UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 12, 2019
SPHERE 3D CORP.
(Exact name of registrant as specified in its charter)
| Ontario, Canada | 001-36532 | 98-1220792 |
| (State or other jurisdiction | (Commission File Number) | (IRS Employer Identification No.) |
| of incorporation) |
| 895 Don Mills Road, | |
| Bldg. 2, Suite 900 | |
| Toronto, Ontario | M3C 1W3 |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (858) 571-5555
Not Applicable
(Former name or former address,
if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d - 2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e - 4(c))
Item 1.01 Entry into a Material Definitive Agreement
Share Exchange Agreement
On July 12, 2019, following the filing of the Amendment (as defined below) to create the Series B Preferred Shares (as defined below), Sphere 3D Corp. (the “Company”) entered into a share exchange agreement (the “Share Exchange Agreement”) with FBC Holdings SÀRL (“FBC”) to exchange the 6,500,000 Series A Preferred Shares held by FBC for 6,500,000 Series B Preferred Shares.
The foregoing description of the Share Exchange Agreement is qualified in its entirety by reference to the Share Exchange Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated into this Item 1.01 by reference.
Amendment to the Exchange and Buy-Out Agreement
On November 13, 2018, the Company entered into an Exchange and Buy-Out Agreement (the “Exchange and Buy-Out Agreement”), by and among the Company, FBC, Silicon Valley Technology Partners Inc. (“SVTP”) and MF Ventures LLC (“MFV”) which was previously disclosed on Form 8-K filed on November 14, 2018. Under the terms of the Exchange and Buy-Out Agreement, (i) the Company granted FBC the right to exchange up to 2,500,000 of Series A Preferred Shares held by FBC for up to all of the shares of SVTP (the “SVTP Shares”) held by the Company (the “Exchange Right”), and (ii) MFV and SVTP have the right to purchase up to 2,120,301 of the SVTP Series A Preferred Shares held by FBC plus up to 2,500,000 Series A Preferred Shares held by FBC (or, following exercise of the Exchange Right by FBC, the SVTP Shares held by FBC).
On July 12, 2019, in connection with the Share Exchange Agreement, the Company entered into an amendment to the Exchange and Buy-Out Agreement (the “Amendment to the Exchange and Buy-Out Agreement”) by and among the Company, FBC, SVTP and MFV such that the rights and obligations under the Exchange and Buy-Out Agreement would apply to the Series B Preferred Shares in respect of which the Series A Preferred Shares were exchanged under the Share Exchange Agreement.
The foregoing description of the Exchange and Buy-Out Agreement is qualified in its entirety by reference to the Exchange and Buy-Out Agreement, a copy of which was attached as Exhibit 10.3 to Form 8-K filed on November 14, 2018. The foregoing description of the Amendment to the Exchange and Buy-Out Agreement is qualified in its entirety by reference to the Amendment to the Exchange and Buy-Out Agreement, a copy of which is attached hereto as Exhibit 10.2 and incorporated into this Item 1.01 by reference.
Item 5.03 Amendment to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Pursuant to the articles of incorporation of the Company, as amended, the Company is authorized to issue an unlimited number of Preferred Shares, issuable in series and the directors are authorized to fix the number of shares in each series of Preferred Shares and to determine the designation, rights, privileges, restrictions and conditions attaching to each series of Preferred Shares.
On July 8, 2019, the directors of the Company passed a resolution authorizing the filing of articles of amendment to create a second series of Preferred Shares, being, an unlimited number of series B preferred shares (the “Series B Preferred Shares”) and to provide for the rights, privileges, restrictions and conditions attaching thereto. The rights, privileges, restrictions and conditions attaching to the Series B Preferred Shares are substantially the same as the series A preferred shares (the “Series A Preferred Shares”) of the Company, save and except that the requirement for the Company to redeem all of the issued and outstanding Series A Preferred Shares on or before November 13, 2020 has been amended to provide that the Company shall only be required to redeem 1,000,000 Series B Preferred Shares on or before November 13, 2020 and any other outstanding Series B Preferred Shares may be redeemed at any time and from time to time after December 19, 2019 at the option of the Company.
On July 12, 2019, the Company filed Articles of Amendment to create the Series B Preferred Shares (the “Amendment”). The foregoing description is qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit 3.1 hereto and is incorporated by reference into this report.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: July 12, 2019
| SPHERE 3D CORP. |
| By: | /s/ Kurt L. Kalbfleisch | |
| Kurt L. Kalbfleisch | ||
| Chief Financial Officer |
EXHIBIT INDEX
(d) Exhibits
SHARE EXCHANGE AGREEMENT
THIS AGREEMENT made as of the 12th day of July, 2019 between FBC HOLDINGS SÀRL, a société à responsabilité limitée incorporated under the laws of Luxembourg with R.C.S. number B.142.133 (“FBC”) and SPHERE 3D CORP., a corporation incorporated under the laws o the Province of Ontario (the “Company”)
RECITALS:
| A. |
FBC is the registered and beneficial owner of 6,500,000 Series A Preferred Shares (the “Series A Shares”) in the capital of the Company. |
| B. |
FBC and the Company desire, and deem it in the best interests of the Company to, exchange the Series A Shares for 6,500,000 Series B Preferred Shares of the Company (the “Series B Shares”), upon the terms and conditions hereinafter set forth (such transaction, the “Exchange”). |
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants hereinafter set forth, the parties hereby covenant and agree as follows:
ARTICLE I
EXCHANGE OF SHARES
1.1 Exchange
FBC and the Company hereby agree, subject to the terms and conditions set forth herein, to conduct the Exchange. At the closing of the Exchange (the “Closing”), the (i) FBC shall deliver to the Company the Series A Shares for cancellation and (ii) the Company shall deliver to FBC the Series B Shares.
ARTICLE II
REPRESENTATIONS AND
WARRANTIES
2.1 Representations and Warranties of FBC
FBC hereby represents and warrants to the Company that as of the date hereof and as of the Closing date:
| (a) |
FBC is a corporation duly incorporated and organized and is a validly existing entity in good standing under the laws of the jurisdiction of its incorporation or organization with the corporate power and authority to execute, deliver and perform the terms of this Agreement and to consummate the transactions contemplated hereunder; | |
| (b) |
this Agreement is a valid and binding obligation of FBC, enforceable against FBC in accordance with its terms. FBC has the full legal right to execute, deliver and perform this Agreement and the execution, delivery and performance of this Agreement by FBC is not subject to the consent or approval of any other person or entity; |
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| (c) |
FBC beneficially owns the Series A Shares free and clear of any claim, lien, charge or encumbrance whatsoever; | |
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| (d) |
there is not, to FBC’s knowledge, now any agreement or other instrument binding upon FBC that will be violated by the execution and delivery of this agreement or will prevent the performance or satisfaction by FBC of any of the terms and conditions herein contained; | |
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| (e) |
FBC is not insolvent, has not committed an act of bankruptcy, proposed a compromise or arrangement to its creditors generally, has not had any petition or a receiving order in bankruptcy filed against it, taken any proceeding with respect to a compromise or arrangement, taken any proceeding to have itself declared bankrupt, has not taken any proceeding to have a receiver appointed of any part of its assets, has not had any encumbrancer take possession of any of its property, and has not had any execution or distress become enforceable or become levied upon any of its property; | |
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| (f) |
no suits, actions or legal proceedings of any sort are pending or are, to FBC’s knowledge, threatened which would restrain or otherwise prevent, in any manner, FBC from effectually and legally transferring the Series A Shares to the Company free and clear of any and all claims, liens, security interests and encumbrances pursuant to this Agreement, nor are there any suits, actions or other legal proceedings pending or, to FBC’s knowledge, threatened, the effect of which would be to make FBC liable for damages, to divest title to the Series A Shares, or to cause a lien to attach to the Series A Shares, and FBC has no knowledge of any claims which could give rise to such a suit, action or legal proceeding; and | |
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| (g) |
FBC is a non-resident of Canada for the purposes of the Income Tax Act (Canada). |
2.2 Representations and Warranties of the Company
The Company hereby represents and warrants to FBC as of the date hereof and as of the Closing date that:
| (a) |
the Company is a corporation duly incorporated and organized and is a validly existing entity in good standing under the laws of the jurisdiction of its incorporation or organization with the corporate power and authority to execute, deliver and perform the terms of this Agreement and to consummate the transactions contemplated hereunder; | |
| (b) |
this Agreement is a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. The Company has the full legal right to execute, deliver and perform this Agreement and the execution, delivery and performance of this Agreement by the Company is not subject to the consent or approval of any other person or entity, except for the NASDAQ Capital Market, which consent has been obtained as of the date hereof; |
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| (c) |
the authorized capital of the Company consists, immediately prior to the Closing, of an unlimited number of Common Shares, an unlimited number of Preferred Shares, issuable in series, an unlimited number of Series A Preferred Shares and an unlimited number of Series B Preferred Shares, of which 2,300,000 Common Shares and 6,500,000 Series A Preferred Shares are issued and outstanding immediately prior to the Closing. All of such issued shares have been duly authorized, are fully paid and non-assessable and were issued in compliance with all applicable securities laws; | |
| (d) |
the rights, privileges and preferences of the Series B Shares are as stated in the Company’s articles of amendment filed on •, 2019 with the Ministry of Government and Consumer Services (Ontario); | |
| (e) |
all of the outstanding shares of Series B Shares, when issued, will be (i) duly authorized, fully paid and non-assessable, (ii) free from all pre-emptive or similar rights, taxes, liens, charges and other encumbrances with respect to the issue thereof, (iii) issued without any restrictive legend, (iv) freely resold by FBC without any restrictions, and (v) issued in compliance with all applicable securities laws; and | |
| (f) |
subject to the accuracy of representations and warranties made by FBC herein, and in reliance upon such representations and warranties, the Company represents to FBC on the date of this Agreement and on the Closing Date that the Exchange will not contravene any applicable state, federal or provincial securities laws in the United States or Canada. In addition, the Company represents that the Exchange is being made in reliance upon the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”) and agrees not to take any position contrary to this Section 2.2(f). For the purposes of Rule 144 of the Securities Act, the Company acknowledges that the holding period of the Series A Shares may be tacked onto the holding period of the Series B Shares and the Company agrees not to take a position contrary to this Section 2.2(f). The Company agrees to issue the Series B Shares without any restrictions on transfer and without any restrictive legend. |
2.3 Survival
The representations and warranties contained in Article II shall survive the Closing of the transactions.
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ARTICLE III
MISCELLANEOUS
3.1 Enurement
This Agreement shall be binding upon and enure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns.
3.2 Jurisdiction
This Agreement shall be governed by and construed in accordance with the laws of the province of Ontario and the federal laws of Canada applicable therein.
3.3 Notice
Notice, requests, demands, and other communications relating to this Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given if and when: (a) delivered personally, on the date of such delivery; (b) delivered by electronic transmission, on the date of such delivery; or (c) mailed by registered or certified mail, postage prepaid, return receipt requested, on the third day after the posting thereof, to the address set forth in the signature pages to this Agreement (as such address may be updated by written notices to the other Parties to this Agreement) .
3.4 Amendments and Waivers
Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of all parties.
3.5 Severability
If any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so enforced, such provision shall be stricken from this Agreement and the remainder of this Agreement shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Agreement
3.6 Entire Agreement
This Agreement and the documents referred to herein, constitutes the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersede any and all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the specific subject matter hereof
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3.7 Execution by Facsimile or Electronic Transmission
The signature of any of the parties hereto may be evidenced by a facsimile, scanned e-mail or internet transmission copy of this Agreement bearing such signature.
3.8 Counterparts
This Agreement may be signed in one or more counterparts, each of which so signed shall be deemed to be an original, and such counterparts together shall constitute one and the same instrument. Notwithstanding the date of execution or transmission of any counterpart, each counterpart shall be deemed to have the effective date first written above.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above mentioned.
| FBC HOLDINGS SÀRL |
| Per: | /s/ Trustmoore Luxembourg S.A. | |
| Trustmoore Luxembourg S.A. | ||
| Manager A | ||
| Per: | /s/ Cyrus Capital Partners, LP | |
| Cyrus Capital Partners, LP | ||
| Manager B |
| SPHERE 3D CORP. |
| Per: | /s/ Peter Tassiopoulos | |
| Peter Tassiopoulos | ||
| Chief Executive Officer |
FIRST AMENDMENT TO
SHARE EXCHANGE AND BUY OUT
AGREEMENT
This FIRST AMENDMENT TO SHARE EXCHANGE AND BUYOUT AGREEMENT (this “Amendment”) is made and entered into as of July 12, 2019 by and among SPHERE 3D CORP., a corporation incorporated under the laws of the Province of Ontario (“Sphere”), FBC HOLDINGS SARL, a société à responsabilité limitée incorporated under the laws of Luxembourg with R.C.S. number B.142.133 (“FBC” or a “Stockholder”), MF VENTURES, LLC, a limited liability company incorporated under the laws of Delaware (“MF”) and Silicon Valley Technology Partners, Inc., a Delaware corporation (“SVTP”)
RECITALS
WHEREAS, the Parties are parties to that certain Share Exchange and Buyout Agreement (the “Original Agreement”) made as of October 19, 2018 pursuant to which (a) Sphere agreed to transfer 1,879,699 shares of Series A Preferred Stock, par value $0.0001 (the “SVTP Series A Preferred Stock”) of SVTP in consideration for the Stockholder surrendering 2,500,000 Preferred Shares of Sphere; and (b) FBC has agreed to grant SVTP and MF the right to buy-out 2,500,000 Preferred Shares of Sphere and 2,120,301 of the SVTP Series A Preferred Stock held by FBC;
WHEREAS, pursuant to a Share Exchange Agreement (the “Exchange Agreement”) dated as of the date hereof between FBC and Sphere, FBC exchanged the 6,500,000 Series A Preferred Shares of Sphere registered in its name for 6,500,000 Series B Preferred Shares of Sphere;
WHEREAS, the Parties wish to amend the Original Agreement so that the right, terms and conditions applying to the Series A Preferred Shares of Sphere apply to the Series B Preferred Shares of Sphere and to dis-apply certain provisions of Section 7.4 of the Exchange Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals and for other good and valuable consideration, the receipt and adequacy of which the parties acknowledge, the parties hereby agree as follows:
1. Capitalized terms used in this Amendment not otherwise defined herein shall have the meanings given to them in the Original Agreement
2. The Original Agreement is hereby amended by deleting the words “Preferred Shares, no par value, of Sphere” in the second recital of the Original Agreement to “Series B Preferred Shares of Sphere”.
3. The Original Agreement is hereby amended by deleting Section 7.4 in its entirety and replacing it with the following:
7.4 Assignment. Neither Sphere, SVTP or MF may assign its rights or obligations under this Agreement without the prior written consent of each of the other parties hereto. Neither the Sphere Shares nor the SVTP Shares may be sold, transferred, conveyed, assigned or otherwise disposed of by FBC (an “FBC Transfer”) unless the transferee or assignee of such Sphere Shares and/or SVTP Shares agrees in writing to be bound by the terms of this Agreement with respect to all of the Sphere Shares and/or SVTP Shares subject to the FBC Transfer, as if such transferee or assignee were FBC hereunder (and, for the avoidance of doubt, FBC shall remain a party to this Agreement with respect to any Sphere Shares and SVTP Shares that are not a part of the FBC Transfer).
4. Except as amended herby, the Original Agreement shall continue in full force and effect, unamended, in accordance with its terms, provisions and conditions as modified by the applicable terms, provisions and conditions of this Amendment.
5. Subject to the restrictions on assignment contained in the Original Agreement, this Amendment will be binding upon and inure to the benefit of the Parties and their respective successors, assigns, heirs, executors, administrators and legal representatives; provided that such party consents in writing to be bound by the terms, conditions and obligations under the Original Agreement, as amended by this Amendment (the “Agreement”).
6. This Amendment will be governed by and construed in accordance with the laws of the State of Delaware, without reference to without reference to principles of conflict of laws or choice of laws.
7. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall constitute one and the same agreement. Delivery of copies of original signed counterparts by facsimile or electronic transmission (including e-mail) shall be deemed as valid as physical delivery of original signed counterparts.
8. The Agreement and the documents referred to therein, together with all the Schedules and Exhibits thereto, constitute the entire agreement and understanding of the Parties with respect to the subject matter of the Agreement, and supersede any and all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the specific subject matter hereof.
9. The Parties will perform and cause to be performed such further and other acts and things and execute and deliver or cause to be executed and delivered such further and other documents as the reasonably considered necessary or desirable to carry out the terms and intent of this Amendment.
*****
[Signatures on following pages]
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the date first written above.
| SPHERE 3D CORP. |
| By: | /s/ Peter Tassiopoulos | |
| Name: | Peter Tassiopoulos | |
| Title: | CEO |
| Address: | 895 Don Mills Road | |
| Bldg. 2, Suite 900 | ||
| Toronto, ON M3C 1W3 | ||
| Email: | peter.tassiopoulos@sphere3d.com | |
| Attn: | Peter Tassiopoulos |
| STOCKHOLDER: | |
| FBC HOLDINGS SARL | |
| By: /s/ Trustmore Luxembourg S.A. | |
| Name: Trustmoore Luxembourg S.A. | |
| Title: Manager A | |
| By: /s/ Cyrus Capital Partners, LP | |
| Name: Cyrus Capital Partners, LP | |
| Title: Manager B | |
| c/o Cyrus Capital Partners, LP | |
| 65 East 55th Street | |
| New York | |
| NY 10022 | |
| United States | |
| Email: dbordessa@cyruscapital.com and | |
| ops@cyruscapital.com | |
| With a copy (which shall not constitute notice) | |
| To | |
| Morgan, Lewis & Bockius UK LLP | |
| Condor House, 5-10 St. Paul's Churchyard | |
| London EC4M 8AL | |
| United Kingdom | |
| Attention: Georgia Quenby/Victoria Thompson | |
| Email: Georgia.quenby@morganlewis.com and | |
| Victoria.thompson@morganlewis.com |
| MF VENTURES LLC | |
| By: /s/ Victor MacFarlane | |
| Name: Victor MacFarlane | |
| Title: CEO | |
| Address: 201 Spear Street, 10th Floor | |
| San Francisco CA 94105 | |
| Email: victor@macfarlanepartners.com | |
| Attn: Victor MacFarlane |
| SVTP: | |
| SILICON VALLEY TECHNOLOGY | |
| PARTNERS, INC | |
| By: /s/ Eric Kelly | |
| Name: Eric Kelly | |
| Title: CEO | |
| Address: 6111 Bollinger Canyon road, Suite 560 | |
| San Ramon, CA 94583 | |
| Email: ekelly@overlandtandberg.com | |
| Attn: Eric Kel |