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 Corporation’s 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 Person’s 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 Exchange’s 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 Exchange’s 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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“ 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:

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

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

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 Corporation’s 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 Overland’s 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

2.6        Ownership of the Debenture

2.7        Exchange of the Debenture

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2.8        Transfer of the Debenture

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.

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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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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.

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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:

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.”

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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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3.2        Manner of Exercise of Right to Convert

3.3        Right to Convert

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3.4        Prepayment Right

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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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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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.

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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.

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4.10      Registration and Counsel’s Opinion.

The Corporation shall, from time to time, at the expense of the Corporation:

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.

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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:

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.

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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).

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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.

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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 Corporation’s 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.

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ARTICLE 7
COVENANTS OF THE CORPORATION

7.1        General Covenants

The Corporation covenants with the Holder as follows:

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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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8.2        Notice of Events of Default

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 Corporation’s 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.

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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:

8.6        Distribution of Moneys

Payments to Holders pursuant to Section 8.5(a) shall be made as follows:

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.

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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.

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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:

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:

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.

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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.

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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:

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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:

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, 39 ^th 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.

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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 Corporation’s 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]

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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

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.

V3 SYSTEMS HOLDINGS, INC.

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OVERLAND STORAGE, INC.

TANDBERG DATA HOLDINGS, S.A.R.L.

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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_____.

Notes to Holders:

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):

The undersigned hereby directs that the Common Shares issued upon conversion hereby be issued, registered and delivered as follows:

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: