Retention Agreement between Sphere 3D Corp. and Jenny Yeh dated December 18, 2017

I am pleased to inform you that the Board of Directors of Sphere 3D Corp. (the “Company”) has approved a new retention arrangement for you, effective as of the date set forth above, to receive the benefits described below if either a Change in Control Event occurs or if your employment is terminated by the Company without Cause or by you for Good Reason prior to a Change in Control Event. (Capitalized terms have the meanings given in Exhibit A to this letter if not otherwise defined herein.). The retention benefits are subject to the terms and conditions set forth in this letter agreement (this “Agreement”). This Agreement supersedes and replaces in its entirety your severance letter agreement with the Company dated November 10, 2017 (the “Prior Agreement”).

1.    Change in Control Event. If a Change in Control Event occurs and you remain employed with the Company or any of its subsidiaries as of immediately prior to the Change in Control Event, you will be entitled to receive (a) an amount equal to twelve (12) times your monthly rate of base salary as in effect on the date of the Change in Control Event, such amount to be paid in a lump sum on the first business day after the Release becomes effective and in all events within sixty (60) days after the Change in Control Event occurs (provided that if such 60-day period spans two calendar years, such payment will be made in the second of such two years) (the “Retention Bonus”); (b) your equity-based awards granted by the Company, to the extent then outstanding and unvested, will accelerate and fully vest (and, in the case of options and similar awards, be fully exercisable) upon (or immediately prior to) the Change in Control Event (the “Equity Acceleration”); and (c) upon a termination of your employment with the Company (or one of its successors or affiliates) on or after the Change in Control Event either by the Company or such successor or affiliate without Cause or by you for Good Reason, you will be entitled to a cash lump sum payment equal to the non-discounted present value of your expected premiums charged to continue health coverage for you (and, if applicable, your eligible dependents) pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for twelve (12) months following your termination date (the “COBRA Benefit”), such amount to be determined by the Company in its reasonable discretion based on your coverage elections as in effect immediately prior to your termination of employment and the estimated monthly premium for such COBRA coverage determined as of your termination date, such amount to be paid within sixty (60) days following your termination date (provided that if such 60-day period spans two calendar years, such payment will be made in the second of such two years).

2.    Termination Without Cause or for Good Reason Prior to Change in Control Event. If, at any time prior to a Change in Control Event, your employment with the Company or one of its subsidiaries is terminated by the Company or such subsidiary without Cause or by you for Good Reason, you will be entitled to receive payment of the Retention Bonus and the COBRA Benefit as set forth above (calculated based on your monthly base salary rate and health coverage benefits, respectively, as in effect immediately prior to your termination), such amounts to be paid together within sixty (60) days following your termination date (provided that if such 60-day period spans two calendar years, such payment will be made in the second of such two years). In addition, you will be entitled to the Equity Acceleration provided above with respect to your equity-based awards granted by the Company that are outstanding and unvested as of such a termination of your employment.

3.    Conditions on Benefits. Notwithstanding the foregoing provisions, your right to receive any of the payments and benefits described in Sections 1 and 2 above is conditioned on both (i) your signing and delivering to the Company a release of claims in a form acceptable to the Company (the “Release”) within twenty-one (21) days (or such longer period of time as is required to make the Release maximally enforceable under applicable law) after the date on which the Company provides the Release to you (and you not revoking such Release within any revocation period provided by applicable law), and (ii) your continued compliance with your obligations to the Company under the Confidentiality and Intellectual Property Agreement dated October 5, 2015 (the “Confidentiality Agreement”). The Company will provide the form of Release to you within seven (7) days after your termination date.

4.    Other Terminations; No Duplication of Benefits. For purposes of clarity, if your employment with the Company or any of its subsidiaries terminates prior to a Change in Control Event for any reason other than a termination by the Company or such subsidiary without Cause or by you for Good Reason, you will not be entitled to any payments or benefits under this Agreement. In no event will you be entitled to benefits under both Sections 1 and 2 of this Agreement. In addition, only the first Change of Control Event that occurs after the date of this Agreement will be taken into account for purposes of this Agreement, and any Change of Control Event that may occur thereafter will be disregarded.

5.    Miscellaneous. Each of the payments provided in this Agreement is subject to all applicable tax withholding. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise, including a Change in Control Event) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no such succession had taken place. This Agreement will be binding upon and inure to the benefit of the Company and any such successor to the Company and will inure to the benefit of and be enforceable by your successors. Nothing contained in this Agreement constitutes an employment or service commitment by the Company (or any of its affiliates or successors) or affects your status as an employee at will who is subject to termination without cause at any time (subject to the provisions hereof). This Agreement, together with the Confidentiality Agreement, contains all of the terms and conditions of the retention benefits provided herein and supersedes all prior understandings and agreements, written or oral, between you and the Company and any of its affiliates with respect thereto (including, without limitation, the Prior Agreement). This Agreement may be amended only by a written agreement between you and the Company that expressly refers to this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California without regard to the conflicts of laws principles thereof. It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A of the U.S. Internal Revenue Code so as not to subject you to payment of any additional tax, penalty or interest imposed under Section 409A, and the provisions of this Agreement will be construed and interpreted in accordance with such intent.

If this Agreement accurately reflects our understanding regarding these matters, please indicate your acceptance by where indicated below and returning it to me. A duplicate copy of this Agreement is included for your records.

SPHERE 3D CORP.

By: /s/ Eric L. Kelly        

Print Name: Eric L. Kelly

Title: Chairman and CEO

Acknowledged and Agreed:

Jenny Yeh

Date:                         

For purposes of this Agreement, the following definitions will apply:

 

then-outstanding shares of common stock of the entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such entity, except to the extent that the ownership in excess of fifty percent (50%) existed prior to the Business Combination, and (3) at least a majority of the members of the board of directors or trustees of the entity resulting from such Business Combination or a Parent were members of the Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or