Sphere 3D Completes Divesture of Overland Storage

In a SEC filing, Sphere 3D Corp., wrote:

On November 13, 2018, Sphere 3D (the company) closed the previously announced transactions contemplated by that certain Share Purchase Agreement (as amended by that certain First Amendment to Share Purchase Agreement dated August 21, 2018, and as further amended by that certain Second Amendment to Share Purchase Agreement dated November 1, 2018), dated February 20, 2018, by and among company, Overland Storage, Inc., a California corporation and a wholly-owned subsidiary of the company, and Silicon Valley Technology Partners, Inc. (formerly Silicon Valley Technology Partners LLC), a Delaware corporation established by Eric Kelly, the company’s CEO, who currently serves as the CEO and chairman of the board of directors of such corporation.

Pursuant to the closing of the purchase agreement, the company sold to purchaser all of the issued and outstanding shares of capital stock of Overland in consideration for:

• (i) the issuance to the company of shares of Series A Preferred Stock of Purchaser representing 19.9% of the outstanding shares of capital stock of purchaser as of the closing, and
• (ii) the release of the company and all of its subsidiaries (other than Overland) from all the obligations and liabilities under the Closing Indebtedness (as defined in the purchase agreement) and assumption thereof by purchaser.

Among other things, in connection with the closing:

• $6.5 million of the outstanding principal amount of that certain 8% Senior Secured Convertible Debenture, dated December 1, 2014, by and between the company and FBC Holdings S.A.R.L, having an outstanding principal amount of $24.5 million was converted into 6,500,000 non-voting preferred shares of the company;
• The company and its subsidiaries were released as obligors and guarantors under the Debenture and under the company’s Credit Agreement, dated April 6, 2016, as amended and as assigned to FBC, having an outstanding principal amount of $18.9 million; and
• The Subordinated Promissory Note, dated December 11, 2017, by and between Overland and MF Ventures, LLC, having an outstanding principal amount of $2.2 million remained an obligation solely of Overland, and the company has no obligations pursuant thereto.

The value of the liabilities of the company that were released upon the closing exceeded $45.0 million (the amount of the purchase price contemplated by the purchase agreement).

In connection with the consummation of the share purchase, Eric Kelly resigned as a director of the company and as chairman of the board of directors of the company and has been appointed CEO and chairman of the board of directors of Overland.

In addition, the company entered into a Secured Promissory Note issued by Overland in favor of the company and HVE Inc., a wholly-owned subsidiary of the company, in the principal amount of $500,000. The proceeds from the secured note will be used to pay certain expenses on or after the closing.

The secured note matures on May 13, 2019 and accrues interest at a rate equal to 8% per annum. The company granted a security interest to Overland in all the SVTP Shares held by the company to secure the company’s obligations under the secured note.

Read also:
Sphere 3D Selling Data Protection and Archive Business (Overland/Tandberg) for $45 Million
To Silicon Valley Technology Partners controlled by Eric Kelly
2018.02.22 | Press Release