 5.9 | $ | — | |||||||
Exercisable at December 31, 2016 | 2,711 | $ | 2.05 | 5.8 | $ | — |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Weighted-average grant date fair value per share | $ | 0.97 | $ | 1.89 | $ | 5.51 | |||||
Intrinsic value of options exercised | $ | — | $ | 1,053 | $ | 1,641 | |||||
Cash received upon exercise of options | $ | — | $ | 225 | $ | 148 |
Number of Shares | Weighted Average Grant Date Fair Value | |||||
Outstanding — January 1, 2014 | — | $ | — | |||
Awards assumed from acquisition | 674 | 7.71 | ||||
Forfeited | (1 | ) | 7.71 | |||
Outstanding — December 31, 2014 | 673 | 7.71 | ||||
Granted | 6,391 | 3.56 | ||||
Vested and released | (1,308 | ) | 5.27 | |||
Forfeited | (138 | ) | 4.71 | |||
Outstanding — December 31, 2015 | 5,618 | 3.66 | ||||
Granted | 1,638 | 0.82 | ||||
Vested and released | (2,038 | ) | 3.32 | |||
Forfeited | (1,454 | ) | 3.39 | |||
Outstanding — December 31, 2016 | 3,764 | $ | 2.58 |
Number of Shares | Weighted Average Grant Date Fair Value | |||||
Outstanding — January 1, 2016 | — | $ | — | |||
Granted | 701 | 0.76 | ||||
Vested | (701 | ) | 0.76 | |||
Outstanding — December 31, 2016 | — | $ | — |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Cost of sales | $ | 366 | $ | 183 | $ | — | |||||
Sales and marketing | 2,773 | 3,090 | 1,072 | ||||||||
Research and development | 1,779 | 1,050 | 22 | ||||||||
General and administrative | 4,213 | 2,831 | 2,159 | ||||||||
Total share-based compensation expense | $ | 9,131 | $ | 7,154 | $ | 3,253 |
11. | Net Loss per Share |
December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Common share purchase warrants | 10,243 | 9,078 | 2,419 | |||||
Convertible notes | 8,167 | 6,500 | 2,451 | |||||
Convertible notes interest | 8,144 | 2,316 | 657 | |||||
Restricted stock not yet vested or released | 3,764 | 5,618 | 673 | |||||
Options outstanding | 3,255 | 3,714 | 3,393 | |||||
VDI earn-out liability | — | — | 1,051 |
12. | Income Taxes |
December 31, | |||||||
2016 | 2015 | ||||||
Unrecognized tax benefits at the beginning of the period | $ | 673 | $ | 673 | |||
Decrease related to prior periods | (267 | ) | — | ||||
Unrecognized tax benefits | $ | 406 | $ | 673 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Domestic | $ | (8,937 | ) | $ | (8,549 | ) | $ | (11,038 | ) | ||
Foreign | (58,698 | ) | (40,044 | ) | (1,642 | ) | |||||
Total | $ | (67,635 | ) | $ | (48,593 | ) | $ | (12,680 | ) |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Current: | |||||||||||
Federal | $ | — | $ | — | $ | — | |||||
State | — | — | — | ||||||||
Foreign | 476 | 266 | 45 | ||||||||
Total current | 476 | 266 | 45 | ||||||||
Deferred: | |||||||||||
Federal | — | — | — | ||||||||
Foreign | 349 | (1,632 | ) | (3 | ) | ||||||
Total deferred | 349 | (1,632 | ) | (3 | ) | ||||||
Provision for income taxes | $ | 825 | $ | (1,366 | ) | $ | 42 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
Income tax at statutory rate | $ | (17,923 | ) | $ | (12,877 | ) | $ | (3,360 | ) | ||
Foreign rate differential | (1,652 | ) | (2,038 | ) | (354 | ) | |||||
Change in valuation allowance | (34,477 | ) | 12,689 | 2,952 | |||||||
Share-based compensation expense | 2,130 | 1,567 | 812 | ||||||||
Goodwill impairment | 8,699 | — | — | ||||||||
Section 382 limitation | 41,044 | — | — | ||||||||
Other differences | 3,004 | (707 | ) | (8 | ) | ||||||
Provision for (benefit from) income taxes | $ | 825 | $ | (1,366 | ) | $ | 42 |
December 31, | |||||||
2016 | 2015 | ||||||
Deferred tax assets: | |||||||
Net operating loss carryforward | $ | 48,138 | $ | 82,636 | |||
Intangible assets | 2,791 | 2,535 | |||||
Tax credits | 2,133 | 3,380 | |||||
Inventory | 1,906 | 2,344 | |||||
Share-based compensation | 920 | 852 | |||||
Warranty and extended warranty | 550 | 1,198 | |||||
Other | 2,708 | 1,325 | |||||
Deferred tax asset, gross | 59,146 | 94,270 | |||||
Valuation allowance for deferred tax assets | (59,039 | ) | (93,516 | ) | |||
Deferred tax asset, net of valuation allowance | 107 | 754 | |||||
Deferred tax liabilities: | |||||||
Intangible assets | (3,063 | ) | (3,366 | ) | |||
Property and equipment | (144 | ) | (143 | ) | |||
Deferred tax liabilities | (3,207 | ) | (3,509 | ) | |||
Net deferred tax asset (liabilities) | $ | (3,100 | ) | $ | (2,755 | ) |
13. | Related Party Transactions |
14. | 401K Plan |
15. | Commitments and Contingencies |
Minimum Lease Payments | ||||
2017 | $ | 1,331 | ||
2018 | 943 | |||
2019 | 774 | |||
2020 | 197 | |||
2021 | 26 | |||
Thereafter | — | |||
Total | $ | 3,271 |
Product Warranty | Deferred Revenue | ||||||
Liability at January 1, 2015 | $ | 1,437 | $ | 8,948 | |||
Liabilities assumed from acquisition | 20 | — | |||||
Settlements made during the period | (224 | ) | (8,952 | ) | |||
Change in liability for warranties issued during the period | 398 | 7,047 | |||||
Change in liability for pre-existing warranties | (602 | ) | — | ||||
Liability at December 31, 2015 | 1,029 | 7,043 | |||||
Settlements made during the period | (54 | ) | (7,040 | ) | |||
Change in liability for warranties issued during the period | 634 | 5,429 | |||||
Change in liability for pre-existing warranties | (558 | ) | — | ||||
Liability at December 31, 2016 | $ | 1,051 | $ | 5,432 | |||
Current liability | $ | 812 | $ | 4,414 | |||
Non-current liability | 239 | 1,018 | |||||
Liability at December 31, 2016 | $ | 1,051 | $ | 5,432 |
16. | Segment Disclosure |
Year Ended December 31, | ||||||||||||
2016 | 2015 | 2014 | ||||||||||
Disk systems | $ | 46,795 | $ | 39,836 | $ | 8,518 | ||||||
Tape automation systems | 10,297 | 12,764 | 1,868 | |||||||||
Tape drives and media | 10,973 | 12,914 | 1,815 | |||||||||
Service | 8,328 | 10,651 | 1,268 | |||||||||
$ | 76,393 | $ | 76,165 | $ | 13,469 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
EMEA | $ | 39,719 | $ | 39,331 | $ | 7,172 | |||||
Americas | 23,043 | 25,284 | 4,749 | ||||||||
APAC | 13,631 | 11,550 | 1,548 | ||||||||
Total | $ | 76,393 | $ | 76,165 | $ | 13,469 |
Year Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
EMEA | $ | 1,703 | $ | 1,779 | $ | 2,038 | |||||
Americas | 937 | 1,584 | 1,340 | ||||||||
APAC | 418 | 609 | 1,049 | ||||||||
Total | $ | 3,058 | $ | 3,972 | $ | 4,427 |
17. | Subsequent Events |
Exhibit | Filed | Incorporated by Reference | |||
Number | Description | Herewith | Form | File No. | Date Filed |
1.1 | Certificate and Articles of Amalgamation | 6-K | 001-36532 | 3/25/2015 | |
1.2 | By-Law Certificate | 6-K | 001-36532 | 3/25/2015 | |
2.1 | Specimen certificate evidencing Common Shares | F-3 | 333-210735 | 4/13/2016 | |
4.1 | Voting Agreements each dated July 15, 2013 between Eric L. Kelly and various shareholders of the Company | 40-F | 000-55232 | 6/27/2014 | |
4.2 | Board Nomination Rights Agreement dated July 15, 2013 between Eric L. Kelly and the Company | 40-F | 000-55232 | 6/27/2014 | |
4.3 | 8% Senior Secured Convertible Debenture dated December 1, 2014 between the Company and FBC Holdings S.A.R.L. for $19.5 million | 6-K | 001-36532 | 12/16/2014 | |
4.4 | First Amendment to 8% Senior Secured Convertible Debenture dated November 30, 2015 between the Company and FBC Holdings S.A.R.L. | 6-K | 001-36532 | 12/2/2015 | |
4.5 | Second Amendment to 8% Senior Secured Convertible Debenture dated April 6, 2016 between the Company and FBC Holdings S.A.R.L. | 6-K | 001-36532 | 4/7/2016 | |
4.6 | Escrow Agreement dated December 1, 2014 between the Company and Continental Stock Transfer and Trust Company | 6-K | 001-36532 | 4/1/2015 | |
4.7 | Revolving Credit Agreement dated December 30, 2014 between the Company, Overland Storage, Inc. and FBC Holdings S.A.R.L. for $5.0 million | 6-K | 001-36532 | 1/22/2015 | |
4.8 | First Amendment to Revolving Credit Agreement dated July 10, 2015 between the Company, Overland Storage, Inc. and FBC Holdings S.A.R.L. | 6-K | 001-36532 | 7/31/2015 | |
4.9 | Form of Purchase Agreement | 6-K | 001-36532 | 6/2/2015 | |
4.10 | Form of Warrant | 6-K | 001-36532 | 6/2/2016 | |
4.11 | Asset Purchase Agreement dated August 10, 2015 between Imation Corp., Overland Storage, Inc. and Sphere 3D Corp. | 6-K | 001-36532 | 8/14/2015 | |
4.12 | Form of Subscription Agreement | 6-K | 001-36532 | 10/7/2015 | |
4.13 | Form of Warrant | 6-K | 001-36532 | 10/7/2015 | |
4.14 | Form of Subscription Agreement | 6-K | 001-36532 | 12/2/2015 | |
4.15 | Form of Canadian Warrant | 6-K | 001-36532 | 12/2/2015 | |
4.16 | Form of Securities Purchase Agreement | 6-K | 001-36532 | 12/2/2015 | |
4.17 | Form of Fund Warrant | 6-K | 001-36532 | 12/2/2015 | |
Exhibit | Filed | Incorporated by Reference | |||
Number | Description | Herewith | Form | File No. | Date Filed |
4.18 | Warrant Exchange Agreement, dated March 25, 2016, by and between the Company and MF Ventures, LLC | 40-F | 001-36532 | 3/30/2016 | |
4.19 | Warrant for the purchase of up to 7,199,216 common shares, dated March 25, 2016, issued to MF Ventures, LLC | 40-F | 001-36532 | 3/30/2016 | |
4.20* | Credit Agreement dated April 6, 2016 between Overland Storage, Inc., Tandberg Data Gmbh and Opus Bank | 6-K | 001-36532 | 4/21/2016 | |
4.21* | Consent, Waiver, Reaffirmation and Amendment Number One to Credit Agreement dated December 30, 2016 between Overland Storage, Inc., Tandberg Data Gmbh and Opus Bank | 6-K | 001-36532 | 3/24/2017 | |
4.22* | Amendment Number Two to Credit Agreement, Amendment Number One to Amendment Number 1, Waiver and Reaffirmation dated March 12, 2017 between Overland Storage, Inc., Tandberg Data Gmbh and Opus Bank | 6-K | 001-36532 | 3/24/2017 | |
4.23* | Third Amendment to Credit Agreement dated March 21, 2017 between Overland Storage, Inc., Tandberg Data Gmbh and Opus Bank | 6-K | 001-36532 | 3/24/2017 | |
4.24 | Term Loan Agreement dated September 16, 2016 between Sphere 3D Corp. and FBC Holdings S.A.R.L. | 6-K | 001-36532 | 3/24/2017 | |
4.25 | Warrant to Purchase up to 862,068 common shares dated December 30, 2016 issued by the Company to Opus Bank | 6-K | 001-36532 | 3/24/2017 | |
4.26 | First Additional Warrant to Purchase common shares dated March 12, 2017 issued by the Company to Opus Bank | 6-K | 001-36532 | 3/24/2017 | |
4.27 | Second Additional Warrant to Purchase common shares dated March 12, 2017 issued by the Company to Opus Bank | 6-K | 001-36532 | 3/24/2017 | |
4.28 | Form of Securities Purchase Agreement dated March 24, 2017 | 6-K | 001-36532 | 3/24/2017 | |
4.29 | Form of Warrant | 6-K | 001-36532 | 3/24/2017 | |
4.30 | Form of Leak-Out Agreement | 6-K | 001-36532 | 3/24/2017 | |
4.31 | Form of Registration Rights Agreement | 6-K | 001-36532 | 3/24/2017 | |
4.32 | Placement Agency Agreement dated March 24, 2017 between the Company and Roth Capital Partners, LLC | 6-K | 001-36532 | 3/24/2017 | |
4.33 | Form of Lock-Up Agreement | 6-K | 001-36532 | 3/24/2017 | |
4.34 | Sphere 3D Second Amended and Restated Stock Option Plan | F-4 | 333-197569 | 7/23/2014 | |
4.35 | Overland Storage, Inc. 2009 Equity Incentive Plan | S-8 | 333-203149 | 3/31/2015 | |
4.36 | Overland Storage, Inc. Form of Stock Option Agreement Under 2009 Plan | S-8 | 333-203149 | 3/31/2015 | |
4.37 | Overland Storage, Inc. Form of Inducement Stock Option Agreement | S-8 | 333-203149 | 3/31/2015 | |
4.38 | Sphere 3D Corp. 2015 Performance Incentive Plan | S-8 | 333-214605 | 11/15/2016 |
Exhibit | Filed | Incorporated by Reference | |||
Number | Description | Herewith | Form | File No. | Date Filed |
4.39 | Form of Inducement Restricted Stock Unit Agreement. | S-8 | 333-209251 | 2/1/2016 | |
4.40 | Form of Executive Inducement Restricted Stock Unit Agreement | S-8 | 333-209251 | 2/1/2016 | |
4.41 | Sphere 3D Corp. Employee Stock Purchase Plan | S-8 | 333-205236 | 6/25/2016 | |
4.42 | Retention Agreement between Overland Storage, Inc. and Eric Kelly dated June 24, 2009 | 10-Q | 000-22071 | 2/10/2010 | |
4.43 | Employment Agreement between Overland Storage, Inc. and Eric Kelly dated August 3, 2011 | 8-K | 000-22071 | 8/4/2011 | |
4.44 | Employment Agreement between Overland Storage, Inc. and Eric Kelly dated August 3, 2011 | 8-K | 000-22071 | 8/4/2011 | |
4.45 | San Diego, California Headquarters Facility Lease dated October 12, 2000 between the Company and LBA-VIF One, LLC | 10-Q | 000-22071 | 2/14/2001 | |
4.46 | First Amendment to Lease dated January 18, 2001 between Overland Storage, Inc. and LBA Overland, LLC, (as successor-in-interest to LBA-VIF One, LLC) | 10-K | 000-22071 | 9/28/2001 | |
4.47 | Second Amendment to Lease dated July 1, 2010 between Overland Storage, Inc. between the Company and LBA Overland, LLC (as successor-in-interest to LBA-VIF One, LLC) | 10-K | 000-22071 | 9/28/2001 | |
4.48 | Third Amendment to Lease dated July 1, 2010 between the Company and Overtape (CA) QRS 15-14, Inc. (successor-in-interest to LBA Overland, LLC, the successor-in-interest to LBA-VIF One, LLC | 10-K | 000-22071 | 9/24/2010 | |
4.49 | Fourth Amendment to Lease dated October 15, 2013 between the Company and Overtape (CA) QRS 15-14, Inc. (successor-in-interest to LBA Overland, LLC, the successor-in-interest to LBA-VIF One, LLC | 10-Q | 000-22071 | 2/13/2014 | |
4.50 | Fifth Amendment to Lease dated December 8, 2015 between the Company and Overtape (CA) QRS 15-14, Inc. (successor-in-interest to LBA Overland, LLC, the successor-in-interest to LBA-VIF One, LLC | X | |||
4.51 | San Jose, California Headquarters Office Lease dated February 9, 2010 between Overland Storage, Inc. and Park Center Plaza Investors, L.P. | X | |||
4.52 | First Amendment to San Jose, California Headquarters Office Lease dated March 22, 2017 between Sphere 3D Corp. and Park Center Plaza Investors, L.P. | X | |||
4.53 | Lease Contract dated May 19, 2016 between Guangzhou Tandberg Electronic Components Co., Ltd. And Guangzhu Shi Panyu Tongxing Paper Products Co., Ltd. | X | |||
4.54 | Form of Stock Purchase Agreement | X | |||
4.55 | Form of One-Year Warrant Agreement | X | |||
Exhibit | Filed | Incorporated by Reference | |||
Number | Description | Herewith | Form | File No. | Date Filed |
4.56 | Form of Five-Year Warrant Agreement | X | |||
8.1 | Subsidiaries of Registrant | X | |||
11.1 | Code of Business Conduct and Ethics Policy | 6-K | 001-36532 | 4/1/2015 | |
12.1 | Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | |||
12.2 | Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | |||
13.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | |||
13.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | |||
15.1 | Consent of Independent Registered Public Accounting Firm | X | |||
101.INS | XBRL Instance Document | X | |||
101.SCH | XBRL Taxonomy Extension Schema | X | |||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | X | |||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | X | |||
101.LAB | XBRL Taxonomy Extension Label Linkbase | X | |||
101.PRE | XBRL Taxonomy Presentation Linkbase | X |
* | Portions of this exhibit have been omitted pursuant to a request for confidential treatment. |
(i) |
By: | /s/ Tripp Bailey |
By: | /s/ Kurt Kalbfleisch |
1. | Relocate existing door in the Test Chambers room to the wall between the Test Chambers room and the lobby corridor. |
2. | Install card access door and demising wall in lobby corridor between the IDF room and the Electrical room. |
3. | Landlord will remove building infrastructure including electrical, plumbing, process piping, etc. from wall between the Test Chamber room to the lobby corridor, as necessary to accommodate the new door. |
ARTICLE 1 | SALIENT LEASE TERMS 1 |
ARTICLE 2 | ADDITIONAL DEFINITIONS 3 |
ARTICLE 3 | PREMISES AND COMMON AREAS 9 |
ARTICLE 4 | TERM AND POSSESSION 11 |
ARTICLE 5 | MINIMUM MONTHLY RENT 13 |
ARTICLE 6 | ADDITIONAL RENT 13 |
ARTICLE 7 | ACCORD AND SATISFACTION 15 |
ARTICLE 8 | SECURITY DEPOSIT 15 |
ARTICLE 9 | USE 16 |
ARTICLE 10 | COMPLIANCE WITH LAWS AND REGULATIONS 17 |
ARTICLE 11 | SERVICE AND EQUIPMENT 19 |
ARTICLE 12 | ALTERATIONS 22 |
ARTICLE 13 | PROPERTY INSURANCE 24 |
ARTICLE 14 | INDEMNIFICATION, WAIVER OF CLAIMS AND SUBROGATION 24 |
ARTICLE 15 | LIABILITY INSURANCE 25 |
ARTICLE 16 | INSURANCE POLICY REQUIREMENTS & INSURANCE DEFAULTS 26 |
ARTICLE 17 | FORFEITURE OF PROPERTY AND LESSOR’S LIEN 27 |
ARTICLE 18 | MAINTENANCE AND REPAIRS 27 |
ARTICLE 19 | DESTRUCTION 29 |
ARTICLE 20 | CONDEMNATION 30 |
ARTICLE 21 | ASSIGNMENT AND SUBLETTING 31 |
ARTICLE 22 | ENTRY BY LESSOR 35 |
ARTICLE 23 | INTENTIONALLY DELETED 35 |
ARTICLE 24 | DEFAULT 35 |
ARTICLE 25 | REMEDIES UPON DEFAULT 36 |
ARTICLE 26 | BANKRUPTCY 38 |
ARTICLE 27 | SURRENDER OF LEASE 39 |
ARTICLE 28 | LANDLORD’S EXCULPATION 39 |
ARTICLE 29 | ATTORNEYS’ FEES 39 |
ARTICLE 30 | NOTICES 39 |
ARTICLE 31 | SUBORDINATION AND FINANCING PROVISIONS 40 |
ARTICLE 32 | ESTOPPEL CERTIFICATES 41 |
ARTICLE 33 | LETTER OF CREDIT 42 |
ARTICLE 34 | OPTION TO RENEW 44 |
ARTICLE 35 | RIGHT OF FIRST OFFER 45 |
ARTICLE 36 | TEMPORARY SPACE 46 |
ARTICLE 37 | SIGNAGE 47 |
ARTICLE 38 | MISCELLANEOUS PROVISIONS 48 |
Address: | 100 West San Fernando, Suite 350 |
1.4 | “Premises”: Approximately 20,777 square feet of Rentable Area, comprised of (i) Suite 200 at the Building, which consists of 10,879 square feet of Rentable Area (“Suite 200”), and (ii) Suite 1300 at the Building, which consists of 9,898 square feet of Rentable Area (“Suite 1300”). |
1.5 | “Building”: That building located at 125 South Market Street, San Jose, California, containing approximately 159,216 square feet of Rentable Area, which shall be deemed the actual square footage of Rentable Area in the Building. |
1.6 | “Complex”: Cityview Plaza, consisting of the Building and those certain office buildings located at Cityview Plaza, San Jose, California, and the Common Areas |
1.7 | “Estimated |
1.8 | “Term”: Eighty-four (84) months following the Commencement Date, plus any partial month for the month in which the Commencement Date occurs if the Commencement Date occurs on other than the first day of a calendar month. If the Commencement Date is other than the first day of a calendar month, the first month shall include the remainder of the calendar month in which the Commencement Date occurs plus the first full calendar month thereafter, and Minimum Monthly Rent for such first month shall include the full Minimum Monthly Rent for the first full calendar month plus Minimum Monthly Rent for the partial month in which the Commencement Date occurs prorated on a daily basis at the Minimum Monthly Rent per square foot rate provided for the first calendar month of the Term of this Lease. |
1.9 | “Minimum |
Time Period | Monthly Rate per Square Foot | Minimum Monthly Rent |
Months 1 – 12 | $1.00 | $10,879.00 |
Months 13 – 24 | $2.00 | $21,758.00 |
Months 25 – 36 | $2.05 | $22,301.95 |
Months 37 – 48 | $2.10 | $22,845.90 |
Months 49 – 60 | $2.30 | $25,021.70 |
Months 61 – 84 | $2.35 | $25,565.65 |
Time Period | Monthly Rate per Square Foot | Minimum Monthly Rent |
Months 1 – 12 | $0.00 | $0.00 |
Months 13 – 24 | $2.20 | $21,775.60 |
Months 25 – 36 | $2.25 | $22,270.50 |
Months 37 – 48 | $2.30 | $22,765.40 |
Months 49 – 60 | $2.50 | $24,745.00 |
Months 61 – 72 | $2.60 | $25,734.80 |
Months 73 – 84 | $2.70 | $26,724.60 |
1.10 | “Base Year |
Costs”: | The actual costs in calendar year 2010 for Base Operating Costs, Base Taxes and Base Insurance. |
1.11 | “Security Deposit”: A Letter of Credit (as defined in Section 33 below), in the amount of $86,000.00, subject to reduction as set forth in Section 33. |
1.12 | “Permitted Use”: The Premises shall be used solely for general office use, and for no other use. |
1.13 | “Proportionate |
1.14 | “Declaration of |
1.15 | “Broker”: Colliers International, for both Landlord and Tenant |
1.16 | “Reciprocal Easement |
Agreement”: | That certain Grant of Reciprocal Easements and Agreement for Maintenance dated as of September 22, 1970 and recorded in Book 9072 at Page 22 of the Official Records of Santa Clara County, California, as amended. |
1.17 | Contents: Included as part of this Lease are the following Exhibits and addenda which are attached hereto and incorporated herein by this reference: |
Exhibits: | A - Plan of the Complex B - Floor Plan of the Premises C - Work Letter for Construction Obligations D - Acknowledgment of Commencement Date E - Rules & Regulations F - Form of Letter of Credit |
35.1.1 | Tenant is in default under the Lease at the time that Landlord would otherwise deliver the Advice; or |
35.1.2 | More than fifty percent (50%) of the Premises is sublet (other than to an Affiliated Transferee) at the time Landlord would otherwise deliver the Advice; or |
35.1.3 | the Lease has been assigned (other than to an Affiliated Transferee) prior to the date Landlord would otherwise deliver the Advice; or |
35.1.4 | Tenant or an Affiliated Transferee is not occupying at least fifty percent (50%) of the Premises on the date Landlord would otherwise deliver the Advice; or |
35.1.5 | such Offer Space is not intended for the exclusive use of Tenant during the Term; or |
35.1.6 | the existing tenant in such Offer Space is interested in extending or renewing its lease for such Offer Space or entering into a new lease for such Offer Space. |
LANDLORD: PARK CENTER PLAZA INVESTORS, L.P., a Delaware limited partnership By: /s/ Joseph I. Neverauskas Name: Joseph I. Neverauskas Its: SVP | TENANT: OVERLAND STORAGE, INC., a California corporation By: /s/ Eric Kelly Name: Eric Kelly Its: President and CEO By: ______________________ Name: ______________________ Its: ______________________ |
1. | Landlord shall perform improvements to the Premises in accordance with the plans prepared by AAI, dated February 4, 2010 and attached hereto as Schedule 2 to Exhibit C (the “Plans”). The improvements to be performed by Landlord in accordance with the Plans are hereinafter referred to as the “Tenant Improvements.” It is agreed that construction of the Tenant Improvements will be completed at Landlord’s sole cost and expense (subject to the terms of Section 2 below) using Building standard methods, materials and finishes. Landlord shall enter into a direct contract for the Tenant Improvements with a general contractor selected by Landlord. In addition, Landlord shall have the right to select and/or approve of any subcontractors used in connection with the Tenant Improvements. Landlord's supervision or performance of any work for or on behalf of Tenant shall not be deemed a representation by Landlord that such Plans or the revisions thereto comply with applicable insurance requirements, building codes, ordinances, laws or regulations, or that the improvements constructed in accordance with the Plans and any revisions thereto will be adequate for Tenant's use, it being agreed that Tenant shall be responsible for all elements of the design of Tenant’s Plans (including, without limitation, compliance with law, functionality of design, the structural integrity of the design, the configuration of the Premises and the placement of Tenant’s furniture, appliances and equipment). |
2. | If Tenant requests, as a part of the Tenant Improvements, alterations or modifications to the mechanical and/or electrical systems serving the Premises (including, without limitation, the lab portion of Suite 200) that are, in Landlord’s sole discretion, in excess of what Landlord reasonably determines Tenant requires (considering Tenant’s use of such space), such alterations or modifications shall be at Tenant’s sole cost and expense. If Tenant shall request any revisions to the Plans after the same have been approved by Landlord and Tenant, Landlord shall have such revisions prepared at Tenant's sole cost and expense and Tenant shall reimburse Landlord for the cost of preparing any such revisions to the Plans, plus any applicable state sales or use tax thereon, upon demand. Promptly upon completion of the revisions, Landlord shall notify Tenant in writing of the increased cost in the Tenant Improvements, if any, resulting from such revisions to the Plans. Tenant, within one business day, shall notify Landlord in writing whether it desires to proceed with such revisions. In the absence of such written authorization, Landlord shall have the option to continue work on the Premises disregarding the requested revision. Tenant shall be responsible for any Tenant Delay in completion of the Premises resulting from any revision to the Plans. If such revisions result in an increase in the cost of Tenant Improvements, such increased costs, plus any applicable state sales or use tax thereon, shall be payable by Tenant upon demand. Notwithstanding anything herein to the contrary, all revisions to the Plans shall be subject to the approval of Landlord. |
3. | Subject to the provisions contained herein, so long as Tenant is not in default under the Lease, Tenant, by delivering written notice to Landlord, shall be entitled to an amount not to exceed $83,108.00 (i.e., a sum equal to $4.00 per rentable square foot in the Premises) (the “Allowance”) to be applied toward (i) Moving and Relocation Costs (as defined below) and/or (ii) the purchase of furnishings, fixtures and equipment (collectively, the “FF&E”) to be located at all times at the Premises and for use by Tenant in the Premises. Tenant shall own all the FF&E and shall be responsible for all costs associated with such FF&E including, without limitation, the cost of insuring the same, all maintenance and repair costs, removal and restoration costs, and taxes), and the FF&E shall be the property of Tenant. Tenant shall maintain and repair the FF&E in good and working order and shall insure the FF&E to the same extent Tenant is required to insure Tenant’s property pursuant to the terms of the Lease. As used herein, “Moving and Relocation Costs” shall be deemed to mean the cost of moving Tenant’s employees (including related furniture and fixtures) currently |
4. | Any additional construction, alterations or improvements to the Premises that Tenant wishes to make over and above the Tenant Improvements (the “Additional Alterations”) shall be performed by Tenant at its sole cost and expense using contractors selected by Tenant and approved by Landlord and shall be governed in all respects by the terms of the Lease, including without limitation Article 12. In any and all events, the Commencement Date shall not be postponed or delayed if any Additional Alterations to the Premises that Tenant elects to make are incomplete on the Commencement Date for any reason whatsoever. Any delay in the completion of any such Additional Alterations to the Premises shall not subject Landlord to any liability for any loss or damage resulting therefrom. |
5. | Upon Tenant’s written request, and provided Tenant is not in default beyond applicable notice and cure periods, Tenant shall be entitled to request an additional allowance (the “Additional Allowance Request”) of up to $331,892.00 (the “Maximum Additional Allowance”) from Landlord in order to finance the costs of such Additional Alterations during the initial Term. The amount of the Maximum Additional Allowance requested by Tenant is referred to as the “Additional Allowance”. In order to request the Additional Allowance, Tenant must complete, execute and deliver to Landlord, no later than sixty (60) days prior to the Final Additional Allowance Disbursement Date (defined below), the “Request for Additional Allowance” in the form attached hereto as Schedule 1. Provided Tenant is not in default beyond any applicable notice and cure period under the Lease, Landlord (subject to Section 7 below) shall disburse the Additional Allowance to Tenant or, at Landlord’s option, to Tenant’s contractor, for payment of the costs of the Additional Alterations in accordance with the provisions applicable for the disbursement of the Allowance set forth above. In no event shall Tenant be entitled to any disbursement of the Additional Allowance after the date that is six (6) months following the date that the Tenant Improvements are substantially complete (the “Final Additional Allowance Disbursement Date”). The parties acknowledge and agree that the Minimum Monthly Rent set forth in Section 1.09 of the Lease assumes that Tenant will request the entire Maximum Additional Allowance. If Tenant requests less than the Maximum Additional Allowance, the amount of Minimum Monthly Rent set forth in Section 1.09 of the Lease shall be proportionately decreased over the remainder of the Term taking into account the actual amount of the Additional Allowance, and the parties will promptly enter into an amendment to the Lease to evidence the same. If Tenant is in default under the Lease after the expiration of applicable cure periods, the entire unpaid balance of the Additional Allowance paid to or on behalf of Tenant shall become immediately due and payable and, except to the extent required by applicable law, shall not be subject to mitigation or reduction in connection with a reletting of the Premises by Landlord. |
6. | Landlord’s obligation to disburse the Additional Allowance and the right to receive repayment of same from Tenant, as described above, is referred to herein as the “Loan”. Notwithstanding anything to the contrary |
7. | This Exhibit C shall not be deemed applicable to any additional space added to the Premises at any time or from time to time, whether by any options under the Lease or otherwise, or to any portion of the original Premises or any additions to the Premises in the event of a renewal or extension of the original Term of the Lease, whether by any options under the Lease or otherwise, unless expressly so provided in the Lease or any amendment or supplement to the Lease. |
_____ (a) | the disbursement of the Additional Allowance to Tenant and to be repaid to Landlord (the “Loan”), plus all other securities of Tenant held by Landlord or, to the knowledge of Tenant, any affiliate of Landlord (such other securities, collectively, the “Other Securities”), do not constitute 10% or more of either (a) the total voting power of all outstanding securities of Tenant on an aggregate basis or (b) the total dollar value of all outstanding securities of Tenant on an aggregate basis (each of the foregoing items (a) and (b) are referred to as an “Ownership Interest in Tenant”). Tenant shall notify Landlord of any redemption, repurchase or other actions taken by Tenant or any other person, which would cause the Loan plus all Other Securities to constitute ten percent (10%) or more of either (i) the total voting power of all outstanding securities of Tenant on an aggregate basis or (ii) the total dollar value of all outstanding securities of Tenant on an aggregate basis. For purposes of this provision, the term “securities” (or, in the singular, “security”) shall have the meaning used for such term in the Investment Company Act of 1940, as amended. |
_____ (b) | Tenant is unable to make the representation in subsection (a) above because Landlord and/or the affiliate(s) of Landlord do hold 10% or more of an Ownership Interest in Tenant (as described above), as described more fully below: |
A | Landlord and Tenant are parties to that certain Office Lease, dated for reference ______, 20__ (the “Lease”) for certain premises (the “Premises”) consisting of approximately ___ square feet at the building commonly known as Cityview Plaza. |
B. | Tenant is in possession of the Premises and the Term of the Lease has commenced. |
C. | Landlord and Tenant desire to enter into this document to confirm the Commencement Date, the expiration date of the initial Term and other matters under the Lease. |
3. | The schedule of the Minimum Monthly Rent set forth in Section 1.9 of Article 1 of the Lease (Salient Lease Terms) is deleted in its entirety, and the following is substituted therefor: |
LANDLORD: PARK CENTER PLAZA INVESTORS, L.P., a Delaware limited partnership By: __DO_NOT-SIGN________ Name: _______________________ Its: _______________________ | TENANT: OVERLAND STORAGE, INC., a California corporation By: __DO_NOT-SIGN________ Name: ______________________ Its: ______________________ By: __DO_NOT-SIGN________ Name: ______________________ Its: ______________________ |
1. | No sign, placard, picture, advertisement, name or notice shall be installed or displayed on any part of the outside or inside of the Building without the prior written consent of the Landlord. Landlord shall have the right to remove, at Tenant’s expense and without notice, any sign installed or displayed in violation of this rule. All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed at Tenant’s expense by a vendor designated or approved by Landlord. In addition, Landlord reserves the right to change from time to time the format of the signs or lettering and to require previously approved signs or lettering to be appropriately altered. |
2. | If Landlord objects in writing to any curtains, blinds, shades or screens attached to or hung in or used in connection with any window or door of the Premises, Tenant shall immediately discontinue such use. No awning shall be permitted on any part of the Premises. Tenant shall not place anything or allow anything to be placed against or near any glass partitions or doors or windows which may appear unsightly, in the opinion of Landlord, from outside the Premises. |
3. | Tenant shall not obstruct any sidewalks, halls, passages, exits, entrances, elevators, or stairways of the Building. No tenant and no employee or invitee of any tenant shall go upon the roof of the Building. |
4. | Any directory of the Building, if provided, will be exclusively for the display of the name and location of tenants only and Landlord reserves the right to exclude any other names. Landlord reserves the right to charge for Tenant’s directory listing. |
5. | All cleaning and janitorial services for the Building and the Premises shall be provided exclusively through Landlord. Tenant shall not cause any unnecessary labor by carelessness or indifference to the good order and cleanliness of the Premises. Landlord shall not in any way be responsible to any Tenant for any loss of property on the Premises, however occurring, or for any damage to any Tenant’s property by the janitor or any other employee or any other person. |
6. | The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed. No foreign substance of any kind whatsoever shall be thrown into any of them, and the expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by the Tenant who, or whose employees or invitees, shall have caused it. |
7. | Tenant shall store all its trash and garbage within its Premises. Tenant shall not place in any trash box or receptacle any material which cannot be disposed of in the ordinary and customary manner of trash and garbage disposal. All garbage and refuse disposal shall be made in accordance with directions issued from time to time by Landlord. Tenant will comply with any and all recycling procedures designated by Landlord. |
8. | Landlord will furnish Tenant two (2) keys free of charge to each door in the Premises that has a passage way lock. Landlord may charge Tenant a reasonable amount for any additional keys, and Tenant shall not make or have made additional keys on its own. Tenant shall not alter any lock or install a new or additional lock or bolt on any door of its Premises. Tenant, upon the termination of its tenancy, shall deliver to Landlord the keys of all doors which have been furnished to Tenant, and in the event of loss of any keys so furnished, shall pay Landlord therefor. |
9. | If Tenant requires telephone, data, burglar alarm or similar service, the cost of purchasing, installing and maintaining such service shall be borne solely by Tenant. No boring or cutting for wires will be allowed without the prior written consent of Landlord. |
10. | No equipment, materials, furniture, packages, bulk supplies, merchandise or other property will be received in the Building or carried in the elevators except between such hours and in such elevators as may be designated by Landlord. The persons employed to move such equipment or materials in or out of the Building must be acceptable to Landlord. |
11. | Tenant shall not place a load upon any floor which exceeds the load per square foot which such floor was designed to carry and which is allowed by law. Heavy objects shall stand on such platforms as determined by Landlord to be necessary to properly distribute the weight. Business machines and mechanical equipment belonging to Tenant which cause noise or vibration that may be transmitted to the structure of the Building or to any space in the Building to such a degree as to be objectionable to Landlord or to any tenants shall be placed and maintained by Tenant, at Tenant’s expense, on vibration eliminators or other devices sufficient to eliminate the noise or vibration. Landlord will not be responsible for loss of or damage to any such equipment or other property from any cause, and all damage done to the Building by maintaining or moving such equipment or other property shall be repaired at the expense of Tenant. |
12. | Landlord shall in all cases retain the right to control and prevent access to the Building of all persons whose presence in the judgment of Landlord would be prejudicial to the safety, character, reputation or interests of the Building and its tenants, provided that nothing contained in this rule shall be construed to prevent such access to persons with whom any tenant normally deals in the ordinary course of its business, unless such persons are engaged in illegal activities. Landlord reserves the right to exclude from the Building between the hours of 6 p.m. and 7 a.m. the following day, or such other hours as may be established from time to time by Landlord, and on Sundays and legal holidays, any person unless that person is known to the person or employee in charge of the Building and has a pass or is properly identified. Tenant shall be responsible for all persons for whom it requests passes and shall be liable to Landlord for all acts of such persons. Landlord shall not be liable for damages for any error with regard to the admission to or exclusion from the Building of any person. |
13. | Tenant shall not use any method of heating or air conditioning other than that supplied or approved in writing by Landlord. |
14. | Tenant shall not waste electricity, water or air conditioning. Tenant shall keep corridor doors closed. Tenant shall close and lock the doors of its Premises and entirely shut off all water faucets or other water apparatus and electricity, gas or air outlets before Tenant and its employees leave the Premises. Tenant shall be responsible for any damage or injuries sustained by other tenants or occupants of the Building or by Landlord for noncompliance with this rule. |
15. | Tenant shall not install any radio or television antenna, satellite dish, loudspeaker or other device on the roof or exterior walls of the Building without Landlord’s prior written consent, which consent may be withheld in Landlord’s sole discretion, and which consent may in any event be conditioned upon Tenant’s execution of Landlord’s standard form of license agreement. Tenant shall be responsible for any interference caused by such installation. |
16. | Tenant shall not mark, drive nails, screw or drill into the partitions, woodwork, plaster, or drywall (except for pictures, tackboards and similar office uses) or in any way deface the Premises. Tenant shall not cut or bore holes for wires. Tenant shall not affix any floor covering to the floor of the Premises in any manner except as approved by Landlord. Tenant shall repair any damage resulting from noncompliance with this rule. |
17. | Tenant shall not install, maintain or operate upon the Premises any vending machine without Landlord’s prior written consent, except that Tenant may install food and drink vending machines solely for the convenience of its employees. |
18. | No cooking shall be done or permitted by any tenant on the Premises, except that Underwriters’ Laboratory approved microwave ovens or equipment for brewing coffee, tea, hot chocolate and similar |
19. | Tenant shall not use in any space or in the public halls of the Building any hand trucks except those equipped with the rubber tires and side guards or such other material-handling equipment as Landlord may approve. Tenant shall not bring any other vehicles of any kind into the Building. |
20. | Tenant shall not permit any motor vehicles to be washed or mechanical work or maintenance of motor vehicles to be performed in any parking lot. |
21. | Tenant shall not use the name of the Building or any photograph or likeness of the Building in connection with or in promoting or advertising Tenant’s business, except that Tenant may include the Building name in Tenant’s address. Landlord shall have the right, exercisable without notice and without liability to any tenant, to change the name and address of the Building. |
22. | Tenant requests for services must be submitted to the Building office by an authorized individual. Employees of Landlord shall not perform any work or do anything outside of their regular duties unless under special instruction from Landlord, and no employee of Landlord will admit any person (Tenant or otherwise) to any office without specific instructions from Landlord. |
23. | Tenant shall not permit smoking or carrying of lighted cigarettes or cigars other than in areas designated by Landlord as smoking areas. |
24. | Canvassing, soliciting, distribution of handbills or any other written material in the Building is prohibited and each tenant shall cooperate to prevent the same. No tenant shall solicit business from other tenants or permit the sale of any good or merchandise in the Building without the written consent of Landlord. |
25. | Tenant shall not permit any animals other than service animals, e.g. seeing-eye dogs, to be brought or kept in or about the Premises or any common area of the Building. |
26. | These Rules and Regulations are in addition to, and shall not be construed to in any way modify or amend, in whole or in part, the terms, covenants, agreements and conditions of any lease of any premises in the Building. Landlord may waive any one or more of these Rules and Regulations for the benefit of any particular tenant or tenants, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of any other tenant or tenants, nor prevent Landlord from thereafter enforcing any such Rules and Regulations against any or all of the tenants of the Building. |
27. | Landlord reserves the right to make such other and reasonable rules and regulations as in its judgment may from time to time be needed for safety and security, for care and cleanliness of the Building, and for the preservation of good order in and about the Building. Tenant agrees to abide by all such rules and regulations herein stated and any additional rules and regulations which are adopted. Tenant shall be responsible for the observance of all of the foregoing rules by Tenant’s employees, agents, clients, customers, invitees and guests. |
BENEFICIARY: | APPLICANT: |
[Landlord] | [Tenant] |
[Address] | [Address] |
With copies of all notices to: | |
AMOUNT: | EXPIRATION: |
USD $__________________ | ___________, 20__, OR AS EXTENDED |
1. | THE ORIGINAL LETTER OF CREDIT, AND |
2. | ORIGINAL BENEFICIARY’S CERTIFICATE, PURPORTEDLY SIGNED BY AN AUTHORIZED REPRESENTATIVE OF BENEFICIARY OR OF ITS AUTHORIZED AGENT, IN THE FORM OF EXHIBIT B ATTACHED HERETO. |
A. | Landlord and Tenant (as successor by merger to Overland Storage, a California corporation (“Former Tenant”)) are parties to that certain Office Lease dated February 9, 2010 (the “Lease”). Pursuant to the Lease, Landlord has leased to Tenant space currently containing approximately 20,777 square feet of Rentable Area (the “Premises”) comprised of (i) 10,879 square feet of Rentable Area described as Suite 200 in the building located at 125 South Market Street, San Jose, California (the “Building”); and (ii) approximately 9,898 square feet of Rentable Area described as Suite 1300 in the Building. |
B. | Tenant desires to surrender a portion of the Original Premises to Landlord containing approximately 10,879 square feet of Rentable Area described as Suite 200 on the second (2nd) floor of the Building (the “Reduction Space”), as shown on Exhibit A hereto (the Original Premises, less the Reduction Space, is referred to herein as the “Remaining Portion of the Original Premises”), and that the Lease be appropriately amended, and Landlord is willing to accept such surrender on the following terms and conditions. |
C. | Tenant has requested that additional space containing approximately 384 square feet of Rentable Area on the second (2nd) floor of the Building (the “Expansion Space”), as shown on Exhibit B attached hereto, be added to the Premises and that the Lease be appropriately amended and Landlord is willing to do the same on the following terms and conditions. |
D. | The Lease by its terms shall expire on June 30, 2017 ("Prior Termination Date"), and the parties desire to extend the Term of the Lease, all on the following terms and conditions. |
1. | Merger. Tenant and Former Tenant have entered into a certain agreement whereby Tenant and Former Tenant have merged (the “Merger”), and, as a consequence of the Merger, all or substantially all of the ownership interests of Former Tenant are owned by Tenant and Former Tenant has become a wholly-owned subsidiary of Tenant. Tenant hereby ratifies and confirms the Lease, and agrees that, retroactively effective as of the date of the Merger, it is the tenant under the Lease and it is bound by all terms and provisions of the Lease. Tenant further represents and warrants that, as of the date of this Amendment, Tenant has a net worth that is equal to or greater than the net worth of Former Tenant as of the Commencement Date (as defined in the Lease) of the Lease, and the Premises will continue to be operated for the Permitted Use (as defined in the Lease) set forth in Section 1.12 of the Lease. |
2. | Reduction. |
2.1 | Tenant shall vacate the Reduction Space in accordance with the terms of the Lease on or prior to March 31, 2017 (the “Required Vacation Date”), which is the date immediately |
2.2 | Effective as of April 1, 2017 (the “Reduction Effective Date”), the Reduction Space shall no longer be considered part of the Premises. As of the Reduction Effective Date, the Reduction Space shall be deemed surrendered by Tenant to Landlord, the Lease shall be deemed terminated with respect to the Reduction Space, and the “Premises”, as defined in the Lease, shall be deemed to mean the Remaining Portion of the Original Premises. |
2.3 | If Tenant shall holdover in the Reduction Space beyond the day immediately preceding the Reduction Effective Date, Tenant shall be liable for Minimum Monthly Rent, Tenant’s Proportionate Share of Operating Costs, Insurance Costs and Taxes and other charges respecting the Reduction Space equal to (i) one hundred twenty-five percent (125%) of the Minimum Monthly Rent in effect under the Lease for the first sixty (60) days of such holdover; and (ii) commencing as of the sixty-first (61st) day of such holdover, one hundred fifty percent (150%) of the Minimum Monthly Rent in effect under the Lease, prorated on a per diem basis and on a per square foot basis for the Reduction Space. Such holdover amount shall not be deemed permission for Tenant to holdover in the Reduction Space. In addition, Tenant shall be liable for consequential and other damages arising from Tenant's holding over. |
3. | Expansion and Effective Date. |
3.1 | Effective as of the Expansion Effective Date (as defined below), the Expansion Space shall be deemed part of the Premises, as defined in the Lease, and from and after the Expansion Effective Date, the Remaining Portion of the Original Premises and the Expansion Space, collectively, shall be deemed the Premises, as defined in the Lease. As of the Expansion Effective Date, the Premises, as defined in the Lease, shall be deemed to contain 10,282 square feet of Rentable Area in the Building, comprised of the Remaining Portion of Original Premises and the Expansion Space. The Term for the Expansion Space shall commence on the Expansion Effective Date and end on the Extended Termination Date (defined in Section 4 below). Notwithstanding anything to the contrary contained in the Lease, as amended hereby, the Expansion Space shall be used by Tenant solely for the storage and operation of Tenant’s data equipment and racks and for no other purpose whatsoever. The Expansion Space is subject to all the terms and conditions of the Lease except as expressly modified herein, except that, notwithstanding anything to the contrary contained in the Lease, as amended hereby, no janitorial service or climate control (i.e., heating, ventilation and air conditioning service) will be supplied to the Expansion Space and Tenant shall not be entitled to receive any allowances, abatements or other financial concessions granted with respect to the Original Premises unless such concessions are expressly provided for herein with respect to the Expansion Space. |
3.2 | The Expansion Effective Date shall be the date upon which the Side Light Work (as defined in Exhibit C attached hereto) in the Expansion Space has been substantially completed; provided, however, that if Landlord shall be delayed in substantially completing the Side Light Work as a result of the occurrence of a Tenant Delay (defined below), then, for purposes of determining the Expansion Effective Date, the date of substantial completion shall be deemed to be the day that said Side Light Work would have been substantially completed |
3.3 | The Expansion Space shall be deemed to be substantially completed on the date that Landlord reasonably determines that the Side Light Work has been performed (or would have been performed absent any Tenant Delays). Landlord and Tenant shall together conduct an inspection of the Side Light Work and prepare a "punch list" setting forth any portions of the Side Light Work that are not in conformity with Exhibit C to this Lease. Landlord shall use good faith efforts to perform such punch list work within a reasonable time following the completion of the punch list. The adjustment of the Expansion Effective Date and, accordingly, the postponement of Tenant's obligation to pay rent on the Expansion Space shall be Tenant's sole remedy and shall constitute full settlement of all claims that Tenant might otherwise have against Landlord by reason of the Expansion Space not being ready for occupancy by Tenant on or before Landlord’s estimated completion date. |
3.4 | In addition to the postponement, if any, of the Expansion Effective Date as a result of the applicability of Section 3.3 above, the Expansion Effective Date shall be delayed to the extent that Landlord fails to deliver possession of the Expansion Space for any other reason (other than Tenant Delays by Tenant). Any such delay in the Expansion Effective Date shall not subject Landlord to any liability for any loss or damage resulting therefrom. If the Expansion Effective Date is delayed, the Extended Termination Date shall not be similarly extended. |
4. | Extension. The Term of the Lease is hereby extended for a period of sixty-four (64) months and shall expire on October 31, 2022 ("Extended Termination Date"), unless sooner terminated in accordance with the terms of the Lease. That portion of the Term commencing the day immediately following the Prior Termination Date ("Extension Date") and ending on the Extended Termination Date shall be referred to herein as the "Extended Term”. |
5.1 | Minimum Monthly Rent for Remaining Portion of the Original Premises. The Minimum Monthly Rent, Tenant’s Proportionate Share of Operating Costs, Insurance Costs and Taxes and all other charges under the Lease shall be payable as provided therein with respect to the Remaining Portion of the Original Premises through and including the Prior Termination Date. Notwithstanding the foregoing, provided that (i) Tenant has vacated the Reduction Space on or before the Required Vacation Date in compliance with the terms and conditions of Section 2 above; and (ii) Tenant is not in default under the Lease, as amended hereby, Tenant shall be entitled to an abatement of Minimum Monthly Rent for the month of April, 2017 in an amount equal to $25,565.65. |
5.2 | Minimum Monthly Rent for Remaining Portion of the Original Premises During Extended Term. As of the Extension Date, the schedule of Minimum Monthly Rent payable for the Remaining Portion of the Original Premises during the Extended Term is the following: |
Period | Rentable Square Footage | Minimum Monthly Rent |
7/1/2017 – 6/30/2018 | 9,898 | $41,076.70 |
7/1/2018 – 6/30/2019 | 9,898 | $42,305.70 |
7/1/2019 – 6/30/2020 | 9,898 | $43,575.95 |
7/1/2020 – 6/30/2021 | 9,898 | $44,879.18 |
7/1/2021 – 6/30/2022 | 9,898 | $46,223.66 |
7/1/2022 – 10/31/2022 | 9,898 | $47,609.38 |
5.3 | Minimum Monthly Rent for Expansion Space through Extended Termination Date. In addition to Tenant’s obligation to pay Minimum Monthly Rent for the Remaining Portion of the Original Premises, during the period commencing on the Expansion Effective Date and continuing through the Extended Termination Date, Tenant shall pay Landlord Minimum Monthly Rent for the Expansion Space as follows: |
Period | Rentable Square Footage | Minimum Monthly Rent |
Expansion Effective Date – 6/30/2018 | 384 | $1,171.20 |
7/1/2018 – 6/30/2019 | 384 | $1,206.40 |
7/1/2019 – 6/30/2020 | 384 | $1,242.56 |
7/1/2020 – 6/30/2021 | 384 | $1,279.68 |
7/1/2021 – 6/30/2022 | 384 | $1,318.08 |
7/1/2022 – 10/31/2022 | 384 | $1,357.76 |
5.4 | Abated Minimum Monthly Rent. Notwithstanding anything in the Lease, as amended hereby, to the contrary, so long as Tenant is not in default under the Lease, as amended hereby, Tenant shall be entitled to an abatement of Minimum Monthly Rent as follows: (i) with respect to the Remaining Portion of the Original Premises, in the monthly amount of $41,076.70 during the period commencing July 1, 2017 and continuing through October 31, 2017; and (ii) with respect to the Expansion Space, in the monthly amount of $1,171.20 for the first four (4) full calendar months after the Expansion Effective Date. The maximum total amount of Minimum Monthly Rent abated in accordance with the foregoing shall equal $168,991.60 (the “Abated Minimum Monthly Rent”). If Tenant defaults under the Lease, as amended hereby, at any time during the Term (as the same may be further extended) and fails to cure such default within any applicable cure period under the Lease, then all Abated Minimum Monthly Rent shall immediately become due and payable. Only Minimum |
6. | Security Deposit. |
6.1 | Landlord and Tenant acknowledge and agree that Tenant has provided, and Landlord is currently holding, a cash Security Deposit in accordance with the terms and conditions of Article 8 of the Lease, as amended by Sections 6.2, 6.3 and 6.4 below, in an amount equal to $43,000.00 as collateral for Tenant’s performance of its obligations under the Lease, as amended hereby, in lieu of a standby Letter of Credit. No additional Security Deposit shall be required in connection with this Amendment. |
6.2 | Section 8.1 of the Lease is hereby amended as follows: |
6.1.1 | The second (2nd) and third (3rd) sentences thereof are hereby deleted in their entireties and replaced with the following: |
6.1.2 | The reference to “return of the Letter of Credit or the proceeds thereof” set forth in the fourth (4th) sentence thereof is hereby deleted in its entirety and replaced with “repayment of the Security Deposit”. |
6.1.3 | The reference to “proceeds of the Letter of Credit” set forth in the fifth (5th) sentence thereof is hereby deleted in its entirety and replaced with “Security Deposit”. |
6.1.4 | There reference to “or proceeds of the Letter of Credit are” set forth in the sixth (6th) sentence thereof is hereby deleted in its entirety and replaced with “is”. |
6.1.5 | The following is hereby added to Section 8.1 of the Lease: “If Tenant is not in default of the Lease, the Security Deposit or any balance thereof shall be returned to Tenant sixty (60) days after the later of: (i) the date Tenant surrenders possession of the Premises to Landlord in accordance with the terms and conditions of this Lease, and (ii) date of the expiration or earlier termination of this Lease.” |
6.3 | The first sentence of Section 8.2 of the Lease is hereby deleted in its entirety and replaced with the following: |
6.4 | The last sentence of Section 8.2 of the Lease and Article 33 of the Lease are each hereby deleted in their entirety. |
7. | Tenant’s Proportionate Share. For the period commencing on the Reduction Effective Date and ending on the Extended Termination Date, Tenant’s Proportionate Share for the Remaining Portion of the Original Premises is 6.22% of the Building. For the period commencing on the Expansion Effective Date and ending on the Extended Termination Date, Tenant’s Proportionate Share for the Expansion Space is 0.24% of the Building. For the period commencing on the Expansion Effective Date and ending on the Extended Termination Date, Tenant’s Proportionate Share for the Remaining Portion of the Original Premises and the Expansion Space, collectively, is 6.46% of the Building. Notwithstanding anything in this Amendment to the contrary, Tenant shall remain liable for all year-end adjustments with respect to Tenant’s Proportionate Share of Operating Costs, Insurance Costs and Taxes applicable to the Reduction Space for that portion of the calendar year preceding the Reduction Effective Date. Such adjustments shall be paid at the time, in the manner and otherwise in accordance with the terms of the Lease, unless otherwise specified herein. |
8. | Additional Rent. |
8.1 | Remaining Portion of Original Premises. For the period commencing on the Extension Date and ending on the Extended Termination Date, Tenant shall pay all additional Rent payable under the Lease, including Tenant’s Proportionate Share of Operating Costs, Insurance Costs and Taxes in accordance with the terms of the Lease, provided, however, effective as of the Extension Date, the Base Year for the computation of Tenant’s Proportionate Share of Operating Costs, Insurance Costs and Taxes for the Remaining Portion of the Original Premises is amended from 2010 to 2017. |
8.2 | Expansion Space. For the period commencing with the Expansion Effective Date and ending on the Extended Termination Date, Tenant shall pay for Tenant’s Proportionate Share of Operating Costs, Insurance Costs and Taxes applicable to the Expansion Space in accordance with the terms of the Lease, as amended hereby; provided, however, that effective as of the Expansion Effective Date, the Base Year for the computation of Tenant’s Proportionate Share of Operating Costs, Insurance Costs and Taxes solely with respect to the Expansion Space is calendar year 2017. |
9. | Access to Expansion Space. Tenant shall be permitted to access the Expansion Space prior to the Expansion Effective Date. In connection therewith, Tenant shall comply with all terms and provisions of the Lease, as amended hereby, and this Amendment, except those provisions requiring payment of Minimum Monthly Rent as to the Expansion Space. However, Tenant shall be liable for all utilities (including, without limitation, all costs in connection with the Supplemental Cooling Unit, as defined in Section 10.2.2 below) and special services during such period. |
10.1 | Condition of Remaining Portion of the Original Premises. By being in possession of the Remaining Portion of the Original Premises, Tenant agrees it has accepted the same “as is” without any agreements, representations, understandings or obligations on the part of Landlord to perform any alterations, repairs or improvements, except as may be expressly provided otherwise in this Amendment. Tenant hereby acknowledges and agrees that Landlord has fulfilled all of its obligations pursuant to Exhibit “C” to the Lease. |
10.2 | Condition of Expansion Space. |
10.2.1 | Tenant acknowledges and agrees that Tenant has been in occupancy of the Expansion Space without Landlord’s consent and has been using the same for storage purposes |
10.2.2 | Subject to Landlord’s prior written approval, Tenant shall have the right to install and use a Supplemental Cooling Unit (defined below) in the Expansion Space, subject to all applicable terms and conditions of the Lease (including, without limitation, Article 12 of the Lease) and the terms and conditions set forth in this Section. For purposes hereof, the “Supplemental Cooling Unit” shall mean a dedicated, self-contained supplemental cooling unit with capacity that shall be subject to Landlord’s prior written approval, and which shall operate independently of and without any connection to the Building’s heating, ventilating and air conditioning system, water or any other system of the Building, except for a connection for electrical power. Landlord may withdraw Tenant’s permission to install the Supplemental Cooling Unit during Landlord’s performance of the Side Light Work at any time that Landlord reasonably determines that Tenant’s installation thereof is causing a dangerous situation for Landlord, Tenant or their respective contractors or employees, or if Landlord reasonably determines that Tenant’s installation of the Supplemental Cooling Unit is hampering or otherwise preventing Landlord from proceeding with the completion of the Side Light Work at the earliest possible date. In addition, Landlord may terminate Tenant’s right to install and operate the Supplemental Cooling Unit if Landlord determines in its sole discretion that the Supplemental Cooling Unit is causing noise and/or disturbing or interfering with Landlord or other tenants of the Building. Tenant shall be responsible, at its cost, for maintaining and repairing the Supplemental Cooling Unit to the reasonable satisfaction of Landlord and the cost of purchasing and installing a submeter (or submeters if reasonably necessary) to measure electricity consumed in connection with the Supplemental Cooling Unit, as well as the cost of all such electricity that is consumed. Tenant shall pay Landlord, within ten (10) days after Landlord’s demand therefor, for all electricity so used at the then current rates charged to Landlord for electricity by the utility provider, plus any additional cost of Landlord in keeping account of and billing Tenant for the electric current so consumed. Upon expiration or earlier termination of the Lease, title to the Supplemental Cooling Unit shall pass to Landlord although, upon the request of Landlord, Tenant shall be required to remove the Supplemental Cooling Unit, at Tenant’s cost, in accordance with the terms of Section 12.4 of the Lease. |
10.3 | Responsibility for Improvements to Remaining Portion of the Original Premises. Landlord shall perform improvements to the Remaining Portion of the Original Premises and to the Expansion Space in accordance with Exhibit C attached hereto. |
11. | Representations. Tenant represents that it has not made any assignment, sublease, transfer, conveyance of the Lease or any interest therein or in the Reduction Space other than those explicitly recited herein and further represents that there is not any claim, demand, obligation, liability, action or cause of action by any other party respecting, relating to or arising out of the Reduction Space, and Tenant agrees to indemnify and hold harmless Landlord and the Landlord Entities from all liabilities, expenses, claims, demands, judgments, damages or costs arising from any of the same, including without limitation, attorneys' fees. Tenant acknowledges that Landlord will be relying on this Amendment in entering into leases for the Reduction Space with other parties. |
12. | Extension Option. Article 34 (Option to Renew) of the Lease is hereby deleted in its entirely. Provided the Lease, as amended hereby, is in full force and effect and Tenant is not in default under any of the other terms and conditions of the Lease, as amended hereby, at the time of notification or commencement, Tenant shall have one (1) option to extend (the “Extension Option”) the Lease for a term of five (5) years (the “Second Extension Term”), for the portion of the Premises being leased by Tenant as of the date the Second Extension Term is to commence, on the same terms and conditions set forth in the Lease, as amended hereby, except as modified by the terms, covenants and conditions as set forth below. Notwithstanding the foregoing, Tenant may only exercise the Extension Option hereunder if (a) at the time of exercise, Tenant is conducting regular, active, ongoing business in, and is in occupancy, (b) at the time of exercise, no part of the Premises is sublet; and (c) the Lease has not been assigned (other than to an Affiliated Transferee). |
12.1 | If Tenant elects to exercise the Extension Option, then Tenant shall provide Landlord with written notice no earlier than the date which is three hundred sixty-five (365) days prior to the expiration of Extended Term but no later than the date which is two hundred seventy (270) days prior to the expiration of the Extended Term. If Tenant fails to provide such notice, Tenant shall have no further or additional right to extend the Extended Term. |
12.2 | The Minimum Monthly Rent in effect at the expiration of the Extended Term shall be adjusted to reflect the Prevailing Market (defined below) rate. Landlord shall advise Tenant of the new Minimum Monthly Rent for the Premises no later than thirty (30) days after receipt of Tenant's written request therefor. Said request shall be made no earlier than thirty (30) days prior to the first date on which Tenant may exercise its Extension Option under this Section 12. Said notification of the new Minimum Monthly Rent may include a provision for its escalation to provide for a change in the Prevailing Market rate between the time of notification and the commencement of the Second Extension Term. |
12.3 | This Extension Option is not transferable (other than to an Affiliated Transferee that is an assignee of Tenant’s interest in this Lease); the parties hereto acknowledge and agree that they intend that the Extension Option shall be “personal” to Tenant as set forth above and that in no event will any assignee (other than an Affiliated Transferee) or sublessee have any rights to exercise the Extension Option. |
12.4 | If the Extension Option is validly exercised or if Tenant fails to validly exercise the Extension Option, Tenant shall have no further right to extend the Extended Term. |
12.5 | For purposes of this Extension Option, “Prevailing Market” shall mean the arms length fair market annual rental rate per rentable square foot under renewal leases and amendments entered into on or about the date on which the Prevailing Market is being determined hereunder for space comparable to the Premises in the Building and buildings comparable to the Building in the same rental market in the San Jose, California area as of the date the Second Extension Term is to commence, taking into account the specific provisions of the |
13. | Other Pertinent Provisions. Landlord and Tenant agree that, effective as of the date of this Amendment (unless different effective date(s) is/are specifically referenced in this Section), the Lease shall be amended in the following additional respects: |
13.1 | Right of First Offer. Article 35 (Right of First Offer) of the Lease is hereby deleted in its entirety and of no further force or effect. |
13.2 | Temporary Space. Article 36 (Temporary Space) of the Lease is hereby deleted in its entirety. |
13.3 | Tenant’s Insurance. Tenant’s insurance required under the Lease, as amended hereby (“Tenant’s Insurance”), shall apply to and include (as applicable) the Expansion Space. Tenant shall provide Landlord with a certificate of insurance, in form and substance satisfactory to Landlord and otherwise in compliance with the terms of the Lease, as amended hereby, evidencing that Tenant’s Insurance covers the Remaining Portion of the Original Premises and the Expansion Space, as soon as practicable after the date of this Amendment but in any event prior to the Expansion Effective Date, and thereafter on an annual basis or more frequently if reasonably requested by Landlord in order to assure that Landlord always has current certificates evidencing Tenant’s Insurance. |
13.4 | Parking. Notwithstanding anything in the Lease to the contrary, commencing on the Reduction Effective Date, Tenant shall have the right to lease up to twenty-one (21) parking stalls, consisting of (i) up to twenty (20) unreserved parking stalls; and (ii) up to one (1) reserved parking stall, at the then prevailing market rate. Except as modified herein, the use of such unreserved parking spaces shall be subject to the terms of the Lease. |
13.5 | Climate Control Hours. The definition of Climate Control Hours set forth in Section 11.1 of the Lease is hereby deleted in its entirety and replaced with: |
13.6 | Building Sign(s). Section 37.3 of the Lease is hereby deleted in its entirety. |
13.7 | Monument Signage. |
14.1 | This Amendment, including Exhibit A (Outline and Location of Reduction Space), Exhibit B (Outline and Location of Expansion Space) and Exhibit B (Tenant Alterations) attached hereto, sets forth the entire agreement between the parties with respect to the matters set forth herein. There have been no additional oral or written representations or agreements. Under no circumstances shall Tenant be entitled to any rent abatement, improvement allowance, leasehold improvements, or other work to the Premises, or any similar economic incentives that may have been provided Tenant in connection with entering into the Lease, |
14.2 | Except as herein modified or amended, the provisions, conditions and terms of the Lease shall remain unchanged and in full force and effect. In the case of any inconsistency between the provisions of the Lease and this Amendment, the provisions of this Amendment shall govern and control. The capitalized terms used in this Amendment shall have the same definitions as set forth in the Lease to the extent that such capitalized terms are defined therein and not redefined in this Amendment. |
14.3 | Landlord shall not be bound by this Amendment until Landlord has executed and delivered the same to Tenant. |
14.4 | Tenant hereby represents to Landlord that Tenant has dealt with no broker in connection with this Amendment other than Cushman & Wakefield. Tenant agrees to indemnify and hold Landlord and the Landlord Entities harmless from all claims of any other brokers claiming to have represented Tenant in connection with this Amendment. |
14.5 | Each signatory of this Amendment represents hereby that he or she has the authority to execute and deliver the same on behalf of the party hereto for which such signatory is acting. Tenant hereby represents and warrants that neither Tenant, nor any persons or entities holding any legal or beneficial interest whatsoever in Tenant, are (i) the target of any sanctions program that is established by Executive Order of the President or published by the Office of Foreign Assets Control, U.S. Department of the Treasury (“OFAC”); (ii) designated by the President or OFAC pursuant to the Trading with the Enemy Act, 50 U.S.C. App. § 5, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-06, the Patriot Act, Public Law 107-56, Executive Order 13224 (September 23, 2001) or any Executive Order of the President issued pursuant to such statutes; or (iii) named on the following list that is published by OFAC: “List of Specially Designated Nationals and Blocked Persons.” If the foregoing representation is untrue at any time during the Term (as extended), an event of default under the Lease will be deemed to have occurred, without the necessity of notice to Tenant. |
14.6 | Pursuant to California Civil Code Section 1938, Landlord hereby notifies Tenant that as of the date of this Amendment, the Premises have not undergone inspection by a “Certified Access Specialist” (“CASp”) to determine whether the Premises meet all applicable construction-related accessibility standards under California Civil Code Section 55.53. Landlord hereby discloses pursuant to California Civil Code Section 1938 as follows: “A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary |
14.7 | Tenant shall not bring upon the Premises or any portion of the Building or use the Premises or permit the Premises or any portion thereof to be used for the growing, manufacturing, administration, distribution (including without limitation, any retail sales), possession, use or consumption of any cannabis, marijuana or cannabinoid product or compound, regardless of the legality or illegality of the same. |
LANDLORD: | TENANT: |
PARK CENTER PLAZA INVESTORS, L.P., a Delaware limited partnership | SPHERE 3D CORP., an Ontario corporation |
By: /s/ Jonathan Praw | By: /s/ Eric Kelly |
Name: Jonathan Praw | Name: Eric Kelly |
Title: V.P. | Title: CEO |
Dated: March 22, 2017 | Dated: March 15, 2017 |
1. | Landlord, at its sole cost and expense (subject to the terms and provisions of Section 2 below) shall perform improvements to the Remaining Portion of the Original Premises and the Expansion Space in accordance with the following work lists using Building standard methods, materials and finishes and as otherwise reasonably determined by Landlord. The improvements to be performed in the Remaining Portion of the Original Premises and described in the first work list below and the improvements to be performed in the Expansion Space and described in the second work list below (such work to be performed in the Expansion Space, hereinafter, the “Side Light Work”) are collectively referred to herein as the “Tenant Alterations”. Landlord shall enter into a direct contract for the Tenant Alterations with a general contractor selected by Landlord. In addition, Landlord shall have the right to select and/or approve of any subcontractors used in connection with the Tenant Alterations. Notwithstanding anything to the contrary contained herein or in the Amendment, Landlord shall provide Tenant with written notice of Landlord’s intent to commence the Tenant Alterations, and not later than three (3) business days following the date of such notice by Landlord, Tenant shall remove, at Tenant’s sole cost and expense all Tenant’s furniture, equipment, fixtures and other personal property located within the Remaining Portion of the Original Premises and, if applicable, the Expansion Space (collectively, “Tenant’s Property”) in a manner satisfactory to Landlord in order to enable Landlord to perform the Tenant Alterations. Tenant shall move such Tenant’s Property back into the Remaining Portion of the Original Premises and, if applicable, the Expansion Space at Tenant’s sole cost and expense only at such time that Landlord has notified Tenant that the Tenant Alterations (or the portion thereof affected by the placement of Tenant’s Property) has been completed. Tenant hereby acknowledges and agrees that Landlord shall have no obligation to move any of Tenant’s Property and shall not commence any of the Tenant Alterations until such Tenant’s Property is removed by Tenant in accordance with this Section 1. |
B. | Install one (1) door in the boardroom within the Remaining Portion of the Original Premises; |
C. | Remove the existing interior wall in the conference room within the Remaining Portion of the Original Premises; and |
D. | Paint up to 5 interior exposed accent walls within the Remaining Portion of the Original Premises. |
A. | Install one (1) side light adjacent to the entry door to the Expansion Space with frosted glass; and |
B. | Install one (1) horizontal side light at the top of the wall in the Expansion Space. |
2. | All other work and upgrades, subject to Landlord’s approval, shall be at Tenant’s sole cost and expense, plus any applicable state sales or use tax thereon, payable upon demand as additional rent. Tenant shall be responsible for any Tenant Delay in completion of the Tenant Alterations resulting from any such other work and upgrades requested or performed by Tenant or any failure by Tenant to remove Tenant’s Property in accordance with Section 1 above. |
3. | Landlord’s supervision or performance of any work for or on behalf of Tenant shall not be deemed to be a representation by Landlord that such work complies with applicable insurance requirements, building codes, ordinances, laws or regulations or that the improvements constructed will be adequate for Tenant’s use. |
4. | Tenant acknowledges that the Tenant Alterations may be performed by Landlord in the Premises during and/or after normal business hours for the Building subsequent to the Extension Date. Landlord and Tenant agree to cooperate with each other in order to enable the Tenant Alterations to be performed in a timely manner and with as little inconvenience to the operation of Tenant’s business as is reasonably possible. Notwithstanding anything herein to the contrary, any delay in the completion of the Tenant Alterations or inconvenience suffered by Tenant during the performance of the Tenant Alterations shall not delay the Extension Date nor shall it subject Landlord to any liability for any loss or damage resulting therefrom or entitle Tenant to any credit, abatement or adjustment of rent or other sums payable under the Lease. |
5. | Provided Tenant is not in default after the expiration of applicable cure periods under the Lease, as amended, Landlord shall provide Tenant with an allowance (the "FF&E Allowance") in an amount not to exceed $9,898.00 (i.e. a sum of up to $1.00 per square foot of Rentable Area in the Remaining Portion of the Original Premises) to be applied toward the cost of purchasing and installing furniture, fixtures and equipment (collectively, “FF&E”), which FF&E shall be located at all times at the Premises and for use by Tenant in the Premises. Landlord shall disburse the FF&E Allowance, or applicable portion thereof, to Tenant within forty-five (45) days after Landlord’s receipt of paid invoices from Tenant with respect to the FF&E. However, in no event shall Landlord have any obligation to disburse any portion of the FF&E Allowance after September 30, 2017. Any unused portion of the FF&E Allowance remaining after such date shall accrue to the sole benefit of Landlord, it being understood that Tenant shall not be entitled to any credit, abatement or other concession in connection therewith. Landlord shall own all FF&E until the expiration of the Lease (provided that Tenant, not Landlord, shall be responsible for all costs associated with such FF&E, including, without limitation, the cost of insuring the same, all maintenance and repair costs and taxes), at which time such FF&E shall become the property of Tenant as if by bill of sale hereunder. Tenant shall maintain and repair all FF&E in good and working order and shall insure such FF&E to the same extent Tenant is required to insure Tenant’s personal property pursuant to the terms of the Lease. |
6. | This Exhibit C shall not be deemed applicable to any additional space added to the Premises at any time or from time to time, whether by any options under the Lease or otherwise, or to any portion of the original Premises or any additions to the Premises in the event of a renewal or extension of the Term of the Lease, whether by any options under the Lease or otherwise, unless expressly so provided in the Lease or any amendment or supplement to the Lease. |
Legal Address: | Pingshan Village No.1, Zhongcun Town, Panyu District, Guangzhou |
Party B (Lessee): | Guangzhou Tandberg Electronic Components Co., Ltd. |
Legal Address: | The G/F of Plant 2, Zhongsan No. 9, Shiguang Rd, Panyu District, Guangzhou, Guangdong Province, China |
1. | “Affiliate” means in relation to any corporate entity, any parent or holding company or direct or indirect subsidiary of such corporate entity or any direct or indirect subsidiary of a parent or holding company of such corporate entity, and in relation to any natural person shareholder, director, officer or employee of the aforesaid, a family member of such natural person. |
2. | “Base Prices” has the meaning ascribed to it in Article 11.1 below. |
3. | “CIETAC” has the meaning ascribed to it in Article 20 below. |
4. | “Contract” or “this Contract” means this “Lease Renewal Contract” including all its attachments and all valid amended agreements. |
5. | “Event of Force Majeure” means occurrence of events unforeseeable, unavoidable and uncontrollable such as earthquakes, hurricanes, floods, fires, wars and any other similar unforeseeable event whose occurrence and consequence cannot be prevented or avoided, have directly affected the performance of this Contract or have prevented this Contract from being performed in compliance with the agreed terms and conditions. |
6. | “First Deposit” has the meaning ascribed to it in Article 12 below. |
7. | “Hazardous Material”: any substance, chemical, compound, product, solid, gas, liquid, waste, by-product, pollutant, contaminant or other material which is hazardous, toxic or otherwise harmful to health, safety or the environment, and includes any material identified or classified as such under any applicable environmental laws and regulations. |
8. | “Open Space” has the meaning ascribed to it in Article 2 below. |
9. | “Party” means Party A and Party B individually, and “Parties” means Party A and Party B collectively. |
10. | “PRC” or “China” means the People’s Republic of China. |
11. | “Premises” means the factory, dormitories and Open Space leased to Party B pursuant to this Contract and as further described in Annex I hereto. |
12. | “Renewal Term” has the meaning ascribed to it in Article 4 below. |
13. | “Second Deposit” has the meaning ascribed to it in Article 12 below. |
14. | “Signature Date” has the meaning ascribed to it in the Preamble above. |
15. | “Term” has the meaning ascribed to it in Article 4 below. |
16. | “Utilities” includes the power capacity, water supply, sewage and other facilities as set forth in Annex II hereto. |
1. | Party A shall (a) ensure that the Premises and fit-out are safe for use and that the structure and building materials of the Premises comply with local/national building code requirements, (b) ensure the normal operation of the infrastructure connected to the Premises such as water supply, electricity supply, etc., and (c) ensure the normal operation of fire infrastructure. |
2. | Party A shall provide Party B with sufficient capacity of public facilities as required for Party B’s lawful operation and production. |
3. | In the event that the Premises are subject to any legal measures by any legal or government agencies, resulting in the curtailment of integrity of the rights to the Premises or Party A is merged or re-organized or in the event that Party A transfers, mortgages or sells the Premises to a third party within the Term or if a third party exercises its rights under a lien or other encumbrance so as to acquire the Premises, then Party A shall, on its own initiative and at its own cost, actively take all measures to maintain the integrity of the rights to the Premises, and to ensure that Party B’s legal right to use the Premises is not restricted and that this Contract remains fully enforceable and legally binding. |
4. | Party A is responsible for timely repair if quality problems of the Premises result in damage to or potential damage to the Premises. If Party B discovers such damage or potential damage, Party A shall arrange for repairs within twentyfour (24) hours after receiving written notice from Party B, and Party A shall bear the cost of such repairs. In the event that Party A fails to replace or repair the Premises as required, Party B may make any such replacements and repairs and deduct such costs from the rental due. If the damage or the repairs result in Party B’s suspension or partial suspension of business operation, Party A shall compensate Party B for economic losses. |
5. | Party A shall be responsible, at its own cost, for purchasing all necessary insurance policies for the Premises and shall provide the true copies of the insurance certificates to Party B. |
1. | In the event that the Premises are damaged due to the fault of Party A or any third party, to such an extent as to render them untenantable in whole or in substantial part, or the Premises are destroyed, Party A shall carry out the work of repairing or rebuilding the Premises without unnecessary delay upon its receipt of notice from Party B of such damage or destruction. In the event that Party A does not carry out the work of repairing or rebuilding within [thirty (30)] calendar days after its receipt of notice from Party B, Party B may terminate this Contract at its discretion and Party A shall compensate Party B for all its economic losses in connection with such termination of this Contract, including but not limited to relocation costs. |
2. | In the event that the Premises are damaged due to Party A’s fault to such extent that Party B is unable to use the Premises, Party A shall be liable for all economic losses suffered by Party B arising from such untenantability. Under such circumstances, Party A must promptly repair or rebuild the Premises, all payments of rent due with respect to the Premises shall be abated (to the extent of such untenantability or unusability) for the period from the date of such damage to the date on which the repaired Premises are delivered to Party B in a condition that is at least equivalent to the condition that existed prior to the occurrence of the damage. Furthermore, Party A shall compensate Party B for any economic losses incurred by Party B during such repair or reconstruction period. |
3. | In the event that the Premises are rendered untenantable or unusable (in whole or in part) due to Party B’s fault, Party B shall promptly repair or rebuild the damaged Premises or the part of the Premises so damaged. Party B shall continue to carry out its obligations under this Contract during such repair or reconstruction period. |
4. | Under the circumstances set forth in (2) and (3) above, Party A and Party B shall make a prompt claim for their insurance compensation to their respective insurance companies. During the period of claim and prior to obtaining their insurance compensation, the Party responsible for such repair or reconstruction shall not delay the repair or reconstruction work of the damaged or destructed Premises. |
5. | In the event that the Premises are rendered untenantable or unusable (in whole or in part) not due to the fault of either party, and Party A decides to repair or rebuild the damaged Premises, all payments of rent due with respect to the Premises shall be abated (to the extent of such untenantability or unusability) for the period from the date of such damage to the date on which the repaired Premises are delivered to Party B in a condition that is at least equivalent to the condition that existed prior to the occurrence of the damage. |
1. | The rent for the indoor space on the Premises shall be based on a price of RMB [19.82]/sq.m/month, and the rent for the Open Space shall be based on a price of RMB [4.66]/sq.m/month (“Base Prices”) for the three years of the Term. |
2. | Rent Payment Method |
2. | Payment of Utilities Fees |
(a) | Party B shall be responsible for the payment of all charges for the Utilities it uses. The consumption of water, electricity and gas shall be charged based on the readings of separate meters and according to the relevant standard rates provided by the relevant government authorities. |
(b) | Where possible, Party B shall be entitled to directly pay any charges or fees in relation to the consumption of the Utilities to the relevant Utilities suppliers. |
(c) | Party A shall not charge Party B for any expenses or fees other than based on the relevant standard rates for Utilities. |
(d) | Party B shall pay the charges for Utilities in accordance with the time schedule stipulated by the relevant offices in charge of collecting the Utilities fees. |
1. | No Management Fee, other than the rent, shall be charged and Party A shall not collect any other similar fees from Party B other than those required from property lessees by PRC laws and regulations. |
2. | Party B shall reimburse Party A for the business tax, urban planning and education surcharge, property tax and mound maintenance fee, subject to the applicable tax rates under effective Chinese law, incurred by Party A due to the rent income with respect to the lease of the Premises to Party B. |
1. | In addition to the other representations and warranties hereunder, Party A warrants as of the Signature Date and shall continuously warrant for the entire Term as follows: |
(a) | It is the owner of the Premises and the holder of the Building Ownership Certificate for the Premises as attached hereto as Annex III. Such Building Ownership Certificate has been duly issued and will continue to be in full force and effect during the entire Term. |
(b) | It is duly authorized and shall continuously be authorized during the Term to lease the Premises to Party B. It is and shall continue to be the holder of the Property Leasing Permit attached hereto as Annex V, and such Property Leasing Permit has been duly issued and will continue to be in full force and effect during the entire Term. |
(c) | Its ownership, construction and operation of the Premises are in compliance with applicable laws and regulations. Party A shall be responsible for any modifications to the Premises necessary to comply with any changes to applicable laws and regulations. |
(d) | It is and shall continue to be the holder of the Land Use Rights Certificate pertaining to such land as including the Premises and attached hereto as Annex IV. The Premises and such land use rights, prior to the registration of this Contract as a lease contract with the relevant governmental authorities, have not been leased to other person(s) and are free and clear from any mortgages or any other rights of any third party, and there are no claims pending or threatened which would result in the creation of any encumbrances or liens on the Premises or such land use rights. |
(e) | Party B shall not be requested to make any additional payment related to the Premises or for the use of the Premises except for the payments set forth herein. |
(f) | The Premises comply with all applicable laws and regulations. |
(g) | The Premises are in compliance with all material obligations set forth in the applicable environmental laws and regulations relating to pollution control and the protection of the environment, including with respect to emission, discharges, releases or threatened releases of pollutants, contaminants, chemicals or toxins, industrial or hazardous substances or wastes into the environment and Party A is not aware of any events or conditions which may interfere with or prevent such compliance of the Premises with the relevant applicable environmental laws and regulations. |
(h) | The Premises do not contain and have not contained any Hazardous Material, landfills or dumps that are not in compliance with applicable PRC laws and regulations. The Premises have not been affected by any pollution whatsoever and do not contain and have not contained any underground storage tanks that are not in compliance with applicable environmental laws and regulations. |
(i) | Party A has not used any Hazardous Material on the Premises in material violation of any applicable environmental laws and regulations. There are no events, practices or actions (including the generation, use, treatment, storage, transport, deposit, disposal, discharge or management of Hazardous Material) that have occurred or are occurring of have been or are in existence at the Premises that are in violation of any applicable environmental laws and regulations. |
(j) | There is no other applicable laws or regulations currently existing which would prevent or limit the usage of the Premises as contemplated by this Contract. |
2. | Party A hereby covenants to Party B that Party A shall indemnify, reimburse, defend and hold harmless Party B for all losses, damages and claims, including but not limited to, attorneys' fees, interest and penalties, incurred by Party B in connection with Party A's breach of its representations and warranties contained in this Contract, or the untruthfulness thereof, including but not limited to any claim based on pollution or threat to the environment related to the Premises. |
1. | Breach |
(a) | In the event of breach by any Party of any provision of this Contract, the other Party shall have the right to cancel and terminate this Contract immediately: (a) if the breach is not rectified within [ninety days] after the notice thereof, or (b) if the breach is not rectifiable. Whether or not this Contract is terminated, the Party in breach of this Contract shall be liable to pay all such costs, losses, damages, and expenses, as may be incurred by the non-breaching Party as a result of such breach. |
(b) | Notwithstanding the provisions of Article 16.1.a, Party B shall be entitled to terminate this Contract, if due to Party A's fault or omission, this Contract is unable to be filed for recordation and registration with the governmental department in charge of real estate administration as per the relevant stipulations, or this Contract is cancelled. In such case Party A shall indemnify Party B for all the expenses and losses it has incurred for the installation of the facilities and equipment within the Premises. |
2. | Right to Terminate |
a. | Either Party may terminate this Contract immediately upon the occurrence of any of the following events: |
(i) | either Party in writing to terminate this Contract with three month notice, then with no compensation incurred; |
(ii) | the other Party is prevented from performing its obligations by reason of an Event of Force Majeure for a period of six (6) months or more; |
(iii) | the other Party is involved in cancellation or revocation of its business license, bankruptcy, receivership, liquidation, a composition with its creditors, dissolution, or any similar proceeding; |
(iv) | the relevant government department requires to cease construction of/remove the Premises or imposes restrictions on the rights and interests attached to the Premises; or |
(v) | the performance of this Contract has become in any material respect commercially impracticable by virtue of any law, order, interference or intervention of any government agency. |
b. | Upon the expiration of the Term or the early termination of the Contract, Party B shall retain ownership of all equipment installed by itself, and may remove all equipment (including all signage, installations and movable partitions set up by Party B in the Premises) provided that any damage caused during such removal shall be repaired by Party B at its own cost. If Party A's property is damaged due to such equipment removal and is not restorable, Party B shall indemnify Party A for all such losses. Party A agrees not to charge the rent or any other fees from Party B during the period of removal/restoration, provided that the period of removal/restoration shall not exceed three months. |
Article 18: | Assignment |
1. | During the Term, Party A shall have the right to assign its rights and obligations under this Contract to its Affiliates, provided that Party A guarantees the rights and interests of Party B under this Contract shall remain intact. Party B hereby gives its consent to the assignment and undertakes to assist Party A to execute relevant assignment contracts with the assignee. |
2. | During the Term, Party B shall have the right to assign its rights and obligations under this Contract to its Affiliates, provided that Party B guarantees that the rights and interests of Party A under this Contract shall remain intact. Party A hereby gives its consent to the assignment and undertakes to assist Party B to execute relevant assignment contracts with the assignee. |
Party A: | |
By: /s/ Li Zhaozhu Name: Li Zhaozhu Title: | (chop) |
Party B: | |
By: /s/ Fok Kam Tong Name: Fok Kam Tong Title: General Manager | (chop) |
Name | Number of Shares Purchased at First Closing | Number of Shares Purchased at Second Closing | Number of Warrant Shares Issuable Upon Exercise of One Year Warrants | Number of Warrant Shares Issuable Upon Exercise of Five Year Warrants | Aggregate Purchase Price |
US$ |
• | Voting Agreements each dated July 15, 2013 between Eric L. Kelly and various shareholders of the Company. |
• | Board Nomination Right Agreement dated July 15, 2013 between Eric L. Kelly and the Company. |
• | Special Warrant Indenture dated June 5, 2014 between the Company and Equity Financial Trust Company. |
• | 8% Senior Secured Convertible Debenture dated December 1, 2014 between the Company and FBC Holdings S.A.R.L. for $19.5 million. |
• | Escrow Agreement dated December 1, 2014 between the Company and Continental Stock Transfer and Trust Company. |
• | Asset Purchase Agreement dated August 10, 2015 between Imation Corp., Overland Storage, Inc. and Sphere 3D Corp. |
• | Lock-Up Agreement dated August 10, 2015 between Imation Corp. and Sphere 3D Corp. |
• | First Amendment to 8% Senior Secured Convertible Debenture dated November 30, 2015 between the Company and FBC Holdings S.A.R.L. |
• | Credit Agreement, dated April 6, 2014, by and among Overland Storage, Inc., Tandberg Data GmbH, and Opus Bank. |
• | Term Loan Agreement dated as of September 16, 2016 by and between Sphere 3D Corp. and FBC Holdings S.à r.l. |
1. | Acknowledgments of the Investor |
2. | Representations and Warranties of the Investor |
I. | REPRESENTATIONS AND WARRANTIES |
(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): |
o Alberta | o Northwest Territories | o Prince Edward Island |
o British Columbia | o Nova Scotia | o Quebec |
o Manitoba | o Nunavut | o Saskatchewan |
o Newfoundland and Labrador | o Ontario | o Yukon |
o New Brunswick |
(iii) | has not been provided with any offering memorandum in connection with the purchase of the Securities; and |
(iv) | is an “accredited investor” (as defined in NI 45-106), and falls within the category(ies) of accredited investor (check all applicable exemptions): |
o | 1. | a financial institution, |
o | 2. | the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada), |
o | 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, |
o | 4. | a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, |
o | 5. | an individual registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d), |
o | 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), |
o | 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, |
o | 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, |
o | 9. | any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government, |
o | 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, |
o | 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, |
o - Please mark to indicate that you have returned an executed copy of Form 45-106F9 (attached to this Certificate) | ||
o | 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, |
o | 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, |
o - Please mark to indicate that you have returned an executed copy of the Risk Acknowledgement Form 45-106F9 (attached to this Certificate) | ||
o | 14. | an individual who, either alone or with a spouse, has net assets of at least $5,000,000, |
o - Please mark to indicate that you have returned an executed copy of the Risk Acknowledgement Form 45-106F9 (attached to this Certificate) | ||
o | 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), |
o | 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, |
o | 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, |
o | 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, |
o | 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, |
o | 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, |
o | 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, |
o | 22. | |
o | 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, |
o | 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, |
o | 25. | a trust established by an accredited investor for the benefit of the accredited investor’s family members of which a majority of the trustees are accredited investors and all of the beneficiaries are the accredited investor’s spouse, a former spouse of the accredited investor or a parent, grandparent, brother, sister, child or grandchild of that accredited investor, of that accredited investor’s spouse or of that accredited investor’s former spouse. |
(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 |
(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; |
(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 |
(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, |
(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 |
(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 |
(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 |
(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 |
(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; |
(a) | a member of the board of directors of a company or an individual who performs similar functions for a company, and |
(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; |
(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 |
(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 |
(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; |
(a) | a chair, vice-chair or president, |
(b) | a vice-president in charge of a principal business unit, division or function including sales, finance or production, or |
(c) | performing a policy-making function in respect of the issuer; |
(a) | cash, |
(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; |
(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, |
(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 |
(iii) | a Schedule III bank, |
(b) | and in Ontario, |
(i) | a bank listed in Schedule I, II or III to the Bank Act (Canada); |
(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 |
(iii) | a loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative or credit union |
(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 |
(b) | at the time of the distribution or trade is actively involved in the business of the issuer; |
(a) | an individual, |
(b) | a corporation, |
(c) | a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not, and |
(d) | an individual or other person in that person's capacity as a trustee, executor, administrator or personal or other legal representative; |
(a) | liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or |
(b) | liabilities that are secured by financial assets; |
(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, |
(b) | is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender, or |
(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); |
(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, |
(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 |
(c) | the second person is a limited partnership and the general partner of the limited partnership is the first person. |
By: | |||
Witness | Name: | ||
Title: |
WARNING! This investment is risky. Don’t 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. | ||
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 initials | ||
• Your net income before taxes combined with your spouse’s 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. |
• 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): | ||
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. |
Number of Warrants: [•] | Warrant Certificate No. [•] |
(a) | duly completing and executing a subscription substantially in the form attached as Schedule "A" (the "Subscription Form"), in the manner therein indicated; and |
(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”). |
8. | (a) As used in this Warrant, 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: |
(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 |
(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. |
(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. |
(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 |
(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; |
(b) | no adjustment in the Exercise Price 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; |
(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; |
(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; |
(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; |
(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; |
(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; |
(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 |
(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. |
16. | The Holder may transfer the Warrants represented hereby by: |
(a) | duly completing and executing the transfer form attached as Schedule "B" ("Transfer Form"); and |
(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, |
SPHERE 3D CORP. | |
Per: | |
Kurt Kalbfleisch, Chief Financial Officer |
TO: | SPHERE 3D CORPORATION 9112 Spectrum Center Boulevard, San Diego, California, 92123 |
) ) ) ) ) ) ) ) ) | ||
WITNESS: | Holder's Name | |
Authorized Signature | ||
Title (if applicable) |
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". |
Number of Warrants: [•] | Warrant Certificate No. [•] |
(a) | duly completing and executing a subscription substantially in the form attached as Schedule "A" (the "Subscription Form"), in the manner therein indicated; and |
(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”). |
8. | (a) As used in this Warrant, 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: |
(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 |
(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. |
(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. |
(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 |
(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; |
(b) | no adjustment in the Exercise Price 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; |
(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; |
(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; |
(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; |
(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; |
(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; |
(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 |
(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. |
16. | The Holder may transfer the Warrants represented hereby by: |
(a) | duly completing and executing the transfer form attached as Schedule "B" ("Transfer Form"); and |
(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, |
SPHERE 3D CORP. | |
Per: | |
Kurt Kalbfleisch, Chief Financial Officer |
TO: | SPHERE 3D CORPORATION 9112 Spectrum Center Boulevard, San Diego, California, 92123 |
) ) ) ) ) ) ) ) ) | ||
WITNESS: | Holder's Name | |
Authorized Signature | ||
Title (if applicable) |
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". |
Name of subsidiary | Jurisdiction of Incorporation or Organization | |
Sphere 3D Inc. | Ontario, Canada | |
V3 Systems Holdings, Inc. | Delaware, United States | |
Overland Storage, Inc. | California, United States | |
Overland Storage (Europe), Ltd. | United Kingdom | |
Overland Storage S.a.r.L. | France | |
Overland Storage GmbH | Germany | |
Overland Technologies Luxembourg S.a.r.L. | Luxembourg | |
Tandberg Data Holdings S.a.r.L. | Luxembourg | |
Tandberg Data SAS | France | |
Tandberg Data (Asia) Pte., Ltd. | Singapore | |
Tandberg Data (Japan), Inc. | Japan | |
Tandberg Data (Hong Kong), Ltd. | Hong Kong | |
Tandberg Data GmbH | Germany | |
Tandberg Data Norge AS | Norway | |
Guangzhou Tandberg Electronic Components Co. Ltd. | China |
1. | I have reviewed this annual report on Form 20-F of Sphere 3D Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; |
4. | The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and |
5. | The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting. |
/s/ Eric L. Kelly |
Eric L. Kelly |
Chief Executive Officer |
1. | I have reviewed this annual report on Form 20-F of Sphere 3D Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; |
4. | The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and |
5. | The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting. |
/s/ Kurt L. Kalbfleisch |
Kurt L. Kalbfleisch |
Senior Vice-President and |
Chief Financial Officer |
• | the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Eric L. Kelly |
Eric L. Kelly |
Chief Executive Officer |
• | the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Kurt L. Kalbfleisch |
Kurt L. Kalbfleisch |
Senior Vice-President and |
Chief Financial Officer |
/s/ Moss Adams LLP |
Moss Adams LLP |
San Diego, California, U.S.A |
March 30, 2017 |
4?,P 7.T
M8KZ[^%7PKUO4_% ^)GQ,$,_CB:)HM,TB%_-M/#5J_6" ]'G88\V?&6(VKA
M?9J /AG_ (2S]LG_ * <7_@+8_\ QRN-U+XT?M?:MXHOO!F@6%O-XCM8$FU"
M2.RLG33(I,[&D;?M\U@"5C)R1\Q&WK]<_$SXF:UK7B=_AO\ #AXG\7M&LFJZ
MU+'YMKX:KJTNHP2W^J71FCWRO@D@;'M/PUYJMT1D11 ] !\SR'
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MPQ?_ +7&I6_B3Q?87&F_"&V<3:#X5O$,
3B,J2RJ"=O/?'^?7MGFO'OC!\7]1L]
M>M_ 'P_@@UGXC:E$+@><"UKHEJ3M-_=X_A!_UO6
M_P /_A]%!K'Q%U*'S_WP+6NAVA.TW]WCL#_JX_O2L,*,!C73?"+X/Z;\)M#N
MX+:ZN=6UK4Y_MNM:]?$&[U.[(PTLA'08 54'RHJ@*.Y/A#\']-^$VAW=O:W=
MSJVLZG/]MUG7;[!NM3NR,-+(W88PJH/E1555 QD]RUPEI"3-(D2QIO=V.U5
MZG)Z ?I0 -<)9P$S2)$L:;W=CM10.IR>@'Z5\Z7TU[^UUJ$ME9SW&G_!*UF9
M+R\@9HY?%DBML:")ARMB!W!S-@JH\L[G=-<7?[6^J2VEI+/8_!.SF:.\NH
MB8Y/%LBG8T$;=5L0RLKL#F?&T 1_-)]"6-G;Z780V5I MK:VL:PP0PQ@+%&H
MPJJHZ 8 Z"@!NFVMMH^G6]A9V\=K:6<2P06]O&%CCC4;55$'0 # Z 5R'
MQ5^*VD?"GP[)J>H">ZNKB5+33=+L5#76IW39V6\"=6=L')'"JK-QM;#OBM\5
MM'^%7AMM1U,7%S=3S+::=I=B-]WJ5TV=EO @Y:0X.<<*H8YPK$236G0!
M\F?\%+/^2%:%_P!C)!_Z2W5=W^PS_P FL^"?^W[_ -+KBN$_X*6?\D*T+_L9
M(/\ TENJ[O\ 89_Y-9\$_P#;]_Z77%?-T_\ D
M6>1CNDFE<_-)([$LSL22236OX@\0:9X3T.^UG6;^WTS2K&%KBZO+J0)%#&HR
MS,QZ "CQ!X@TSPGH=]K.LWUOIFE6,+7%U>74@2*&-1EF9CT %>$>'_#^I_M1
M:Y8^+?%MA<:9\+K&9;KP[X5O8RDNL2*
@ Y9B2 % ))( !)H\;>-M#^'/A74O$GB34H=)T73XC-
M<74YPJCH !U9B2 %&2Q( !) KQOP3X)USX\>*M-^(WQ%TV;2= TZ477A+P1>
M##6S?P:A?KT:Z(.4B.1 #WD)*@!X(\$Z[\=O%>F_$;XBZ;-I&@:=*+GPEX(N
MQ\ULW.W4+Y>C71!RD1R( >\A)7%_8');X<>,R>3_ ,)=J'\HZ^FJ^'/V8/BO
M/X/\ ^(O"_ABPC\0_$+6O%>HMIVDLY6*WB'E![R[8