UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16
OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of December, 2014
Commission File Number: 000-55232
Sphere 3D Corp.
(Translation of registrant's name into English)
240 Matheson Blvd. East
Mississauga, Ontario L4Z 1X1
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
[ ] Form 20-F [ x ] Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
SUBMITTED HEREWITH
Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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SPHERE 3D CORP. |
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(Registrant) |
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Date: December 15, 2014 |
By: |
/s/ Scott Worthington |
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Scott Worthington |
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Title: |
Authorized Signatory |
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE APRIL 2, 2015.
WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND
COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES
REPRESENTED BY THIS CERTIFICATE INCLUDING THE SECURITIES ISSUABLE ON CONVERSION
OF THIS DEBENTURE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED
ON OR THROUGH THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA
OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL APRIL 2, 2015.
THE SECURITIES REPRESENTED HEREBY, AND THE SECURITIES ISSUABLE
UPON CONVERSION HEREOF, HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR STATE SECURITIES
LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT
OF SPHERE 3D CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (A) TO SPHERE 3D CORPORATION, (B) OUTSIDE THE UNITED STATES IN
ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) PURSUANT
TO THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER, OR (D) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION AFTER
PROVIDING A LEGAL OPINION OR OTHER EVIDENCE SATISFACTORY TO SPHERE 3D
CORPORATION.
SPHERE 3D CORPORATION
8% SENIOR SECURED
CONVERTIBLE DEBENTURE
DUE: MARCH 31, 2018
USD$19,500,000
SPHERE
3D CORPORATION (the Corporation) for value received, hereby
acknowledges itself indebted and, subject to the provisions hereinafter
mentioned, promises to pay to or to the order of FBC HOLDINGS S.A.R.L.
(the Holder) on March 31, 2018 or on such earlier date as the
principal amount hereof may become due in accordance with the provisions
hereunder (the Maturity Date) the principal sum of $19,500,000 in
lawful money of the United States on presentation and surrender of this
Debenture at the principal office of the Corporation in Mississauga, Ontario and
to pay interest on the principal amount hereof from and including the date
hereof, at the rate of 8% per annum calculated and payable in the manner
described herein (less any tax required by law to be deducted), and should the
Corporation at any time fail to make payment of any principal or interest, to
pay interest on the amount of interest unpaid at the same rate, in like money.
The principal hereof may become or be declared due and payable before the stated
maturity in the events, in the manner, with the effect, at the times, but
subject to the limitations provided hereunder.
The indebtedness evidenced by this Debenture is a direct secured
obligation of the Corporation, which is secured by a first ranking Lien (as
defined below) over the Collateral (as defined below), subject to Permitted
Liens (as defined below) and except as may otherwise be provided for pursuant to
the terms of the Debenture.
This
Debenture may only be transferred with the prior written consent of the
Corporation, upon compliance with the conditions prescribed herein, in the
register to be kept at the principal office of the Corporation or in such other
place or places as the Corporation may designate, by the registered holder hereof or his executors or administrators
or other legal representatives, or his or their attorney duly appointed by an
instrument in form and substance satisfactory to the Corporation, and upon
compliance with such reasonable requirements as the Corporation may prescribe.
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ARTICLE 1
GENERAL MATTERS
1.1 Definitions
In this Debenture, unless there is something in the subject
matter or context inconsistent therewith:
Board of Directors means the
board of directors of the Corporation;
Business Day means any day
which is not a Saturday or Sunday or bank holiday in the City of Toronto,
Ontario and the City of New York, New York;
Capital Lease means a capital
lease or a lease which should be treated as a capital lease under GAAP (or prior
to December 1, 2014 IFRS);
Capital Lease Lessor means any
lessor under a Capital Lease entered into by the Corporation in the ordinary
course of business.
Collateral means the
Corporations Property subject to the Liens created hereunder and under the
Collateral Documents;
Collateral Documents means any
agreements, instruments and documents delivered from time to time to the Holder
by the Corporation for the purpose of establishing, perfecting, preserving or
protecting any Liens granted to the Holder over the Property of the Corporation
as security for the obligations of the Corporation with respect to the
Debenture;
Commercial Lender has the
meaning ascribed thereto in Section 2.4;
Common Share Interest Repayment
Right has the meaning given to it in Section 2.3(d);
Common Shares means common
shares in the capital of the Corporation as such shares are constituted on the
date hereof, as the same may be reorganized, reclassified or otherwise changed
pursuant to any of the events set out in Section 3.5;
Conversion Date means the date
on which the Debenture so surrendered for conversion is received by the
Corporation with a duly executed Conversion Form, and in the event the register
for the Debenture is closed shall be the next date on which such registers are
open;
Conversion Form means the form
of conversion attached to the back of this Debenture Certificate as Appendix 2;
Conversion Price means as to
$10,000,000 of principal of the Debenture, $7.50 per Common Shares, and as to
$9,500,000 of principal amount of the Debenture, and $8.50 per Common Share, subject to adjustment
in certain circumstances as provided for in Section 3.5.
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Convertible Securities means
any evidences of indebtedness, shares or other securities directly or indirectly
convertible into or exercisable or exchangeable for Common Shares.
Corporation means Sphere 3D
Corporation, and includes any successor thereto which shall have complied with
the provisions of Article 10;
Counsel means a
barrister or solicitor or firm of barristers and solicitors retained by the
Corporation;
Current Market Price per
Common Share at any date shall be the weighted average price per Common Share
for the last 10 days on which the Common Shares traded, ending on the day before
such date, on the Exchange, or, if the Common Shares are not listed on any stock
exchange, then on the over-the-counter market. The weighted average price per
Common Share shall be determined by dividing the aggregate sale price of all
Common Shares sold on such exchange or market, as the case may be, during the
said 10 trading days by the total number of Common Shares so sold on the
Exchange or market;
Debenture means the 8% Senior
Secured convertible redeemable debenture issued by the Corporation on the date
hereof and due on the Maturity Date;
Debenture Certificate means
this Debenture Certificate;
Director means a director of
the Corporation for the time being and Directors means the board of directors
of the Corporation or, whenever duly empowered, the executive committee (if any)
of the board of directors of the Corporation for the time being, and reference
to action by the Directors means action by the directors as a board or action by
the executive committee of the board as a committee;
Disputed Intellectual Property
means intellectual property of Overland that is subject to any pending
litigation specifically relating to such intellectual property as of the date
hereof.
Event of Default has the
meaning attributed to such term in Section 8.1;
Exchange means the TSX Venture
Exchange or, if not listed on the TSX Venture Exchange, NASDAQ or, if not listed
on either such exchange then such other recognized stock exchange upon which the
Common Shares are listed from time to time provided that only the following
stock exchanges shall be a recognized stock exchange for purposes hereof: New
York Stock Exchange, NASDAQ, Toronto Stock Exchange and TSX Venture Exchange;
Forced Conversion Date means
the date that the Forced Conversion Event occurs;
Forced Conversion Event has
the meaning attributed to such term in Section 3.3(a);
GAAP: United States generally
accepted accounting principles applied on a consistent basis.
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Guarantors has the meaning
given to it in Section 11.1;
Holder with respect to a
Debenture means FBC HOLDINGS S.A.R.L., its designees or assigns, being the
Person in whose name such Debenture is registered by the Corporation;
IFRS means the international
financial reporting standards adopted by the International Accounting Standards
Board, as amended from time to time;
Immaterial Subsidiary means a
Subsidiary that owns assets (other than intercompany claims and intercompany
receivables and, solely with respect to Tandberg Data Corporation, a lease
deposit in an amount not to exceed $119,000) having a fair market value not in
excess of $100,000.
Interest Rate has the meaning
given to it in Section 2.3(b);
Interest Termination Date
means the earliest to occur of the Forced Conversion Date, the Conversion Date
and the Maturity Date;
Lien means, in respect of any
Person, any mortgage, debenture, pledge, hypothec, lien, charge, assignment by
way of security, hypothecation or security interest granted or permitted by such
Person or arising by operation of law, in respect of any of such Persons
Property, or any consignment or Capital Lease of Property by such Person as
consignee or lessee or any other security agreement, trust or arrangement having
the effect of security for the payment of any debt, liability or obligation, and
Liens shall have corresponding meanings;
Material Adverse Effect shall
mean (a) a material adverse effect on the business, operations, performance,
properties, assets, or condition (financial or otherwise) of the Corporation and
its Subsidiaries taken as a whole, (b)(i) an adverse effect on the legality,
validity or enforceability of the Debenture, or (ii) an adverse effect on the
validity, enforceability, perfection or priority of any Lien created under any
of the Collateral Documents which could reasonably be considered material having
regard to the Collateral Documents taken as a whole, or (c) an adverse effect on
the right, entitlement or ability of the Corporation or its Subsidiaries to pay
or perform any of their debts, liabilities or obligations under any the
Debenture or the Collateral Documents, as applicable, which could reasonably be
considered material having regard to the Corporation and its Subsidiaries taken
as a whole;
Material Contracts means,
collectively, each written agreement, arrangement or understanding entered into
by the Corporation or any of its Subsidiaries which, if terminated or expired
could reasonably be expected to have a Material Adverse Effect;
Material Licenses means,
collectively, each license, permit or approval issued by any governmental
authority, or any applicable stock exchange or securities commission, to the
Corporation or any of its Subsidiaries, the breach or loss of which could
reasonably be expected to result in a Material Adverse Effect;
Maturity Date means March 31,
2018, or such earlier date on which the entire principal owing pursuant to this
Debenture is due and payable by the Corporation;
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New Control Person Approval
means that the Holder has received shareholder approval in accordance with
section 1.10 of Policy 4.1 of the TSX Venture Exchanges Corporate Finance
Manual with respect to (i) this Debenture and (ii) the Holder as a Control
Person (as that term is defined in Policy 1.1 of the TSX Venture Exchanges
Corporate Finance Manual) upon exercise of the conversion rights under Article
3.
Overland means Overland
Storage, Inc., a California company, which merged with S3D Acquisition Company,
a California corporation and wholly-owned subsidiary of the Corporation, on
December 1, 2014 and pursuant to which Overland became a wholly-owned subsidiary
of the Corporation.
Permitted Liens means, with
respect to any Person, the following:
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Liens relating to this Debenture; |
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(b) |
Liens relating to a revolving credit facility issued by
the Holder or related party to the Corporation in the amount of up to
$5,000,000, which security shall rank pari passu with this
Debenture; |
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(c) |
Liens for Taxes not yet due or for which installments
have been paid based on reasonable estimates pending final assessments, or
if due, the validity of which is being contested diligently and in good
faith by appropriate proceedings by that Person for which reasonable
reserves under GAAP (or prior to December 1, 2014 IFRS) are
maintained; |
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(d) |
undetermined or inchoate Liens, rights of distress and
charges incidental to current operations which have not at such time been
filed or exercised and of which the Holder has not been given notice, or
which relate to obligations not due or payable, or if due, the validity of
which is being contested diligently and in good faith by appropriate
proceedings by that Person; |
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(e) |
the right reserved to or vested in any municipality or
governmental or other public authority by the terms of any lease, licence,
franchise, grant or permit acquired by that Person or by any statutory
provision to terminate any such lease, licence, franchise, grant or
permit, or to require annual or other payments as a condition to the
continuance thereof; |
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(f) |
the Lien resulting from the deposit of cash or securities
in connection with contracts, tenders or expropriation proceedings, or to
secure workmens compensation, employment insurance, surety or appeal
bonds, costs of litigation when required by law; |
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(g) |
Liens and claims incidental to current construction,
mechanics, warehousemens, carriers and other similar Liens, and public,
statutory and other like obligations incurred in the ordinary course of
business; |
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security given to a public utility or any municipality or
governmental authority when required by such utility or authority in
connection with the operations of that Person in the ordinary course of
its business; |
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(i) |
the Lien created by a judgment of a court of competent
jurisdiction, as long as the judgment is being contested diligently and in
good faith by appropriate proceedings by that Person and does not result
in an Event of Default; |
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(j) |
the Collateral Documents and any Liens arising
thereunder; |
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(k) |
Liens relating to Specified Priority
Encumbrances; |
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(l) |
Liens or any rights of distress that are either (i)
requirements of applicable law, or (ii) reserved in or exercisable under
any lease or sublease to which it is a lessee which secure the payment of
rent or compliance with the terms of such lease or sublease, provided that
such Liens do not extend to assets other than those at the relevant leased
location; |
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(m) |
encumbrances in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of real property
which do not materially detract from the value of such property or impair
the use thereof in the business of such Person; |
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(n) |
Liens securing the interest of any Capital Lease Lessor
on such Persons Property or a secured partys purchase money security
interest over certain property as a result of such secured party financing
all or part of such property; provided, that, (i) the indebtedness secured
thereby is otherwise permitted by this Debenture and (ii) such Liens are
limited to the property acquired and do not secure indebtedness other than
the related Capital Lease obligations or the purchase price of such
property; |
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leases or subleases of real property granted in the
ordinary course of business, and leases, subleases, non-exclusive licenses
or sublicenses of personal property (other than intellectual property)
granted in the ordinary course of business; |
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(p) |
(i) non-exclusive licenses of intellectual property
granted to third parties in the ordinary course of business, and (ii)
exclusive licenses of intellectual property in exchange for fair value as
reasonably determined by the Corporations or Overland's Board of
Directors; |
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(q) |
Liens in favor of other financial institutions arising in
connection with deposit and/or securities accounts held at such
institutions; |
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any interest or title of a lessor under any operating
lease entered into in the ordinary course of its business and covering
only the assets so leased; |
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deposits made in the ordinary course of business to
secure liability for premiums to insurance carriers; |
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(t) |
Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of custom duties in connection with
the importation of goods; |
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(u) |
Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into in
the ordinary course of business; |
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Liens on assets of foreign Subsidiaries securing
indebtedness not otherwise prohibited hereunder; |
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the filing of UCC financing statements solely as a
precautionary measure in connection with operating leases or consignment
of goods; and |
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(x) |
Liens not otherwise permitted the foregoing (a) through
(w) so long as neither (i) the aggregate outstanding principal amount of
the obligations secured thereby nor (ii) the aggregate fair market value
(determined as of the date such Lien is incurred) of the assets subject
thereto exceeds Two Hundred Thousand Dollars ($200,000) at any one
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Person shall be interpreted
broadly and shall include any individual, partnership, limited partnership,
joint venture, syndicate, sole proprietorship, company or partnership with or
without share capital, unincorporated association, trust, trustee, executor,
administrator or other legal personal representative, government or governmental
authority or entity, however designated or constituted;
Property means, with respect
to any Person, all or any portion of its undertaking, property and assets, both
real and personal, moveable and immovable, tangible and intangible, of every
nature and kind whatsoever, wheresoever situate, both present and future, now
owned or hereinafter acquired, including for greater certainty, any and all
intellectual property rights, any proceeds from the sale or other disposition
thereof and any share in the capital of a corporation or equity interests in any
other Person;
Purchase Money Lender means a
Person extending financing for the acquisition of equipment acquired or held by
the Corporation or any of its Subsidiaries;
Security means the grants,
assignments, transfers, mortgages, charges, pledges and security interests
granted to and in favour of the Holder in this Debenture;
Senior Indebtedness has the
meaning ascribed thereto in Section 2.4;
Shareholders means the
shareholders of the Corporation, from time to time;
Specified Priority
Encumbrance has the meaning ascribed thereto in Section 2.4;
Subsidiary means, in relation
to the Corporation, any entity, including a corporation, trust, partnership or
limited partnership, which is controlled, directly or indirectly, by the
Corporation;
SVB Credit Agreement means
that certain Amended and Restated Loan and Security Agreement dated as of March
19, 2014, among Silicon Valley Bank, a California corporation, Overland and the
Corporation, as amended, restated, modified or supplemented from time to time in
accordance with the terms hereof;
Tax or Taxes means
all taxes, charges, fees, levies, imposts and other assessments, including all
income, sales, use, goods and services, value added, capital, capital gains,
withholding, payroll, employer health, excise, franchise, real property and
personal property taxes, and any other taxes, customs duties, fees, assessments,
royalties, duties, deductions, or similar charges in the nature of a tax,
including Canada Pension Plan and provincial pension plan contributions,
employment insurance payments and workers compensation
premiums, together with any instalments, and any interest, fines and penalties,
imposed by any governmental authority in relation to the foregoing; and
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this Debenture, this
Debenture Certificate, hereto, hereby, hereunder, hereof, herein and
similar expressions refer to this debenture and not to any particular Article,
Section, subsection, paragraph, subdivision or other portion hereof.
1.2 Meaning of
outstanding for Certain Purposes
The Debenture delivered by the Corporation hereunder shall be
deemed to be outstanding until it shall be cancelled or delivered to the
Corporation for cancellation, or a new Debenture shall be issued in substitution
therefor under Section 2.9 or moneys for the payment thereof shall be set aside
under Article 9, provided that:
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where a new Debenture has been issued in substitution for
a Debenture which has been lost, stolen or destroyed, only one such
Debenture shall be counted for the purpose of determining the aggregate
principal amount of the Debentures outstanding; and |
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a Debenture which has been partially purchased shall be
deemed to be outstanding only to the extent of the unpurchased part of the
principal amount thereof. |
1.3 Interpretation
Not Affected By Headings, etc.
The division of this Debenture into Articles, Sections,
subsections and paragraphs, and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Debenture.
1.4 Statute
References
Any reference in this Debenture to a statute shall be deemed to
be a reference to such statute as amended, re-enacted or replaced from time to
time.
1.5 Monetary
References
Any reference in this Debenture to Dollars, dollars or the
sign $ shall be deemed to be a reference to lawful money of the United States.
1.6 Day Not a
Business Day
In the event that any day on or before which any action is
required to be taken hereunder is not a Business Day, then such action shall be
required to be taken on or before the requisite time on the first Business Day
thereafter.
1.7 Invalidity of
Provisions
Each of the provisions contained in this Debenture is distinct
and severable and a declaration of invalidity or unenforceability of any such
provision by a court of competent jurisdiction shall not affect the validity or
enforceability of any other provision hereof or thereof.
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1.8 Governing Law
The Debenture shall be governed by and construed in accordance
with the laws of the Province of Ontario and the federal laws of Canada
applicable therein and shall be treated in all respects as Ontario contracts and
the parties irrevocably attorn to the jurisdiction of the courts of Ontario.
1.9 Expenses
Each party bear its own costs and expenses (including legal
fees and expenses and the fees and expenses of any broker, finder, financial
advisor, investment banker, legal advisor or similar person engaged by such
party) incurred in connection with the making of this Debenture, the performance
of its obligations hereunder and the consummation of the transactions
contemplated hereby.
1.10 Context
Words importing the singular include the plural and vice versa
and words importing the masculine gender include the feminine gender and vice
versa.
ARTICLE 2
THE DEBENTURE
2.1 Terms of the
Debenture
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(a) |
The Debenture shall be designated 8% Senior Secured
Convertible Redeemable Debenture, shall be dated as of the date hereof,
shall mature on the Maturity Date and shall be payable, and earn interest
at the Interest Rate (subject to Section 2.3) from and including the date
hereof, in the manner described hereunder. |
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(b) |
During the term commencing on the date hereof and ending
on the Interest Termination Date, the Debenture shall bear interest at the
Interest Rate, payable after as well as before maturity, default and
judgment and with interest on any amounts in default at the same rate.
Interest shall accrue but not be payable until the Interest Payment
Date. |
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(c) |
The principal of the Debenture and interest thereon due
on the Maturity Date will be made payable in lawful money of the United
States against surrender of the Debenture by the Holder thereof at the
principal office of the Corporation. |
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(d) |
Upon the occurrence of a Forced Conversion Event, the
Corporation may repay all of the principal amounts and interest accrued on
the Debenture at any time prior to the Maturity Date in accordance with
Section 3 hereof. |
2.2 Execution of
Debenture
The Debenture shall be signed (either manually or by facsimile
signature) by any duly authorized officer of the Corporation. A facsimile
signature upon the Debenture shall for all purposes hereof be deemed to be the
signature of the individual whose signature it purports to be and to have been
signed at the time such facsimile signature is reproduced.
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2.3 Concerning
Interest
(a) |
Interest for any period of less than 12 months shall be
computed on the basis of a year of 365 days (366 days if such period falls
within a leap year). |
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(b) |
Prior to the Interest Termination Date, the Debenture
shall bear interest from, and including, the date of issue at the rate
equal to 8.0% percent per annum, payable in arrears in equal semi-annual
payments (the Interest Rate) (with the exception of the first
interest payment and the last interest payment, which will include
interest as set forth below) on June 30th and December
31st in each year (each, an Interest Payment Date),
and the last such payment (representing interest payable from the last
Interest Payment Date) to fall due on the Maturity Date, payable after as
well as before maturity and after as well as before default, with interest
on amounts in default at the same rate. |
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(c) |
Interest on the Debenture shall cease to accrue on the
Interest Termination Date unless, upon due presentation and surrender
thereof for payment or conversion on or after the Interest Termination
Date, such payment is withheld or refused. |
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(d) |
The Corporation may, at its option, subject to applicable
regulatory approval, elect to satisfy its obligation to pay (less any
taxes required to be deducted) interest due in respect of the Debenture on
each Interest Payment Date or the Maturity Date, in whole or in part (the
Common Share Interest Repayment Right) by issuing and delivering
to the Holder on the Interest Payment Date, that number of Common Shares
obtained by dividing the aggregate amount of the interest owing to Holder
by the Current Market Price of the Common Shares on the Interest Payment
Date. No fractional Common Shares shall be delivered upon the exercise of
the Common Share Interest Repayment Right but, in lieu thereof, the
Corporation shall pay to the Holder the cash equivalent thereof determined
on the basis of the Current Market Price of the Common Shares on the
Interest Payment Date (less any tax required to be deducted, if
any). |
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(e) |
Notwithstanding any other provision of this Agreement,
the Holder shall not exercise the Common Share Interest Repayment Right
hereunder if it will result in the Holder either (i) becoming a Control
Person (as that term is defined in Policy 1.1 of the TSX Venture
Exchanges Corporate Finance Manual), unless the New Control Person
Approval has been obtained, or (ii) be in violation of any other
applicable listing requirement of the Exchange or regulatory
requirement. |
2.4 Ranking and
Subordination
The Debenture is a direct secured obligation of the
Corporation, which is secured by a first ranking Lien over the Collateral,
subject to Permitted Liens (which by definition include the Lien created in
favour of the Holder in connection with the issuance of this Debenture).
Notwithstanding, the Holder hereby covenants and agrees that it will at all
times do, execute, acknowledge and deliver a subordination agreement or priority
agreement, in form and substance reasonably requested by the Corporation and
take all other actions reasonably requested by the Corporation, to subordinate
the security interest of the Holder in favour of any bank, financial company, or
commercial lender (each a Commercial Lender), provided that the
Corporations indebtedness and indebtedness owed by its wholly-owned subsidiary,
Overland, owed to such Commercial Lender does not exceed $11,000,000 and
provided that no subordination agreement will be required with respect to
Overlands pledge of the stock of its foreign subsidiaries. The obligations and
indebtedness owing to such Commercial Lenders, to Capital Lease Lessors, to
Purchase Money Lenders, and to any Person holding a Lien that is senior to the
Lien created in favour of the Holder in connection with the issuance of this
Debenture by operation of law are collectively referred to herein as the
Senior Indebtedness and the senior ranking priorities of such
Commercial Lenders, Capital Lease Lessors, Purchase Money Lenders and such other
Persons are collectively referred to as the Specified Priority
Encumbrances.
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2.5 Registration
of the Debenture
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(a) |
The address of the Holder shall be as set forth in
Section 12.2 hereof. The Corporation shall keep, at its principal office,
a central register in which shall be entered the name and latest known
address of the Holder and the other particulars, as prescribed by law, of
the Debenture held by such Holder. |
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(b) |
No transfer of a Debenture shall be effective as against
the Corporation unless first consented to in writing by the Corporation,
made on the appropriate register by the Corporation and upon compliance
with such requirements as the Corporation may prescribe. |
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(c) |
The register referred to in this Section shall at all
times during regular business hours be open for inspection by Holder upon
prior written notice to the Corporation. |
2.6 Ownership of
the Debenture
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(a) |
Payment of or on account of the principal of, and
interest on the Debenture issued in the name of the Holder shall be made
only to or upon the order in writing of the Holder thereof and such
payment shall be a complete discharge to the Corporation for the amounts
so paid. |
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(b) |
The Holder of the Debenture shall be entitled to the
then-owing principal and interest evidenced by such Debenture, free from
all equities or rights of set-off or counterclaim between the Corporation
and the original or any intermediate Holder thereof (except any equities
of which the Corporation is required to take notice by law) and all
Persons may act accordingly and a transferee of a Debenture shall, after
the appropriate form of transfer is lodged with the Corporation and upon
compliance with all other conditions required herein or by law, be
entitled to be entered on the appropriate register as the owner of such
Debenture free from all equities or rights of set-off or counterclaim
between the Corporation and the transferor or any previous Holder thereof,
save in respect of equities of which the Corporation is required to take
notice by statute or by order of a court of competent
jurisdiction. |
2.7 Exchange of
the Debenture
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(a) |
A Debenture of any denomination may be exchanged for a
Debenture of any other authorized denomination or denominations, any such
exchange to be for one or more Debentures of an equivalent aggregate
principal amount. Exchanges of a Debenture may be made at the location of
the register of Holders set forth in Section 2.5(a). Any Debenture
tendered for exchange shall be surrendered to the Corporation and shall be
cancelled. |
- 12 -
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(b) |
Except as otherwise provided herein, upon any exchange of
a Debenture of any denomination for a Debenture of any other authorized
denominations and upon any transfer of a Debenture, the Corporation may
make a sufficient charge to reimburse it for any stamp tax, security
transfer tax or other governmental charge required to be paid, and in
addition a reasonable charge for its services for each Debenture exchanged
or transferred, and payment of such charges shall be made by the party
requesting such exchange or transfer as a condition precedent
thereto. |
2.8 Transfer of
the Debenture
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(a) |
No transfer of a Debenture shall be valid unless made on
the register maintained by the Corporation for the Debenture and in
accordance with applicable laws and upon compliance with the conditions
herein by the registered Holder thereof or such Holders legal
representatives, upon execution by the Holder of the transfer form
attached as Appendix 1 to this Debenture Certificate and upon compliance
with such reasonable requirements as the Corporation may prescribe. Upon
compliance with the foregoing conditions and the surrender by the
transferor of the Debenture Certificate representing the Debenture to be
transferred at the place contemplated herein, the Corporation shall
execute and deliver at the place where the relevant Debenture Certificate
is surrendered or, if so required by the transferee, send by mail (at the
risk of the transferee) to such address as the transferee may specify, a
new Debenture Certificate registered in the name of the transferee
evidencing such transferred Debenture. If less than all the Debentures
evidenced by the Debenture Certificate so surrendered are transferred, the
transferor shall be entitled to receive, in the same manner, a new
Debenture Certificate registered in his name evidencing the Debentures not
so transferred. All Debenture Certificates surrendered for registration of
transfer shall be cancelled. |
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(b) |
Notwithstanding anything contained herein, the
Corporation shall not register any transfer of a Debenture if it has
reasonable grounds to believe that such transfer is otherwise not in
accordance with applicable law. |
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(c) |
The Debenture has not been and will not be registered
under the United States Securities Act of 1933, as amended (the 1933
Act) or the securities laws of any state of the United States and
cannot be offered, sold, pledged or otherwise transferred or assigned in
the United States or to or for the account of a U.S. person unless
registered under the 1933 Act and the securities laws of all applicable
states or unless an exemption from such registration requirements is
available. |
2.9 Replacement of
Debenture
If the Debenture shall become mutilated or be lost, stolen or
destroyed, the Corporation in its discretion, may issue and deliver a new
Debenture upon surrender and cancellation of the mutilated Debenture, or, in the
case of a lost, stolen or destroyed Debenture, in lieu of and in substitution
for the same, and the substituted Debenture shall be of like tenor and maturity
as this Debenture Certificate and the Holders thereof shall be entitled to the
benefits equally with all other Debentures issued. In case of loss, theft or
destruction, the applicant for a new Debenture shall furnish to the Corporation
such evidence of such loss, theft or destruction as shall be satisfactory to the Corporation in its discretion,
acting reasonably, and the applicant shall also furnish an indemnity in an
amount and form satisfactory to the Corporation in its discretion, acting
reasonably. The applicant shall pay all expenses incidental to the issuance of
any such new Debenture.
- 13 -
2.10 Distribution on
Insolvency or Liquidation
In the event of any insolvency or bankruptcy proceedings, or
any receivership, liquidation, reorganization or other similar proceedings
relating to the Corporation, or to its property or assets, or in the event of
any proceedings for dissolution, voluntary liquidation or termination or other
winding-up of the Corporation:
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(a) |
the holders of all Senior Indebtedness, if any, will
first be entitled to receive payment in full of the principal thereof,
premium or penalty (or any other amount payable under such Senior
Indebtedness), if any, and interest due thereon, before the Holder is
entitled to receive any payment or distribution of any kind or character,
whether in cash, property or securities, which may be payable or
deliverable in respect of the Debenture; |
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(b) |
any payment by, or distribution of assets of, the
Corporation of any kind or character, whether in cash, property or
securities (other than securities of the Corporation or any other person
provided for by a plan of reorganization or readjustment), the payment of
which is subordinate at least to the extent provided herein with respect
to the Debenture, to the payment of all Senior Indebtedness, provided that
(i) the Senior Indebtedness is assumed by the new person, if any,
resulting from such reorganization or readjustment and (ii) without
prejudice to the rights of such holders with respect to any such plan
(including without limitation as to whether or not to approve same and on
what conditions to do so), the rights of the holders of Senior
Indebtedness are not altered adversely by such reorganization or
readjustment) to which the Holders would be entitled, except for the
provisions of Sections 2.10 and 2.11 will be paid or delivered by the
person making such payment or distribution, whether a trustee in
bankruptcy, a receiver, a receiver manager, a liquidator or otherwise,
directly to the holders of Senior Indebtedness or their representatives,
ratably according to the aggregate amounts remaining unpaid on account of
the Senior Indebtedness held or represented by each, to the extent
necessary to make payment in full of all Senior Indebtedness remaining
unpaid after giving effect to any concurrent payment or distribution (or
provision therefor) to the holders of such Senior Indebtedness;
and |
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(c) |
subject to Section 2.14, if, notwithstanding the
foregoing, any payment by, or distribution of assets of, the Corporation
of any kind or character, whether in cash, property or securities (other
than securities of the Corporation as reorganized or readjusted or
securities of the Corporation or any other person provided for by a plan
of reorganization or readjustment) the payment of which is subordinate, at
least to the extent provided in Sections 2.10 and 2.11 with respect to the
Debenture, to the payment of all Senior Indebtedness, provided that (i)
the Senior Indebtedness is assumed by the new person, if any, resulting
from such reorganization or readjustment and (ii) without prejudice to the
rights of such holders with respect to any such plan (including without
limitation as to whether or not to approve same and on what conditions to
do so), the rights of the holders of Senior Indebtedness are not altered
adversely by such reorganization or readjustment), is received by the
Holder before all Senior Indebtedness is paid in full, such payment or
distribution will be held in trust for the benefit of, and will be paid over to
the holders of such Senior Indebtedness or their representatives, for
application to the payment of all Senior Indebtedness remaining unpaid until
such Senior Indebtedness has been paid in full, after giving effect to any
concurrent payment or distribution (or provision therefor) to the holders of
such Senior Indebtedness. |
- 14 -
2.11 Subrogation of Debenture
Subject to the payment in full of all Senior Indebtedness, the
Holders shall be subrogated to the rights of the holders of Senior Indebtedness
to receive payments and distributions of assets of the Corporation in respect of
and on account of Senior Indebtedness, to the extent of the application thereto
of moneys or other assets which would have been received by the Holder, but for
the provisions of Sections 2.10 and 2.11 hereof, until the principal of and
interest on, if any, the Senior Indebtedness shall be paid in full. No payment
or distribution of assets of the Corporation to the Holders which would be
payable or distributable to the holders of Senior Indebtedness pursuant to
Sections 2.10 and 2.11 shall, as among the Corporation, its creditors (other
than the holders of Senior Indebtedness) and the Holder, be deemed to be a
payment by the Corporation to or on account of the Holder, it being understood
that the provisions hereof are, and are intended, solely for the purpose of
defining the relative rights of the Holder, on the one hand, and the holders of
the Senior Indebtedness (or other indebtedness), on the other hand. Nothing
contained in this Debenture is intended to or shall impair, as between the
Corporation and its creditors (other than the holders of Senior Indebtedness (or
other indebtedness), the obligation of the Corporation, which is unconditional
and absolute, to pay to the Holder the principal of and interest on, if any, the
Debenture, as and when the same shall become due and payable in accordance with
their terms, or to affect the relative rights of the Holder and the creditors of
the Corporation, other than the holders of the Senior Indebtedness (or other
indebtedness), nor shall anything herein or therein prevent the Holder from
exercising all remedies otherwise permitted by applicable law upon default under
this Debenture, subject to the rights, if any, under the provisions hereof, of
the holders of Senior Indebtedness upon the exercise of any such remedy.
2.12 No Set-Off
The Corporation agrees and the Holder by his acceptance
thereof, likewise agrees, that it shall have no right of set-off or counterclaim
with respect to the principal of, premium, if any, and the interest on the
Debenture at any time when any payment of, or in respect of, such amounts to the
Holder is prohibited by the provisions of this Article 2 or is otherwise
required to be paid to the holders of Senior Indebtedness (or other
indebtedness) or their representative, as their respective interests may appear.
2.13 Rights of Holders of
Senior Indebtedness Not Impaired
No right of any present or future holder of any Senior
Indebtedness to enforce the subordination herein will at any time or in any way
be prejudiced or impaired by any act or failure to act on the part of the
Corporation or by any non-compliance by the Corporation with the terms,
provisions and covenants of this Debenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
- 15 -
2.14 Altering the Senior
Indebtedness
The holders of the Senior Indebtedness have the right to
extend, renew, modify or amend the terms of the Senior Indebtedness (or other
indebtedness) or any security therefor and to release, sell or exchange such
security and otherwise to deal freely with the Corporation, all without notice
to or consent of the Holder and without affecting the liabilities and
obligations of the parties to this Debenture or the Holder.
2.15 Additional Indebtedness
This Debenture does not restrict the Corporation from incurring
additional unsecured indebtedness which ranks junior to the indebtedness
represented by the Debenture.
2.16 Withholding Taxes
Any and all payments by the Corporation hereunder to or for the
benefit of the Holder will be made in full, free and clear of and without any
deduction or withholding for or on account of any present or future taxes unless
the Corporation is required by applicable law to so deduct or withhold, in which
event the Corporation will:
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(a) |
forthwith pay to Holder such additional amount so that
the net amount received by the Holder after any deduction or withholding
will equal the full amount which would have been received by it had no
such deduction or withholding been made; |
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(b) |
make the deduction or withholding required by applicable
law (including any deduction or withholding from any additional amount
paid pursuant to subparagraph (a) above); and |
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(c) |
pay to the relevant taxation or other authorities within
the period for payment permitted by applicable law the full amount of the
deduction or withholding (including the full amount of any deduction or
withholding from any additional amount paid pursuant to subparagraph (a)
above). |
2.17 Legends on the
Debenture and Common Share Certificates
The Debenture and all Common Shares issuable upon conversion of
the Debenture and all certificates issued in exchange therefor or in
substitution thereof, if issued prior to the date that is four months and one
day following the date hereof shall bear the following legends:
"UNLESS PERMITTED UNDER SECURITIES
LEGISLATION THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY
BEFORE APRIL 2, 2015.
And if applicable:
WITHOUT PRIOR WRITTEN APPROVAL OF THE
TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION,
THE SECURITIES REPRESENTED BY THIS CERTIFICATE [For Debenture: INCLUDING THE
SECURITIES ISSUABLE ON CONVERSION OF THIS DEBENTURE] MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF
THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A
CANADIAN RESIDENT UNTIL APRIL 2, 2015.
- 16 -
2.18 U.S. Legend on the
Debenture and Common Share Certificates
Neither the Debenture nor the Common Shares issuable upon
conversion of the Debentures will be registered under any United States federal
or state securities laws, and to the extent issued and sold in the United States
or for the account or benefit of a U.S. Person or a person in the United States,
shall bear the following additional legend until such time as the legend is no
longer required under applicable requirements of the 1933 Act or applicable
state securities laws (the U.S. Legend):
THE SECURITIES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE SECURITIES ACT), OR STATE SECURITIES LAWS. THE HOLDER HEREOF, BY
PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF SPHERE 3D CORPORATION THAT
SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO SPHERE
3D CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, OR (D)
PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION AFTER PROVIDING A LEGAL OPINION
OR OTHER EVIDENCE SATISFACTORY TO SPHERE 3D CORPORATION.
ARTICLE 3
CONVERSION OF THE DEBENTURE
3.1 Conversion
Privileges and Conversion Price
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(a) |
Upon and subject to the provisions and conditions of this
Article 3, the Holder shall have the right, at any time prior to 5:00 p.m.
(Toronto time) on the last Business Day prior to the Maturity Date, to
convert in whole or in part this Debenture (including accrued and unpaid
interest to and including the Conversion Date) into Common Shares (subject
to adjustment as provided for in Section 3.4) at the Conversion
Price. |
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(b) |
Such right of conversion shall extend only to the maximum
number of whole Common Shares into which the aggregate principal amount of
and accrued interest on the Debenture surrendered for conversion by the
Holder thereof may be converted in accordance with the foregoing
provisions of this Section. Fractional interests in Common Shares shall be
adjusted for in the manner provided in Section 3.6. |
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(c) |
Notwithstanding any other provision of this Agreement,
the Holder shall not exercise the conversion privileges hereunder and
convert any portion of the principal or accrued interest thereon to the
extent that the exercise of the conversion right will result in the Holder
either (i) becoming a Control Person (as that term is defined in Policy
1.1 of the TSX Venture Exchanges Corporate Finance Manual), unless the
New Control Person Approval has been obtained, or (ii) be in violation of
any other applicable listing requirement of the Exchange or regulatory
requirement. |
- 17 -
3.2 Manner of
Exercise of Right to Convert
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(a) |
A Holder desiring to convert a Debenture into Common
Shares shall surrender such Debenture to the Corporation at its principal
office in the City of Mississauga, Ontario, Canada, together with the
Conversion Form attached hereto as Appendix 2, or any other written notice
in a form satisfactory to the Corporation, duly executed by the Holder or
its legal representatives in form and executed in a manner satisfactory to
the Corporation, exercising its right to convert such Debenture in
accordance with the provisions of this Article 3. Thereupon such Holder
or, subject to payment of all applicable stamp or security transfer taxes
or other governmental charges and compliance with all reasonable
requirements of the Corporation, his nominee(s) or assignee(s), shall be
entered in the books of the Corporation as at the Conversion Date as the
holder of the number of freely tradable (subject to expiration of any hold
period under applicable securities laws) Common Shares into which such
Debenture is convertible in accordance with the provisions of this Article
3 and, as soon as practicable thereafter, the Corporation shall deliver or
cause to be delivered to such Holder or, subject as aforesaid, his
nominee(s) or assignee(s), a certificate or certificates for such Common
Shares. |
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(b) |
The Common Shares issued upon such conversion shall on
and after the Conversion Date be deemed to be issued and outstanding as
fully paid and non- assessable Common Shares on the date that the
Corporation receives the Debenture and the Conversion Form in accordance
with Section 3.2(a). |
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(c) |
As promptly as practicable after the Conversion Date, but
in any event within ten (10) Business Days following the Conversion Date,
the Corporation shall deliver a certificate representing the Common Shares
in respect of which the conversion is being exercised, registered and
delivered in accordance with the instructions contained in the Conversion
Form. |
3.3 Right to
Convert
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(a) |
The Corporation shall have the right, at any time that
the Current Market Price exceeds 150% of the Conversion Price (the
Forced Conversion Event), to require that the Debenture be
converted into Common Shares at the Conversion Price in accordance with
the procedures set forth in subsection 3.3(b). |
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(b) |
The Corporation shall deliver to the Holder written
notice of the Forced Conversion Event, whereupon such Holder shall
surrender its Debenture for conversion in accordance with the procedures
set out in Section 3.2. |
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(c) |
Notwithstanding any other provision of this Agreement,
the Corporation shall not exercise the automatic conversion privileges
hereunder and convert any portion of the principal or accrued interest
thereon to the extent that the automatic conversion will result in the
Holder either (i) becoming a Control Person (as that term is defined in
Policy 1.1 of the TSX Venture Exchanges Corporate Finance Manual), unless
the New Control Person Approval has been obtained, or (ii) be in violation
of any other applicable listing requirement of the Exchange or regulatory
requirement. |
- 18 -
3.4 Prepayment
Right
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(a) |
The Corporation may, at any time prior to the close of
business on September 1, 2015, prepay up to $10,000,000 of the total
principal amount outstanding of the Debenture (plus accrued but unpaid
interest thereon), on not less than ten (10) Business Days notice to the
Holder, at a price equal to 120% of the aggregate of principal and
interest being converted. |
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(b) |
Upon receipt of any notice of prepayment delivered by the
Corporation to the Holder pursuant to this Section 3.4, the Holder shall
have five (5) Business Days within which to exercise its right of
conversion under Section 3 in respect of the amount proposed to be
prepaid, after which the right of the Holder to exercise its right of
conversion under Section 3 shall be forfeited in respect of such prepaid
amount provided that funds in respect of such prepaid amount are actually
paid by the Corporation to the Holder within a further five (5) Business
Days. |
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(c) |
All payments made by the Corporation pursuant to this
Section 3.4 shall be made to such account as the Holder may specify from
time to time, for value on the date when due, and shall be made in full in
immediately available funds, without abatement, set-off or counterclaim
for any reason whatsoever. |
3.5 Adjustment of
Conversion Price
The Conversion Price in effect at any date shall be subject to
adjustment from time to time as follows:
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(a) |
If and whenever at any time the Corporation shall (i)
subdivide or redivide the outstanding Common Shares into a greater number
of Common Shares, (ii) reduce, combine or consolidate the outstanding
Common Shares into a smaller number of Common Shares, or (iii) issue
Common Shares to the holders of all or substantially all of the
outstanding Common Shares by way of a dividend or distribution, the
Conversion Price in effect on the effective date of such subdivision,
redivision, reduction, combination or consolidation or on the record date
for such issue of Common Shares by way of a dividend or distribution, as
the case may be, shall in the case of the events referred to in (i) and
(iii) above, be decreased in the proportion that the number of Common
Shares outstanding immediately prior to such subdivision, redivision,
dividend or distribution bears to the number of outstanding common shares
resulting from such subdivision, redivision or distribution, or shall, in
the case of the events referred to in (ii) above, be increased in the
proportion that the number of Common Shares outstanding immediately prior
to such reduction, combination or consolidation bears to the number of
outstanding Common Shares resulting from such reduction, combination or
consolidation. Such adjustment shall be made successively whenever any
event referred to in this Section 3.5(a) shall occur; any such issue of
Common Shares by way of a distribution shall be deemed to have been made
on the record date for the distribution. |
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(b) |
If and whenever at any time the Corporation shall fix a
record date for the issuance of options, rights or warrants to all or
substantially all the holders of its outstanding Common Shares entitling
them, for a period expiring not more than 45 days after such record date,
to subscribe for or purchase Common Shares (or
securities convertible into or exercisable or exchangeable for
Common Shares) at a price per Common Share (or having a conversion,
exercise or exchange price per Common Share) less than the Current Market
Price of the Common Shares on such record date, the Conversion Price shall
be adjusted immediately after such record date so that it shall equal the
price determined by multiplying the Conversion Price in effect on such
record date by a fraction, the numerator of which shall be the total
number of Common Shares outstanding on such record date plus a number of
Common Shares equal to the number arrived at by dividing the aggregate
conversion or exchange price of the convertible or exchangeable securities
so offered by such Current Market Price per Common Share, and the
denominator of which shall be the total number of Common Shares
outstanding on such record date plus the total number of additional Common
Shares offered for subscription or purchase (or into which the convertible
or exchangeable securities so offered are convertible or exchangeable).
Any Common Shares owned by or held for the account of the Corporation
shall be deemed not to be outstanding for the purpose of any such
computation; such adjustment shall be made successively whenever such a
record date is fixed; to the extent that any such options, rights or
warrants are not exercised prior to the expiration thereof, the Conversion
Price shall be readjusted to the Conversion Price which would then be in
effect if such record date had not been fixed or to the Conversion Price
which would then be in effect based upon the number of Common Shares (or
securities convertible or exchangeable into Common Shares) actually issued
upon the exercise of such rights or warrants, as the case may be. In the
event that such Common Shares are not listed and quoted for trading in a
public market, the price per Common Share shall be the fair market value
of such Common Shares, which shall be determined by the Board of Directors
in their sole discretion. |
- 19 -
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(c) |
If and whenever at any time the Corporation shall fix a
record date for the making of a distribution to all or substantially all
the holders of its outstanding Common Shares of (i) Common Shares or
shares of any class, whether of the Corporation or any other corporation,
(ii) rights, options or warrants (excluding those referred to in
Subsection 3.5(b)) (iii) evidences of indebtedness or (iv) assets then, in
each such case, the Conversion Price shall be adjusted immediately after
such record date so that it shall equal the price determined by
multiplying the Conversion Price in effect on such record date by a
fraction, of which the numerator shall be the total number of Common
Shares outstanding on such record date multiplied by the Current Market
Price per Common Share on such record date, less the fair market value (as
determined by the Board of Directors, which determination shall absent
manifest error or fraud be conclusive) of such Common Shares, rights,
options, warrants, evidences of indebtedness or assets so distributed, and
of which the denominator shall be the total number of Common Shares
outstanding on such record date multiplied by such Current Market Price
per Common Share; any Common Shares owned by or held for the account of
the Corporation shall be deemed not to be outstanding for the purpose of
any such computation; such adjustment shall be made successively whenever
such a record date is fixed; to the extent that such distribution is not
so made, the Conversion Price shall be readjusted to the Conversion Price
which would then be in effect if such record date had not been fixed or to
the Conversion Price which would then be in effect based upon such Common
Shares or rights, options or warrants or evidences of indebtedness or
assets actually distributed, as the case may
be. |
- 20 -
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(d) |
If and whenever at any time, there is (A) any
reclassification of or amendment to the outstanding Common Shares, any
change of the Common Shares into other shares or any other reorganization
of the Corporation (other than as described in Section 3.5(c)), (B) any
consolidation, amalgamation, arrangement, merger or other form of business
combination of the Corporation with or into any other corporation
resulting in any reclassification of the outstanding Common Shares, any
change of the Common Shares into other shares or any other reorganization
of the Corporation, or (C) any sale, lease, exchange or transfer of the
undertaking or assets of the Corporation as an entirety or substantially
as an entirety to another corporation or entity, then, in each such event,
the Holder of this Debenture which is thereafter redeemed by conversion or
converted, shall be entitled to receive, and shall accept, in lieu of the
number of Common Shares to which such Holder was theretofore entitled, the
kind and number or amount of shares or other securities or property which
such Holder would have been entitled to receive as a result of such event
if, on the effective date thereof, such Holder had been the registered
holder of the number of Common Shares to which such Holder was theretofore
entitled upon hereunder. If necessary as a result of any such event,
appropriate adjustments will be made in the application of the provisions
set forth in this subsection with respect to the rights and interests
thereafter of the Holder of this Debenture to the end that the provisions
set forth in this subsection will thereafter correspondingly be made
applicable, as nearly as may reasonably be necessary, in relation to any
shares or other securities or property thereafter deliverable hereunder.
Any such adjustments will be made by the directors, acting reasonably, and
shall for all purposes be conclusively deemed to be an appropriate
adjustment. |
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(e) |
In any case in which this Section 3.5 shall require that
an adjustment shall become effective immediately after a record date for
an event referred to herein, the Corporation may defer, until the
occurrence of such event, issuing to the Holder of any Debenture converted
after such event, any additional Common Shares issuable upon such
conversion by reason of the adjustment required by such event before
giving effect to such adjustment; provided, however, that the Corporation
shall deliver to such Holder an appropriate instrument evidencing such
Holders right to receive such additional Common Shares upon the occurrence
of the event requiring such adjustment. |
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(f) |
In any case in which Sections 3.5(b) or 3.5(c) require
that an adjustment be made to the Conversion Price, no such adjustment
shall be made if the Holder of the outstanding Debenture receives the
rights or warrants referred to in Section 3.5(b) or the Common Shares,
shares, rights, options, warrants, evidences of indebtedness or assets
referred to in Section 3.5(c), as the case may be, in such kind and number
as they would have received if they had been holders of Common Shares on
the applicable record date or effective date, as the case may be, by
virtue of the outstanding Debenture having been converted into Common
Shares at the Conversion Price in effect on the applicable record date or
effective date, as the case may be. |
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(g) |
The adjustments provided for in this Section 3.5 are
cumulative and shall apply to successive subdivisions, redivisions,
reductions, combinations, consolidations, distributions, issues or other
events resulting in any adjustment under the provisions of this Section,
provided that, notwithstanding any other provision of
this Section, no adjustment of the Conversion Price shall be
required unless such adjustment would require an increase or decrease of
at least 1% in the Conversion Price then in effect; provided however that
any adjustments which by reason of this Section 3.5(g) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. |
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(h) |
In the event of any question arising with respect to the
adjustments provided in this Section 3.5, such questions shall be
conclusively determined by a firm of chartered accountants (who may be the
auditors of the Corporation) appointed by the Corporation and acceptable
to the Holder, acting reasonably; such accountants shall have access to
all necessary records of the Corporation and such determination shall be
binding upon the Corporation and the Holder. |
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(i) |
In the event of any adjustment to the Conversion Price
pursuant to this Section 3.5, the number of Common Shares issuable upon
the conversion of the Debenture shall be simultaneously adjusted by
multiplying the number of Common Shares issuable upon conversion
immediately prior to such adjustment by a fraction which shall be the
reciprocal of the fraction used in the adjustment of the Conversion
Price. |
3.6 No Requirement
to Issue Fractional Common Shares
The Corporation shall not be required to issue fractional
Common Shares upon the conversion of Debenture pursuant to this Article and in
any such case, the number of Common Shares issuable upon conversion hereof shall
be rounded down to the nearest whole number, without payment or compensation
therefor.
3.7 Cancellation
of Converted Debenture
Any Debenture converted in whole under the provisions of this
Article shall be forthwith delivered to, and cancelled by, the Corporation.
3.8 Notice of
Special Matters
The Corporation covenants that so long as any Debenture remains
outstanding, it will give notice to the Holders of its intention to fix a record
date for any event referred to in Section 3.5 which may give rise to an
adjustment in the Conversion Price, and, in each case, such notice shall specify
the particulars of such event and the record date and the effective date for
such event; provided that the Corporation shall only be required to specify in
such notice such particulars of such event as shall have been fixed and
determined on the date on which such notice is given. Such notice shall be given
not less than 14 days in each case prior to such applicable record date.
3.9 Prohibition on
Exercise by U.S. Persons
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(a) |
The Debenture may not be exercised in the United States
or by or on behalf of a U.S. Person unless an exemption is available from
the registration requirements of the 1933 Act and applicable state
securities laws and the holder of the Debenture has furnished an opinion
of counsel of recognized standing in form and substance satisfactory to
the Corporation to such effect. |
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(b) |
Any holder which converts a Debenture shall provide to
the Corporation either: |
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(i) |
a written certification that such holder (a) at the time
of conversion of the Debenture is not in the United States; (b) is not a
U.S. Person and is not converting the Debenture, on behalf of a U.S.
Person; and (c) did not execute or deliver the Conversion Form for the
Debenture in the United States; or |
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(ii) |
a written opinion of counsel of recognized standing in
form and substance satisfactory to the Corporation to the effect that an
exemption from the registration requirements of the 1933 Act and
applicable state securities laws is available for the issuance of the
Common Shares issuable on conversion of the
Debenture. |
No certificates representing Common Shares will be registered
or delivered to an address in the United States unless the holder of Debenture
complies with the requirements of Section 3.9(b) above.
ARTICLE 4
SECURITY AND RANKING OF THE DEBENTURE
4.1 Charge.
In consideration of the premises herein contained and to secure
the due payment of the principal and interest and all other moneys from time to
time owing pursuant to the Debenture, and the performance by the Corporation of
the obligations contained herein, the Corporation hereby mortgages, assigns,
pledges, transfers, and charges in favour of the Holder, a continuing security
interest in and to the whole of its Property. The Corporation hereby
acknowledges that: (i) value has been given; (ii) the Corporation has rights in
its Property (other than after-acquired property); and (iii) it has not agreed
to postpone the time of attachment of the security interest granted hereunder.
4.2 Exceptions re
Leaseholds and Contractual Rights.
The last day of the term of any lease, sublease or agreement
therefor is specifically excepted from the Lien created by this Debenture, but
the Corporation agrees to stand possessed of such last day in trust for the
Holder and the Corporation shall assign and dispose thereof in accordance with
such direction. To the extent that the Lien created by this Debenture in any
contractual rights would constitute a breach or cause the acceleration of such
contract, said Lien shall not be granted hereunder but the Corporation shall
hold its interest therein in trust for the Holder, shall use its best efforts to
obtain the appropriate consents to the attachment of said Lien and shall grant a
Lien in such contractual rights to the Holder forthwith upon obtaining the
appropriate consents to the attachment of said Lien.
4.3 Priority of
Security.
Subject to Section 2.4, the Lien granted pursuant to the terms
of this Debenture will be a first ranking Lien over the Collateral, subject to
Permitted Liens and any Specified Priority Encumbrances.
- 23 -
4.4 Supplemental
Documents.
The Corporation shall execute and deliver such further
agreements supplemental hereto, which shall thereafter form part hereof, for the
purpose of mortgaging, charging, pledging or securing in favour of the Holder
any property now owned or hereafter acquired by the Corporation and falling
within the description of the Collateral, for correcting or amplifying the
description of any Collateral hereby charged or secured or intended so to be,
for curing any defect in the execution or delivery of this Debenture, or for any
other purpose not inconsistent with the terms of this Debenture.
4.5 Continuing
Security.
Any and all payments made at any time in respect of the
obligations under the Debenture and the proceeds realized from any securities
held therefor (including moneys realized from the enforcement of this Debenture)
may be applied (and reapplied from time to time notwithstanding any previous
application) to such part or parts of the obligations under the Debenture. The
Corporation shall be accountable for any deficiency and the Holder shall be
accountable for any surplus.
4.6 Additional
Security.
The Corporation shall deliver to the Holder any other security
documentation, including any and all estoppels, acknowledgements, consents,
subordinations, postponements or priority or inter-creditor agreements, as the
Holder deems necessary, acting reasonably.
4.7 Negative
Pledge.
The Corporation shall not be at liberty to and shall not,
except in respect of the Permitted Liens and the Specified Priority
Encumbrances, create or incur any security of any kind whatsoever upon the
Collateral without granting to the Holder then outstanding additional security
so that the Holder shall remain in the same position as if no further security
had been created or incurred.
4.8 Obligation to
Pay Not Impaired.
Nothing contained in this Section 4.8 or elsewhere in this
Debenture is intended to or shall impair, as between the Corporation, its
creditors other than the holders of the Specified Priority Encumbrances, and the
Holder of the Debenture, the obligation of the Corporation, which is absolute
and unconditional, to pay to the Holder of the Debenture the principal of,
premium, if any, and interest on the Debenture, as and when the same shall
become due and payable in accordance with their terms, or affect the relative
rights of the Holder of the Debenture and creditors of the Corporation other
than the holder(s) of the Specified Priority Encumbrances, nor shall anything
herein or therein prevent the Holder of any Debenture from exercising all
remedies otherwise permitted by applicable law or under the Debenture, subject
to the rights, if any, of the holder(s) of Specified Priority Encumbrances under
this Section 4.8.
4.9 Payment on
Debenture Permitted.
Nothing contained in this Section 4.9 or elsewhere in this
Debenture, shall affect the obligation of the Corporation to make, or prevent
the Corporation from making, any payment of principal of, premium, if any, or
interest on the Debenture.
- 24 -
4.10 Registration and
Counsels Opinion.
The Corporation shall, from time to time, at the expense of the
Corporation:
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(a) |
record, file, enter or register or cause to be recorded,
filed, entered or registered, this Debenture, all other Collateral
Documents, financing statements and all other instruments without delay,
where necessary or advisable in perfecting the Liens and the rights of the
Holder of Debenture hereunder for such action to be taken, and under the
provisions of all applicable personal property security
statutes; |
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(b) |
renew or cause to be renewed the recordings, filings or
registrations made in respect of the Collateral Documents from time to
time as and when required to maintain the perfection and priority of the
Liens granted pursuant to the Collateral Documents. The Corporation agrees
that the Holder shall have the right to require the form of this Debenture
be amended to reflect any changes in laws, whether arising as a result of
statutory amendments, court decisions or otherwise, in order to confer
upon the Holder, the Liens intended to be created hereby; and |
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(c) |
deliver or exhibit to the Holder, on demand, certificates
or other forms of confirmation acceptable to the Holder establishing such
registration or recording, and renew the same from time to time, if such
renewal is necessary in Counsels opinion to preserve or protect the Liens
created pursuant to the Collateral Documents. |
If the Corporation fails to perform its obligations under this
Section 4.10, the Holder may, in its discretion, perform any such obligation
capable of being performed by it at the expense of the Corporation.
4.11 Defeasance.
Upon payment by the Corporation to the Holders of all amounts
owing under the Debenture, including but not limited to principal and interest,
and all other money secured by this Debenture and provided the Security granted
herein constituted shall not have become enforceable, then the Collateral shall
revert and revest in the Corporation without any release, acquittance,
reconveyance, re-entry or other act or formality whatsoever, but the Holder
shall nevertheless, within thirty (30) days of being requested in writing by the
Corporation, execute, acknowledge or deliver to the Corporation a full release
and reconveyance of the Collateral or such parts thereof as shall not have been
disposed under the powers herein contained and such further and other documents
reasonably requested by the Corporation.
ARTICLE 5
POSSESSION, USE AND RELEASE OF
COLLATERAL
5.1 Possession
Until Default.
Until the Security hereby constituted shall have become
enforceable and the Holder shall have determined to enforce the same, the
Corporation shall be permitted in the same manner and to the same extent as if
this Debenture had not been executed, but subject to the express terms hereof,
to possess, operate, manage, use and enjoy its Property and to take and use the
rents, income and profits thereof.
- 25 -
5.2 Collection of
Payments.
It is hereby expressly agreed that until the Security hereby
constituted shall have become enforceable and the Holder shall have determined
to enforce the same, the Corporation shall be permitted to collect and receive
or payments payable under any of its agreements, if any, as and when the same
shall become due and payable according to the terms of such agreements.
5.3 Discretion of
Holder as to Dealing with Collateral.
Subject to the Security hereby constituted becoming enforceable
the Holder may at any time and from time to time upon the application (evidenced
by certified resolution of the Directors) and at the cost of the Corporation, do
or concur in doing all or any of the following things:
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(a) |
assent to any modification of or change in any agreement,
license, privilege, franchise, concession and contract forming, or which
may be subsisting in respect of, any part of the Collateral; |
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(b) |
permit the Corporation to receive any of the Collateral
or the documents of title thereto or an undertaking to deal with the same
in a specified manner; |
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(c) |
settle, adjust, refer to arbitration, compromise and
arrange all accounts, reckonings, controversies, questions, claims and
demands whatsoever in relation to any of the Collateral; and |
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(d) |
execute and do all such contracts, deeds, documents and
things and bring, defend and abandon all such actions, suits and
proceedings in relation to any of the Collateral for purposes not
inconsistent with the provisions of this Debenture as may seem
expedient. |
5.4 Generally as
to Releases.
The powers, rights and discretions conferred upon the Holder
and the Corporation by this Article 5 shall be deemed to be several and not
dependent on each other and each such power, right or discretion shall
accordingly be construed as complete in itself and not by reference to any other
such right, power or discretion; and the exercise of any one or more of such
powers, rights and discretions, or any combination of them, from time to time
shall not be deemed to exhaust the right of the Holder or the Corporation to
exercise such powers, rights or discretions, or combination of them, thereafter
from time to time.
5.5 Liability of
Holder.
Neither the Holder nor any receiver shall: (i) be responsible
or liable for any debts contracted by it, for damages to persons or property,
for salaries or for non-fulfilment of contracts during any period when the
Holder or any receiver shall manage or be in possession of the Collateral; (ii)
be liable to account as mortgagee in possession or for anything except actual
receipts or be liable for any loss on realization or for any default or omission
for which a mortgagee in possession may be liable; (iii) be bound to do, observe
or perform or to see to the observance or performance by the Corporation of any
obligations or covenants imposed upon the Corporation; or (iv) in the case of
any chattel paper, security or instrument, be obligated to preserve rights
against any other persons.
- 26 -
5.6 Mandatory
Provisions of Applicable Law.
All rights, remedies and powers provided herein may be
exercised only to the extent that the exercise thereof does not violate any
mandatory provision of applicable law and all provisions of this Debenture are
intended to be subject to all mandatory provisions of applicable law which may
be controlling in the premises and to be limited to the extent necessary so that
they will not render this Debenture invalid, unenforceable or not entitled to be
recorded, registered or filed under any mandatory provisions of applicable law.
If any mandatory provision of applicable law shall provide for different or
additional requirements than or to those specified herein as prerequisites to or
incidental to the realization, sale or foreclosure of the Collateral or any part
thereof, then, to that extent, such laws shall be deemed to have been set forth
herein at length, and any conflicting provisions hereof shall be disregarded,
and the method of realization, sale or foreclosure of the Collateral required by
any such laws shall, insofar as may be necessary, be substituted herein as the
method of realization, sale or foreclosure in lieu of that set forth above. Any
provision hereof contrary to mandatory provisions of applicable law shall be
deemed to be ineffective and shall be severable from and not invalidate any
other provision of this Debenture.
5.7 Further
Assurances.
The Corporation hereby covenants and agrees that it will at all
times do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered all such further acts, deeds, mortgages, transfers,
assignments and assurances as the Holder may reasonably require for the better
accomplishing and effectuating the purpose of this Debenture.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
The Corporation represents and warrants to the Holder for the
benefit of the Holder of the Debenture that as of the date hereof:
6.1 Existence and
Qualification.
The Corporation and each of its Subsidiaries (i) has been duly
formed, incorporated, amalgamated, merged, created or continued, as the case may
be, and is validly subsisting and in good standing as a corporation under the
laws of its jurisdiction of formation, amalgamation, merger or continuance, as
the case may be, and (ii) has all Material Licenses and, except as could not
reasonably be expected to have a Material Adverse Effect, is duly qualified to
carry on its business in each jurisdiction in which the nature of its business
requires qualification.
6.2 Power and
Authority.
Each of the Corporation and its Subsidiaries has the corporate
power and authority to enter into, and to exercise its rights and perform its
obligations under, the Debenture to which it is a party. The Corporation and
each of its Subsidiaries has the corporate power and authority to own its
Property and carry on its business as currently conducted and as currently
proposed to be conducted by it.
6.3 Execution,
Delivery, Performance and Enforceability of Documents.
The execution, delivery and performance of the Debenture has
been duly authorized by all corporate actions required, and this Debenture has
been duly executed and delivered. The Debenture constitutes the legal, valid and binding obligation
of the Corporation, enforceable against it in accordance with its terms (except,
in any case, as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors rights generally
and by principles of equity).
- 27 -
6.4 Compliance
with Applicable Laws, Organizational Documents and Contractual Obligations.
None of the execution or delivery of, the consummation of the
transactions contemplated in, or compliance with the terms, conditions and
provisions of the Debenture or related documents by the Corporation, conflicts
with or results in any breach of, or constitutes a default under or
contravention of, any organizational documents of the Corporation, any
applicable law, or any Material Contract or Material License, except for any
conflict, breach, default or contravention which could not reasonably be
expected to have a Material Adverse Effect, or results or will result in the
creation or imposition of any Lien upon any of its Property except for Permitted
Liens.
6.5 Consent
Respecting Debenture Documents.
The Corporation has obtained, made or taken all consents,
approvals, authorizations, declarations, registrations, filings, notices and
other actions whatsoever required by any governmental authority (except for
registrations or filings which may be required in respect of the Collateral
Documents) to enable it to execute and deliver the Debenture and related
documents to which it is a party and to consummate the transactions contemplated
in the Debenture, save and except for approval of the TSX Venture Exchange or
any other applicable Exchange, which approvals the Corporation will use its
commercially reasonable efforts to obtain, to the extent applicable, immediately
following the execution of this Debenture.
6.6 Taxes.
The Corporation and each of its Subsidiaries has paid or made
adequate provision for the payment of all Taxes which are due and payable by it,
including interest and penalties, or has accrued such amounts in its financial
statements for the payment of such Taxes except for charges, fees or dues which
are not material in amount, not delinquent or if delinquent are being contested
in good faith, and in respect of which non-payment would not, individually or in
the aggregate, have or reasonably be expected to have a Material Adverse Effect.
6.7 Absence of
Litigation.
There are no actions, suits or proceedings pending or, to its
knowledge, threatened against or affecting the Corporation or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect.
6.8 Title to
Assets.
The Corporation and each of its Subsidiaries has good title to,
or the right to use, its assets, free and clear of all Liens except Permitted
Liens.
- 28 -
6.9 Insurance.
The Corporation and each of its Subsidiaries that operate a
business, has maintained and maintains insurance which is in full force and
effect and complies with all of the requirements of this Debenture.
6.10 Compliance with Laws.
Neither the Corporation nor any of its Subsidiaries is in
default under any applicable law, except where default thereunder, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
6.11 No Default or Event of
Default.
No default or Event of Default has occurred which is
continuing.
6.12 Financial Statements.
All of the quarterly and annual financial statements which have
been issued by the Corporation prior to the date hereof are complete in all
material respects and such financial statements fairly present the results of
operations and financial position of the Corporation and its Subsidiaries as of
the dates referred to therein and have been prepared in accordance with GAAP (or
prior to December 1, 2014 IFRS) or, where applicable, Canadian Generally
Accepted Accounting Principles. The Corporation and its Subsidiaries do not have
any liabilities (contingent or other) or other obligations of the type required
to be disclosed in accordance with GAAP (or prior to December 1, 2014 IFRS)
which are not fully disclosed on the financial statements issued by the
Corporation prior to the date hereof, other than liabilities and obligations
incurred in the ordinary course of its business.
6.13 No Material Adverse
Effect.
Since the date of the Corporations most recent annual audited
financial statements and its respective most recent unaudited financial
statements, there has been no condition (financial or otherwise), event or
change in its business, liabilities, operations, results of operations, or
assets which constitutes or has, or could reasonably be expected to constitute
or have, a Material Adverse Effect.
6.14 Debt.
Neither the Corporation nor any of its Subsidiaries has any
debt as of the date hereof, except (a) trade payables and deferred revenue,
which are incurred in the ordinary course of business, (b) indebtedness owing in
an amount up to $11,000,000 to a Commercial Lender (including the SVB Credit
Agreement), and (c) a revolving credit facility issued by the Holder or related
party to the Corporation in the amount of up to $5,000,000.
6.15 Collateral Documents.
The Collateral Documents, upon execution and delivery thereof
by the parties thereto, will create in favour of the Holders of the Debenture, a
legal, valid and enforceable Lien in the Collateral and (i) if and when any
Collateral which is a security for the purposes of the Securities Transfer
Act (Ontario) is required to be and is delivered to the Holder in Ontario,
together with an effective endorsement, the Holder shall have, subject to any
Permitted Liens and the Specified Priority Encumbrance, a fully perfected first
priority Lien on and in, all right, title and interest of the Corporation, prior
and superior in right to any Liens on such security to which the Personal
Property Security Act (Ontario) applies, and (ii) when financing statements
in appropriate form have been duly filed in the offices where such filing is
required to perfect such Liens created under the Collateral Documents (other
than with respect to any security as specified in subsection (i)) will
constitute a fully perfected Lien on and in, all right, title and interest of
the Corporation to the extent perfection can be obtained by filing Personal
Property Security Act (Ontario) or similar financing statements, in each
case prior and superior in right to any other Person, other than with respect to
Permitted Liens.
- 29 -
ARTICLE 7
COVENANTS OF THE CORPORATION
7.1 General
Covenants
The Corporation covenants with the Holder as follows:
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(a) |
the Corporation will duly and punctually pay or cause to
be paid to the Holder the principal of and interest accrued on the
Debenture (including, in the case of default, interest on the amount in
default) on the dates, at the places, and in the manner mentioned
herein; |
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(b) |
the Corporation will use its reasonable best efforts to
preserve and maintain its corporate existence and will carry on and
conduct its business in a proper and efficient manner; |
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(c) |
the Corporation will use its reasonable best efforts to
remain a reporting issuer not in default of the requirements of the
applicable securities laws in the Canadian jurisdictions in which the
Corporation is currently a reporting issuer and to ensure that the
Corporation shall make all requisite filings under applicable securities
legislation necessary to remain a reporting issuer not in
default; |
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(d) |
the Corporation shall, so long as the Debenture remains
outstanding, reserve and there shall remain unissued out of its authorized
capital, a sufficient number of Common Shares to satisfy the right of
conversion herein provided for and when issued and delivered as directed,
such Common Shares shall be issued as fully paid and non-assessable Common
Shares; |
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(e) |
the Corporation will furnish to the Holder a copy of all
financial statements, whether annual or quarterly, of the Corporation and
the report if any, of the Corporations auditors thereon at the same time
as they are furnished to the Shareholders after the date hereof and prior
to the Maturity Date; |
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(f) |
the Corporation will forthwith notify the Holder in
writing in the event (i) of the occurrence of an Event of Default or of
any event or circumstance that, with the giving of notice or lapse of time
or both, would constitute an Event of Default and (ii) that the
Corporation changes its name or the location of its principal office;
and |
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(g) |
the Corporation will duly and punctually perform and
carry out all of the acts or things to be done by it, and perform all
covenants required to be performed by it as provided in this
Debenture. |
- 30 -
7.2 Affirmative
Covenants
To the extent required by any applicable Exchange or regulatory
requirement, the Corporation covenants with the Holder to call a meeting of its
shareholders by no later than March 31, 2015 for the purpose of obtaining the
New Control Person Approval.
ARTICLE 8
DEFAULT AND ENFORCEMENT
8.1 Events of
Default
Each of the following events is, for the purposes of the
Debenture, an Event of Default:
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(a) |
if any payment on account of principal owing on any
Debenture is not paid when the same becomes due under any provision
hereof; or |
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(b) |
if any payment on account of interest owing on any
Debenture which is due is not made within 15 Business Days of the date
same becomes due under any provision hereof; or |
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(c) |
if the Corporation is in default in observing or
performing any other covenant or condition of this Debenture on its part
to be observed or performed and if such default continues for a period of
30 days after notice in writing has been given to the Corporation by the
Holder specifying such default and requiring the Corporation to rectify
the same, unless the Holder (having regard to the subject matter of the
default) shall have agreed to a longer period and, in such event for the
longer period agreed to by the Holder; or |
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(d) |
if an order shall be made or an effective resolution
passed for the winding-up, liquidation or dissolution of the Corporation
or any Guarantor, except in the course of carrying out or pursuant to a
transaction which is otherwise permitted herein; or |
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(e) |
if the Corporation or any Guarantor commences or
institutes proceedings to be adjudicated or declared a bankrupt or
insolvent, or if the Corporation or any Guarantor shall make a general
assignment for the benefit of its creditors or a proposal under the
Bankruptcy and Insolvency Act (Canada), or shall be declared
bankrupt or becomes insolvent or consents to the institution of bankruptcy
or insolvency proceedings against it under such Act or any other
bankruptcy, insolvency or analogous laws, or petitions or applies to any
tribunal for the appointment of a receiver, receiver-manager, receiver and
manager, custodian, liquidator or trustee, or a person with like powers,
or if the Corporation or any Guarantor passes any resolution for its
winding-up or liquidation, or commences any proceeding relating to it
under any reorganization, arrangement, readjustment of debt, dissolution
or liquidation law or statute, or admits in writing its inability to pay
its debts generally as they become due or by any act indicates its consent
to, approval of, or acquiescence in, any such proceedings for a
substantial portion of its property, or if a receiver and manager,
liquidator, trustee, custodian or sequestrator or any other Person with
similar powers shall be appointed (and such appointment is not dismissed
or stayed by the Corporation or the Guarantor, as applicable, within 30
days) in respect of the Corporation or the Guarantor or of the property of
the Corporation or the Guarantor; or |
- 31 -
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(f) |
if an encumbrancer shall take possession of the property
of the Corporation, or if a distress or execution or any similar process
shall be levied or enforced against the property of the Corporation or any
part thereof and remain unsatisfied for such period as would permit such
property or such part thereof to be sold thereunder; or |
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(g) |
if an order is made or legislation enacted by a competent
body having authority for the expropriation, confiscation, forfeiture,
escheating, other taking or compulsory divestiture, whether or not with
compensation, of all or any portion of the assets of the Corporation which
is material having regard to the net value of the assets of the
Corporation and such order or legislation remains in effect and has not
been stayed by a court of competent jurisdiction for a period of more than
30 days from the day of pronouncement of the order or enactment of the
legislation, as the case may be; or |
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(h) |
if the Debenture shall become unenforceable, or be
alleged by the Corporation to be unenforceable; or |
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(i) |
the Corporation failing to obtain approval of the TSX
Venture Exchange or any other applicable Exchange relating to the issuance
of this Debenture, by June 30, 2015, to the extent applicable;
or |
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(j) |
the Corporation failing to obtain the New Control Person
Approval by June 30, 2015, to the extent
applicable. |
8.2 Notice of
Events of Default
|
(a) |
If an Event of Default shall occur and is continuing, the
Corporation shall, within 10 Business Days after it becomes aware of the
occurrence of such Event of Default, give notice thereof to the
Holder. |
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|
(b) |
Where notice of the occurrence of an Event of Default has
been given and the Event of Default is thereafter cured, notice that the
Event of Default is no longer continuing shall be given by the Corporation
to the Holders within 10 Business Days after the Event of Default has been
cured. |
8.3 Acceleration
on Default
If any Event of Default has occurred and is continuing, the
Holders of more than 50% of the principal amount of the Debenture may, by notice
in writing to the Corporation, declare the principal of and interest on the
Debenture then outstanding and any other moneys payable thereunder, to be due
and payable and the same shall forthwith become immediately due and payable to
the Holders, and the Corporation shall pay forthwith to the Holders the
principal of and accrued and unpaid interest on such Debenture and all other
moneys payable thereunder, together with subsequent interest thereon at the rate
borne by the Debenture from the date of such declaration until payment is
received by the Holders. Such payment when made shall be deemed to have been
made in discharge of the Corporations obligations hereunder.
8.4 Waiver of
Default
If an Event of Default shall have occurred, the Holders of more
than 50% of the principal amount of the Debenture then outstanding shall have
the power by instrument signed by such Holders to waive any Event of Default
hereunder and/or to cancel any declaration pursuant to Section 8.3 and the Holders shall thereupon waive the Event of
Default and/or cancel such declaration upon such terms and conditions as such
Holders shall prescribe.
- 32 -
8.5 Application of
Moneys
Unless otherwise provided herein, any moneys arising from any
enforcement hereof by any Holder of a Debenture, shall be held in trust and
applied together with any moneys then or thereafter available for the purpose,
as follows:
|
(a) |
first, in or towards payment of the principal of all of
the Debentures then outstanding, thereafter in or towards payment of the
accrued and unpaid interest and interest on overdue interest on such
Debentures, or if the Holders, by instrument signed by the Holders of more
than 66 2/3% of the principal amount of the Debentures then outstanding
shall have directed payments to be made in accordance with any other order
of priority, or without priority as between principal, interest and any
additional amounts, then such moneys shall be applied in accordance with
such direction; and |
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(b) |
second, the surplus (if any) of such moneys shall be paid
to the Corporation or as it may direct. |
8.6 Distribution
of Moneys
Payments to Holders pursuant to Section 8.5(a) shall be made as
follows:
|
(a) |
at least 15 days notice of every such payment shall be
given in the manner provided in Article 12 specifying the date and time
when and the place or places where such payment is to be made and the
amount of the payment and the application thereof as between principal and
interest; |
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(b) |
payment of any Debenture shall be made upon presentation
thereof at the principal office of the Holder and any such Debenture
thereby paid in full shall be surrendered, otherwise a notation of such
payment shall be endorsed thereon; but the Holder may in its discretion
dispense with presentation and surrender or endorsement in any special
case upon receipt by it of such indemnity as it shall consider sufficient;
and |
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(c) |
from and after the date of payment specified in the
notice, interest shall accrue only in respect of such amount which is
owing and is duly presented on or after the date so specified and payment
of such amount is not made. |
8.7 Remedies
Cumulative
No remedy herein conferred upon or reserved to the Holders of
the Debenture is intended to be exclusive of any other remedy, but each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing by law or by statute.
8.8 Immunity of
Certain Persons
The Holders waive and release any right, cause of action or
remedy now or hereafter existing in any jurisdiction against any past, present
or future incorporator, shareholder, director, officer, employee or agent of the Corporation and the Shareholders or of
any Successor Corporation for the payment of the principal of or interest on the
Debenture or on any covenant, agreement, representation or warranty by the
Corporation contained herein.
- 33 -
8.9 Judgment
Against the Corporation
In the case of any judicial or other proceedings to obtain
judgment for the principal of or interest on the Debenture, judgment may be
rendered against the Corporation in favour of the Holders for any amount which
may remain due in respect of the Debenture.
ARTICLE 9
SATISFACTION AND DISCHARGE
9.1 Cancellation
and Destruction
All matured Debentures shall forthwith after payment thereof be
delivered to the Corporation and cancelled by it. All Debentures which are
cancelled or required to be cancelled under this or any other provision of this
Debenture shall, on receipt, be destroyed by the Corporation.
9.2
Non-Presentation of Debenture
If the Holder of any Debenture shall fail to present the same
for payment on the date on which the principal thereof and/or the interest
thereon or represented thereby becomes payable, either at maturity or otherwise,
or shall not accept payment on account thereof and give such receipt therefor
(if any) as the Corporation may require, the Corporation shall be entitled to
set aside the principal moneys and/or the interest as the case may be, in trust
to be paid to the Holder of such Debenture upon due presentation and surrender
thereof in accordance with the provisions of this Debenture; and thereupon the
principal moneys and/or the interest payable on or represented by each Debenture
in respect whereof such moneys have been set aside shall be deemed to have been
paid and thereafter such Debenture shall not be considered as outstanding
hereunder and the Holders thereof shall thereafter have no right in respect
thereof except that of receiving payment of the moneys so set aside by the
Corporation (without interest thereon) upon due presentation and surrender
thereof, subject always to the provisions of Section 9.3.
9.3 Repayment of
Unclaimed Moneys
Any moneys set aside under Section 9.2 and not claimed by and
paid to any Holder of a Debenture within six years after the date of such
setting aside shall, subject to applicable law, be repaid to the Corporation and
thereafter the Holder of a Debenture in respect of which such moneys were so
paid to the Corporation shall have no rights in respect thereof except to obtain
payment of such moneys without interest thereon from the Corporation.
9.4 Discharge
Upon the payment by the Corporation of all of the principal and
interest due on the Debenture (including interest on amounts in default), this
Debenture shall automatically terminate and the Corporation and the Guarantors
shall be released from all covenants contained herein. Notwithstanding the
foregoing, at the expense of the Corporation, the Holder shall, at the request
of the Corporation, execute and deliver to the Corporation such deeds or other
instruments as shall be necessary to evidence the satisfaction and discharge of
the Debenture and to release the Corporation from its covenants contained
herein.
- 34 -
ARTICLE 10
SUCCESSOR CORPORATIONS
10.1 Certain Requirements in
Respect of Merger, etc.
The Corporation shall not enter into any transaction (whether
by reconstruction, reorganization, consolidation, amalgamation, merger,
transfer, sale, lease or otherwise) whereby all or substantially all of its
undertaking, property and assets would become the property of any other Person
or, in the case of such amalgamation or merger, of the continuing company
resulting therefrom (the Successor Corporation), unless:
|
(a) |
the Successor Corporation shall execute, prior to or
contemporaneously with the completion of such transaction, such other
instruments as in the opinion of Counsel are necessary or advisable to
evidence the assumption by the Successor Corporation of the liability for
the due and punctual payment of all the Debentures and the interest
thereon and all other moneys payable hereunder and the covenant of such
Successor Corporation to pay the same and its agreement to observe and
perform all the covenants and obligations of the Corporation under this
Debenture; and |
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|
(b) |
no condition or event shall exist in respect of the
Corporation or the Successor Corporation, either at the time of such
transaction or immediately thereafter after giving full effect thereto,
which constitutes or would, after the giving of notice or the lapse of
time or both, constitute an Event of Default
hereunder. |
10.2 Vesting of Powers in
Successor
Whenever the conditions of Section 10.1 have been duly observed
and performed, the Corporation shall execute and deliver such required
documentation and thereupon:
|
(a) |
the Successor Corporation shall possess and from time to
time may exercise each and every right and power of the Corporation under
the Debenture in the name of the Corporation or otherwise, and any act or
proceeding by any provision of the Debenture required to be done or
performed by the Corporation may be done and performed with like force and
effect by such Successor Corporation; and |
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(b) |
the Corporation shall be released and discharged from
liability under the Debenture. |
ARTICLE 11
GUARANTEE
11.1 Guarantee
All obligations of the Holder shall be jointly and severally
guaranteed by each Canadian and United States Subsidiary that is not an
Immaterial Subsidiary (collectively, the Guarantors) as signatories to
this Debenture.
- 35 -
11.2 Joint and Several
Each of the Guarantors hereby agrees to be jointly and
severally liable for, and hereby irrevocably and unconditionally guarantees to
the Holder and their respective successors and assigns, the full and prompt
payment when due (whether at stated maturity, by acceleration or otherwise) and
at all times thereafter, and performance, of all of the obligations owed or
hereafter owing to the Holder by the Corporation hereunder. Each of the
Guarantors agrees that its guarantee obligation hereunder is a continuing
guarantee of payment and performance and not of collection, that its obligations
under this Guarantee shall not be discharged until payment and performance, in
full, of all of the obligations of the Corporation under the Debenture have
occurred and this Debenture has been terminated, and that its obligations
hereunder shall be primary, absolute and unconditional.
The obligations of the Guarantors hereunder shall not be
satisfied, reduced or discharged by any intermediate payment, settlement or
satisfaction of the whole or any part of the principal, interest, fees or other
money or amounts which may at any time be or become owing or payable under, by
virtue of, or otherwise in connection with the obligations of the Corporation
under this Debenture or any of the documents executed in connection herewith.
The Guarantors shall be regarded, and shall be in the same
position, as principal debtor with respect to the obligations of the Corporation
hereunder and any amounts expressed to be payable from the Guarantors shall be
recoverable from the Guarantors as primary obligors and principal debtors in
respect thereof.
11.3 Charge
In consideration of the premises herein contained and to secure
the due payment of the principal and interest and all other moneys from time to
time owing pursuant to the Debenture, and the performance by the Corporation and
the Guarantors of the obligations contained herein, each Guarantor hereby
mortgages, assigns, pledges, transfers, and charges in favour of the Holder, a
continuing security interest in and to the whole of its Property, subject to
Permitted Liens. Notwithstanding the foregoing, the collateral shall not be
deemed to include (a) more than 65% of the capital stock of any direct foreign
Subsidiary; (b) any Disputed Intellectual Property whether registered or not,
except that the collateral shall include all accounts, general intangibles,
instruments, and chattel paper that consist of other rights to payment and
proceeds from the sale, licensing or disposition of any part, or rights in, the
intellectual property (the Rights to Payment); (c) intent-to-use
trademarks; or (d) any rights or interests in or under, any license, contract,
permit, instrument, security or franchise to which the Guarantor is a party or
any of its rights or interests thereunder to the extent, but only to the extent,
that such a grant would, under the terms of such license, contract, permit,
instrument, security or franchise, result in a breach of the terms of, or
constitute a default under, such license, contract, permit, instrument, security
or franchise (other than to the extent that any such term would be rendered
ineffective pursuant to the Uniform Commercial Code or any other applicable law
or principles of equity), provided, that immediately upon the ineffectiveness,
lapse or termination of any such provision the collateral shall include, and the
Guarantor shall be deemed to have granted a security interest in, all such
rights and interests as if such provision had never been in effect.
Notwithstanding the foregoing, if a judicial authority (including a U.S.
Bankruptcy Court) holds that a security interest in the underlying Disputed
Intellectual Property is necessary to have a security interest in the Rights to
Payments, then the collateral shall automatically, and effect as of the date of
this Debenture, include the Disputed Intellectual Property. Each Guarantor
hereby acknowledges that: (i) value has been given; (ii) such Guarantor has
rights in its Property (other than after-acquired property); and (iii) no
Guarantor has agreed to postpone the time of attachment of the security interest
granted hereunder. The provisions of Sections 4.2 to 4.10 of this Debenture shall also apply to each Guarantor with
all necessary amendments to reflect application of such provisions to such
Guarantor rather than the Corporation.
- 36 -
11.4 Subordinate; Waiver of
Defences
The Guarantors hereby expressly and irrevocably subordinate to
the payment of the obligations of the Corporation hereunder, any and all rights
at law or in equity to reimbursement, exoneration, contribution, indemnification
or set-off and any and all defences available to a surety, guarantor or
accommodation co-obligor until all of the obligations of the Corporation
hereunder are indefeasibly paid in full in cash and this Debenture has been
terminated. The Guarantors further agree to waive any rights of subrogation
arising at law or in equity.
The obligations of the Guarantors hereunder shall not be
affected or impaired by any act, omission, matter or thing whatsoever, occurring
before, upon or after any demand for payment hereunder which, but for this
provision, might constitute a whole or partial defence to a claim against the
Guarantors hereunder or might operate to release or otherwise exonerate the
Guarantors from any of their obligations hereunder or otherwise affect such
obligations. Each of the Guarantors hereby irrevocably waives any defence it may
now or hereafter have in any way relating to any of the foregoing, including,
without limitation:
|
(a) |
any limitation of status or power, disability, incapacity
or other circumstance relating to the Corporation or the
Guarantors; |
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(b) |
any irregularity, defect, unenforceability or invalidity
in respect of any indebtedness or other obligation of the Corporation or
any of the Guarantors; |
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|
(c) |
any failure of the Corporation or any of the Guarantors
to perform or to comply with any of the provisions of this Debenture or
any documents executed in connection herewith; |
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(d) |
the taking or enforcing or exercising or the refusal or
neglect to take or enforce or exercise any right or remedy from or against
the Corporation, the Guarantors or their respective assets or the release
or discharge of any such right or remedy by the Holder; |
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(e) |
the granting of time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and other indulgences to the
Corporation or any Guarantor (except to the extent such Guarantor receives
any such indulgence); |
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(f) |
any amendment, restatement, variation, modification,
supplement or replacement of this Debenture or any documents executed in
connection herewith; |
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(g) |
any change in the ownership, control, name, objects,
businesses, assets, capital structure or constitution of the Corporation
or any Guarantor or any merger or amalgamation of the Corporation or any
Guarantor with any person or persons; |
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(h) |
the existence of any claim, set-off or other rights that
any Guarantor may have at any time against the Corporation, the Holder,
whether in connection with the Debenture or otherwise; and |
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(i) |
any other circumstance that might otherwise constitute a
legal or equitable discharge or defence of any
Guarantor. |
- 37 -
11.5 Actions by Holder
The Holder, without releasing, discharging, limiting or
otherwise affecting in whole or in part the Guarantors obligations and
liabilities hereunder and without the consent of or notice to the Guarantors,
may:
|
(a) |
grant time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and any other indulgences to
the Corporation or the Guarantors; |
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(b) |
amend, vary, modify, supplement or replace this Debenture
or any document issued in connection therewith or any other related
document to which the Guarantors are not a party; |
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(c) |
take or abstain from taking security or collateral from
the Corporation or the Guarantors or from perfecting security or
collateral of any such person; |
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(d) |
release, discharge, compromise, realize, enforce or
otherwise deal with or do any act or thing in respect of any security
given by the Corporation or the Guarantors with respect to any of the
obligations of the Corporation or the Guarantors contemplated by this
Debenture; |
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(e) |
accept compromises or arrangements from the Corporation
or the Guarantors; |
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(f) |
apply all money at any time received from the Corporation
or either Guarantor or from any collateral to any part of the obligations
outstanding under this Debenture as they may see fit; and |
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(g) |
otherwise deal with, or waive or modify their right to
deal with, the Corporation, the Guarantors and all other persons and
securities as they may see fit. |
ARTICLE 12
NOTICE
12.1 Notice to the Corporation
Any notice to the Corporation under the provisions of this
Debenture shall be valid and effective if delivered personally to, if telecopied
to, or, subject to Section 12.3, if given by registered mail, postage prepaid,
addressed to, the Corporation at 240 Matheson Blvd. East, Mississauga, Ontario,
L4Z 1X1, Attention: Mr. Scott Worthington, Chief Financial Officer, Facsimile
No. (905) 282-9966, and shall be deemed to have been given on the date of
delivery. The Corporation may from time to time notify the Holder of a change in
address which thereafter, until changed by further notice, shall be the address
of the Corporation for all purposes of this Debenture.
12.2 Notice to Holder
Except as otherwise expressly provided herein, all notices to
be given hereunder with respect to the Debentures shall be valid and effective
if such notice is delivered personally or, subject to Section 12.3, sent by
registered mail, postage prepaid, addressed to the Holder at 46A, Avenue J. F.
Kennedy, Luxembourg, Luxembourg, with a further copy sent to: 399 Park Avenue,
39th Floor, New York, NY 10022, Attention: Mr. Stephen Barnes, Head
of Operations, Facsimile No. (212) 380-5801, email: ops@cyruscapital.com, or
such other post office addresses appearing in any of the registers hereinbefore mentioned. Any notice so
delivered shall be deemed to have been given on the day upon which it is
delivered. Any accidental error, omission or failure in giving or in delivering
or mailing any such notice or the non-receipt of any such notice by any Holder
or Holders shall not invalidate or otherwise prejudicially affect any action or
proceeding founded thereon.
- 38 -
12.3 Mail Service Interruption
If the Corporation determines that mail service is or is
threatened to be interrupted at the time when the Corporation is required or
elects to give any notice to the Holders hereunder, the Corporation shall,
notwithstanding the provisions hereof, give such notice at the Corporations
expense by means of publication in The Globe and Mail, national edition, or any
other English language daily newspaper or newspapers of general circulation in
Canada and any notice so published shall be deemed to have been given on the
first date on which the publication takes place.
If, by reason of any actual or threatened interruption of mail
service due to strike, lock-out or otherwise, any notice to be given to the
Corporation would be unlikely to reach its destination in a timely manner, such
notice shall be valid and effective only if delivered personally in accordance
with Article 12.
[Signature page to follow]
- 39 -
IN WITNESS WHEREOF THE CORPORATION has caused this Debenture to
be signed by an authorized officer as of the date first noted above.
SPHERE 3D CORPORATION
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By: |
Eric Kelly |
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Eric Kelly |
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Chief Executive Officer |
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By: |
Peter Tassiopoulos |
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Peter Tassiopoulos |
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President |
IN WITNESS WHEREOF THE CORPORATION has caused this Debenture to
be signed by an authorized officer each of the Guarantors with respect to
Article 12 as of the date first noted above.
SPHERE 3D INC.
|
By: |
Eric Kelly |
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Eric Kelly |
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Chief Executive Officer |
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By: |
Peter Tassiopoulos |
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Peter Tassiopoulos |
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President |
V3 SYSTEMS HOLDINGS, INC.
|
By: |
Eric Kelly |
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Eric Kelly |
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Chief Executive Officer |
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By: |
Peter Tassiopoulos |
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Peter Tassiopoulos |
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Vice Chairman
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- 40 -
OVERLAND STORAGE, INC.
|
By: |
Eric Kelly |
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Eric Kelly |
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Chief Executive Officer |
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By: |
Peter Tassiopoulos |
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Peter Tassiopoulos |
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President |
TANDBERG DATA HOLDINGS, S.A.R.L.
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By: |
Eric Kelly |
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Eric Kelly |
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Chief Executive Officer |
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By: |
Kurt Kalbfleisch |
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Kurt Kalbfleisch
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Chief Financial Officer
|
- 41 -
APPENDIX 1
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto (insert name of the transferee)
___________________________________________ (the Transferee) of (insert
residential address)
____________________________________________________________
$_______________________________ principal amount of 8%
Senior Secured Convertible Debenture of Sphere 3D Corporation (the
Corporation) registered in the name of the undersigned on the register of the
Debenture represented by the within certificate, and irrevocably appoints:
______________________________________________________________________________________________________________
as
the attorney of the undersigned to transfer the said Debenture on the books or
register of transfer for the Debenture of the Corporation, with full power of
substitution.
DATED the _____ day of ______________________, 20_____.
Signature of Holder |
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Signature Guaranteed By: |
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(Signature of Holder to be the same as |
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appears on the face of this Debenture |
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Certificate) |
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Notes to Holders:
|
1. |
In order to transfer the Debenture represented by this
certificate, this transfer form must be delivered to the
Corporation. |
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2. |
The signature to this transfer form must correspond with
the name as written on the face of this Debenture certificate without
alteration, enlargement or change whatsoever. |
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3. |
The signature to this transfer form must be guaranteed by
a Canadian Schedule I chartered bank or an eligible guarantor institution
with membership in an approved signature guarantee medallion
program. |
APPENDIX 2
CONVERSION FORM
The undersigned, being the registered holder of this 8% Senior
Secured Convertible Debenture, hereby irrevocable elects to convert:
$___________________________ principal amount of the attached Debenture into
Common Shares at the Conversion Price of $_______________ and hereby delivers
such Debenture to the principal office of the Corporation in the City of
Toronto, Ontario.
The undersigned represents, warrants and certifies as follows
(only one of the following must be checked):
|
A. |
[ ] The undersigned holder (a) at the time of
exercise of the Debenture is not in the United States; (b) is not a U.S.
person (a U.S. Person) as defined in Regulation S under the U.S.
Securities Act of 1933, as amended (the 1933 Act), and is not exercising
the Debenture on behalf of a U.S. Person; (c) did not execute or deliver
this conversion form in the United States; and (d) has in all other
aspects complied with the terms of Regulation S under the 1933 Act;
or |
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B. |
[ ] The undersigned holder has delivered a written
opinion of counsel of recognized standing in form and substance reasonably
satisfactory to the Corporation or other evidence reasonably satisfactory
to the Corporation to the effect that an exemption from the registration
requirements of the 1933 Act and applicable state securities laws is
available for the issuance of the Common Shares. |
The undersigned hereby directs that the Common Shares issued
upon conversion hereby be issued, registered and delivered as follows:
Name in Full |
Address in Full |
Number of Common Shares |
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Dated this ______ day of _________________, ______________
Signature of Holder: ____________________________________
_____ Please check if certificates representing the Common
Shares are to be delivered at the office where this Debenture Certificate is
surrendered, failing which the certificates will be mailed to the address
indicated in the registration instructions above.
Notes to Holders:
|
1. |
Certificates representing Common Shares will not be
registered or delivered to an address in the United States unless Box B is
checked. |
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2. |
If Box B is to be checked, holders are encouraged to
consult with the Corporation in advance to determine that the legal
opinion tendered in connection with the conversion will be satisfactory in
form and substance to the Corporation. |
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