Sphere 3D and Overland Merger Update

Sphere 3D Corporation announced an update of its proposed merger with Overland Storage, Inc.

Overland has entered into a financing arrangement with FBC Holdings S.á r.l., an affiliated company with Cyrus Capital Partners and the majority shareholder of Overland.

The proceeds from the Overland Financing provide $5 million of working capital for Overland to complete various cost cutting initiatives including streamlining of their manufacturing facilities, and the elimination of redundant facilities, and an additional $2.5 million for repayment of a portion of Overland’s outstanding indebtedness to Sphere 3D.

Sphere 3D has agreed that, immediately after the closing of the merger transaction and subject to regulatory approval, it will issue common shares to Cyrus Capital in repayment of $2.5 million of the principal amount of the Overland Financing, at an ascribed price equal to the 20-day volume weighted average price ending 3 days before such conversion but in any event at a minimum of $6.50. It is expected that no more than 384,615 common shares of Sphere 3D will be issued to Cyrus Capital in connection with such repayment. These securities are subject to a four-month hold period from the issuance date in accordance with the policies of the TSXV and applicable securities laws.

Additionally, the company reports that Overland has entered into a Memorandum of Understanding with the Plaintiffs in the consolidated class action cases referred to as In re Overland Storage Inc., Shareholders Litigation that would, subject to court approval and other standard conditions, provide for the settlement of all outstanding claims in regard to Overland’s proposed merger transaction with Sphere 3D.

In connection with the Overland Financing, Sphere 3D and Overland have executed an amendment to the Agreement and Plan of Merger Agreement dated May 15, 2014 to reduce the exchange ratio from 0.510594 common shares of Sphere 3D for each share of Overland common stock to 0.46385 common shares of Sphere 3D for each share of Overland common stock.

Sphere 3D and Overland filed an amended Registration Statement on Form F-4/A with the SEC to include additional disclosures in relation to: the financing, amended Agreement and Plan of Merger, the MOU regarding the settlement of the outstanding class action litigation, and to address outstanding comments with the SEC. Upon effectiveness of the Form F-4/A, Overland will be in a position to set its shareholder meeting date for a date that is expected to be 20 calendar days following effectiveness.

Peter Tassiopoulos, Sphere 3D’s CEO stated: “Significant progress has been made for us to be in a position to not only consummate this transaction, but to begin combined operations from a solid foundation post-closing. Overland has successfully been able to exceed their stated goal of $20 million in annualized operating savings since their Tandberg acquisition while gaining efficiency throughout their organization. With the Overland Financing in place now to support these measures, and the filing of the additional disclosures earlier today, we believe that we are well on our way to finalizing the merger transaction and moving forward with growth and profitability as our primary focus.”