UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

January 26, 2024

 

 

 

SELINA HOSPITALITY PLC

 

 

 

27 Old Gloucester Street

London WC1N 3AX

United Kingdom

Tel: +44 737 680 9248

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ☒ Form 40-F ☐

 

 

 

 

 


 

Completion of Fundraising, Liability Management and other Transactions

 

As announced by Selina Hospitality PLC (the “Company”) via Reports on Form 6-K issued on December 4, 2023 and January 4, 2024 (the “Announcements”), the Company entered into an agreement in principle with a steering committee (the “Steering Committee”) comprised of noteholders holding approximately 26.0% of the outstanding indebtedness under the Indenture between the Company and Wilmington Trust, National Association, as trustee (“Trustee”), dated as of October 27, 2022 (the “Existing Indenture”), in respect of $147.5 million principal amount of 6.0% Convertible Senior Notes due 2026 (the “2026 Notes”), and Osprey Investments Limited (“Osprey Investments”), the investor under the strategic financing arrangements announced by the Company on June 27, 2023 (the “Original Osprey Investment Arrangements”), to restructure the 2026 Notes (the “Note Restructuring”) in a manner that would involve the Company exchanging the 2026 Notes held by each of the participating holders for warrants to acquire ordinary shares of the Company and new senior secured notes due 2029 (the “2029 Notes”) in conjunction with (i) Osprey Investments or its affiliate agreeing to purchase $28.0 million of ordinary shares of the Company at a price of $0.20 per share, converting some of its existing convertible debt into equity of the Company and having the option to invest up to $20.0 million in additional funds at a price of $0.10 per share together with the participating holders of the 2026 Notes (the “New Osprey Investment Arrangements”) and (ii) the Company seeking to raise an additional $20 million from investors (the “Incremental Fundraise”), all as described in the Announcements (the “Announced Transactions”).

 

Certain elements of the Announced Transactions are subject to approval by the Company’s shareholders at a general meeting to be convened by the Company to seek shareholder authority for the issuance of a sufficient number of new ordinary shares of the Company, on a non-pre-emptive basis, to give effect to the Transactions (the “Shareholder Approval”). The Company currently expects such general meeting to be convened by March 31, 2024 and to date, the participating holders of the 2026 Notes, Osprey Investment’s affiliate that entered into the New Osprey Investment Arrangements, Osprey International Limited (“Osprey”), and holders of approximately 37.5% of the number of outstanding ordinary shares of the Company just prior to the Closing have provided undertakings pursuant to which each such holder, among other things, has agreed that such holder will vote in favor of, or otherwise support, the Shareholder Approval.

 

The Company now announces that it has entered into definitive documentation for the Announced Transactions on January 25, 2024, resulting in funding commitments totalling $35.5 million, the elimination of $52.3 million of debt and the reduction of approximately $19.9 million in cash outflow in 2024, including cash interest savings under the 2026 Notes and the two secured convertible promissory notes originally issued to Osprey Investments in June and July 2023 in the aggregate original principal amount of $15.6 million and the use of debt service reserve funds for payment of certain obligations owed to Inter-American Investment Corporation (“IDB”) under its $50.0 million loan facility dated as of November 20, 2020 (as amended, the “IDB Facility”), as well as certain other deferrals and fee reductions agreed by IDB. Further to the foregoing and unless otherwise noted below, the Company is expecting to complete the following transactions on January 26, 2023 (the “Closing”):

 

  Following completion of a consent solicitation process completed on January 12, 2024 (the “Consent Solicitation”), holders of more than 50% of the 2026 Notes have agreed to amend the 2026 Notes via a supplemental indenture executed by the Trustee on January 25, 2024;

 

  The Note Restructuring involving 82.1% of the 2026 Notes (excluding the Kibbutz Notes), representing an aggregate principal amount of $109.0 million, and in connection therewith, will issue 2029 Notes in an aggregate principal amount of $65.4 million;

 

  It will exchange a further $14.7 principal amount of 2026 Notes (the “Kibbutz Notes”), formerly held by Kibbutz Holding S.a.r.l., a related party of the Company which is controlled by Rafael Museri and Daniel Rudasevski, directors of the Company and its Chief Executive Officer and Chief Growth Officer, respectively, into ordinary shares of the Company as well as a new 6.0% convertible secured note due 2029, issued in the principal amount of $10.0 million (the “New Osprey Note”), all of which are held by Osprey;

 

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  The two secured convertible promissory notes issued to Osprey by a subsidiary of the Company, as the borrower, in June 2023 (in the original principal amount of $11.1 million, the “June Note”) and July 2023 (in the original principal amount of $4.4 million, the “July Note”), have been amended and the lender’s interest is now held by Osprey;

 

  Osprey will convert $4.0 million of the July Note into ordinary shares of the Company;

 

  A gross amount of $20.0 million will be funded to the Company on or about January 26, 2024 by Osprey pursuant to subscription agreements between the Company and Osprey, with an additional $8.0 million committed to be funded in phased payments following the Shareholder Approval;

 

  A subsidiary of the Company has entered into a sale and purchase agreement (“SPA”) and securityholders’ agreement (“SHA”) with GAH Education Holding Limited regarding the Company’s investment in FutureLearn Limited, a company that owns and operates a British digital education platform that provides online courses, microcredentials and other degrees (“FutureLearn”), and the Company has invested $3.3 million of the Osprey investment proceeds into the FutureLearn business, with up to $0.7 million in further investments to be made by the Company;

 

  A gross amount of $5.0 million will be funded to the Company by third party investors pursuant to subscription agreements between the Company and such investors, as part of the Incremental Fundraise, and to date the Company has entered into subscription agreements with investors for a further $2.5 million of the Incremental Fundraise, including $0.5 million from Messrs. Museri and Rudasevski and other employees, with such investments to be funded upon and subject to the Company obtaining Shareholder Approval;

 

  The Company has entered into co-marketing arrangements with Osprey whereby the Company will grant to Osprey up to 1.5 billion Luna loyalty tokens over a period of three years for the use of accommodation and services at Selina branded hotels at discounted rates and provide other benefits to Osprey in exchange for Osprey promoting the Selina branded hotels and services to its employees, students and other parties within the network of universities operated by its affiliates;

 

  The Company’s subsidiaries, Selina Global Services Spain S.L. and Selina Operation One (1) S.A. (“SOP1”), the primary obligors under the IDB Facility have entered into amendment and waiver agreements relating to certain terms of the IDB Facility, including the deferral of various payments, that are anticipated to result in a reduction of cash outflow in 2024 of approximately $11.8 million (including the early release of funds held in a debt service reserve account established for IDB);

 

  Certain provisions of the employment contracts of Messrs. Museri and Rudasavski, not including their compensation arrangements, have been varied as described in more detail below; and

 

  In connection with the Closing, the Company has paid or agreed to pay approximately $7.0 million in legal, advisor and trustee fees, including certain costs incurred by the Steering Committee, Osprey and Osprey Investments, and Kibbutz Holding S.a.r.l., a related party of the Company (“Kibbutz”) that has provided guarantees to Osprey and received warrants from the Company in respect of the Original Osprey Investment Arrangements.

 

The foregoing transactions (the “Transactions”) are summarized further below. These summaries and the content of this Current Report update in their entirety the summaries of the proposed Transactions furnished in the Announcements.

 

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Summary of the Note Restructuring and the Consent Solicitation

 

Note Restructuring

 

As part of the Note Restructuring, the Company and the participating holders of the 2026 Notes entered into Exchange Agreements under which the participating noteholders have been or will be issued, for each $1,000.00 principal amount of 2026 Notes exchanged, (i) warrants to purchase 2,409 ordinary shares of the Company at an exercise price equal to the nominal value per ordinary share (currently $0.005064 rounded to six decimal places), subject to Shareholder Approval and adjustment as set out in the warrant agreement, and (ii) $600.00 principal amount of 2029 Notes. Excluding the Kibbutz Notes, the Company will be required to issue an aggregate of (a) warrants which, subject to Shareholder Approval, would be exercisable for a maximum of 262,674,790 ordinary shares of the Company, and (b) 2029 Notes in an aggregate principal amount of $65,412,000. A portion of the indebtedness evidenced by the 2026 Notes to be exchanged for 2029 Notes will, as part of the Exchange Agreements, be credited against the exercise price of the warrants on a pre-paid basis.

 

The 2029 Notes will be constituted pursuant to the terms of an indenture entered into between the Company and Wilmington Savings Fund Society and dated January 25, 2024 (the “2029 Notes Indenture”). The terms and conditions of the 2029 Notes are similar to those of the 2026 Notes, as summarized in the Company’s 2022 annual report on Form 20-F filed on April 28, 2023 (https://www.sec.gov/Archives/edgar/data/1909417/000190941723000006/slna-20221231.htm), except that the 2029 Notes are senior secured notes without a conversion feature, benefit from a guarantee of the Company’s subsidiary that is holding certain of the Company’s intellectual property relating to the Selina brand (the “Selina IP”), Selina Nomad Limited, and have certain other modified terms as explained further below:

 

(i) The 2029 Notes have a principal amount equivalent to 60% of the principal amount of the participating 2026 Notes, have a maturity date of November 1, 2029, and bear interest at a rate of 6% per annum, which interest will accrue and be payable in kind (“PIK interest”) through maturity. A one-time initial PIK interest payment of $4,796,880 will accrue upon Closing.

 

(ii) The Company’s accrued and unpaid interest under the 2026 Notes as well as its obligation to pay PIK interest under the 2029 Notes is secured by a first rank charge in favour of the holders of the 2029 Notes over the Selina IP, which charge is pari passu with the charge over such collateral that was granted to Osprey pursuant to the Original Osprey Investment Arrangements. In addition, the Company’s obligation to repay the principal amount of the 2029 Notes is secured by a second ranking charge over the Selina IP.

 

(iii) The 2029 Notes include customary debt covenants and a negative pledge that, among other things, limit the amount of new indebtedness that can be taken on by the Company and secured by a first ranking security interest over the Selina IP to four times the earnings before interest, taxes and depreciation achieved by the Company over the trailing 12-month period prior to the incurrence of the new indebtedness.

 

(iv) The obligations of the Company under the 2026 Notes to complete a $60.0 million qualifying equity issuance by either 27 October 2024 or 27 October 2025 and, together with the Company’s subsidiaries, to maintain $15.0 million in unrestricted cash until February 27, 2024 have been removed.

 

(v) The 2029 Notes are subject to a new intercreditor agreement that includes a market-based waterfall provision, which has been agreed between Osprey and the participating noteholders, governing the distribution of cash proceeds from the sale of assets by the Company.

 

(vi) For the first 24 months of the term of the 2029 Notes Indenture, a breach of certain covenants, including the debt covenants and negative pledge provisions, will not constitute an Event of Default (as defined therein) unless such breach (i) has a material adverse effect on (a) the Company and its subsidiaries, taken as a whole, or (b) the ability of the Company or any Guarantor (as defined therein) to perform their obligations under the relevant loan documents, or (c) enforceability or ranking of any lien on the collateral; (ii) arises from the Company or any subsidiary repudiating any of the relevant loan documents; or (iii) is continuing at the end of the 24-month period.

 

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The Company has the right to redeem the 2029 Notes at any time by paying the principal and all accrued interest plus a premium equal to the greater of (i) 1% of the principal amount of the 2029 Notes, and (ii) the excess of (a) the present value at such redemption date of all required interest payments through maturity (computed using a discount rate equal to the applicable treasury rate at such redemption date plus 50 basis points) over (b) the outstanding principal amount of the 2029 Notes.

 

The Company will be required by the 2029 Notes Indenture to furnish to the holders of the 2029 Notes the following financial and other information within the timeframes set out below:

 

(i) audited financial statements of the Company and its consolidated entities within 120 days after the end of the relevant financial year;
(ii) unaudited half yearly financial statements of the Company and its consolidated entities within 90 days after the end of the relevant six months;
(iii) unaudited quarterly management reports of the Company within 90 days after the end of the Company’s first and third fiscal quarters; and

(iv)

a compliance certificate regarding the Company’s compliance with the terms of the 2029 Notes signed by an officer of the Company, delivered within 120 days after the end of the relevant financial year.

 

The Company and its subsidiaries will not be permitted under the terms of the 2029 Notes Indenture to incur indebtedness except for the following categories of permitted indebtedness:

 

(i) debt under the 2029 Notes;
(ii) existing debt;
(iii) debt to a subsidiary provided that debt is subordinated to the 2029 Notes;
(iv) debt of a subsidiary incurred in the ordinary course of business provided such debt is not secured by and is non-recourse to the collateral which secures the 2029 Notes;
(v) contingent liabilities under surety bonds;
(vi) hedging obligations not incurred for speculative purposes;
(vii) guarantees of debt incurred by a subsidiary to finance the costs of opening, acquiring, converting, improving or renovating properties to be leased by the Company or a subsidiary;
(viii) debt arising from indemnification, earn-out, deferred purchase price or similar agreements;
(ix) contingent liabilities arising out of the endorsement of cheques;
(x) debt incurred in the ordinary course in connection with treasury management arrangements such as deposit accounts, overdraft facilities, credit cards and other similar credit facilities;
(xi) debt owed to insurance providers that has a term of 12 months or less;
(xii) debt incurred in connection with letters of credit, bank guarantees and similar instruments;
(xiii) debt in connection with customer deposits and advance payments received in the ordinary course of business;
(xiv) subordinated debt;
(xv) new debt secured by a first priority lien over the collateral ranking equally with the 2029 Notes provided that when the new debt is incurred, the Company’s indebtedness to EBITDA ratio for the trailing 12 months is 4 to 1 or less;
(xvi) debt incurred to finance an acquisition or of a business that is acquired by or merged into the Company or a subsidiary;
(xvii) debt to any employee or director to finance the purchase of capital stock or debt representing deferred compensation or similar obligations to employees, subject to existing liabilities and an overall cap of $5,000,000;
(xviii) debt in connection with performance bonds and similar instruments; and
(xix) certain refinancing indebtedness as specified in the 2029 Notes Indenture.

 

In addition, the Company will be subject to certain restrictions on the creation of encumbrances over the assets of the Company and its subsidiaries, restrictions on mergers and the sale of all or substantially all of the Company’s assets, the sale of the collateral that secures the 2029 Notes as well as certain customary events of default.

 

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As noted above, the Exchange Agreements include an undertaking from the participating holders of the 2026 Notes, have agreed to support the Shareholder Approval as well as the potential de-listing of the ordinary shares of the Company from the Nasdaq Global Market and the deregistration as an SEC-reporting company, subject to applicable conditions, should the requisite majority of shareholders elect to proceed with some form of take-private transaction in the future.

 

Upon Closing, the participating holders of 2026 Notes, the Company and certain of its subsidiary companies, Osprey and Osprey Investments, among others, entered into a release agreement under which the parties released each other from claims arising from the negotiation, execution and implementation of the Transactions, except for certain excepted matters as specified in the release agreement.

 

Consent Solicitation

 

A supplemental indenture to the 2026 Notes was entered into on January 25, 2024. Pursuant to that supplemental indenture, certain covenants under the 2026 Notes have been removed, including the Company’s requirement to complete a $60.0 million qualifying equity issuance by either 27 October 2024 or 27 October 2025 and, together with the Company’s subsidiaries, to maintain $15.0 million in unrestricted cash until February 27, 2024.

 

After the Note Restructuring and exchange of the Kibbutz Notes, 2026 Notes in the aggregate principal amount of $23,780,000 remain outstanding.

 

New Osprey Investment Arrangements

 

New Subscriptions

 

In connection with the New Osprey Investment Arrangements, on January 25, 2024 Osprey and the Company entered into two subscription agreements providing for the committed purchase by Osprey of $16.0 million of ordinary shares of the Company at a price of $0.20 per share (the “$16m Subscription”) and a further committed purchase of $12.0 million of ordinary shares of the Company at a price of $0.20 per share (the “$12m Subscription”). Completion of the $16m Subscription is expected to occur on January 26, 2024 and in connection therewith 80,000,000 new ordinary shares of the Company were subscribed for and issued to Osprey. In addition, pursuant to the $16m Subscription, Osprey has subscribed for and been issued new private warrants to subscribe for 380,677,338 ordinary shares in the Company, at an exercise price equal to the nominal value per ordinary share and subject to adjustment as set out in the warrant agreement.

 

In respect of the $12.0m Subscription, $4.0 million of new ordinary shares have been subscribed for and are expected to be issued to Osprey as of January 26, 2024. The remaining $8.0 million subscription amount is payable by Osprey in future monthly instalments, subject to and following the Company receiving Shareholder Approval so as to enable the Company to issue a sufficient amount of ordinary shares to fulfil that subscription. The $12.0m Subscription requires the Company, through a subsidiary, Selina Ventures Holdings Ltd (“Selina Ventures”), to invest $4.0 million into FutureLearn, with $3.3 million paid upon closing of the $12.0m Subscription and the remainder due in two subsequent equal payments in accordance with the terms of the $12.0 Subscription. After the full $4.0 million investment in FutureLearn, the Company will hold an approximate 6.2% interest, which will be governed by the SHA. Under the SHA, Selina Ventures will have the benefit of limited protections regarding its shareholding in FutureLearn and the conduct of the FutureLearn business, which the Company considers customary for a minority shareholding of this nature. The net proceeds from the $12.0m Subscription, after the Company’s required investments in FutureLearn, are to be utilized by the Company for sales and marketing purposes and commercial costs to be agreed with Osprey.

 

In addition to the aggregate $28.0 million in investment by Osprey pursuant to the $12m Subscription and the $16m Subscription, the Company intends to try to raise an additional $12.5 million of investment, at a price of $0.073 per ordinary share, pursuant to the Incremental Fundraise. Subscriptions for the remaining portion of the Incremental Fundraise must be executed within 15 days following Closing. Osprey also has been granted the right, exercisable in its discretion during a period of 12 months following the Closing, to purchase a further $20.0 million of ordinary shares of the Company at a price of $0.10 per share. Participating holders of the 2026 Notes will have the right to participate in such investment, pro-rata to their shareholdings and on a pari passu basis, so long as they remain shareholders of the Company. There are no assurances that the Incremental Fundraise will be completed or that such optional investment will be made by Osprey and/or the participating holders of the 2026 Notes.

 

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Partial conversion of existing Osprey convertible notes

 

As part of the Original Osprey Investment Arrangements, Osprey Investments provided an aggregate of $14.0 million of funding to the Company pursuant to the June Note and July Note, which notes were issued in the original principal amount of $15.6 million after taking into account an original issue discount of 10.0%. Osprey Investments had the right to convert $4.0 million (the “Converted Principal”) of the indebtedness owing under the July Note into ordinary shares of the Company and Osprey Investments exercised such right at Closing and designated Osprey as the recipient of the shares. Accordingly, Osprey has been issued, 20,000,000 new ordinary shares of the Company at a subscription price of $0.20 per share as well as warrants to acquire 1,481,482 ordinary shares of the Company at an exercise price equal to the nominal value per share.

 

As a result of the conversion of the Converted Principal, $0.4 million of the July Note remains outstanding, together with the $11.1 million principal amount of the June Note. The June Note and July Note are described in more detail in the Reports on form 6-K issued by the Company on June 27, 2023 (https://www.sec.gov/Archives/edgar/data/1909417/000149315223022569/form6-k.htm) and August 1, 2023 (https://www.sec.gov/Archives/edgar/data/1909417/000149315223026265/form6-k.htm), respectively.

 

The terms of the June Note and July Note (together, the “Existing Osprey Notes”), in the aggregate principal amount of $11.6 million following conversion of the Converted Principal, also have been amended, as of January 25, 2024, as follows:

 

(i) The maturity date of each of the Existing Osprey Notes has been extended to November 1, 2029.
(ii) The interest payable under the Existing Osprey Notes, which has been accruing to date at a rate of 12% per annum, will now accrue and be payable in kind through maturity.
(iii) Osprey’s existing put option under each of the Existing Osprey Notes, pursuant to which Osprey had the right to require the borrower to repay each of the Existing Osprey Notes after the third anniversary of each note has been removed.
(iv) The one-year restriction on Osprey’s right to convert the remaining indebtedness under Existing Osprey Notes into equity has been removed.
(v) The conversion pricing in respect of each of the Existing Osprey Notes has been reduced to $0.10 per ordinary share, subject to receipt of Shareholder Approval necessary to issue such ordinary shares.

 

Exchange of the Kibbutz Notes and Assignment of related Warrants

 

In connection with the Transactions, Kibbutz entered into an exchange agreement with the Company and Osprey, whereby $4.7 million of the Kibbutz Notes have been exchanged for 23,500,000 ordinary shares of the Company, at a conversion price of $0.20 per share, with the remainder of the Kibbutz Notes being exchanged for the New Osprey Note that was issued on substantially similar terms as the 2029 Notes, save that the New Osprey Note is secured by a first ranking charge over the Selina IP, guaranteed by the same guarantors as under the Existing Osprey Notes and may be converted into ordinary shares of the Company, subject to receipt of Shareholder Approval, at a price of $0.10 per share (which conversion right is not available under the 2029 Notes). As part of the exchange of the Kibbutz Notes, the 426,044 warrants issued to Kibbutz as part of its investment in the 2026 Notes also have been assigned to Osprey.

 

Warrants

 

As part of Osprey Investments exercising its right to convert the Converted Principal of the July Note into ordinary shares of the Company as described above, in addition to receiving the 20,000,000 new ordinary shares of the Company, Osprey received warrants to acquire 1,481,482 ordinary shares of the Company at an exercise price equal to the nominal value per share and it is intended that these warrants will be exercised shortly after the Closing.

 

The 10,370,103 warrants issued to Osprey Investments as part of the Original Osprey Investment Arrangements have been amended to reduce the exercise price equal to the nominal value per share and remove the one-year lock-up period applicable to such warrants. It is expected that Osprey Investments will exercise those warrants shortly after the Closing.

 

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The Company also has issued to Osprey new warrants, with an exercise price equal to the nominal value per share, that entitle Osprey to acquire 380,677,338 additional ordinary shares of the Company, subject to Shareholder Approval. It is expected that these warrants will be exercised by Osprey upon receipt of the Shareholder Approval.

 

As part of the Transactions, the exercise price of 2,450,000 warrants held by Kibbutz or to which Kibbutz is entitled in connection with the Original Osprey Investment Arrangements has been repriced to the nominal value per share, similar to other warrants held by investors that have invested new money in 2023 and in connection with the Original Osprey Investment Arrangements (the “Kibbutz Warrant Re-Pricing”). The Kibbutz Warrant Re-Pricing is a related party transaction for which further details have been provided below.

 

In addition, the $11.50 per share exercise price of the 3,848,885 warrants currently held by holders of the 2026 Notes will be reduced to the nominal value per share following Closing.

 

Finally, the Board of Directors of the Company has approved the implementation of a warrant exchange whereby the 7,666,566 public warrants currently held by shareholders of the Company and the 6,575,000 private placement warrants currently held by Bet on America LLC, the former sponsor of Boa Acquisition Corp., the special purpose acquisition company that merged with and into a subsidiary of the Company as part of the business combination that closed on October 27, 2022, may be exchanged for equity in the Company at a rate of one ordinary share per four warrants exchanged (the “Warrant Exchange”). The timing of the Warrant Exchange has not yet been determined.

 

Osprey and the Company also have entered into a fee letter relating to approximately $2.0 million in fees for underwriting, commercial and other services rendered to the Company by Osprey or its affiliates prior to Closing. The Company has the right to set-off amounts payable by it under such fee letter against the exercise price payable by Osprey to the Company in connection with the future exercise of the warrants issued to Osprey.

 

New money investors

 

The Company has agreed that certain existing shareholders that had invested in the Company as part of the Original Osprey Investment Arrangements or otherwise since January 1, 2023 (“New Money Investors”) are entitled to receive additional ordinary shares of the Company to take into account the dilutive impact of the Transactions. To the extent that such New Money Investors elect to participate, the exercise price of any warrants that the New Money Investors hold (which totals 2,048,371 as at the date hereof) will be reduced to the nominal value per share such that their investment cost, on a per share basis, is expected to be equivalent to the effective cost of Osprey’s investment, on a per share basis, following the Transactions.

 

Board Observer and Independent Director Nomination Rights

 

The Company entered into an investors’ rights agreement with Osprey on January 25, 2024 (the “Osprey Investor Rights Agreement”), pursuant to which Osprey has the ability to designate by notice in writing to the Company individuals who will comprise the majority of the Company’s Board of Directors (the “Board”), as well as the chair of the Company and at least a majority of the members of each of the Company’s compensation committee, finance committee and nominating and corporate governance committee, subject to the observance of certain ongoing governance requirements. The Osprey Investor Rights Agreement contains customary provisions regarding the procedure for nominating such individuals, including the right of the Company to conduct background and other eligibility checks, and provides for the Company’s indemnification of those directors in the ordinary course.

 

In addition, the Company has agreed that during the period beginning on the issue date of the 2029 Notes and while at least 25% of the aggregate principal amount of the 2029 Notes remains outstanding (the “Nominating Board Observer Period”), the holders of the 2029 Notes who together hold not less than 51% of the then outstanding total principal amount of the 2029 Notes will have the right to designate by notice in writing to the Company two individuals, and a replacement for any such individual, if applicable, each of whom shall act as an observer (and not as a director) of the Company’s Board (the “Board Observers”).

 

Each Board Observer shall be entitled to attend, but not participate in, the meetings of the Company’s Board (and its committees) at which business may be conducted, without voting rights or other authority to act on behalf of the Company, and to receive all material provided to the Company’s Board (and its committees) in respect of any such meeting at the same time and in the same manner as the directors of the Company, subject to the Board Observers executing customary confidentiality agreements. However, the Board Observers shall not have the right to attend any “executive sessions” convened by the chair of the Board and the Company reserves the right to exclude such Board Observers from access to any materials or meetings (or any portion thereof) if the chair determines in good faith, with the concurrence of the Independent Director or upon the advice of counsel, that such exclusion is reasonably necessary to preserve the attorney-client privilege or relates to a matter for which a Board Observer has a conflict of interest.

 

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The Company also has agreed in the 2029 Notes Indenture that from and after the date of the 2029 Notes Indenture and until the end of the Nominating Board Observer Period, the Company shall cause at least one individual, selected by a majority of the holders of the 2029 Notes, or a list provided by such parties, to be appointed as an independent director to the Company’s Board (the “Independent Director”). The initial Independent Director shall be Shelly Hod Moyal, subject to the completion of director appointment formalities, or to the extent she is unable to be appointed, the Company shall appoint an Independent Director from the list provided by a majority of the 2029 Notes as a replacement appointee. The Independent Director will have the right to serve on all committees of the Board and will be entitled to reasonable and customary compensation and indemnification arrangements at the expense of the Company. If any Independent Director resigns, is removed or is unable to continue service for any reason, the Company will be required to cause the appointment of a replacement Independent Director (such person to qualify as an “independent director” pursuant to Nasdaq Rule 5605(a)(2) and other relevant governance requirements as in effect when the 2029 Notes Indenture was issued).

 

Other Commercial Arrangements and Changes to Employment Contracts

 

In connection with the Closing, a subsidiary of the Company, Selina Loyalty Management Limited, and Osprey have entered into a commercial agreement pursuant to which the Company and its affiliates have agreed to provide to Osprey and its affiliates, and their employees as well as students and alumni of universities operated by Osprey’s affiliates, certain services and benefits, including up to 1.5 billion loyalty tokens, discounts on accommodation and certain food and beverage services and access to experiences and content provided at Selina branded hotels, in exchange for Osprey’s affiliates providing certain marketing and promotional services in respect of the Company and the Selina branded hotels operated by the Company and its subsidiaries. The term of the agreement is to run for three years from the Closing and the estimated cost to the Company over the term is approximately $2.4 million.

 

In addition, the employment agreements between the Company and Rafael Museri and Daniel Rudasevski, directors of the Company and its Chief Executive Officer and Chief Growth Officer, respectively, attached as Exhibits 10.22 and 10.23 to the Registration Statement on Form F-4/A filed with the U.S. Securities and Exchange Commission on September 30, 2022, have been amended to, among other things, clarify that the primary work location of each executive is in Tel Aviv, Israel and limit the reason each executive may resign for “Good Reason” to a material reduction in the base salary of each executive.

 

Amendments and Waivers relating to the IDB Facility

 

The parties to the IDB Facility entered into amendment and waiver agreements, dated as of January 19, 2024, but effective upon the Closing, relating to certain terms and conditions of the IDB Facility. These are summarized below.

 

(i) The debt service reserve account (“DSRA”) that had been established in connection with the IDB Facility, which has a balance of approximately $6.1 million, will be used to pay (i) $4.4 million in principal payments due for 2024 (which amount will be prepaid shortly following Closing in one payment, without any prepayment penalty or fee), with principal payments from January 2025 onwards to be paid normally as scheduled, and (ii) approximately $1.5 million in interest, representing 50% of ordinary interest payments due through June 2024, with the remainder of interest payments to be paid using non-DSRA funds as normal. The obligors will be required to replenish the DSRA, starting in the first quarter of 2026, to a level consisting of three months of debt service payments ahead (including principal and base interest).

 

(ii) Additional interest payments due under the IDB Facility, currently 2.75% of earnings before interest, taxes, depreciation and amortisation (“EBITDA”) of the SOP1 subgroup of companies, comprising the Company’s Latin American operations, will be payable once each year, in May, compared to twice a year, with the next payment to occur in May 2025. The calculation of additional interest will, retroactive to January 2023, be based on EBITDA less rent costs for the relevant period rather than EBITDA before rent.

 

(iii) Under the IDB Facility, there is an accrued exit fee of $2.2 million, which arose from the listing of the Company’s shares in October 2022 and currently is due and payable. IDB have agreed to defer the payment of that fee such that 50% of it will be due in June 2026 and 50% in June 2027. At the option of the Company and so long as the Company remains listed on the Nasdaq Global Market, that exit fee may be converted into ordinary shares of the Company at such time at the then current market price, with the amount converted limited to the average daily value of the Company’s ordinary shares traded over the 10 trading days prior to the equitization of the fee, subject to the Company having obtained shareholder approval for the issuance of such shares. If the IDB Facility is fully repaid within 24 months from the Closing, then IDB has agreed that no exit fee will be payable.

 

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(iv) IDB have agreed that the Transactions will not give rise to a further exit fee or mandatory prepayment event, and they have agreed to waive any mandatory or voluntary prepayment fees that would have resulted from the Transactions or in connection with any prepayments made before the end of 2024. In addition, any prepayment fees that otherwise may be payable in connection with a voluntary or mandatory prepayment event in the future will be limited to a maximum of $1.0 million.

 

(v) Finally, Osprey has been included as a permitted controlling party of the Company, subject to clearing IDB’s standard “know your customer” assessments.

 

Pro-Forma Capital Structure

 

The following table shows the indicative pro-forma capital structure of the Company at Closing, following the Shareholder Approval for the issuance of additional ordinary shares required to complete the Transactions and after incremental optional investments of $40.0 million that may be made as part of the New Osprey Investment Arrangements.

 

  Osprey  

New Money

Investors

  Participating noteholders  

Existing

shareholders

Interest at Closing
Number of shares held 155,777,897   9,547,795   3,848,885A   208,422,124B
% interest 41.3%   2.5%   1.0%   55.2%
Interest after Shareholder ApprovalC
Number of shares held 792,010,785D   56,504,147   308,550,884E   402,535,471F
% interest 50.8%   3.6%   19.8%   25.8%
Interest after incremental investmentsG
Number of shares held 935,939,255   56,504,147   364,622,415   402,535,471
% interest 53.2%   3.2%   20.7%   22.9%

 

Note: Figures may change depending on certain factors, such as the completion of the Warrant Exchange.

 

A. Includes 3,848,885 ordinary shares assuming the exercise of warrants currently held by the noteholders at a reduced exercise price equal to the nominal value per share.

 

B. Calculated on a fully diluted basis, including 106,294,735 ordinary shares that are issued and outstanding (excluding shares which are held by or subscribed for by New Money Investors), 69,178,081 ordinary shares issued to certain existing and new investors at Closing, as part of the Incremental Fundraise, 18,707,742 unvested equity awards and headroom under the Company’s existing equity incentive plans plus the 14,241,566 outstanding public and private warrants that currently have an exercise price of $11.50 per share, which exercise price currently is approved to be reduced to the nominal value per share.

 

C. Takes into account the impact of the $7.5 million raised prior to Closing as part of the Incremental Fundraise.

 

D. Assumes Osprey exercises all of its warrants and converts into equity the remaining $11.5 million principal amount of the June Note and July Note as well as the $10.0 million principal amount of the New Osprey Note, with the accrued, but unpaid interest due under each note to be paid in cash.

 

E. Assumes participation by 100% of holders of the 2026 Notes, excluding the Kibbutz Notes.

 

F. Assumes that the Warrant Exchange has been completed.

 

G. Assumes the maximum amount of $40.0 million in incremental investments contemplated as part of the Transactions are made, including the remaining $12.5 million from investors as part of the Incremental Fundraise and $20.0 million by Osprey and participating noteholders as part of the optional investment that Osprey has the right to make beyond its $28.0 million in committed investment, with Osprey funding approximately 72.3% of the optional $20.0 million investment and the participating noteholders funding approximately 27.7% of that investment.

 

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In addition, the parties have permitted the Company to establish a new management equity incentive pool of up to 15% of the fully diluted share capital of the Company, and the issuance of ordinary shares under that share scheme would be dilutive to all shareholders on a proportionate basis.

 

Following the implementation of the Transactions that are subject to Shareholder Approval, including the exercise of warrants by Osprey and assuming conversion of the remainder of the Existing Osprey Notes and the New Osprey Note, Osprey would obtain a controlling interest in the Company, before taking into account any dilution pursuant to the potential incremental equity investment of up to $40.0 million in the Company and the impact of any management incentive plan which may be put in place.

 

Related Party Transactions

 

Since Rafael Museri and Daniel Rudasevski are directors of Kibbutz and each holds a 32.3% interest in Kibbutz, Kibbutz is considered a related party of the Company. As such, the exchange of the Kibbutz Notes and the Kibbutz Warrant Re-Pricing are related party transactions and, accordingly, Messrs. Museri and Rudasevski did not participate in the decisions relating to the Transactions in general, which Transactions were approved by the independent directors of the Company in accordance with the Company’s related party transactions policy. In addition, the Company has agreed to reimburse Kibbutz for the legal and consultancy costs incurred by Kibbutz, up to an aggregate amount of $85,000, in connection with the Transactions, similar to reimbursements agreed in respect of the advisors to the Steering Committee and Osprey.

 

Further to the foregoing, each of Mr. Museri and Mr. Rudasevski has signed subscription agreements for the purchase of 2,054,794 ordinary shares of the Company for a subscription amount of $150,000 (a purchase price of $0.073 per ordinary share). Those subscription agreements may be terminated by Messrs. Museri and Rudasevski in the event additional subscriptions from third party investors are entered into to replace such subscriptions prior to Shareholder Approval.

 

Miscellaneous Matters

 

Unless otherwise stated, all dollar amounts stated herein refer to United States dollars.

 

Certain statements regarding the Note Restructuring and New Osprey Investment Arrangements represent forward-looking statements. See the “Forward-Looking Information” section below for further details.

 

The information furnished in this Report on Form 6-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liability of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Forward-Looking Information

 

This Report on Form 6-K includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events, and include terms such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential,” or “continue,” or the negatives of these terms or variations of them or similar terminology. In particular, such forward-looking statements include those pertaining to our beliefs about our ability to obtain additional funding and/or future shareholder approvals required to complete the various transactions set out herein. Such forward-looking statements are subject to risks, uncertainties (some of which are beyond our control), and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon assumptions that, while we consider reasonable, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, without limitation: potential negative impacts on our financial results as a result of changes in travel, hospitality, and real estate markets, including the possibility that travel demand and pricing do not recover to the extent anticipated, particularly in the current geopolitical and macroeconomic environment; volatility in the capital markets; our ability to execute on our plans to increase occupancy and margins; the potential inability to meet our obligations under our commercial arrangements and debt instruments; delays in or cancellations of our efforts to develop, redevelop, convert or renovate the properties that we own or lease; challenges to the legal rights to use certain of our leased hotels; risks associates with operating a significant portion of our business outside of the United States; risks that information technology system failures, delays in the operation of our information technology systems, or system enhancement failures could reduce our revenues; changes in applicable laws or regulations, including legal, tax or regulatory developments, and the impact of any litigation or other legal or regulatory proceedings; possible delays in ESG and sustainability initiatives; the possibility that we may be adversely affected by other economic, business and/or competitive factors, including risks related to the impact of a world health crisis; and other risks and uncertainties described under the heading “Risk Factors” contained in the Annual Report on Form 20-F for the fiscal year ended December 31, 2022 and subsequent filings with the Securities and Exchange Commission. In addition, there may be additional risks that the Company does not presently know, or that the Company currently believes are immaterial, which also could cause actual results to differ from those contained in the forward-looking statements. Nothing in this Report on Form 6-K should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Except as may be required by law, we do not undertake any duty to update these forward-looking statements.

 

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INDEX TO EXHIBITS

 

Exhibit No.   Description
     
99.1   The subscription agreement ($12 million) entered into between the Company and Osprey, dated January 25, 2024;
     
99.2   The subscription agreement ($16 million) entered into between the Company and Osprey, dated January 25, 2024;
     
99.3   The amendment to the Secured Convertible Promissory Note dated June 26, 2023 entered into between, amongst others, the Company and Osprey;
     
99.4   The amendment to the Secured Convertible Promissory Note dated July 31, 2023 entered into between, amongst others, the Company and Osprey;
     
99.5   The new Warrant Agreement dated January 25, 2024, entered into between, amongst others, the Company and Osprey;
     
99.6   The amendment to the Existing Warrant Agreement dated July 31, 2023 by entered into between the Company, Kibbutz and Osprey;
     
99.7   The Termination letter relating to the existing future funding agreement entered into between the Company, Selina Management UK Limited, Kibbutz and Osprey;
     
99.8   The Note Exchange Agreement dated January 25, 2024 relating to the 2026 convertible loan note entered into between the Company, Osprey and Kibbutz;
     
99.9   The Future Funding Letter dated January 25, 2024 in relation to future equity investments in the Company, among the Company, the consenting Noteholders and Osprey;
     
99.10   The 2029 secured convertible promissory note dated January 26, 2024 entered into between, amongst others, the Company and Osprey;
     
99.11   The supplemental indenture dated January 25, 2024 issued by the Company in connection with the 6% convertible notes due 2026;
     
99.12   The indenture dated January 25, 2024 issued by the Company in connection with the 6% senior secured notes due 2029;
     
99.13   The form of Note Exchange Agreement dated January 25, 2024 relating to the 2026 convertible notes entered into between, amongst others, the Company and each consenting Noteholder;
     
99.14   The intercreditor agreement dated January 25, 2024 entered into between, amongst others, the Company, Osprey Investments and Osprey;
     
99.15   The supplemental debenture dated January 25, 2024 entered into between Selina Brand Holdings Limited, Selina Nomad Limited and Aether Financial Services UK Limited;
     
99.16   The investor’s rights agreement dated January 25, 2024 entered into between the Company and Osprey;
     
99.17   The securityholders’ agreement dated January 25, 2024 entered into between FutureLearn Limited, GAH Education Holding Limited and Selina Ventures Holdings Ltd;
     
99.18   The sale and purchase agreement dated January 25, 2024 entered into between FutureLearn Limited and Selina Ventures Holdings Ltd;
     
99.19   The registration rights agreement dated January 25, 2024 entered into between the Company and Osprey;
     
99.20   The new Warrant Agreement dated January 25, 2024 entered into between the Company and each participating holder;
     
99.21   A form of the unrestricted global note to be entered into by the Company on January 26, 2024 in connection with the 6% senior secured notes due 2029; and
     
99.22   The debenture dated January 25, 2024 entered into between Selina North America Holdings Limited and Ludmilio Limited;
     
99.23   The amended and restated intercreditor agreement dated January 25, 2024 entered into between, amongst others, the Company and Ludmilio Limited;
     
99.24   The amended and restated share pledge agreement dated January 25, 2024 entered into between, Selina Operations US Corp. and Ludmilio Limited;
     
99.25   The amended and restated account pledge agreement dated January 25, 2024 entered into between, Selina Operations US Corp. and Ludmilio Limited;
     
99.26   The amended and restated account pledge agreement dated January 25, 2024 entered into between, Selina North America Holdings Limited. and Ludmilio Limited;
     
99.27   Form of subscription agreement for the subscriptions entered into between the Company and certain investors (for the funding of an aggregate of $5 million in equity subscriptions) on January 25, 2024; and
     
99.28   Form of subscription agreement for the subscriptions entered into between the Company and certain investors (for the funding of an aggregate of $2.525 million in equity subscriptions to be funded following receipt of shareholder approval) on January 25, 2024.
     
99.29   Release Agreement entered into between participating holders of 2026 Notes, the Company and certain of its subsidiary companies, Osprey Investments and Osprey, and certain administrative released parties (the Trustee, Aether Financial Services UK Limited and Pertnot Limited), dated January 25, 2024.
     
99.30   Fee letter relating to underwriting, commercial and other services rendered to the Company by Osprey or its affiliates, dated January 25, 2024.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  SELINA HOSPITALITY PLC
   
Date: January 26, 2024 By: /s/ JONATHON GRECH
    Jonathon Grech
    Chief Legal Officer and Corporate Secretary

 

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Exhibit 99.1

 

EXECUTION VERSION

 

Confidential

 

SUBSCRIPTION AGREEMENT

 

Selina Hospitality PLC

27 Old Gloucester Street

London WC1N 3AX

United Kingdom

 

Ladies and Gentlemen:

 

This Subscription Agreement (this “Subscription Agreement”) is being entered into as of 25 January 2024 (the “Signing Date”) by and among Selina Hospitality PLC (the “Issuer”), a company organized and existing under the laws of England and Wales having company number 13931732, and Osprey International Limited, registered in Cyprus with number HE385659 or an affiliate thereof (the “Investor”), a company incorporated under the laws of Cyprus, with its registered address at 9E Foti Pitta Street, 1065, Nicosia, Cyprus, with incorporation number HE 229246, in connection with the Investor’s subscription for 80,000,000 ordinary shares of the Issuer (“Ordinary Shares”), having a nominal value of $0.005064 each (rounded to six decimal places) (the “Subscribed Shares”), in a private placement for a per share purchase price of $0.20 per share (the “Per Share Price”) and an aggregate purchase price of $16,000,000 (the “Subscription Amount”) and the issue of 382,158,820 private warrants (substantially in the form of the Warrant Agreement entered into by the Issuer and certain other parties on the date hereof (the “Warrant Agreement”)) of the Issuer which will have a five-year term, but be subject to cancellation by the Issuer under certain conditions, and an exercise price of $0.01 per share (the “Warrants”, and the ordinary shares issuable thereunder, the “Warrant Shares” (the Warrant Shares and the Subscribed Shares together being the “Securities”). The Issuer desires to allot to the Investor the Subscribed Shares and the Warrants in consideration for the Issuer’s receipt of the Subscription Amount.

 

The Issuer and the Investor are executing and delivering this Subscription Agreement in reliance upon the exemption from securities registration afforded by Regulation S (“Regulation S”) under the Securities Act of 1933, as amended (the “Securities Act”).

 

At Closing (as defined below), the parties hereto shall execute and deliver (i) the Warrant Agreement and the related Warrant Certificate, each in the form attached hereto as Exhibit A (the “Warrant Documents”) and (ii) the Registration Rights Agreement in the form attached hereto as Exhibit B (the “Registration Rights Agreement”). This Subscription Agreement, collectively with the Warrant Documents, the Registration Rights Agreement and the Investor’s Rights Agreement in the form attached hereto as Exhibit C and each of the other agreements entered into by the parties hereto and thereto in connection with the transactions contemplated hereby and thereby are collectively referred to herein as the “Transaction Documents”.

 

In connection therewith, and in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, set forth herein, and intending to be legally bound hereby, each of the Investor and Issuer acknowledges and agrees as follows:

 

1.Subscription. The Investor hereby irrevocably subscribes for and agrees to purchase from the Issuer, and the Issuer agrees to allot and/or issue and sell and, in the case of the Warrants, issue to the Investor for the Subscription Amount, in each case subject to the terms and conditions set forth herein (or waiver thereof) and the Warrant Documents, the Subscribed Shares at the Per Share Price and the Warrants. The Investor acknowledges that the Warrants will not be publicly tradeable or eligible for transfer via the Depository Trust Company.

 

2.Closing. Within three (3) business days after the Signing Date, subject to the satisfaction or waiver of the Issuer Closing Conditions and the Investor Closing Conditions, (i) the Issuer shall, upon payment of the Subscription Amount, issue and/or allot and sell to Investor (or cause to be issued and allotted to Investor) the Subscribed Shares at the Per Share Price and cause the Subscribed Shares to be registered with the Issuer’s transfer agent in the name of the Investor (the “Closing,” and the date of such registration being the “Closing Date”), and issue to the Investor the Warrants under the Warrant Agreement; and (ii) the Investor shall deliver to the Issuer the Subscription Amount for the Subscribed Shares (less such amounts netted off the Subscription Amount pursuant to Section 4.b), which amount shall be paid by wire transfer of U.S. dollars, in immediately available funds, to the account specified by the Issuer. The Investor acknowledges that the Subscribed Shares initially shall be held by the Issuer’s transfer agent in book entry form. In addition, for purposes of this Subscription Agreement, “business day” shall mean a day, other than a Saturday or Sunday, on which commercial banks in both New York, New York and London, United Kingdom are open for the general transaction of business.

 

 

 

 

3.Closing Conditions.

 

a.The obligation of the Investor to consummate the purchase of, and subscription for, the Securities pursuant to this Subscription Agreement shall be subject to the following conditions, each of which may be waived in writing by the Investor in its discretion (the “Investor Closing Conditions”):

 

a.that no applicable governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation (whether temporary, preliminary or permanent) which is then in effect and has the effect of making consummation of the transactions contemplated hereby illegal or otherwise restraining or prohibiting consummation of the transactions contemplated hereby;

 

b.that all representations and warranties of the Issuer contained in this Subscription Agreement shall be true and correct in all material respects as of the date made and as of the Closing Date as though made at that time (except for those representations and warranties that speak as of a specified earlier date, which shall be so true and correct in all material respects as of such specified earlier date) and the Issuer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by the Issuer at or prior to the Closing Date;

 

c.the Investor shall have received the opinion of Greenberg Traurig, LLP, outside counsel to the Issuer, dated on the Closing Date, in a form reasonably acceptable to the Investor;

 

d.the Issuer shall have executed and delivered to the Investor: (A) each of the Transaction Documents to which it is party and each other document to which it is a party in connection with the arrangements contemplated hereby and thereby and (B) the Securities being purchased by the Investor at the Closing Date pursuant to this Subscription Agreement;

 

e.the Issuer shall have delivered to the Investor a certificate evidencing the formation and good standing of the Issuer in its jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction within ten (10) business days prior to the Closing Date;

 

f.the Issuer shall have delivered to the Investor a certified copy of the certificate of incorporation and articles of association of the Issuer within ten (10) business days prior to the Closing Date;

 

g.the Issuer shall have delivered to the Investor a certificate, executed by the Secretary of the Issuer and dated as of the Closing Date, as to (a) the resolutions of its board of directors regarding the agreements and transactions contemplated hereby in a form reasonably acceptable to the Investor, (b) the governing documents of the Issuer, each as in effect at the Closing Date;

 

h.the Issuer shall have notified the Nasdaq Global Market (the “Principal Market”) of the transactions contemplated hereby, including the applicable listing of additional shares notification to the Principal Market, and as of the Closing Date, the Principal Market shall not have made any objection (not subsequently withdrawn) to the Issuer that the consummation of the transactions contemplated hereby would violate the Principal Market’s listing rules applicable to the Issuer; the Securities shall have been approved for listing on the Principal Market;

 

i.to the extent required to give effect to the Issuer’s obligations pursuant to this Subscription Agreement and the other Transaction Documents, on or prior to the Closing Date, the Issuer shall deliver all irrevocable instructions to, and have received acknowledgement from, each relevant transfer agent, depositary or clearing system in order for the Issuer to perform its obligations pursuant to this Subscription Agreement and the other Transaction Documents;

 

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j.the Issuer shall have obtained, as of the Closing Date, all governmental or regulatory consents and approvals, if any, necessary for the sale and issuance of the Securities;

 

k.the Issuer and holders who together hold not less than 80% of the outstanding principal amount of the Issuer’s $147.5 million principal amount of 6.00% Convertible Senior Notes due 2026 (the “2026 Notes”) shall have completed the “Note Restructuring”, being the exchange of the 2026 Notes as detailed in the Issuer’s Current Report on Form 6-K published on December 4, 2023 (the “6-K Report”) (the “Note Exchange”) and the Issuer shall have provided evidence of the completion of the Note Exchange to the Investor (in form and substance satisfactory to the Investor);

 

l.the Issuer shall have issued to the Investor or its affiliate 20,000,000 Ordinary Shares issuable pursuant to that certain Notice of Conversion with respect to the Secured Convertible Promissory Note dated 31 July 2023 issued by Selina Management Company UK Ltd;

 

m.the Issuer and the Investor shall, among others, have entered into certain amendments as referred to in the section of the 6-K Report headed “New Osprey Investment Arrangements”, being amendments to that certain (i) Secured Convertible Promissory Note dated 26 June 2023, in the principal amount of $11,111,111 issued by Selina Management Company UK Ltd and (ii) Secured Convertible Promissory Note dated 31 July 2023, in the principal amount of $4,444,444 issued by Selina Management Company UK Ltd;

 

n.the Issuer shall have issued to the Investor or its affiliate 23,500,000 Ordinary Shares issuable pursuant to that certain Exchange Agreement with respect to $4.7 million principal amount of the Kibbutz Note (as such term is defined in the section of the 6-K Report headed “New Osprey Investment Arrangements”);

 

o.the Issuer and the Investor shall, among others, have entered into the new secured convertible promissory note on or about the date of this Agreement, in the principal amount of $10,000,000 issued by the Issuer (the “New Note”);

 

p.such number of the Issuer’s shareholders (including, to the extent they are or will become shareholders of the Issuer as a result of the Note Exchange, those holders of the 2026 Notes who have participated in the Note Exchange) shall have entered into transaction support agreements to undertake to vote in favor or otherwise support the Shareholder Approvals in a number sufficient to pass such resolutions;

 

q.all documents, instruments, filings and recordations required by or reasonably necessary in connection with the security documents relating to the New Note (the “Security Documents”), shall have been made, executed and delivered, as applicable, in accordance with the terms thereof and to the parties thereto, save for any security interests to be granted under the Security Documents and/or any filings or instruments to be entered into after the Closing Date, in each case in accordance with the New Note and the Security Documents;

 

r.the Investor shall have obtained the Issuer’s wire instructions on Issuer letterhead duly executed by an authorised officer of the Issuer; and

 

s.the quotation or listing of the Ordinary Shares on the Principal Market shall not have been suspended, as of the Closing Date, by the SEC or the Principal Market, nor shall suspension have been threatened as of the Closing Date, either by the SEC or the Principal Market or by virtue of the Issuer falling below the continued listing requirements of the Principal Market.

 

The obligation of the Issuer to consummate the purchase of, and subscription for, the Securities on the Closing Date pursuant to Section 2 shall be subject to the following conditions, each of which may be waived in writing by the Issuer in its discretion (the “Issuer Closing Conditions”): (i) that no applicable governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation (whether temporary, preliminary or permanent) which is then in effect and has the effect of making consummation of the transactions contemplated hereby illegal or otherwise restraining or prohibiting consummation of the transactions contemplated hereby; and (ii) that all representations and warranties of the Investor contained in this Subscription Agreement shall be true and correct in all material respects at and as of the Closing Date (except for those representations and warranties that speak as of a specified earlier date, which shall be so true and correct in all material respects as of such specified earlier date).

 

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4.Further Assurances.

 

a.At the Closing, the parties hereto shall execute and deliver such additional documents and take such additional actions as the parties reasonably may deem to be practical and necessary in order to consummate the subscription as contemplated by this Subscription Agreement.

 

b.At the Closing, the Company hereby undertakes to apply the Subscription Amount first to pay:

 

i.The professional fees of Goodwin Procter (UK) LLP in an amount of $1,750,000 plus VAT to the account set out below:

 

  Bank:   HSBC Bank plc  
  Sort Code:   401276  
  Account Number:   83838467  
         
  ; and      

 

ii.the professional fees of Greenberg Traurig LLP plus VAT and any expenses in connection with the work on the transactions contemplated by the Transaction Documents (“Transaction”) to the account below:

 

  Account Name:   Greenberg Traurig, LLP Client Account - USD
  Bank:   Barclays Bank
  Account Number:   46935955
  Sort Code:   20-00-00
  IBAN:   GB32 BARC 2000 0046 9359 55
  SWIFTBIC:   BARCGB22

 

Such payments shall be made by the Investor directly to the accounts set out above in this Section4.b. In addition, the professional fees of Stifel/Miller Buckfire in connection with the Transaction and fees of the trustee for the 2026 Notes (Wilmington Trust) and the trustee for the new notes issued in the Note Exchange (WSFS Bank) will be paid directly by the Investor to such parties, in the amounts as set forth in a funds flow memorandum of even date herewith, following which the Subscription Amount net of such fees will be paid to the Issuer in accordance with Section 2 in satisfaction of the Investor’s obligations hereunder.

 

5.Issuer’s Representations and Warranties. The Issuer represents and warrants to the Investor that:

 

a.The Issuer is validly existing under the laws of England and Wales. The Issuer has all requisite power and authority to own, lease and operate its properties and conduct its business as presently conducted to enter into, deliver and, subject to the passing of the Shareholder Approvals (as defined below) solely with respect to the authority to issue the Warrant Shares, perform its obligations under the Transaction Documents. The Issuer is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to do so would not reasonably be expected, individually or in the aggregate, to have a material adverse effect on the business, financial condition or results of operations of the Issuer and its subsidiaries, taken as a whole or the ability of the Issuer to meet any of its obligations under any of the Transaction Documents (a “Material Adverse Effect”).

 

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b.The Securities, subject to the passing of the Shareholder Approvals solely with respect to the authority to issue the Warrant Shares, have been duly authorized and, when issued and delivered to the Investor against full payment therefor in accordance with the terms of this Subscription Agreement, will constitute the valid and binding obligation of the Issuer, free from all preemptive or similar rights (except for those which have been validly waived prior to the date hereof), taxes, liens and charges and other encumbrances with respect to the issue thereof.

 

c.The Issuer has the requisite power and authority to enter into and, subject to the passing of the Shareholder Approvals solely with respect to the authority to issue the Warrant Shares, perform its obligations under the Transaction Documents. The execution and delivery of the Transaction Documents by the Issuer and the consummation by the Issuer of the transactions contemplated hereby and thereby (as applicable), including without limitation, the issuance of the Securities have been or will be, subject to the passing of the Shareholder Approvals solely with respect to the authority to issue the Warrant Shares, duly authorized by the Issuer (as applicable) and, no further filings, consents or authorizations are required by the Issuer, its board of directors or its shareholders (including, without limitation, any other form of shareholder approval pursuant to the Companies Act 2006 (UK) (“Companies Act”) or Rule 5635 of the Principal Market). The Transaction Documents have been duly authorized, executed and delivered by the Issuer and each constitutes a legal, valid and binding obligation of the Issuer and, assuming that the Transaction Documents each constitutes the valid and binding agreement of the Investor and the other parties thereto, the Transaction Documents are enforceable against the Issuer in accordance with their terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, reorganization, moratorium or other applicable laws relating to or affecting the rights of creditors generally, or (ii) principles of equity, whether considered at law or equity.

 

d.The sale and issuance of the Securities and the compliance by the Issuer with all of the provisions of the Transaction Documents and the consummation of the transactions contemplated herein do not and will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Issuer or any of its subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which the Issuer or any of its subsidiaries is a party or by which the Issuer or any of its subsidiaries is bound or to which any of the property or assets of the Issuer is subject (except in respect of any change of control of the Issuer which may occur pursuant to or under any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument listed in Annex A attached hereto as a result of the consummation of the transactions contemplated herein or hereby); (ii) result in any violation of the provisions of the constitutional documents of the Issuer; or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign (including foreign, federal and state securities laws and regulations and the rules and regulations of the Principal Market and including all applicable foreign, federal and state laws, rules and regulations), having jurisdiction over the Issuer or any of its properties.

 

e.Subject to the passing of the Shareholder Approvals solely with respect to the authority to issue the Warrant Shares, the Issuer is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other governmental authority, self-regulatory organization or other person in connection with the execution, delivery and performance by the Issuer of the Transaction Documents (including, without limitation, the issuance of the Securities) other than notifications or applications to list additional shares required by the Nasdaq Global Market, and the failure of which to obtain would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect. All consents, authorizations, orders, filings and registrations which the Issuer is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the Closing Date (or in the case of the filings detailed above, will be made timely after the Closing Date), and the Issuer is unaware of any facts or circumstances which might prevent the Issuer from obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents. As disclosed in its current report on Form 6-K dated September 12, 2023, the Issuer is currently in violation of the continued listing requirements of the Principal Market and undertakes to be in compliance with such listing requirements before expiration of the grace period under Nasdaq rules; and to the knowledge of the Issuer, there are no other facts or circumstances which would reasonably lead to delisting or suspension of the Ordinary Shares. The issuance by the Issuer of the Securities shall not have the effect of delisting or suspending the Ordinary Shares from the Principal Market. The Securities have been approved for listing on the Principal Market.

 

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f.Assuming the accuracy of the Investor’s representations and warranties set forth in Section 6, no registration under the Securities Act is required for the offer and sale of the Securities (including the issuance of the Warrant Shares) by the Issuer to the Investor hereunder. The Securities (i) were not offered by any form of general solicitation or general advertising (within the meaning of Regulation D) and (ii) are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, or any state securities laws. No directed selling efforts (as defined in Rule 902 of Regulation S) have been made by any of the Issuer, any of its affiliates or any person acting on its behalf with respect to any Securities that are not registered under the Securities Act; all such persons have complied with the offering restrictions requirement of Regulation S; none of such persons has taken any actions that would result in the sale of the Securities to the Investor hereunder requiring registration under the Securities Act; and the Issuer is a “foreign issuer” (as defined in Regulation S).

 

g.The Issuer has not engaged any broker, finder, commission agent, placement agent or arranger in connection with the sale of the Securities, and the Issuer is not under any obligation to pay any broker’s fee or commission in connection with the sale of the Securities.

 

h.None of the Issuer nor any of its affiliates, nor any person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of the any of the Securities under the Securities Act, whether through integration with prior offerings or otherwise, or cause this offering of the Securities to require approval of stockholders of the Issuer, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Issuer are listed or designated for quotation.

 

i.All factual disclosure provided to the Investor regarding the Issuer and its subsidiaries, their businesses and the transactions contemplated hereby and thereby, furnished by or on behalf of the Issuer or any of its subsidiaries was, when provided, true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

 

j.The Issuer acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Issuer or any of its subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by the Investor or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Investor’s purchase of the Securities. The Issuer further represents to the Investor that its decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Issuer and its representatives;

 

k.The Issuer has timely filed all reports, schedules, forms, statements and other documents required to be filed by it to the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (and all the foregoing, and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The SEC Documents complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, as of their respective filing dates, and at the time they were filed did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective filing dates, the financial statements of the Issuer included in the SEC Documents complied in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with international financial reporting standards (“IFRS”) (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of an unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of each of the Issuer and its subsidiaries, on a consolidated basis, at the respective dates thereof and the results of operations and cash flows for the periods indicated. The Issuer is not currently planning to amend or restate any of its financial statements (including, without limitation, any notes or any letter of the independent accountants of the Issuer with respect thereto) included in the SEC Documents, nor is the Issuer currently aware of facts or circumstances which would require the Issuer to amend or restate its financial statements, in each case, in order for any of its financial statements to be in material compliance with IFRS and the rules and regulations of the SEC. The Issuer has not been informed by its independent accountants that they recommend that the Issuer amend or restate any of its financial statements or that there is a need for the Issuer to do so.

 

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l.Other than as disclosed to the Investor or as disclosed publicly (including in the SEC Documents), since 31 October 2020 there has been no material adverse change and no material adverse development in the business, assets, liabilities, properties, operations, condition (financial or otherwise), results of operations of the Issuer or any of its subsidiaries, taken as a whole, and there is no change known to the Issuer or any facts or circumstances that would reasonably be expected to give rise to or cause such a change, other than as disclosed to the Investor. Neither the Issuer nor any of its subsidiaries has sought protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, and none of its creditors has initiated or, to the knowledge of the Issuer, has threatened to initiate, involuntary bankruptcy proceedings against the Issuer or any of its subsidiaries. The Issuer and its subsidiaries, on a consolidated basis, are not as of the date hereof, and after giving effect to the Transaction Documents and the transactions contemplated hereby and thereby to occur at or subsequent to the Closing Date, will not be insolvent.

 

m.No event, liability, development or circumstance has existed or exists, or is contemplated to occur, as the date hereof or as of the Closing Date (as applicable), with respect to the Issuer, its subsidiaries or their respective business, properties, prospects, operations or financial condition that required disclosure by the Issuer on a Current Report or Form 6-K, or would require disclosure on Form 6-K within the four business days following the date hereof or the Closing Date (as applicable) upon such occurrence, and that has not been filed with the SEC.

 

n.Neither the Issuer nor any of its subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Issuer or any of its subsidiaries, except in all cases for violations which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Since October 27, 2022, (i) the Ordinary Shares have been listed or designated for quotation on the Principal Market, (ii) trading the Ordinary Shares has not been suspended by the SEC or the Principal Market and (iii) other than the Nasdaq notice received by the Issuer and disclosed in its Current Report on Form 6-K on 12 September 2023, the Issuer has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Ordinary Shares from the Principal Market.

 

o.None of the officers, directors or employees of the Issuer or any of its subsidiaries is presently party to any transaction with the Issuer or any of its subsidiaries that would be required to be disclosed pursuant to Item 7.B of Form 20-F promulgated under the Exchange Act and that has not been disclosed in the SEC Documents.

 

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p.As of the date hereof, the issued share capital of the Issuer consisted of 109,260,826 Ordinary Shares. All of such outstanding shares are duly authorized and have been validly issued and fully paid. All of such outstanding shares are duly authorized and have been, or upon issuance, will be, validly issued and fully paid. Other than as disclosed to the Investor or as disclosed publicly (including in the SEC Documents and save in respect of up to, in total, 15,000 shares of Class B common stock in Selina RY in connection with an employee stock option plan):

 

a.there are no outstanding options, warrants, rights or obligations to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Issuer or any member of the Issuer, the Borrower, the Guarantors and any Significant Subsidiary (as defined below, and, collectively, the “Restricted Group”) (other than intra-company), or contracts, commitments, understandings or arrangements by which the Issuer and any member of the Restricted Group (other than intra- company) is or may become bound to issue additional capital stock of the Issuer or any of such member of the Restricted Group or options, warrants, rights or obligations to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Issuer or any member of the Restricted Group;

 

Borrower” means Selina Management Company UK Ltd;

 

Significant Subsidiary” means (i) any subsidiary of the Parent whose consolidated revenue is at least 10% of the consolidated revenue of the Parent and its subsidiaries taken as a whole and (ii) any member of the Selina RY Group);

 

“Selina RY” means Selina RY Holding Inc. (a Delaware corporation) and “Selina RY Group” means Selina RY and any of its Subsidiaries from time to time;

 

b.there are no agreements or arrangements (other than as set forth in the Transaction Documents) under which the Issuer or any member of the Restricted Group is obligated to register the sale of any of their securities under the Securities Act;

 

c.there are no outstanding securities or instruments of the Issuer or any member of the Restricted Group which contain redemption or similar provisions;

 

d.there are no contracts, commitments, understandings or arrangements by which the Issuer or any member of the Restricted Group is or may become bound to redeem a security of the Issuer or any member of the Restricted Group; and

 

e.there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities.

 

q.Other than as disclosed to the Investor in Exhibit D hereto or as disclosed publicly (including in the SEC Documents), as of September 30, 2023, the Issuer or any member of the Restricted Group did not have (save for any intra-company or intra-group amounts) any Indebtedness (as defined below) with a value in excess of $5,000,000 or is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument would reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect. The Issuer and the members of the Restricted Group are not (i) in violation of any term of, or in default under, any contract, agreement or instrument relating to any Indebtedness of the Issuer or any member of the Restricted Group, except (i) as publicly disclosed in the Issuer’s Current Report on Form 6-K on November 1, 2023, and (ii) where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (ii) a party to any contract, agreement or instrument relating to any indebtedness of the Issuer or any member of the Restricted Group, the performance of which, in the judgment of the Issuer’s officers, has or is expected to have a Material Adverse Effect.

 

Indebtedness” means with respect to any specified Person (as defined below), any indebtedness of such Person (excluding accrued expenses and trade payables in the ordinary course of business): (i) in respect of borrowed money, (ii) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof), (iii) in respect of banker’s acceptances (except to the extent any such reimbursement obligations relate to trade payables in the ordinary course of business and such obligations are satisfied within 30 days of incurrence), (iv) representing Capital Lease Obligations (as defined below), (v) representing the balance deferred and unpaid of the purchase price of any property due more than one year after such property is acquired, (vi) the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any subsidiary, any preferred stock (but excluding, in each case, any accrued dividends), (vii) representing any Hedging Obligations, (viii) the principal component of all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; and (ix) the principal component of Indebtedness of other Persons to the extent guaranteed by such Person;

 

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Person” means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, limited liability company or government or other entity;

 

Capital Lease Obligation” means, at the time any determination is to be made, the amount of the liability in respect of a lease (of any nature, including, without limitation, leases of properties and capital lease or rental agreements between any member of the Parent Group and any landlord or local partner and related agreements relating to the leasing, conversion, fit-out, maintenance, repair and/or operation of any properties in any Permitted Business, howsoever such obligation is described or accounted) and relate financing arrangements, that would at that time be accounted for on a balance sheet prepared in accordance with IFRS, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty; “Disqualified Stock” means any Capital Stock (as defined below) that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable; pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature; provided, that only the portion of Capital Stock which so matures or is mandatorily redeemable, or is so redeemable at the option of the holder thereof prior to such date, will be deemed to be Disqualified Stock. For purposes hereof, the amount of Disqualified Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Note, and if such price is based upon, or measured by, the Fair Market Value of such Disqualified Stock, such Fair Market Value to be determined as set forth herein; “Hedging Obligations” means with respect to any specified Person, the obligations of such Person under any foreign exchange contract, currency swap agreement, currency option, cap, floor, ceiling or collar agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in currency exchange rates;

 

Capital Stock” means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or, membership interests and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock).

 

Parent Group” means Selina Hospitality plc and its successors or assigns and its direct and indirect Subsidiaries.

 

Subsidiarymeans, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person. Unless otherwise specified, all references herein to a

 

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“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Parent.

 

Permitted Business” means (i) any businesses, services or activities engaged in by the Parent or any of the Restricted Group on the Issue Date and (ii) the business, services or activities that are related or complementary to owning, developing, maintaining, repairing, operating and/or leasing hostels, hotels and other forms of short term and/or long term lodging facilities, the provision of food and/or beverages at such properties, and any business or activity relating to, arising from, or necessary, appropriate or incidental to the foregoing activities.

 

r.There are no actions, suits or proceedings by or before any arbitrator or governmental authority pending against or, to the actual knowledge of the Issuer, without inquiry, threatened against of affecting the Issuer (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve any Transaction Document or the Securities.

 

s.The Issuer and each of its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Issuer believes to be prudent and customary in the businesses in which the Issuer and its subsidiaries are engaged.

 

t.The Issuer and each member of the Restricted Group has timely filed or caused to be filed all tax returns and reports required to have been filed and has paid or caused to be paid all taxes required to have been paid by it, except, (i) taxes that are being contested in good faith by appropriate proceedings and for which the Issuer or such subsidiary, as appliable, has set aside on its books adequate reserves or (ii) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

 

u.Subject to the material weaknesses identified in the Issuer’s 2022 Annual Report on Form 20-F filed by the Issuer on April 28, 2023, (i) the Issuer maintains internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that is effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS; and (ii) the Issuer maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that are effective in ensuring that information required to be disclosed by the Issuer in reports it filed or submits under the Exchange Act and under the Companies Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and the Companies Act, including without limitation, controls and procedures designed to ensure that information required to be disclosed by the Issuer in the reports it files or submits under the Exchange Act and the Companies Act is accumulated and communicated to the Issuer’s management.

 

v.The Issuer is eligible to register its Ordinary Shares for resale on Form F-1.

 

w.The Issuer has not, and to its knowledge no on acting on its behalf has, taken, directly or indirectly, any action designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization or manipulation of the price of any security of the Issuer to facilitate the sale or resale of the Securities.

 

x.The Issuer acknowledges that its obligations to issue the Subscribed Shares and Warrant Shares pursuant to the terms of this Subscription Agreement in accordance with the Transaction Documents is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Issuer.

 

y.All disclosure provided to the Investor regarding the Issuer and its subsidiaries, their businesses and the transactions contemplated hereby, furnished by or on behalf of the Issuer or any of its subsidiaries is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The Issuer acknowledges and agrees that the Investor does not make or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 5.

 

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z.The Issuer has implemented and maintains in effect policies and procedures designed to ensure compliance by the Issuer, its subsidiaries and their respective officers, directors, employees and agents with Anti-Corruption Laws and applicable economic, trade or financial sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by (a) the United States government, (b) the United Nations, (c) the European Union and any EU member state, (d) the United Kingdom, (e) the respective Governmental Authorities of any of the foregoing, including without limitation, OFAC, the United States Department of State and His Majesty’s Treasury (“Sanctions”), and the Issuer, its subsidiaries and their respective officers and directors and, to the knowledge of the Issuer, its employees and agents are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects and are not knowingly engaged in any activity that would reasonably be expected to result in the Issuer being designated as a Restricted Person. No issuance of the Securities or the use of proceeds, the transactions contemplated hereby and by the Transaction Documents will violate Anti-Corruption Laws or applicable Sanctions. “Restricted Person” means: (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC, or any other list of prohibited or restricted parties promulgated by OFAC, the Department of Commerce, or the Department of State (“OFAC Sanctions Lists”), or a person or entity prohibited or restricted by any OFAC sanctions program, or a person or entity whose property and interests in property subject to U.S. jurisdiction are otherwise blocked under any U.S. laws, Executive Orders or regulations, (ii) a person or entity listed on the Sectoral Sanctions Identifications (“SSI”) List maintained by OFAC or otherwise determined by OFAC to be subject to one or more of the Directives issued under Executive Order 13662 of March 20, 2014, or on any other of the OFAC Sanctions Lists, (iii) an entity owned, directly or indirectly, individually or in the aggregate, 50 percent or more by, acting on behalf of, or controlled by, one or more persons described in subsections (i) or (ii), (iv) organized, incorporated, established, located, resident or born in, or a citizen, national or the government, including any political subdivision, agency or instrumentality thereof, of, Cuba, Iran, North Korea, Myanmar, Venezuela, Syria, the Crimea and the non- government controlled areas of the Zaporizhzhia and Kherson Regions of Ukraine and the so-called Donetsk People’s Republic and so-called Luhansk People’s Republic regions of Ukraine or any other country or territory embargoed or subject to substantial trade restrictions by the United States, (v) a person or entity named on the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) Denied Persons List, Entity List, or Unverified List (“BIS Lists”), (vi) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (vii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank (collectively, (i) through (vii), a “Restricted Person”).

 

aa.There are no material disagreements of any kind presently existing, or reasonably anticipated by the Issuer to arise, between the Issuer and the accountants formerly or presently employed by the Issuer. The Issuer’s position with respect to any fees owed to its accountants could not reasonably be expected to affect the Issuer’s ability to perform any of its obligations under any of the Transaction Documents.

 

6.Investor Representations and Warranties. The Investor represents and warrants to the Issuer that:

 

a.At the time the Investor was offered the Securities, it was, and as of the date hereof and as of the Closing Date (i) is not a U.S. person and located offshore (as such terms are defined in Regulation S under the Securities Act), (ii) is acquiring the Securities only for its own account and not for the account of others, or if the Investor is subscribing for the Securities as a fiduciary or agent for one or more investor accounts, the Investor has full investment discretion with respect to each such account, and the full power and authority to make the acknowledgements, representations and agreements herein on behalf of each owner of each such account, and (iii) is not acquiring the Securities with a view to, or for offer or resale in connection with, any public sale or distribution thereof in violation of the Securities Act (provided, however, that by making the representations herein, the Investor does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to an effective registration statement under the Securities Act or an exemption from such registration and in compliance with the applicable U.S. federal and state securities laws). The Investor is not an entity formed for the specific purpose of acquiring the Securities.

 

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b.The Investor acknowledges and agrees that the Securities are being offered in an offshore transaction not involving any public offering within the meaning of the Securities Act and that the offer and sale of the Securities have not been registered under the Securities Act or any U.S. state securities laws. The Investor acknowledges and agrees, except as otherwise provided herein, that the Securities may not be offered, resold, transferred, pledged or otherwise disposed of by the Investor absent an effective registration statement under the Securities Act and any other applicable U.S. state securities laws (i) to the Issuer or a subsidiary thereof, (ii) to non-U.S. persons pursuant to “offshore transactions” and following expiration of a 40-day “distribution compliance period” (each within the meaning of Regulation S) or (iii) pursuant to another applicable exemption from the registration requirements of the Securities Act, and in each of clauses (i) and (iii) in accordance with any applicable securities laws of the states and other jurisdictions of the United States, and that any certificates or book entries representing the Securities shall contain a restrictive legend or notation to such effect. The Investor acknowledges and agrees that the Securities will be subject to transfer restrictions and, as a result of these transfer restrictions, the Investor may not be able to readily offer, resell, transfer, pledge or otherwise dispose of the Securities and may be required to bear the financial risk of an investment in the Securities for an indefinite period of time. The Investor acknowledges and agrees that it has been advised to consult legal counsel prior to making any offer, resale, transfer, pledge or disposition of any of the Securities. For purposes of this Subscription Agreement, “Transfer” shall mean any direct or indirect transfer, redemption, disposition or monetization in any manner whatsoever, including, without limitation, covenants and agreements included in this Subscription Agreement.

 

c.The Investor acknowledges and agrees that the Investor is subscribing for and purchasing the Securities from the Issuer. The Investor further acknowledges that there have been no representations, warranties, covenants and agreements made to the Investor by or on behalf of the Issuer or any of its affiliates or any control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing or any other person or entity, expressly or by implication, other than those representations, warranties, covenants and agreements of the Issuer expressly set forth in Section 5 of this Subscription Agreement. As used herein, the term “control persons” has the meaning ascribed to such term in Section 405 of the Securities Act.

 

d.The Investor’s acquisition and holding of the Securities will not constitute or result in a non-exempt prohibited transaction under Section 406 of the Employee Retirement Income Security Act of 1974, as amended, Section 4975 of the Internal Revenue Code of 1986, as amended, or any applicable similar law.

 

e.The Investor acknowledges and agrees that the Investor has received access to, and has had an adequate opportunity to review, such financial and other information as the Investor deems necessary in order to make an investment decision with respect to the Securities, including, without limitation, with respect to the Issuer and the business of the Issuer and its subsidiaries and made its own assessment and is satisfied concerning the relevant tax and other economic considerations relevant to the Investor’s investment in the Securities. The Investor acknowledges and agrees that the Investor and the Investor’s professional advisor(s), if any, have had the full opportunity to ask such questions, receive such answers and obtain such information as the Investor and such Investor’s professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Securities.

 

f.The Investor became aware of this offering of the Securities solely by means of direct contact between the Investor and the Issuer, and the Securities were offered to the Investor solely by direct contact between the Investor and the Issuer. The Investor did not become aware of this offering of the Securities, nor were the Securities offered to the Investor, by any other means. Solely with respect to itself, the Investor acknowledges that the Securities (i) were not offered by any form of general solicitation or general advertising or any directed selling efforts (within the meaning of Regulation S) and (ii) are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, or any state securities laws. The Investor acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, the Issuer or any of it respective affiliates or any control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing), other than the representations and warranties of the Issuer contained in Section 5 of this Subscription Agreement, in making its investment or decision to invest in the Issuer.

 

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g.The Investor acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Securities (including, without limitation, the risks set out in the Issuer’s 2022 annual report on Form 20-F filed with the SEC on April 28, 2023). The Investor has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities, and the Investor has sought such accounting, legal and tax advice as the Investor has considered necessary to make an informed investment decision.

 

h.Alone, or together with any professional advisor(s), the Investor has adequately analyzed and fully considered the risks of an investment in the Securities and determined that the Securities are a suitable investment for the Investor and that the Investor is able at this time and in the foreseeable future to bear the economic risk of a total loss of the Investor’s investment in the Issuer.

 

i.In making its decision to purchase the Securities, the Investor has relied solely upon independent investigation made by the Investor. Without limiting the generality of the foregoing, the Investor has not relied on any statements or other information about the Issuer or the offer of the Securities provided by or on behalf of any bankers, counsel or advisors to the Issuer or its affiliates.

 

j.The Investor has been duly formed or incorporated and is validly existing and is in good standing under the laws of its jurisdiction of formation or incorporation, with power and authority to enter into, deliver and perform its obligations under this Subscription Agreement.

 

k.The execution, delivery and performance by the Investor of this Subscription Agreement are within the powers of the Investor, have been duly authorized and will not constitute or result in a breach or default under or conflict with any order, ruling or regulation of any court or other tribunal or of any governmental commission or agency, or any agreement or other undertaking, to which the Investor is a party or by which the Investor is bound, and will not conflict with or violate any provisions of the Investor’s organizational documents, including, without limitation, its formation papers, bylaws, or partnership or operating agreement, as may be applicable, except, in each case, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Investor to perform its obligations under this Subscription Agreement. The Subscription Agreement has been duly executed and delivered by the Investor and constitutes a legal, valid and binding obligation of the Investor, and assuming this Subscription Agreement constitutes a valid and binding agreement of the Issuer, is enforceable against the Investor in accordance with its terms except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, and (ii) principles of equity, whether considered at law or equity.

 

l.The Investor is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons administered by OFAC or in any OFAC Sanctions Lists, or a person or entity prohibited by any OFAC sanctions program, (ii) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (iii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank. The Investor agrees to provide law enforcement agencies, if requested thereby, such records as required by applicable law, provided that the Investor is permitted to do so under applicable law. If the Investor is a financial institution subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.) (the “BSA”), as amended by the USA PATRIOT Act of 2001 (the “PATRIOT Act”), and its implementing regulations (collectively, the “BSA/PATRIOT Act”), the Investor maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. To the extent required, it maintains policies and procedures reasonably designed for the screening of its investors against the OFAC sanctions programs, including, without limitation, the OFAC Sanctions Lists. To the extent required by applicable law, the Investor maintains policies and procedures reasonably designed to ensure that the funds held by the Investor and used to purchase the Securities were legally derived.

 

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m.The Investor does not have, as of the date hereof, and during the 30-day period immediately prior to the date hereof such Investor has not entered into, any “put equivalent position” as such term is defined in Rule 16a-1 under the Exchange Act short sale positions with respect to the securities of the Issuer. Notwithstanding the foregoing, in the case of an Investor that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Investor’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Investor’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Subscription Agreement.

 

n.The Investor has, and on the Closing Date will have, sufficient funds to pay the Subscription Amount pursuant to Section 2 above.

 

7.Covenants.

 

a.The Investor shall use its reasonable best efforts to timely satisfy each of the covenants hereunder and the conditions to be satisfied by it as provided herein. The Issuer shall use its reasonable best efforts to timely satisfy each of the covenants hereunder and the conditions to be satisfied by it as provided herein.

 

b.The Issuer acknowledges and agrees that the Securities may, subject to applicable law, be pledged by the Investor in connection with a bona fide margin agreement or other loan financing arrangement that is secured by the Securities. The Issuer hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by the Investor.

 

c.Until the date (i) on which the Warrants are no longer outstanding and the Investor no longer holds any registrable securities of the Issuer to be registered pursuant to the Registration Rights Agreement or (ii) if the Issuer has been directed by the Investor to do so, until the date that the SEC has confirmed the termination of the Issuer’s reporting obligations following a filing by the Issuer of Form 15F, certifying that it meets the requirements for termination of its reporting obligations under Rule 12h-5 (collectively, the “Reporting Period”), the Issuer shall use its reasonable best efforts to timely file all reports required to be filed with the SEC pursuant to the Exchange Act.

 

d.For so long as the Investor owns any of the Warrants, the Issuer covenants that at any time the Ordinary Shares shall be listed on the Principal Market or the New York Stock Exchange (or any of their respective successors) (“Eligible Exchange”) the Issuer will list and keep listed, following registration of the Ordinary Shares and the Warrants with the SEC and for so long as the Ordinary Shares shall so be listed on the Principal Market or any Eligible Exchange, any Ordinary Shares issuable upon conversion of any of the Warrants. Further, so long as the Investor owns any of the Warrants and for so long as the Investor has not directed the Issuer to delist its Ordinary Shares from the Principal Market and to terminate its reporting obligations with the SEC by filing Form 15F with the SEC, the Issuer shall (at its own expense) use its reasonable best efforts to maintain the listing of authorization for quotation (as the case may be) of the Ordinary Shares on the Principal Market or any other Eligible Exchange and neither the Issuer nor any of its subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Ordinary Shares on the Principal Market.

 

e.The Issuer shall procure that it is in compliance with the listing requirements of the Principal Market before expiration of the grace period under the rules of the Principal Market.

 

f.None of the Issuer, its subsidiaries, their affiliates nor any person acting on their behalf will take any action or steps that would require registration of the issuance of any of the Securities under the Securities Act.

 

g.The Issuer shall use its best efforts to obtain the Shareholder Approvals (which proposal shall include a recommendation by the Issuer’s board of directors in favor of the approval of such proposal) no later than March 31, 2024. “Shareholder Approvals” means the passing of resolutions by shareholders of the Issuer in a general meeting to approve (i) the authorisation of the Issuer’s directors to allot the Warrant Shares and (ii) the disapplication of statutory pre-emption rights in full in respect of the issue of the Warrant Shares.

 

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8.Termination. This Subscription Agreement shall be capable of termination and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, in the following circumstances:

 

a.with the mutual written agreement of each of the Investor and the Issuer; or

 

b.the occurrence of a material breach by a party, which material breach is not cured by such party within a period of five (5) business days after notice of the breach has been provided to it (each a “Termination Event”), in which case the non-breaching party shall be entitled to terminate this Subscription Agreement following such failure to cure the material breach, provided that nothing herein will relieve any party from liability for any willful and material breach of any covenant, agreement, obligation, representation or warranty hereunder prior to the time of termination, and each party will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from any such willful and material breach. Upon the occurrence of any Termination Event, any monies paid by the Investor to or on behalf of the Issuer in connection herewith shall promptly (and in any event within one business day) following the Termination Event be returned to the Investor.

 

9.Miscellaneous.

 

a.Neither this Subscription Agreement nor any rights that may accrue to the Investor hereunder (other than the Securities acquired hereunder) may be transferred or assigned without the prior written consent of the parties hereto.

 

b.The Issuer may request from the Investor such additional information as the Issuer may deem necessary or advisable to register the resale of the Securities and evaluate the eligibility of the Investor to acquire the Securities, and the Investor shall promptly provide any such information so requested. Without limiting the generality of the foregoing or any other covenants or agreements in this Subscription Agreement, the Investor acknowledges that the Issuer may file a copy of this Subscription Agreement with the SEC as an exhibit to a current or periodic report, or a registration statement of the Issuer.

 

c.The Investor acknowledges and agrees that neither it, nor any person or entity acting on its behalf or pursuant to any understanding with the Investor, shall, directly or indirectly, engage in any hedging activities or execute any Short Sales (as defined below) with respect to any Securities or any securities of Issuer or any instrument exchangeable for or convertible into any Securities or any securities of Issuer prior to the Closing or the earlier termination of this Subscription Agreement in accordance with its terms. “Short Sales” shall include, without limitation, all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges (other than pledges in the ordinary course of business as part of prime brokerage arrangements), forward sale contracts, options, puts, calls, swaps and similar arrangements (including, without limitation, on a total return basis), and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers.

 

d.The agreements, representations and warranties made by the Issuer in this Subscription Agreement (including Section 9 hereof) shall survive the Closing Date.

 

e.This Subscription Agreement may not be terminated other than pursuant to the terms of Section 8 above. The provisions of this Subscription Agreement may not be modified, amended or waived except by an instrument in writing, signed by each of the parties hereto. No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder.

 

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f.This Subscription Agreement (including, without limitation, the schedule hereto) constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof. Except as expressly set forth herein, this Subscription Agreement shall not confer any rights or remedies upon any person other than the parties hereto, and their respective successor and assigns, and the parties hereto acknowledge that any such persons so referenced are third party beneficiaries of this Subscription Agreement for the purposes of, and to the extent of, the rights granted to them, if any, pursuant to the applicable provisions.

 

g.If any provision of this Subscription Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Subscription Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect.

 

h.This Subscription Agreement may be executed in one or more counterparts (including, without limitation, by facsimile or electronic mail or in .pdf) and by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document. All counterparts so executed and delivered shall be construed together and shall constitute one and the same agreement.

 

i.Any notice or communication required or permitted hereunder to be given to the Investor shall be in writing and either delivered personally, emailed or sent by overnight mail via a reputable overnight carrier, or sent by certified or registered mail, postage prepaid, to such address(es) or email address(es) set forth on the signature page hereto, and shall be deemed to be given and received (i) when so delivered personally, (ii) when sent, with no mail undeliverable or other rejection notice, if sent by email, or (iii) three (3) business days after the date of mailing to the address below or to such other address or addresses as the Investor may hereafter designate by notice to the Issuer.

 

j.THIS SUBSCRIPTION AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS THEREOF) AS TO ALL MATTERS (INCLUDING ANY ACTION, SUIT, LITIGATION, ARBITRATION, MEDIATION, CLAIM, CHARGE, COMPLAINT, INQUIRY, PROCEEDING, HEARING, AUDIT, INVESTIGATION OR REVIEWS BY OR BEFORE ANY GOVERNMENTAL ENTITY RELATED HERETO), INCLUDING MATTERS OF VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, AND THE UNITED STATES DISTRICT COURT, LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY SOLELY IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS SUBSCRIPTION AGREEMENT AND THE DOCUMENTS REFERRED TO IN THIS SUBSCRIPTION AGREEMENT AND IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR INTERPRETATION OR ENFORCEMENT HEREOF OR ANY SUCH DOCUMENT THAT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS SUBSCRIPTION AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION, SUIT OR PROCEEDING SHALL BE HEARD AND DETERMINED BY SUCH COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH SUCH ACTION, SUIT OR PROCEEDING IN THE MANNER PROVIDED IN THIS SECTION 9(j) OF THIS SUBSCRIPTION AGREEMENT OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW SHALL BE VALID AND SUFFICIENT SERVICE THEREOF. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (II) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THE FOREGOING WAIVER; (III) SUCH PARTY MAKES THE FOREGOING WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS SUBSCRIPTION AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 9(j).

 

10.Disclosure. The Issuer may, if it deems appropriate within four (4) business days following the date of this Subscription Agreement, issue one or more press releases and/or file with the SEC a report on Form 6-K (collectively, the “Disclosure Document”) disclosing all material terms of the transactions contemplated hereby. Upon the issuance of the Disclosure Document, to the actual knowledge of Issuer, the Investor shall not be in possession of any material, non-public information received from Issuer or any of its officers, directors, or employees or agents.

 

[Signature pages follow]

 

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IN WITNESS WHEREOF, the Investor has executed or caused this Subscription Agreement to be executed by its duly authorized representative as of the date set forth below.

 

Osprey International Limited  
     
By: /S/ GIORGOS GEORGIOU  
     
Print name: Giorgos Georgiou  
     
Title: Director  
     
Date: 25 January 2024  
     
Address: 9E, Foti Pitta, 1065, Nicosia, Cyprus  

 

[Signature Page - $16M Subscription Agreement]

 

 

 

 

IN WITNESS WHEREOF, the Issuer has accepted this Subscription Agreement as of the date set forth below.

 

Selina Hospitality PLC  
     
By: /s/ RAFAEL MUSERI  
     
Print name: Rafael Museri  
     
Title: CEO  
     
Date: 25 January 2024  

 

[Signature Page - $16M Subscription Agreement]

 

 

 

 

EXHIBIT A

WARRANT AGREEMENT

 

17

 

 

EXHIBIT B

REGISTRATION RIGHTS AGREEMENT

 

18

 

 

EXHIBIT C

INVESTOR’S RIGHTS AGREEMENT

 

19

 

 

EXHIBIT D

INDEBTEDNESS

 

20

 

 

ANNEX A

INSTRUMENTS AND AGREEMENTS

 

2026 Notes

 

1.Indenture in respect of $147.5 million principal amount of 6.00% Convertible Senior Notes due 2026, dated as of October 27, 2002, between Selina Hospitality plc and Wilmington Trust, National Association, as trustee, as amended

 

Dorado - Australia

 

2.Facility agreement for up to $5.5 million, dated November 8, 2021, among Selina Holding Australia Pty Ltd and certain of its subsidiaries, Selina Hospitality PLC, as guarantor, and Dorado Direct Investment 21 Pty Ltd, as trustee, as amended

 

IDB – Latin America

 

3.Loan agreement for up to $50.0 million, dated November 20, 2020, among Selina Global Services Spain S.L., as the borrower, Selina Operation One (1) S.A., and Inter-American Investment Corporation, as amended

 

Arcstone – United Kingdom, Portugal, Austria and United States

 

4.Facility agreement between Selina Operations Midlands Ltd, as borrower, and Arcstone Loan Notes Portfolio 1 Limited, as lender, dated December 4, 2019 in respect of the property known as 56-60 Mount Pleasant, Liverpool, L3 5SH, United Kingdom

 

5.Facility agreement between Selina Operations Midlands Ltd, as borrower, and Arcstone Loan Notes Portfolio 1 Limited, as lender, dated December 4, 2019 in respect of the property known as 42-44 (Odd) Oldham Street, 17-21 (even) Hilton Street and 37 Spear Street, Manchester, United Kingdom

 

6.Facility agreement between Selina Operations Midlands Ltd, as borrower, and Arcstone Loan Notes Portfolio 1 Limited, as lender, dated December 4, 2019 in respect of the property known as 50 Newton Street, Manchester, M1 2EA, United Kingdom

 

7.Facility agreement between Selina Operations Midlands Ltd, as borrower, and Arcstone Loan Notes Portfolio 1 Limited, as lender, dated December 4, 2019 in respect of the property known as 89-95 Livery Street, Birmingham, B3 1RN, United Kingdom

 

8.Facility agreement between Seli-na Operation Lisboa RF Unipessoal LDA, as borrower, and Arcstone Loan Notes Portfolio 1 Limited, as lender, dated January 10, 2020 in respect of the property known as Beco do Carrasco no1, 1200-096, Lisboa, Portugal

 

9.Facility agreement between Seli-na Operation Porto Unipessoal LDA, as borrower, and Arcstone Loan Notes Portfolio 1 Limited, as lender, dated January 10, 2020 in respect of the property known as Rua das Oliveiras, nos 61 a 65 Porto, Portugal

 

10.Facility agreement between Selina Operation Brighton Ltd., as borrower, and Arcstone Portfolio 2 Limited, as lender, dated February 7, 2020 in respect of the property known as 135 Kings Road, Brighton, BN1 2HX, United Kingdom

 

11.Facility agreement between Seli-na Operation Ericeira Unipessoal LDA, as borrower, and Arcstone Portfolio 2 Limited, as lender, dated February 21, 2020 in respect of the property known as Rua da Boavista, EN 116, Municipality of Mafra

 

12.Facility agreement between Seli-na Operation Peniche Unipessoal LDA, as borrower, and Arcstone Portfolio 2 Limited, as lender, dated February 21, 2020 in respect of the property known as Casais do Baleal, Avenida do Mar no 100, Ferrel, Peniche, Portugal

 

13.Facility agreement between Seli-na Operation Vila Nova Unipessoal LDA, as borrower, and Arcstone Portfolio 2 Limited, as lender, dated February 21, 2020 in respect of the property known as Rua do Caris, 9, 7645-242, Vila Nova de Milfontes, Odemira, Portugal

 

21

 

 

14.Facility agreement between Selina Operation Bad Gastein GMBH, as borrower, and Arcstone Portfolio 3 Limited, as lender, dated July 31, 2020 in respect of the property known as Kaiser Franz Josef-Strasse 6, 5640 Bad Gastein, Austria

 

15.Facility agreement between Selina Operation Camden Ltd., as borrower, and Arcstone Portfolio 3 Limited, as lender, dated July 31, 2020 in respect of the property known as 88-89 Chalk Farm Road, London NW1 8AR, United Kingdom

 

16.Facility agreement between Selina Operation NY Ave, LLC, as borrower, and Arcstone Holdings Limited, as lender, dated April 25, 2022 in respect of the property known as 411 New York Avenue, N.E., Washington, D.C., United States

 

Mogno Capital - Brazil

 

17.The series one debentures issued pursuant to the Series One Debentures Indenture (Instrumento Particular de Escritura da 1ª Emissão de Debêntures Simples, Não Conversíveis em Ações, da Espécie Quirografária com Garantia Adicional Corporativa, em Duas Séries, para Colocação Privada, da Selina Brazil Hospitalidade S.A.), dated November 25, 2019, among Selina Brazil Hospitalidade S.A., as issuer, and Gaia Securitizadora S.A., as trustee (Debenturista), as amended

 

18.The series two debentures issued pursuant to the Series Two Debentures Indenture (Instrumento Particular de Escritura da 2ª Emissão de Debêntures Simples, Não Conversíveis em Ações, da Espécie Quirografária com Garantia Adicional Corporativa, em Duas Séries, para Colocação Privada, da Selina Brazil Hospitalidade S.A.), dated July 27, 2020, among Selina Brazil Hospitalidade S.A., as issuer, and Gaia Securitizadora S.A., as trustee (Debenturista), as amended

 

19.The series three debentures issued pursuant to the Series Three Debentures Indenture (Instrumento Particular de Escritura da 3ª Emissão de Debêntures Simples, Não Conversíveis em Ações, da Espécie Quirografária, com Garantia Adicional Corporativa, em Quatro Séries, para Colocação Privada, da Selina Brazil Hospitalidade S.A.), dated November 23 2020, among Selina Brazil Hospitalidade S.A., as issuer, and Gaia Securitizadora S.A., as trustee (Debenturista), as amended

 

20.The series four debentures issued pursuant to the Series Four Debentures Indenture (Instrumento Particular de Escritura da 4ª Emissão de Debêntures Simples, Não Conversíveis em Ações, da Espécie Quirografária, com Garantia Adicional Corporativa, em Seis Séries, para Colocação Privada, da Selina Brazil Hospitalidade S.A.), dated October 27, 2021, among Selina Brazil Hospitalidade S.A., as issuer, and Planeta Securitizadora S.A., as trustee (Debenturista), as amended

 

21.Joint Venture Agreement entered on September 30, 2019, among Selina Brazil Hospitalidade S.A. and Mogno Capital Investimentos Ltda. for real estate development and financing Selina projects in Brazil, with additional corporate guarantee, as amended

 

Brazil - Bank Loan Agreement Santander

 

22.Bank credit note issued in the amount of US$300,000 pursuant to the loan agreement dated May 19, 2023, among Selina Operation Hospedagem Ltda., as issuer, and Santander Bank, as the creditor (com garantia adicional no âmbito do Programa Emergencial de Acesso a Crédito (“PEAC”) administrado pelo BNDES - Banco Nacional de Desenvolvimento)

 

Nuvei – Global payment processing

 

23.Merchant services agreement dated December 15, 2021, between Selina Hospitalty PLC and Nuvei Limited, as amended

 

22

 

 

Exhibit 99.2

 

EXECUTION VERSION

 

Confidential

SUBSCRIPTION AGREEMENT

Selina Hospitality PLC

27 Old Gloucester Street

London WC1N 3AX

United Kingdom

 

Ladies and Gentlemen:

 

This Subscription Agreement (this “Subscription Agreement”) is being entered into as of 25 January 2024 (the “Signing Date”) by and between Selina Hospitality PLC (the “Issuer”), a company organized and existing under the laws of England and Wales having company number 13931732, and Osprey International Limited, registered in Cyprus with number HE385659 or an affiliate thereof (the “Investor”), a company incorporated under the laws of Cyprus, with its registered address at 9E Foti Pitta Street, 1065, Nicosia, Cyprus, with incorporation number HE 229246, in connection with the Investor’s subscription for 60,000,000 ordinary shares of the Issuer (“Ordinary Shares”), having a nominal value of $0.005064 each (rounded to six decimal places) (the “Subscribed Shares” or the “Securities”), including an initial subscription (the “Initial Subscription”) of 20,000,000 Ordinary Shares (the “Initial Subscribed Shares”), in a private placement for a per share purchase price of $0.20 per share (the “Per Share Price”) and an aggregate purchase price of $12,000,000, with $4,000,000 payable for the Initial Subscribed Shares (the “Initial Subscription Amount”) and the $8,000,000 balance payable monthly, commencing in the month immediately following the month in which the Issuer obtains the Shareholder Approvals (as defined below), with such payments as outlined in Annex A hereto (the “Subscription Amount”). The monthly Securities will be issued by the Issuer to the Investor in the amount of Subscribed Shares per month outlined in Annex A hereto (the “Monthly Subscribed Shares” or the “Monthly Securities”), subject to the receipt of the corresponding monthly purchase price (the “Monthly Subscription Amount”) on or about the 20th of each month, such payment date to be three business days after the monthly payment date of the amount per month into FutureLearn, a British digital education platform that provides online courses, microcredentials and other degrees, and the formation of a joint venture with an affiliate of the Investor, or its subsidiary governing the operation of the FutureLearn business (“FutureLearn”), as outlined in Annex A hereto (each occurrence, a “Monthly Subscription Date”). The Subscription Amount reduced by the aggregate payments to FutureLearn is referred to as the “Issuer Net Amount.” The Issuer desires to allot to the Investor the Subscribed Shares in consideration for the Issuer’s receipt of the Subscription Amount.

 

The Issuer and the Investor are executing and delivering this Subscription Agreement in reliance upon the exemption from securities registration afforded by Regulation S (“Regulation S”) under the Securities Act of 1933, as amended (the “Securities Act”).

 

At the initial Closing (as defined below), the parties hereto shall execute and deliver the Registration Rights Agreement in the form attached hereto as Exhibit A (the “Registration Rights Agreement”). This Subscription Agreement, collectively with the Registration Rights Agreement and the Investor’s Rights Agreement in the form attached hereto as Exhibit B and each of the other agreements entered into by the parties hereto and thereto in connection with the transactions contemplated hereby and thereby are collectively referred to herein as the “Transaction Documents”.

 

In connection therewith, and in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, set forth herein, and intending to be legally bound hereby, each of the Investor and Issuer acknowledges and agrees as follows:

 

1.Subscription and Additional Subscription. The Investor hereby irrevocably subscribes for and agrees to purchase from the Issuer, and the Issuer agrees to allot and/or issue and sell to the Investor for each Monthly Subscription Amount, in each case subject to the terms and conditions set forth herein, the Monthly Securities at the Per Share Price and for the Initial Subscription Amount, the Initial Subscribed Shares at the Per Share Price.

 

2.Closing. Within three (3) business days after the Signing Date with respect to the Initial Subscription and three (3) business days after each Monthly Subscription Date (it being acknowledged that the first Monthly Subscription Date shall not occur until such time as the Shareholder Approvals have been obtained), as applicable, subject to the satisfaction or waiver of the Issuer Closing Conditions and the Investor Closing Conditions, (i) the Issuer shall, upon payment of the Initial Subscription Amount or Monthly Subscription Amount, as applicable, issue and allot to Investor (or cause to be issued and allotted to Investor) the Initial Subscribed Shares or Monthly Securities, as applicable, at the Per Share Price and cause such Initial Subscribed Shares or Monthly Subscribed Shares to be registered with the Issuer’s transfer agent in the name of the Investor (the “Closing,” and each date of such registration being a “Closing Date”); and (ii) the Investor shall deliver to the Issuer the Initial Subscription Amount for the Initial Subscribed Shares and the Monthly Subscription Amount for the Monthly Securities, as applicable, which amount shall be paid by wire transfer of U.S. dollars, in immediately available funds, to the account specified by the Issuer. The Investor acknowledges that the Subscribed Shares initially shall be held by the Issuer’s transfer agent in book entry form. In addition, for purposes of this Subscription Agreement, “business day” shall mean a day, other than a Saturday or Sunday, on which commercial banks in both New York, New York and London, United Kingdom are open for the general transaction of business. If and to the extent the Investor withholds payment of a Monthly Subscription Amount in accordance with Section 7(i), the Issuer shall not be obliged to allot and issue the relevant Monthly Subscribed Shares to the Investor.

 

 

 

 

3.Closing Conditions.

 

a.The obligation of the Investor to consummate the purchase of, and subscription for, the Securities pursuant to this Subscription Agreement shall be subject to the following conditions, each of which may be waived in writing by the Investor in its discretion (the “Investor Closing Conditions”):

 

(i)that no applicable governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation (whether temporary, preliminary or permanent) which is then in effect and has the effect of making consummation of the transactions contemplated hereby illegal or otherwise restraining or prohibiting consummation of the transactions contemplated hereby;

 

(ii)that all representations and warranties of the Issuer contained in this Subscription Agreement shall be true and correct in all material respects as of the date made and as of each Closing Date as though made at that time (except for those representations and warranties that speak as of a specified earlier date, which shall be so true and correct in all material respects as of such specified earlier date) and the Issuer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by the Issuer at or prior to each Closing Date;

 

(iii)the Investor shall have received the opinion of Greenberg Traurig, LLP, outside counsel to the Issuer, dated as of each Closing Date, in a form reasonably acceptable to the Investor;

 

(iv)the Issuer shall have executed and delivered to the Investor: (A) at the initial Closing, each of the Transaction Documents to which it is party and each other document to which it is a party in connection with the arrangements contemplated hereby and thereby and (B) the Securities being purchased by the Investor at each Closing Date pursuant to this Subscription Agreement;

 

(v)the Issuer shall have delivered to the Investor a certificate evidencing the formation and good standing of the Issuer in its jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction within three (3) business days prior to each Closing Date;

 

(vi)the Issuer shall have delivered to the Investor a certified copy of the certificate of incorporation and articles of association of the Issuer within ten (10) business days prior to the initial Closing Date;

 

(vii)the Issuer shall have delivered to the Investor a certificate, executed by the Secretary of the Issuer and dated as of the initial Closing Date, as to (a) the resolutions of its board of directors regarding the agreements and transactions contemplated hereby in a form reasonably acceptable to the Investor, (b) the governing documents of the Issuer, each as in effect at the initial Closing Date;

 

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(viii)the Issuer shall have notified the Nasdaq Global Market (the “Principal Market”) of the transactions contemplated hereby, including the applicable listing of additional shares notification to the Principal Market, and as of each Closing Date, the Principal Market shall not have made any objection (not subsequently withdrawn) to the Issuer that the consummation of the transactions contemplated hereby would violate the Principal Market’s listing rules applicable to the Issuer; the Securities shall have been approved for listing on the Principal Market;

 

(ix)to the extent required to give effect to the Issuer’s obligations pursuant to this Subscription Agreement and the other Transaction Documents, on or prior to each Closing Date, the Issuer shall deliver all irrevocable instructions to, and have received acknowledgement from, each relevant transfer agent, depositary or clearing system in order for the Issuer to perform its obligations pursuant to this Subscription Agreement and the other Transaction Documents;

 

(x)the Issuer shall have obtained, as of each Closing Date, all governmental or regulatory consents and approvals, if any, necessary for the sale and issuance of the Securities;

 

(xi)the quotation or listing of the Ordinary Shares on the Principal Market shall not have been suspended, as of each Closing Date, by the SEC or the Principal Market, nor shall suspension have been threatened as of each Closing Date, either by the SEC or the Principal Market or by virtue of the Issuer falling below the continued listing requirements of the Principal Market;

 

(xii)the Investor shall have obtained the Issuer’s wire instructions on Issuer letterhead duly executed by an authorised officer of the Issuer;

 

(xiii)the Issuer and holders who together hold not less than 80% of the outstanding principal amount of the Issuer’s $147.5 million principal amount of 6.00% Convertible Senior Notes due 2026 (the “2026 Notes”) shall have completed the “Note Restructuring”, being the exchange of the 2026 Notes as detailed in the Issuer’s Current Report on Form 6-K published on December 4, 2023 (the “6-K Report”) (the “Note Exchange”) and the Issuer shall have provided evidence of the completion of the Note Exchange to the Investor (in form and substance satisfactory to the Investor);

 

(xiv)the Issuer shall have issued to the Investor or its affiliate 20,000,000 Ordinary Shares issuable pursuant to that certain Notice of Conversion with respect to the Secured Convertible Promissory Note dated 31 July 2023 issued by Selina Management Company UK Ltd;

 

(xv)the Issuer and the Investor shall, among others, have entered into certain amendments as referred to in the section of the 6-K Report headed “New Osprey Investment Arrangements”, being amendments to that certain (i) Secured Convertible Promissory Note dated 26 June 2023, in the principal amount of $11,111,111 issued by Selina Management Company UK Ltd and (ii) Secured Convertible Promissory Note dated 31 July 2023, in the principal amount of $4,444,444 issued by Selina Management Company UK Ltd;

 

(xvi)the Issuer shall have issued to the Investor or its affiliate 23,500,000 Ordinary Shares issuable pursuant to that certain Exchange Agreement with respect to the $4.7 million principal amount of the Kibbutz Note (as such term is defined in the section of the 6-K Report headed “New Osprey Investment Arrangements”);

 

(xvii)the Issuer and the Investor shall, among others, have entered into the new secured convertible promissory note on or about the date of this Agreement, in the principal amount of $10,000,000 issued by the Issuer (the “New Note”);

 

(xviii)for each of the two subsequent Closings after the initial Closing, the Issuer shall have consummated the investments into FutureLearn as outlined in Annex A attached hereto;

 

(xix)such number of the Issuer’s shareholders (including, to the extent they are or will become shareholders of the Issuer as a result of the Note Exchange, those holders of the 2026 Notes who have participated in the Note Exchange) shall have entered into transaction support agreements to undertake to vote in favor or otherwise support the Shareholder Approvals in a number sufficient to pass such resolutions;

 

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(xx)all documents, instruments, filings and recordations required by or reasonably necessary in connection with the security documents relating to the New Note (the “Security Documents”), shall have been made, executed and delivered, as applicable, in accordance with the terms thereof and to the parties thereto, save for any security interests to be granted under the Security Documents and/or any filings or instruments to be entered into after the Closing Date, in each case in accordance with the New Note and the Security Documents; and

 

(xxi)with respect to the Monthly Securities only, the shareholders of the Issuer having passed in a general meeting such resolutions necessary to (i) grant authority to the Issuer’s directors to allot the Monthly Securities and (ii) dis-apply any statutory pre-emption rights in full in respect of the issue of the Monthly Securities (the “Shareholder Approvals”).

 

b.The obligation of the Issuer to consummate the purchase of, and subscription for, the Securities on each Closing Date pursuant to Section 2 shall be subject to the following conditions, each of which may be waived in writing by the Issuer in its discretion (the “Issuer Closing Conditions”): (i) that no applicable governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation (whether temporary, preliminary or permanent) which is then in effect and has the effect of making consummation of the transactions contemplated hereby illegal or otherwise restraining or prohibiting consummation of the transactions contemplated hereby; and (ii) that all representations and warranties of the Investor contained in this Subscription Agreement shall be true and correct in all material respects at and as of each Closing Date (except for those representations and warranties that speak as of a specified earlier date, which shall be so true and correct in all material respects as of such specified earlier date).

 

4.Further Assurances. At each Closing, the parties hereto shall execute and deliver such additional documents and take such additional actions as the parties reasonably may deem to be practical and necessary in order to consummate the transactions contemplated by the Transaction Documents.

 

5.Issuer’s Representations and Warranties. The Issuer represents and warrants to the Investor as of the Signing Date and on each Closing Date that:

 

a.The Issuer is validly existing under the laws of England and Wales. The Issuer has all requisite power and authority to own, lease and operate its properties and conduct its business as presently conducted to enter into, deliver and, subject to the passing of the Shareholder Approvals solely with respect to the authority to issue the Monthly Securities, perform its obligations under the Transaction Documents. The Issuer is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to do so would not reasonably be expected ,individually or in the aggregate, to have a material adverse effect on the business, financial condition or results of operations of the Issuer and its subsidiaries, taken as a whole or the ability of the Issuer to meet any of its obligations under any of the Transaction Documents (a “Material Adverse Effect”).

 

b.The Securities, subject to the passing of the Shareholder Approvals solely with respect to the authority to issue the Monthly Securities, have been duly authorized and, when issued and delivered to the Investor against full payment therefor in accordance with the terms of this Subscription Agreement, will constitute the valid and binding obligation of the Issuer, free from all preemptive or similar rights (except for those which have been validly waived prior to the date hereof), taxes, liens and charges and other encumbrances with respect to the issue thereof.

 

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c.The Issuer has the requisite power and authority to enter into and, subject to the passing of the Shareholder Approvals solely with respect to the authority to issue the Monthly Securities, perform is obligations under the Transaction Documents. The execution and delivery of the Transaction Documents by the Issuer and the consummation by the Issuer of the transactions contemplated hereby and thereby (as applicable), including without limitation, the Securities have been or will, subject to of the passing of the Shareholder Approvals solely with respect to the authority to issue the Monthly Securities, be duly authorized by the Issuer (as applicable) and no further filings, consents or authorizations are required by the Issuer, its board of directors or its shareholders (including, without limitation, any other form of shareholder approval pursuant to the Companies Act 2006 (UK) (“Companies Act”) or Rule 5635 of the Principal Market). The Transaction Documents have been duly authorized, executed and delivered by the Issuer and each constitutes a legal, valid and binding obligation of the Issuer and, assuming that the Transaction Documents each constitutes the valid and binding agreement of the Investor and the other parties thereto, the Transaction Documents are enforceable against the Issuer in accordance with their terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, reorganization, moratorium or other applicable laws relating to or affecting the rights of creditors generally, or (ii) principles of equity, whether considered at law or equity.

 

d.The sale and issuance of the Securities and the compliance by the Issuer with all of the provisions of the Transaction Documents and the consummation of the transactions contemplated herein do not and will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Issuer or any of its subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which the Issuer or any of its subsidiaries is a party or by which the Issuer or any of its subsidiaries is bound or to which any of the property or assets of the Issuer is subject (except in respect of any change of control of the Issuer which may occur pursuant to or under any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument listed in Annex B attached hereto as a result of the consummation of the transactions contemplated herein or hereby); (ii) result in any violation of the provisions of the constitutional documents of the Issuer; or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign (including foreign, federal and state securities laws and regulations and the rules and regulations of the Principal Market and including all applicable foreign, federal and state laws, rules and regulations), having jurisdiction over the Issuer or any of its properties.

 

e.Subject to the passing of the Shareholder Approvals solely with respect to the authority to issue the Monthly Securities, the Issuer is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other governmental authority, self-regulatory organization or other person in connection with the execution, delivery and performance by the Issuer of the Transaction Documents (including, without limitation, the issuance of the Securities), other than notifications or applications to list additional shares required by the Nasdaq Global Market and the failure of which to obtain would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect. All consents, authorizations, orders, filings and registrations which the Issuer is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to each Closing Date (or in the case of the filings detailed above, will be made timely after each Closing Date), and the Issuer is unaware of any facts or circumstances which might prevent the Issuer from obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents. As disclosed in its current report on Form 6-K dated 12 September 2023, the Issuer is currently in violation of the listing requirements of the Principal Market and undertakes to be in compliance with such listing requirements before expiration of the grace period under Nasdaq rules; and to the knowledge of the Issuer, there are no other facts or circumstances which would reasonably lead to delisting or suspension of the Ordinary Shares. The issuance by the Issuer of the Securities shall not have the effect of delisting or suspending the Ordinary Shares from the Principal Market. The Securities have been approved for listing on the Principal Market.

 

f.Assuming the accuracy of the Investor’s representations and warranties set forth in Section 6, no registration under the Securities Act is required for the offer and sale of the Securities by the Issuer to the Investor hereunder. The Securities (i) were not offered by any form of general solicitation or general advertising (within the meaning of Regulation D) and (ii) are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, or any state securities laws. No directed selling efforts (as defined in Rule 902 of Regulation S) have been made by any of the Issuer, any of its affiliates or any person acting on its behalf with respect to any Securities that are not registered under the Securities Act; all such persons have complied with the offering restrictions requirement of Regulation S; none of such persons has taken any actions that would result in the sale of the Securities to the Investor hereunder requiring registration under the Securities Act; and the Issuer is a “foreign issuer” (as defined in Regulation S).

 

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g.The Issuer has not engaged any broker, finder, commission agent, placement agent or arranger in connection with the sale of the Securities, and the Issuer is not under any obligation to pay any broker’s fee or commission in connection with the sale of the Securities

 

h.None of the Issuer nor any of its affiliates, nor any person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the Securities under the Securities Act, whether through integration with prior offerings or otherwise, or cause this offering of the Securities to require approval of stockholders of the Issuer, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Issuer are listed or designated for quotation.

 

i.All factual disclosure provided to the Investor regarding the Issuer and its subsidiaries, their businesses and the transactions contemplated hereby and thereby, furnished by or on behalf of the Issuer or any of its subsidiaries was, when provided, true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

 

j.The Issuer acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Issuer or any of its subsidiaries (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by the Investor or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Investor’s purchase of the Securities. The Issuer further represents to the Investor that its decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Issuer and its representatives.

 

k.The Issuer has timely filed all reports, schedules, forms, statements and other documents required to be filed by it to the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (and all the foregoing, and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The SEC Documents complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, as of their respective filing dates, and at the time they were filed did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective filing dates, the financial statements of the Issuer included in the SEC Documents complied in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto as in effect as of the time of filing. Such financial statements have been prepared in accordance with international financial reporting standards (“IFRS”) (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of an unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of each of the Issuer and its subsidiaries, on a consolidated basis, at the respective dates thereof and the results of operations and cash flows for the periods indicated. The Issuer is not currently planning to amend or restate any of its financial statements (including, without limitation, any notes or any letter of the independent accountants of the Issuer with respect thereto) included in the SEC Documents, nor is the Issuer currently aware of facts or circumstances which would require the Issuer to amend or restate its financial statements, in each case, in order for any of its financial statements to be in material compliance with IFRS and the rules and regulations of the SEC. The Issuer has not been informed by its independent accountants that they recommend that the Issuer amend or restate any of its financial statements or that there is a need for the Issuer to do so.

 

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l.Other than as disclosed to the Investor or as disclosed publicly (including in the SEC Documents), since 31 October 2020 there has been no material adverse change and no material adverse development in the business, assets, liabilities, properties, operations, condition (financial or otherwise), results of operations of the Issuer or any of its subsidiaries, taken as a whole, and there is no change known to the Issuer or any facts or circumstances that would reasonably be expected to give rise to or cause such a change, other than as disclosed to the Investor. Neither the Issuer nor any of its subsidiaries has sought protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, and, none of its creditors has initiated or, to the knowledge of the Issuer, has threatened to initiate, involuntary bankruptcy proceedings against the Issuer or any of its subsidiaries. The Issuer and its subsidiaries, on a consolidated basis, are not as of the date hereof, and after giving effect to the Transaction Documents and the transactions contemplated hereby and thereby to occur at or subsequent to each Closing, will not be insolvent.

 

m.No event, liability, development or circumstance has existed or exists, or is contemplated to occur, as the date hereof or as of each Closing Date (as applicable), with respect to the Issuer, its subsidiaries or their respective business, properties, prospects, operations or financial condition that required disclosure by the Issuer on a Current Report or Form 6-K, or would require disclosure on Form 6-K within the four business days following the date hereof or each Closing Date (as applicable) upon such occurrence, and that has not been filed with the SEC.

 

n.Neither the Issuer nor any of its subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Issuer or any of its subsidiaries, except in all cases for violations which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Since October 27, 2022, (i) the Ordinary Shares have been listed or designated for quotation on the Principal Market, (ii) trading the Ordinary Shares has not been suspended by the SEC or the Principal Market and (iii) other than the Nasdaq notice received by the Issuer and disclosed in its current report on Form 6-K on 12 September 2023, the Issuer has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Ordinary Shares from the Principal Market.

 

o.None of the officers, directors or employees of the Issuer or any of its subsidiaries is presently party to any transaction with the Issuer or any of its subsidiaries that would be required to be disclosed pursuant to Item 7.B of Form 20-F promulgated under the Exchange Act and that has not been disclosed in the SEC Documents.

 

p.As of the date hereof, the issued share capital of the Issuer consisted of 109,260,826 Ordinary Shares. All of such outstanding shares are duly authorized and have been validly issued and fully paid. All of such outstanding shares are duly authorized and have been, or upon issuance, will be, validly issued and fully paid. Other than as disclosed to the Investor or as disclosed publicly (including in the SEC Documents and save in respect of up to, in total, 15,000 shares of Class B common stock in Selina RY in connection with an employee stock option plan):

 

a.there are no outstanding options, warrants, rights or obligations to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Issuer or any member of the Issuer, the Borrower, the Guarantors and any Significant Subsidiary (as defined below, and, collectively, the “Restricted Group”) (other than intra-company), or contracts, commitments, understandings or arrangements by which the Issuer and any member of the Restricted Group (other than intra-company) is or may become bound to issue additional capital stock of the Issuer or any of such member of the Restricted Group or options, warrants, rights or obligations to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Issuer or any member of the Restricted Group;

 

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Borrower” means Selina Management Company UK Ltd;

 

Significant Subsidiary” means (i) any subsidiary of the Parent whose consolidated revenue is at least 10% of the consolidated revenue of the Parent and its subsidiaries taken as a whole and (ii) Selina RY or any of its subsidiaries from time to time); and

 

Selina RY” means Selina RY Holding Inc. (a Delaware corporation).

 

b.there are no agreements or arrangements (other than as set forth in the Transaction Documents) under which the Issuer or any member of the Restricted Group is obligated to register the sale of any of their securities under the Securities Act;

 

c.there are no outstanding securities or instruments of the Issuer or any member of the Restricted Group which contain redemption or similar provisions;

 

d.there are no contracts, commitments, understandings or arrangements by which the Issuer or any member of the Restricted Group is or may become bound to redeem a security of the Issuer or any member of the Restricted Group; and

 

e.there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Securities.

 

q.Other than as disclosed to the Investor in Exhibit C hereto or as disclosed publicly (including in the SEC Documents), as of September 30, 2023, the Issuer or any member of the Restricted Group did not have (save for any intra-company or intra-group amounts) any Indebtedness (as defined below) with a value in excess of $5,000,000 or is a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument would reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect. The Issuer and the members of the Restricted Group are not (i) in violation of any term of, or in default under, any contract, agreement or instrument relating to any Indebtedness of the Issuer or any member of the Restricted Group, except (i) as publicly disclosed in the Issuer’s Current Report on Form 6-K on November 1, 2023, and (ii) where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (ii) a party to any contract, agreement or instrument relating to any indebtedness of the Issuer or any member of the Restricted Group, the performance of which, in the judgment of the Issuer’s officers, has or is expected to have a Material Adverse Effect.

 

Capital Lease Obligation” means, at the time any determination is to be made, the amount of the liability in respect of a lease (of any nature, including, without limitation, leases of properties and capital lease or rental agreements between the Issuer or any of its subsidiaries and any landlord or local partner and related agreements relating to the leasing, conversion, fit-out, maintenance, repair and/or operation of any properties in any Permitted Business, howsoever such obligation is described or accounted) and relate financing arrangements, that would at that time be accounted for on a balance sheet prepared in accordance with IFRS, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty;

 

Capital Stock” means (i) in the case of a corporation, corporate stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (iii) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or, membership interests and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock); and

 

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Disqualified Stock” means any Capital Stock (as defined below)that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable; pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature; provided, that only the portion of Capital Stock which so matures or is mandatorily redeemable, or is so redeemable at the option of the holder thereof prior to such date, will be deemed to be Disqualified Stock. For purposes hereof, the amount of Disqualified Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Note, and if such price is based upon, or measured by, the Fair Market Value of such Disqualified Stock, such Fair Market Value to be determined as set forth herein;

 

Hedging Obligations” means with respect to any specified Person, the obligations of such Person under any foreign exchange contract, currency swap agreement, currency option, cap, floor, ceiling or collar agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in currency exchange rates;

 

Indebtedness” means with respect to any specified Person (as defined below), any indebtedness of such Person (excluding accrued expenses and trade payables in the ordinary course of business): (i) in respect of borrowed money, (ii) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof), (iii) in respect of banker’s acceptances (except to the extent any such reimbursement obligations relate to trade payables in the ordinary course of business and such obligations are satisfied within 30 days of incurrence), (iv) representing Capital Lease Obligations (as defined below), (v) representing the balance deferred and unpaid of the purchase price of any property due more than one year after such property is acquired, (vi) the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any subsidiary, any preferred stock (but excluding, in each case, any accrued dividends), (vii) representing any Hedging Obligations, (viii) the principal component of all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; and (ix) the principal component of Indebtedness of other Persons to the extent guaranteed by such Person;

 

Permitted Business” means (i) any businesses, services or activities engaged in by the Issuer or any of the Restricted Group on the initial Closing Date and (ii) the business, services or activities that are related or complementary to owning, developing, maintaining, repairing, operating and/or leasing hostels, hotels and other forms of short term and/or long term lodging facilities, the provision of food and/or beverages at such properties, and any business or activity relating to, arising from, or necessary, appropriate or incidental to the foregoing activities; and

 

Person” means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, limited liability company or government or other entity.

 

r.There are no actions, suits or proceedings by or before any arbitrator or governmental authority pending against or, to the actual knowledge of the Issuer, without inquiry, threatened against of affecting the Issuer (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve any Transaction Document or the Securities.

 

s.The Issuer and each of its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Issuer believes to be prudent and customary in the businesses in which the Issuer and its subsidiaries are engaged.

 

t.The Issuer and each member of the Restricted Group has timely filed or caused to be filed all tax returns and reports required to have been filed and has paid or caused to be paid all taxes required to have been paid by it, except, (i) taxes that are being contested in good faith by appropriate proceedings and for which the Issuer or such subsidiary, as appliable, has set aside on its books adequate reserves or (ii) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

 

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u.Subject to the material weaknesses identified in the Issuer’s 2022 annual report on Form 20-F filed by the Issuer on April 28, 2023, (i) the Issuer maintains internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that is effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS; and (ii) the Issuer maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that are effective in ensuring that information required to be disclosed by the Issuer in reports it filed or submits under the Exchange Act and under the Companies Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and the Companies Act, including without limitation, controls and procedures designed to ensure that information required to be disclosed by the Issuer in the reports it files or submits under the Exchange Act and the Companies Act 2006 is accumulated and communicated to the Issuer’s management.

 

v.The Issuer is eligible to register its Ordinary Shares for resale on Form F-1.

 

w.The Issuer has not, and to its knowledge no on acting on its behalf has, taken, directly or indirectly, any action designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization or manipulation of the price of any security of the Issuer to facilitate the sale or resale of the Securities.

 

x.The Issuer acknowledges that its obligations to issue the Securities pursuant to the terms of this Subscription Agreement in accordance with the Transaction Documents is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Issuer.

 

y.All disclosure provided to the Investor regarding the Issuer and its subsidiaries, their businesses and the transactions contemplated hereby, furnished by or on behalf of the Issuer or any of its subsidiaries is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The Issuer acknowledges and agrees that the Investor does not make or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 5.

 

z.The Issuer has implemented and maintains in effect policies and procedures designed to ensure compliance by the Issuer, its subsidiaries and their respective officers, directors, employees and agents with Anti-Corruption Laws and applicable economic, trade or financial sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by (a) the United States government, (b) the United Nations, (c) the European Union and any EU member state, (d) the United Kingdom, (e) the respective Governmental Authorities of any of the foregoing, including without limitation, OFAC, the United States Department of State and His Majesty’s Treasury (“Sanctions”), and the Issuer, its subsidiaries and their respective officers and directors and, to the knowledge of the Issuer, its employees and agents are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects and are not knowingly engaged in any activity that would reasonably be expected to result in the Issuer being designated as a Restricted Person. No issuance of the Securities or the use of proceeds, the transactions contemplated hereby and by the Transaction Documents will violate Anti-Corruption Laws or applicable Sanctions. “Restricted Person” means: (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC, or any other list of prohibited or restricted parties promulgated by OFAC, the Department of Commerce, or the Department of State (“OFAC Sanctions Lists”), or a person or entity prohibited or restricted by any OFAC sanctions program, or a person or entity whose property and interests in property subject to U.S. jurisdiction are otherwise blocked under any U.S. laws, Executive Orders or regulations, (ii) a person or entity listed on the Sectoral Sanctions Identifications (“SSI”) List maintained by OFAC or otherwise determined by OFAC to be subject to one or more of the Directives issued under Executive Order 13662 of March 20, 2014, or on any other of the OFAC Sanctions Lists, (iii) an entity owned, directly or indirectly, individually or in the aggregate, 50 percent or more by, acting on behalf of, or controlled by, one or more persons described in subsections (i) or (ii), (iv) organized, incorporated, established, located, resident or born in, or a citizen, national or the government, including any political subdivision, agency or instrumentality thereof, of, Cuba, Iran, North Korea, Myanmar, Venezuela, Syria, the Crimea and the non-government controlled areas of the Zaporizhzhia and Kherson Regions of Ukraine and the so-called Donetsk People’s Republic and so-called Luhansk People’s Republic regions of Ukraine or any other country or territory embargoed or subject to substantial trade restrictions by the United States, (v) a person or entity named on the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) Denied Persons List, Entity List, or Unverified List (“BIS Lists”), (vi) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (vii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank (collectively, (i) through (vii), a “Restricted Person”).

 

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aa.There are no material disagreements of any kind presently existing, or reasonably anticipated by the Issuer to arise, between the Issuer and the accountants formerly or presently employed by the Issuer. The Issuer’s position with respect to any fees owed to its accountants could not reasonably be expected to affect the Issuer’s ability to perform any of its obligations under any of the Transaction Documents.

 

6.Investor Representations and Warranties. The Investor represents and warrants to the Issuer as of the Signing Date and on each Closing Date that:

 

a.At the time the Investor was offered the Securities, it was, and as of the date hereof and as of each Closing Date is (i)not a U.S. person and located offshore (as such terms are defined in Regulation S under the Securities Act) (ii) is acquiring the Securities only for its own account and not for the account of others, or if the Investor is subscribing for the Securities as a fiduciary or agent for one or more investor accounts, the Investor has full investment discretion with respect to each such account, and the full power and authority to make the acknowledgements, representations and agreements herein on behalf of each owner of each such account, and (iii) is not acquiring the Securities with a view to, or for offer or resale in connection with, any public sale or distribution thereof in violation of the Securities Act (provided, however, that by making the representations herein, the Investor does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to an effective registration statement under the Securities Act or an exemption from such registration and in compliance with the applicable U.S. federal and state securities laws). The Investor is not an entity formed for the specific purpose of acquiring the Securities.

 

b.The Investor acknowledges and agrees that the Securities are being offered in an offshore transaction not involving any public offering within the meaning of the Securities Act and that the offer and sale of the Securities have not been registered under the Securities Act or any U.S. state securities laws. The Investor acknowledges and agrees, except as otherwise provided herein, that the Securities may not be offered, resold, transferred, pledged or otherwise disposed of by the Investor absent an effective registration statement under the Securities Act and any other applicable U.S. state securities laws (i) to the Issuer or a subsidiary thereof, (ii) to non-U.S. persons pursuant to “offshore transactions” and following expiration of a 40-day “distribution compliance period” (each within the meaning of Regulation S) or (iii) pursuant to another applicable exemption from the registration requirements of the Securities Act, and in each of clauses (i) and (iii) in accordance with any applicable securities laws of the states and other jurisdictions of the United States, and that any certificates or book entries representing the Securities shall contain a restrictive legend or notation to such effect. The Investor acknowledges and agrees that the Securities will be subject to transfer restrictions and, as a result of these transfer restrictions, the Investor may not be able to readily offer, resell, transfer, pledge or otherwise dispose of the Securities and may be required to bear the financial risk of an investment in the Monthly Securities for an indefinite period of time. The Investor acknowledges and agrees that it has been advised to consult legal counsel prior to making any offer, resale, transfer, pledge or disposition of any of the Securities. For purposes of this Subscription Agreement, “Transfer” shall mean any direct or indirect transfer, redemption, disposition or monetization in any manner whatsoever, including, without limitation, covenants and agreements included in this Subscription Agreement.

 

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c.The Investor acknowledges and agrees that the Investor is subscribing for and purchasing the Securities from the Issuer. The Investor further acknowledges that there have been no representations, warranties, covenants and agreements made to the Investor by or on behalf of the Issuer or any of its affiliates or any control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing or any other person or entity, expressly or by implication, other than those representations, warranties, covenants and agreements of the Issuer expressly set forth in Section 5 of this Subscription Agreement. As used herein, the term “control persons” has the meaning ascribed to such term in Section 405 of the Securities Act.

 

d.The Investor’s acquisition and holding of the Securities will not constitute or result in a non-exempt prohibited transaction under Section 406 of the Employee Retirement Income Security Act of 1974, as amended, Section 4975 of the Internal Revenue Code of 1986, as amended, or any applicable similar law.

 

e.The Investor acknowledges and agrees that the Investor has received access to, and has had an adequate opportunity to review, such financial and other information as the Investor deems necessary in order to make an investment decision with respect to the Securities, including, without limitation, with respect to the Issuer and the business of the Issuer and its subsidiaries and made its own assessment and is satisfied concerning the relevant tax and other economic considerations relevant to the Investor’s investment in the Securities. The Investor acknowledges and agrees that the Investor and the Investor’s professional advisor(s), if any, have had the full opportunity to ask such questions, receive such answers and obtain such information as the Investor and such Investor’s professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Securities.

 

f.The Investor became aware of this offering of the Securities solely by means of direct contact between the Investor and the Issuer, and the Securities were offered to the Investor solely by direct contact between the Investor and the Issuer. The Investor did not become aware of this offering of the Securities, nor were the Securities offered to the Investor, by any other means. Solely with respect to itself, the Investor acknowledges that the Securities (i) were not offered by any form of general solicitation or general advertising or any directed selling efforts (within the meaning of Regulation S) and (ii) are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, or any state securities laws. The Investor acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, the Issuer or any of it respective affiliates or any control persons, officers, directors, employees, partners, agents or representatives of any of the foregoing), other than the representations and warranties of the Issuer contained in Section 5 of this Subscription Agreement, in making its investment or decision to invest in the Issuer.

 

g.The Investor acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Securities (including, without limitation, the risks set out in the Issuer’s 2022 annual report on Form 20-F filed with the SEC on April 28, 2023). The Investor has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities, and the Investor has sought such accounting, legal and tax advice as the Investor has considered necessary to make an informed investment decision.

 

h.Alone, or together with any professional advisor(s), the Investor has adequately analyzed and fully considered the risks of an investment in the Securities and determined that the Securities are a suitable investment for the Investor and that the Investor is able at this time and in the foreseeable future to bear the economic risk of a total loss of the Investor’s investment in the Issuer.

 

i.In making its decision to purchase the Monthly Securities, the Investor has relied solely upon independent investigation made by the Investor. Without limiting the generality of the foregoing, the Investor has not relied on any statements or other information about the Issuer or the offer of the Monthly Securities provided by or on behalf of any bankers, counsel or advisors to the Issuer or its affiliates.

 

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j.The Investor has been duly formed or incorporated and is validly existing and is in good standing under the laws of its jurisdiction of formation or incorporation, with power and authority to enter into, deliver and perform its obligations under this Subscription Agreement.

 

k.The execution, delivery and performance by the Investor of this Subscription Agreement are within the powers of the Investor, have been duly authorized and will not constitute or result in a breach or default under or conflict with any order, ruling or regulation of any court or other tribunal or of any governmental commission or agency, or any agreement or other undertaking, to which the Investor is a party or by which the Investor is bound, and will not conflict with or violate any provisions of the Investor’s organizational documents, including, without limitation, its formation papers, bylaws, or partnership or operating agreement, as may be applicable ,except, in each case, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Investor to perform its obligations under this Subscription Agreement. The Subscription Agreement has been duly executed and delivered by the Investor and constitutes a legal, valid and binding obligation of the Investor, and assuming this Subscription Agreement constitutes a valid and binding agreement of the Issuer, is enforceable against the Investor in accordance with its terms except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, and (ii) principles of equity, whether considered at law or equity.

 

l.The Investor is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons administered by OFAC or in any OFAC Sanctions Lists, or a person or entity prohibited by any OFAC sanctions program, (ii) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (iii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank. The Investor agrees to provide law enforcement agencies, if requested thereby, such records as required by applicable law, provided that the Investor is permitted to do so under applicable law. If the Investor is a financial institution subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.) (the “BSA”), as amended by the USA PATRIOT Act of 2001 (the “PATRIOT Act”), and its implementing regulations (collectively, the “BSA/PATRIOT Act”), the Investor maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. To the extent required, it maintains policies and procedures reasonably designed for the screening of its investors against the OFAC sanctions programs, including, without limitation, the OFAC Sanctions Lists. To the extent required by applicable law, the Investor maintains policies and procedures reasonably designed to ensure that the funds held by the Investor and used to purchase the Securities were legally derived.

 

m.The Investor does not have, as of the date hereof, and during the 30-day period immediately prior to the date hereof such Investor has not entered into, any “put equivalent position” as such term is defined in Rule 16a-1 under the Exchange Act or short sale positions with respect to the securities of the Issuer. Notwithstanding the foregoing, in the case of an Investor that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Investor’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Investor’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Subscription Agreement.

 

n.The Investor has, and on each Closing Date will have, sufficient funds to pay the Subscription Amount pursuant to Section 2 above.

 

7.Covenants.

 

a.The Investor shall use its reasonable best efforts to timely satisfy each of the covenants hereunder and the conditions to be satisfied by it as provided herein. The Issuer shall use its reasonable best efforts to timely satisfy each of the covenants hereunder and the conditions to be satisfied by it as provided herein.

 

b.The Issuer acknowledges and agrees that the Securities may, subject to applicable law, be pledged by the Investor in connection with a bona fide margin agreement or other loan financing arrangement that is secured by the Securities. The Issuer hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by the Investor.

 

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c.Until the date (i) on which the Securities are no longer outstanding and the Investor no longer holds any registrable securities of the Issuer to be registered pursuant to the Registration Rights Agreement or (ii) if the Issuer has been directed by the Investor to do so, until the date that the SEC has confirmed the termination of the Issuer’s reporting obligations following a filing by the Issuer of Form 15F, certifying that it meets the requirements for termination of its reporting obligations under Rule 12h-5 (collectively, the “Reporting Period”), the Issuer shall use its reasonable best efforts to timely file all reports required to be filed with the SEC pursuant to the Exchange Act.

 

d.The Issuer shall procure that it is in compliance with the listing requirements of the Principal Market before expiration of the grace period under the rules of the Principal Market.

 

e.None of the Issuer, its subsidiaries, their affiliates nor any person acting on their behalf will take any action or steps that would require registration of the issuance of any of the Securities under the Securities Act.

 

f.The Issuer shall use its best efforts to obtain the Shareholder Approvals (which proposal shall include a recommendation by the Issuer’s board of directors in favor of the approval of such proposal) no later than March 31, 2024.

 

g.The Issuer shall use its best efforts to cause the shareholders of the Issuer to pass in a general meeting resolutions to approve a reverse stock split of the Ordinary Shares to regain compliance with the minimum bid price requirement for continued listing on the Principal Market (which proposal shall include a recommendation by the Issuer’s board of directors in favor of the approval of such proposal) no later than March 31, 2024, provided that the Issuer shall have a further 90 days from the date of receipt of such shareholder approval to implement the reverse stock split.

 

h.Promptly after each of the initial Closing and the two subsequent Closings, as applicable, the Issuer shall consummate the investments into FutureLearn as outlined in Annex A attached hereto.

 

i.The Issuer shall apply the Issuer Net Amount exclusively for sales, marketing and commercial costs. The Issuer shall, in respect of the application by the Issuer of each Monthly Subscription Amount which forms part of the Issuer Net Amount, provide a budget to the Investor prior to the month in which such Monthly Subscription Amount is due to be paid in accordance with this Agreement, such budget setting out the intended use of the relevant Monthly Subscription Amount in a level of detail satisfactory to the Investor (acting reasonably) (each, a “Monthly Budget”). If the amount of any relevant Monthly Subscription Amount is not, by the end of the month following the month in which the relevant Monthly Subscription Amount has been paid, applied in full in accordance with the relevant Monthly Budget (without the consent of the Investor), the Investor shall be entitled to delay payment of the following Monthly Subscription Amount(s) until such time as the prior Monthly Subscription Amount(s) have been fully utilized by the Issuer in accordance with the relevant Monthly Budget(s). The Issuer and Investor shall each appoint one authorised representative who shall be designated to, and have all such necessary authority on behalf of the Investor and Issuer (as applicable), to agree on Monthly Budgets and provide approvals on behalf of each of the Issuer and Investor for the purposes of this section.

 

8.Termination. This Subscription Agreement shall be capable of termination and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, in the following circumstances: (i) with the mutual written agreement of each of the Investor and the Issuer; or (ii) the occurrence of a material breach by a party, which material breach is not cured by such party within a period of five (5) business days after notice of the breach has been provided to it (each a “Termination Event”), in which case the non-breaching party shall be entitled to terminate this Subscription Agreement following such failure to cure the material breach; provided that nothing herein will relieve any party from liability for any willful and material breach of any covenant, agreement, obligation, representation or warranty hereunder prior to the time of termination, and each party will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from any such willful and material breach. Upon the occurrence of any Termination Event, any monies paid by the Investor to or on behalf of the Issuer in connection herewith shall promptly (and in any event within one business day) following the Termination Event be returned to the Investor.

 

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9.Miscellaneous.

 

a.Neither this Subscription Agreement nor any rights that may accrue to the Investor hereunder (other than the Securities acquired hereunder) may be transferred or assigned without the prior written consent of the parties hereto.

 

b.The Issuer may request from the Investor such additional information as the Issuer may deem necessary or advisable to register the resale of the Securities, and evaluate the eligibility of the Investor to acquire the Securities, and the Investor shall promptly provide any such information so requested. Without limiting the generality of the foregoing or any other covenants or agreements in this Subscription Agreement, the Investor acknowledges that the Issuer may file a copy of this Subscription Agreement with the SEC as an exhibit to a current or periodic report, or a registration statement of the Issuer.

 

c.The Investor acknowledges and agrees that neither it, nor any person or entity acting on its behalf or pursuant to any understanding with the Investor, shall, directly or indirectly, engage in any hedging activities or execute any Short Sales (as defined below) with respect to any Securities or any securities of Issuer or any instrument exchangeable for or convertible into any Securities or any securities of Issuer prior to the Closing or the earlier termination of this Subscription Agreement in accordance with its terms. “Short Sales” shall include, without limitation, all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges (other than pledges in the ordinary course of business as part of prime brokerage arrangements), forward sale contracts, options, puts, calls, swaps and similar arrangements (including, without limitation, on a total return basis), and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers.

 

d.The agreements, representations and warranties made by the Issuer in this Subscription Agreement shall survive each Closing Date.

 

e.This Subscription Agreement may not be terminated other than pursuant to the terms of Section 8 above. The provisions of this Subscription Agreement may not be modified, amended or waived except by an instrument in writing, signed by each of the parties hereto. No failure or delay of either party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder.

 

f.This Subscription Agreement (including, without limitation, the schedule hereto) constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof. Except as expressly set forth herein, this Subscription Agreement shall not confer any rights or remedies upon any person other than the parties hereto, and their respective successor and assigns, and the parties hereto acknowledge that any such persons so referenced are third party beneficiaries of this Subscription Agreement for the purposes of, and to the extent of, the rights granted to them, if any, pursuant to the applicable provisions.

 

g.If any provision of this Subscription Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Subscription Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect.

 

h.This Subscription Agreement may be executed in one or more counterparts (including, without limitation, by facsimile or electronic mail or in .pdf) and by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document. All counterparts so executed and delivered shall be construed together and shall constitute one and the same agreement.

 

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i.Any notice or communication required or permitted hereunder to be given to the Investor shall be in writing and either delivered personally, emailed or sent by overnight mail via a reputable overnight carrier, or sent by certified or registered mail, postage prepaid, to such address(es) or email address(es) set forth on the signature page hereto, and shall be deemed to be given and received (i) when so delivered personally, (ii) when sent, with no mail undeliverable or other rejection notice, if sent by email, or (iii) three (3) business days after the date of mailing to the address below or to such other address or addresses as the Investor may hereafter designate by notice to the Issuer.

 

j.THIS SUBSCRIPTION AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS THEREOF) AS TO ALL MATTERS (INCLUDING ANY ACTION, SUIT, LITIGATION, ARBITRATION, MEDIATION, CLAIM, CHARGE, COMPLAINT, INQUIRY, PROCEEDING, HEARING, AUDIT, INVESTIGATION OR REVIEWS BY OR BEFORE ANY GOVERNMENTAL ENTITY RELATED HERETO), INCLUDING MATTERS OF VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, AND THE UNITED STATES DISTRICT COURT, LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY SOLELY IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS SUBSCRIPTION AGREEMENT AND THE DOCUMENTS REFERRED TO IN THIS SUBSCRIPTION AGREEMENT AND IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR INTERPRETATION OR ENFORCEMENT HEREOF OR ANY SUCH DOCUMENT THAT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS SUBSCRIPTION AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION, SUIT OR PROCEEDING SHALL BE HEARD AND DETERMINED BY SUCH COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH SUCH ACTION, SUIT OR PROCEEDING IN THE MANNER PROVIDED IN THIS SECTION 9(j) OF THIS SUBSCRIPTION AGREEMENT OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW SHALL BE VALID AND SUFFICIENT SERVICE THEREOF. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (II) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THE FOREGOING WAIVER; (III) SUCH PARTY MAKES THE FOREGOING WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS SUBSCRIPTION AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 9(j).

 

10.Disclosure. The Issuer may, if it deems appropriate within four (4) business days following the date of this Subscription Agreement, issue one or more press releases and/or file with the SEC a report on Form 6-K (collectively, the “Disclosure Document”) disclosing all material terms of the transactions contemplated hereby. Upon the issuance of the Disclosure Document, to the actual knowledge of Issuer, the Investor shall not be in possession of any material, non-public information received from Issuer or any of its officers, directors, or employees or agents.

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the Investor has executed or caused this Subscription Agreement to be executed by its duly authorized representative as of the date set forth below.

 

Osprey International Limited  
     
By: /s/ GIORGOS GEORGIOU  
     
Print name: Giorgos Georgiou  
     
Title: Director  
     
Date: 25 January 2024  
     
Address: 9E, Foti Pitta, 1065, Nicosia, Cyprus  

  

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IN WITNESS WHEREOF, the Issuer has accepted this Subscription Agreement as of the date set forth below.

 

Selina Hospitality PLC  
     
By: /s/ RAFAEL MUSERI  
     
Print name: Rafael Museri  
     
Title: CEO  
     
Date: 25 January 2024  

 

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EXHIBIT A

REGISTRATION RIGHTS AGREEMENT

 

19

 

 

EXHIBIT B

INVESTOR’S RIGHTS AGREEMENT

 

20

 

 

EXHIBIT C

GROUP DEBT AS OF SEPTEMBER 30, 2023

 

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ANNEX A

PAYMENT SCHEDULE

Initial Subscription

 

Investor amount payable to the Issuer (US$) (Gross)  Initial Subscribed Shares  FutureLearn Amount (US$)
4,000,000   20,000,000    3,333,333.33 

 

Monthly Subscription

 

Month  Investor amount payable to the Issuer (US$) (Gross)  Monthly Subscribed Shares  FutureLearn Amount (US$)
1   1,000,000    5,000,000    333,333.33 
2   1,000,000    5,000,000    333,333.33 
3   666,667    3,333,335    N/A 
4   666,667    3,333,335    N/A 
5   666,667    3,333,335    N/A 
6   666,667    3,333,335    N/A 
7   666,667    3,333,335    N/A 
8   666,667    3,333,335    N/A 
9   666,666    3,333,330    N/A 
10   666,666    3,333,330    N/A 
11   666,666    3,333,330    N/A 

 

   Investor amount payable to the Issuer (US$) (Gross)  Subscribed Shares  FutureLearn Amount (US$)
TOTAL:  $12,000,000    60,000,000   $4,000,000 

 

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ANNEX B

INSTRUMENTS AND AGREEMENTS

2026 Notes

 

1.Indenture in respect of $147.5 million principal amount of 6.00% Convertible Senior Notes due 2026, dated as of October 27, 2002, between Selina Hospitality plc and Wilmington Trust, National Association, as trustee, as amended

 

Dorado - Australia

 

2.Facility agreement for up to $5.5 million, dated November 8, 2021, among Selina Holding Australia Pty Ltd and certain of its subsidiaries, Selina Hospitality PLC, as guarantor, and Dorado Direct Investment 21 Pty Ltd, as trustee, as amended

 

IDB – Latin America

 

3.Loan agreement for up to $50.0 million, dated November 20, 2020, among Selina Global Services Spain S.L., as the borrower, Selina Operation One (1) S.A., and Inter-American Investment Corporation, as amended

 

Arcstone – United Kingdom, Portugal, Austria and United States

 

4.Facility agreement between Selina Operations Midlands Ltd, as borrower, and Arcstone Loan Notes Portfolio 1 Limited, as lender, dated December 4, 2019 in respect of the property known as 56-60 Mount Pleasant, Liverpool, L3 5SH, United Kingdom

 

5.Facility agreement between Selina Operations Midlands Ltd, as borrower, and Arcstone Loan Notes Portfolio 1 Limited, as lender, dated December 4, 2019 in respect of the property known as 42-44 (Odd) Oldham Street, 17-21 (even) Hilton Street and 37 Spear Street, Manchester, United Kingdom

 

6.Facility agreement between Selina Operations Midlands Ltd, as borrower, and Arcstone Loan Notes Portfolio 1 Limited, as lender, dated December 4, 2019 in respect of the property known as 50 Newton Street, Manchester, M1 2EA, United Kingdom

 

7.Facility agreement between Selina Operations Midlands Ltd, as borrower, and Arcstone Loan Notes Portfolio 1 Limited, as lender, dated December 4, 2019 in respect of the property known as 89-95 Livery Street, Birmingham, B3 1RN, United Kingdom

 

8.Facility agreement between Seli-na Operation Lisboa RF Unipessoal LDA, as borrower, and Arcstone Loan Notes Portfolio 1 Limited, as lender, dated January 10, 2020 in respect of the property known as Beco do Carrasco no1, 1200-096, Lisboa, Portugal

 

9.Facility agreement between Seli-na Operation Porto Unipessoal LDA, as borrower, and Arcstone Loan Notes Portfolio 1 Limited, as lender, dated January 10, 2020 in respect of the property known as Rua das Oliveiras, nos 61 a 65 Porto, Portugal

 

10.Facility agreement between Selina Operation Brighton Ltd., as borrower, and Arcstone Portfolio 2 Limited, as lender, dated February 7, 2020 in respect of the property known as 135 Kings Road, Brighton, BN1 2HX, United Kingdom

 

11.Facility agreement between Seli-na Operation Ericeira Unipessoal LDA, as borrower, and Arcstone Portfolio 2 Limited, as lender, dated February 21, 2020 in respect of the property known as Rua da Boavista, EN 116, Municipality of Mafra

 

12.Facility agreement between Seli-na Operation Peniche Unipessoal LDA, as borrower, and Arcstone Portfolio 2 Limited, as lender, dated February 21, 2020 in respect of the property known as Casais do Baleal, Avenida do Mar no 100, Ferrel, Peniche, Portugal

 

13.Facility agreement between Seli-na Operation Vila Nova Unipessoal LDA, as borrower, and Arcstone Portfolio 2 Limited, as lender, dated February 21, 2020 in respect of the property known as Rua do Caris, 9, 7645-242, Vila Nova de Milfontes, Odemira, Portugal

 

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14.Facility agreement between Selina Operation Bad Gastein GMBH, as borrower, and Arcstone Portfolio 3 Limited, as lender, dated July 31, 2020 in respect of the property known as Kaiser Franz Josef-Strasse 6, 5640 Bad Gastein, Austria

 

15.Facility agreement between Selina Operation Camden Ltd., as borrower, and Arcstone Portfolio 3 Limited, as lender, dated July 31, 2020 in respect of the property known as 88-89 Chalk Farm Road, London NW1 8AR, United Kingdom

 

16.Facility agreement between Selina Operation NY Ave, LLC, as borrower, and Arcstone Holdings Limited, as lender, dated April 25, 2022 in respect of the property known as 411 New York Avenue, N.E., Washington, D.C., United States

 

Mogno Capital - Brazil

 

17.The series one debentures issued pursuant to the Series One Debentures Indenture (Instrumento Particular de Escritura da 1ª Emissão de Debêntures Simples, Não Conversíveis em Ações, da Espécie Quirografária com Garantia Adicional Corporativa, em Duas Séries], para Colocação Privada, da Selina Brazil Hospitalidade S.A.), dated November 25, 2019, among Selina Brazil Hospitalidade S.A., as issuer, and Gaia Securitizadora S.A., as trustee (Debenturista), as amended

 

18.The series two debentures issued pursuant to the Series Two Debentures Indenture (Instrumento Particular de Escritura da 2ª Emissão de Debêntures Simples, Não Conversíveis em Ações, da Espécie Quirografária com Garantia Adicional Corporativa, em Duas Séries, para Colocação Privada, da Selina Brazil Hospitalidade S.A.), dated July 27, 2020, among Selina Brazil Hospitalidade S.A., as issuer, and Gaia Securitizadora S.A., as trustee (Debenturista), as amended

 

19.The series three debentures issued pursuant to the Series Three Debentures Indenture (Instrumento Particular de Escritura da 3ª Emissão de Debêntures Simples, Não Conversíveis em Ações, da Espécie Quirografária, com Garantia Adicional Corporativa, em Quatro Séries, para Colocação Privada, da Selina Brazil Hospitalidade S.A.), dated November 23 2020, among Selina Brazil Hospitalidade S.A., as issuer, and Gaia Securitizadora S.A., as trustee (Debenturista), as amended

 

20.The series four debentures issued pursuant to the Series Four Debentures Indenture (Instrumento Particular de Escritura da 4ª Emissão de Debêntures Simples, Não Conversíveis em Ações, da Espécie Quirografária, com Garantia Adicional Corporativa, em Seis Séries, para Colocação Privada, da Selina Brazil Hospitalidade S.A.), dated October 27, 2021, among Selina Brazil Hospitalidade S.A., as issuer, and Planeta Securitizadora S.A., as trustee (Debenturista), as amended

 

21.Joint Venture Agreement entered on September 30, 2019, among Selina Brazil Hospitalidade S.A. and Mogno Capital Investimentos Ltda. for real estate development and financing Selina projects in Brazil, with additional corporate guarantee, as amended

 

Brazil - Bank Loan Agreement Santander

 

22.Bank credit note issued in the amount of US$300,000 pursuant to the loan agreement dated May 19, 2023, among Selina Operation Hospedagem Ltda., as issuer, and Santander Bank, as the creditor (com garantia adicional no âmbito do Programa Emergencial de Acesso a Crédito (“PEAC”) administrado pelo BNDES - Banco Nacional de Desenvolvimento)

 

Nuvei – Global payment processing

 

23.Merchant services agreement dated December 15, 2021, between Selina Hospitalty PLC and Nuvei Limited, as amended

 

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Exhibit 99.3

 

EXECUTION VERSION

 

THIS AMENDED AND RESTATED SECURED CONVERTIBLE PROMISSORY NOTE (THIS “NOTE”) AND THE SHARES, IF ANY, ISSUABLE UPON CONVERSION, HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY APPLICABLE U.S. STATE SECURITIES LAWS. THIS NOTE AND THE SHARES, IF ANY, ISSUABLE UPON CONVERSION, HAVE OR WILL HAVE BEEN ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OF THE RESALE THEREOF UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM, SCOPE AND SUBSTANCE TO THE BORROWER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.

 

THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”). PURSUANT TO TREASURY REGULATION §1.1275-3(b)(1), JONATHON GRECH, AS A REPRESENTATIVE OF THE PARENT HEREOF WILL, BEGINNING TEN DAYS AFTER THE ISSUANCE DATE OF THIS NOTE, PROMPTLY MAKE AVAILABLE TO THE HOLDER UPON REQUEST THE INFORMATION DESCRIBED IN TREASURY REGULATION §1.1275-3(b)(1)(i). SUCH REPRESENTATIVE MAY BE REACHED AT TELEPHONE NUMBER +447534460715

 

AMENDED AND RESTATED SECURED CONVERTIBLE PROMISSORY NOTE

 

Principal Amount: $11,111,111 Amended and restated as of January 25, 2024 (the “Amendment and Restatement Date”)

 

FOR VALUE RECEIVED, and upon and subject to the terms and conditions set forth herein, Selina Management Company UK Ltd, a company organized and existing under the laws of England, having company number 10975317 and a registered address of 102 Fulham Palace Road, London W6 9PL, United Kingdom (the “Borrower”), promises to pay to Osprey International Limited, registered in Cyprus with number HE385659, or its registered assigns or successors in interest (hereinafter, the “Lender”), the principal amount at maturity of eleven million, one hundred and eleven thousand, one hundred and eleven U.S. dollars ($11,111,111), issued at an original issue discount of ten (10) percent, the sum paid by Lender being equal to ten million U.S. dollars ($10,000,000), with interest thereon calculated from the date hereof in accordance with the provisions of this Note (this “Note”). Selina Hospitality PLC (the “Parent”), Selina Operations US Corp (a Delaware corporation), Selina Operation Astoria Hotel LLC (a Delaware limited liability company), Selina Operation Chelsea LLC (a Delaware corporation), Selina Operation Chicago LLC (a Delaware limited liability company), Selina Operation New Orleans LLC (a Delaware limited liability company) and Selina RY Holding Inc. (a Delaware corporation) (“Selina RY”), Selina North America Holdings Limited (a company incorporated in England and Wales), Selina Brand Holdings Limited (a company incorporated in England and Wales) and Selina Nomad Limited (a company incorporated in England and Wales), are each guarantors (together with any other Subsidiary of the Parent that executes a joinder agreement as Guarantor in future (each a “Guarantor” and the Borrower together with each Guarantor being an “Obligor”) and each gives the representations, covenants and Events of Default in this Note. Ludmilio Limited, a company incorporated under the laws of Cyprus, with incorporation number HE414304, shall act as collateral agent for the Secured Parties (the “Collateral Agent”). Terms used but not otherwise defined herein shall have the meaning as assigned in Exhibit A.

 

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Section 1. PAYMENTS.

 

1.1 MATURITY. If not sooner paid in full or converted in accordance with the terms of this Note, final payment of all unpaid principal hereunder and any accrued and unpaid interest on such principal shall be due and payable in cash on November 1, 2029 (the “Maturity Date”). Except as specifically provided for in this Note the Borrower is not permitted to prepay any portion of the outstanding principal of this Note.

 

1.2 INTEREST. The outstanding principal amount of the Note shall bear interest at a fixed rate of twelve percent (12%) per annum (subject to increase under Sections 6.3 and 6.6 below which shall increase the cash-pay component of interest), which shall entirely be comprised of compounded interest (“PIK Interest”), which shall accrue on a daily basis from the date hereof until all amounts owing by any Obligor under or in connection with any Transaction Document is repaid in full (and no interest shall be payable in cash). PIK Interest shall be compounded together with the principal amount of the Note on each anniversary of the date hereof. Accrued and unpaid interest due on the Maturity Date or Borrower Conversion Date, as applicable, will be payable at such time in cash or, at the election of the Lender, Shares, in each case pursuant to Section 1.4. Accrued and unpaid interest due on the Lender Conversion Date will be payable as set out in Section Error! Reference source not found.. If any Obligor fails to pay the Lender any amount payable under a Transaction Document on its due date (including but not limited to the interest payments), interest shall accrue on the overdue amount from the due date up to the date of actual payment at a rate of fifteen percent (15%) per annum for the first six months from the due date and seventeen percent (17%), compounded on 31 March, 30 June, 30 September and 31 December in each calendar year (as applicable), as liquidated damages. The Parties agree that these liquidated damages are reasonable and proportionate to protect the Lender’s legitimate interest in the Obligors’ performance under the Transaction Documents and risks inherent in an instrument of this nature.

 

1.3 BORROWER’S MANDATORY CONVERSION OPTION.

 

(a) Right to Convert. If at any time (i) the Last Reported Sale Price of the Shares of the Parent is greater than $6.00 per share for at least sixty (60) consecutive Trading Days, and (ii) the average daily trading volume of the Shares of the Parent during such sixty (60) day Trading Day period is greater than 5,000,000 Shares of the Parent per day in the aggregate, then the Borrower shall have the right (the “Borrower Conversion Right”) to convert the entire principal amount of the Note into that number of Shares (together with cash in lieu of any fractional shares as provided in Section 1.7) equal to the quotient obtained by dividing 100.0% of the amount of principal being converted by the Election Conversion Price, and any accrued and unpaid interest thereon will be payable at such time in cash or, at the election of the Borrower, in equity based on the Election Conversion Price, provided that (A) the issuance is effected within seven days from and including the last day of the period of sixty consecutive days referred to above; (B) the price of the Shares remains greater than $6.00 on the day that such issuance takes effect and the Lender or its nominee becomes the legal and beneficial owner of such Shares; and (C) before giving the Borrower Conversion Notice (defined below), the Borrower has given the Lender 10 Business Days’ prior notice of its intention to deliver a Borrower Conversion Notice and requested from the Lender details of the entity/nominee that the Lender wishes to hold such Shares and whether or not it wishes to receive cash or Shares in discharge of accrued interest up to the Conversion Issuance Date (the period of seven days which satisfies subparagraphs (A) to (C) in the proviso immediately above being the “Conversion Issuance Period” and the “Conversion Issuance Date” being a date within the Conversion Issuance Period during which such subparagraphs (A) to (C) have been satisfied). Save for any stamp, registration, issuance and similar Taxes (to which the provisions of Section 8.3(a) shall instead apply), the Parent and Borrower shall pay any and costs and expenses that may be payable with respect to the conversion (or any part thereof) of this Note or the Notes (or any of them), including upon the issuance of, and/or the delivery of any of: (i) the Shares; and (ii) any depositary receipt certificates or similar certificates or evidence of title, in each case in respect of the Shares, upon the conversion of this Note.

 

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(b) Conversion Procedures. The Borrower will inform the Lender of such election by delivering to the Lender by facsimile or electronic mail (or otherwise deliver), an executed notice of such election, which notice shall include, among other things (i) the number of Shares to be issued by the Parent, (ii) request the Lender to elect to receive (and the Borrower shall pay) the accrued and unpaid interest up to and including the Conversion Issuance Date in cash or Shares as contemplated in Section 1.2, and (iii) certify that there is no Equity Conditions Failure as of the date of such notice (a “Borrower Conversion Notice”). The Lender shall review the Borrower Conversion Notice and determine the principal amounts, interest and Shares to be converted, paid and delivered respectively. If the Lender determines that any variable in the Borrower Conversion Notice is incorrect it shall notify the Borrower of the correct variable and the Borrower Conversion Notice shall be amended for that change for all purposes under the Transaction Documents. All calculations and determinations in respect of the foregoing shall be made by the Lender, whose determination shall be binding on the parties hereto and to the other Transaction Documents absent manifest error and so long as the Lender’s calculations are consistent with the provisions of this Note. If the Borrower confirmed that there was no Equity Conditions Failure as of the date of the Borrower Conversion Notice, but an Equity Conditions Failure occurs between the date of the Borrower Conversion Notice and any time until the Borrower Conversion Date (the “Borrower Conversion Interim Period”), the Borrower shall provide the Lender a subsequent written notice to that effect. If the Equity Conditions are not satisfied (or waived in writing by the Lender) during the Borrower Conversion Interim Period, then the Borrower Conversion Notice shall be null and void and the Lender shall be entitled to all the rights of this Note. Provided that the conditions in the proviso of Section 1.3(a) and the Equity Conditions have been met and the other conditions in this Note have been met, the conversion shall be effected within the Conversion Issuance Period (the “Borrower Conversion Date”). The Lender shall promptly return this Note to a reputable common carrier for delivery to Borrower after that date (or an indemnification undertaking with respect to the Note in the case of its loss, theft, destruction or mutilation as set forth in Section 8.13).

 

(c) Effect of Conversion. On or before the first Trading Day following the date of the Borrower Conversion Notice, the Borrower shall transmit by electronic mail certain representations as to whether the Shares may then be resold pursuant to Rule 144 or an effective and available registration statement, to the Lender and the Parent, which confirmation shall constitute an instruction to the Parent to process the Borrower Conversion Notice in accordance with the terms therein, as may be amended pursuant to Section 1.3(b) (subject to the satisfaction (or waiver in writing by the Lender) of the conditions in the provision of Section 1.3(a) and the Equity Conditions and the other conditions set forth in this Note during the Borrower Conversion Interim Period). On the Borrower Conversion Date (a “Borrower Conversion Share Delivery Date” and, together with a Lender Conversion Share Delivery Date (as defined below), a “Share Delivery Date”), the Borrower and the Parent shall (x) provided that either (A) the Shares are subject to an effective resale registration statement in favor of the Lender or (B) if converted at a time when Rule 144 would be available for resale of the Shares by the Lender, credit such aggregate number of Shares to which the Lender is entitled pursuant to this Note and as set forth in the Borrower Conversion Notice, plus, if applicable, any Shares for the accrued and unpaid interest through the Borrower Conversion Date, to the Lender’s or its designee’s balance account with the applicable clearing system or depository, or (y) if the Shares are not subject to an effective resale registration statement in favor of the Lender and, if converted at a time when Rule 144 would not be available for resale of the Shares by the Lender (and, for the avoidance of doubt, the Lender has waived the related Equity Conditions Failure), issue and deliver to the address or account, as applicable, as specified in the register for the Parent, a depositary receipt certificate or book-entry notation, as applicable, registered in the name of the Lender or its designee, for the number of Shares to which the Lender shall be entitled pursuant to this Note and as set forth in the Borrower Conversion Notice, plus, if applicable, any Shares for the accrued and unpaid interest through the Borrower Conversion Date. From and after the Borrower Conversion Date, assuming rightful delivery of the Borrower Conversion Notice to the Lender and that the relevant Shares have become legally and beneficially owned by the Lender or its nominee and all steps necessary to effect such conversion have been completed (and all relevant documents evidencing the same have been delivered to the Lender) and all other amounts required to be paid under or in connection with the Transaction Documents by any Obligor have been repaid in full, the Note shall cease to be outstanding (as further provided herein) and interest thereon shall cease to accrue. Subject to the other terms and conditions of this Note, all obligations of the Borrower in respect of the principal amount of the Note shall be discharged thereby and accordingly, thereupon, the Borrower shall have no further obligation with respect to the principal amount of this Note and the Note shall thereupon be cancelled and cease to have any effect. The Lender (or such nominee as it may specify) shall be treated as the shareholder of record of the Parent as of the Borrower Conversion Date, irrespective of the date such Shares are credited to the Lender’s account with any applicable depository and/or clearing system or the date of delivery of the certificate evidencing the Shares, as the case may be, except for any additional authorizations required to issue any Shares in lieu of interest pursuant to the Borrower’s Conversion Right. The Parent’s and Borrower’s obligations to issue and deliver the Shares in accordance with the terms and subject to the conditions hereof are absolute and unconditional.

 

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(d) Status of Shares. The Parent represents and warrants to the Lender that it has all approvals and authorizations to allot and issue such number of Shares as is necessary for the Borrower and the Parent to comply with its obligations under the Transaction Documents (including any additional authorizations required to issue any Shares in lieu of interest pursuant to the Borrower’s Conversion Right or the Lender’s Conversion Right).

 

(e) Registration of Shareholder. The Borrower shall maintain a register for the recordation of the name and address of the Lender as the holder of this Note (and the name and address of any Person who is transferred all or any portion of this Note to the extent permitted by the terms hereof) and principal amount (and stated interest with respect thereto) held by the Lender (and any Person who is transferred all or any portion of this Note to the extent permitted by the terms hereof). The entries in such register shall be conclusive and binding for all purpose absent manifest error. The Borrower and the Parent shall treat each Person whose name is recorded in such register as the owner of this Note for all purposes, including, without limitation, the right to receive payments of principal and interest hereunder, notwithstanding notice to the contrary. Upon any Conversion (a “Conversion” being a conversion of the Indebtedness under the Note into Shares pursuant to either a Borrower Conversion Notice or Lender Conversion Notice, each in accordance with the terms of this Note), the Parent shall procure and ensure that the Lender (or any nominee it may direct, (in its absolute discretion)) shall be registered in the share register of the Parent and/or any other applicable registration, including in a depository and/or clearing system, as the holder of the applicable Shares with no further conditions as set forth in this Section 1.3 and in the Equity Conditions.

 

(f) Additional Actions. Upon any Conversion, the Parent and the Borrower shall take all actions and submit all such documents required, desirable or advisable in order to duly transfer the Shares to the Lender (or the relevant nominee), including but not limited to, the delivery to the Lender of a duly signed share transfer deed, an updated shareholder register of the Parent and/or any other applicable registration and a share certificate evidencing the registration of the Shares under the name of the Lender or the relevant nominee or if such Shares are traded on a clearing system or in dematerialised or uncertificated form, take such action is necessary or desirable to cause such Shares to be transferred to the Lender or any nominee of the Lender that it may specify in writing under the rules of such clearing system or exchange, including giving all necessary or desirable instructions to any nominee or custodian or system-user under that exchange to ensure the transfer of the Shares to the Lender or its nominee, including for the dematerialisation or rematerialisation of any assets or investments held in a settlement or clearance system, in each case, consistent with the terms of this Section 1.3.

 

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(g) Additional Documents. Upon any Conversion, the Parent and the Borrower shall also (and shall procure that, if applicable, any of their shareholders and relevant wholly-owned Subsidiaries will): execute, enter into and deliver any agreements, directions, powers of attorney, certificates, notices, acknowledgements, corporate resolutions and any other documents; and give any such instructions, file any documentation and/or do and perform any such acts, in each case, which may be required or desirable in connection with, the transfer, registration or ownership of the Shares to the Lender or otherwise to give full effect to this Note, in each case, on the relevant Conversion Date or any other date reasonably requested by the Lender, including as required under the rules of any applicable clearing system or depository.

 

(h) Other Instruments. Notwithstanding any other provision of this Note or any Transaction Document to the contrary, if the Shares have become an instrument other than the ordinary shares referred to in the Articles as of the date of this Note and/or are not listed for trading, or not able to be traded if listed for trading, on the Principal Exchange (and, for the avoidance of doubt, the Lender has waived the related Equity Conditions Failure), the Lender shall, in its absolute discretion, have the option to accept such other instrument but it shall not be obliged to do so and the Note shall continue in full force and effect. The Parent and the Borrower shall do all things that the Lender may request to put the Lender in an equivalent position but for such change of instrument.

 

1.4 PAYMENT IN CASH. Except as otherwise specified herein, all cash payments hereunder shall be made by each Obligor to the Lender in United States Dollars at the Lender’s address specified above (or at such other address as the Lender may specify), in immediately available funds, on the due date thereof in full without set off or counterclaim. If any amount is scheduled to be due on a date that is not a Business Day, such amount shall instead be due on the immediately preceding Business Day.

 

1.5 PREPAYMENT

 

(a) Prepayment. The Borrower may at any time, by giving to the Lender not less than five (5) Business Days’ (or such shorter period as the Lender may agree) written notice to that effect, prepay in cash the whole or any part of the outstanding principal of the Note or any accrued but unpaid interest due on the Note (but, if in part, reduces the outstanding principal by a minimum amount of $5,000,000).

 

(b) Notice of Prepayment. Any notice of prepayment given by the Borrower pursuant to subsection (a) shall be irrevocable and shall specify the date upon which such prepayment is to be made and the amount of such prepayment.

 

(c) Warrants upon Prepayment. Concurrently with any prepayment of any amount of the Note and any accrued but unpaid interest thereon which the Borrower undertakes in accordance with this Section 1.5, the Borrower shall procure that the Parent shall issue to the Lender private warrants of the Parent in the form annexed to the Warrant Agreement to subscribe for new Shares, which warrants will have a five-year term and an exercise price of $1.50 per share (the “Prepayment Warrants”). The number of Prepayment Warrants to be issued by the Parent shall be calculated by reference to the aggregate dollar amount of this Note and any accrued but unpaid interest thereon which the Borrower prepays in accordance with this Section 1.5 on the basis that one Prepayment Warrant shall be issued (rounded up to the nearest whole number of Prepayment Warrants) for each $1.50 that is prepaid).

 

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1.6 LENDER’S CONVERSION RIGHT.

 

(a) Right to Convert. Subject to the terms and conditions set forth in this Note, the Lender shall have the right (the “Lender Conversion Right”), exercisable in its sole discretion, at any time prior to the Maturity Date, to either:

 

(i) convert the outstanding and unpaid principal amount of this Note (in whole or in part) into validly issued and fully paid Shares (together with cash in lieu of any fractional shares) equal to the quotient obtained by dividing 100.0% of the amount of principal being converted by the Election Conversion Price, and the accrued and unpaid interest on this Note will be payable at such time in cash, or at the election of the Lender to be delivered in writing to the Borrower, in Shares based on the Election Conversion Price; or

 

(ii) convert the outstanding and unpaid principal amount of this Note into 37.7% of the validly issued, fully paid and nonassessable share capital of Selina RY (or, if converted in part, pro rata),

 

and, in the case of subclause (ii), the accrued and unpaid interest on the Note will be payable at such time, at the option of the Lender, to be delivered in writing to the Borrower, (A) in cash, (B) in Shares based on a $1.50 share price, or (C) in additional equity in Selina RY based on the ratio with the numerator being the amount of accrued interest at the time and the denominator being $29,500,000 million (as the implied valuation of Selina RY), provided that the option to be paid in Shares pursuant to sub-clause (B) shall be subject to the Parent obtaining shareholder approval of the issuance of the number of Shares necessary at the time to satisfy this obligation, and the Parent shall use its best efforts to obtain such shareholder approval as soon as practicable in connection with such Conversion. Subject to the other terms and conditions of this Note, all obligations of the Borrower in respect of the principal amount of the Note shall be discharged upon conversion and accordingly, thereupon, the Borrower shall have no further obligation with respect to the principal amount of this Note and the Note shall thereupon be cancelled and cease to have any effect. Additionally, in the case of subclause (ii), Borrower shall deliver or cause to be delivered to the Lender, a certificate in accordance with the requirements of Treasury Regulations sections 1.897-2(h) and 1.1445-2(c) certifying that Selina RY is not, and has not been, during the relevant period specified in Section 897(c)(1)(A)(ii) of the Code, a “United States real property holding corporation” within the meaning of Section 897(c) of the Code, together with an executed notice to the IRS described in Treasury Regulations section 1.897-2(h)(2).

 

Save for any stamp, registration, issuance, and similar Taxes (to which the provisions of Section 8.3(a) shall instead apply), the Parent and Borrower shall pay any and all costs and expenses that may be payable with respect to the conversion (or any part thereof) of this Note or the Notes, including upon the issuance, transfer and/or the delivery of any of: (i) the Shares, and (ii) any share capital or other equity of Selina RY, and in each case any depositary receipt certificates or similar certificates or evidence of title to the Shares and/or any share capital or other equity of Selina RY (as applicable), upon the conversion of this Note.

 

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(b) Conversion Procedures. To convert any portion of this Note into Shares on any date in accordance with this Section 1.6, the Lender shall deliver by electronic mail (or otherwise deliver) to the Borrower and the Parent on such date, a copy of an executed Notice of Conversion, the form of which is attached hereto as Annex A (a “Lender Conversion Notice”). If required hereunder, but without delaying the Parent’s and Borrower’s requirement to deliver the Shares on the Lender Conversion Date (as defined below), the Lender shall surrender this Note to a common carrier for delivery to the Borrower as soon as practicable on or following the applicable Lender Conversion Date on which the Lender submitted a Lender Conversion Notice to the Borrower and the Parent electing to convert all or portion of this Note as represented on such Lender Conversion Notice (or an indemnification undertaking with respect to this Note in the case of its loss, theft, destruction or mutilation in compliance with the procedures set forth in Section 8.11). The Lender Conversion Notice shall specify (i) the principal amount of the Note being converted into Shares or share capital of Selina RY; and (ii) whether the accrued and unpaid interest on the Note will be payable in cash, in Shares or in additional equity of Selina RY, and the amount(s) so payable in cash, in Shares or in additional equity of Selina RY. No ink-original Lender Conversion Notice shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Lender Conversion Notice be required. On or before the first Trading Day following the date of the Lender Conversion Notice, the Borrower shall transmit by electronic mail a confirmation of receipt of such Lender Conversion Notice and certain representations as to whether the Shares may then be resold pursuant to Rule 144 or an effective and available registration statement, to the Lender and the Parent, which confirmation shall constitute an instruction to the Parent to process the Lender Conversion Notice in accordance with the terms therein. On or before the second Trading Day following the date on which the Lender has delivered the applicable Lender Conversion Notice (a “Lender Conversion Share Delivery Date”), the Borrower and the Parent shall (x) provided that either (A) the applicable Shares are subject to an effective resale registration statement in favor of the Lender or (B) if converted at a time when Rule 144 would be available for resale of the Shares by the Lender, credit such aggregate number of Shares to which the Lender is entitled pursuant this Note and as set forth in the Lender Conversion Notice, plus, if applicable, any Shares for the accrued and unpaid interest through the Lender Conversion Date, to the Lender’s or its designee’s balance account with the applicable clearing system and/or depository, or (y) if the Shares are not subject to an effective resale registration statement in favor of the Lender and, if converted at a time when Rule 144 would not be available for resale of the applicable Shares by the Lender, issue and deliver to the address or account, as applicable, as specified in the Lender Conversion Notice, a depositary receipt certificate or book-entry notation, as applicable, registered in the name of the Lender or its designee, for the number of Shares to which the Lender shall be entitled pursuant to this Note and as set forth in the Lender Conversion Notice, plus, if applicable, any Shares for the accrued and unpaid interest through the Lender Conversion Date. If this Note is physically surrendered for conversion as required by this Section 1.6 and the then outstanding principal amount of this Note is greater than the principal amount of the Shares issuable upon conversion, the Parent and Borrower shall as soon as practicable after delivery of this Note and at its own expense, issue and deliver to the Lender a new note representing the outstanding principal not yet converted. The date on which such conversion shall be effected (such date, the “Lender Conversion Date” and together with the Borrower Conversion Date each a “Conversion Date”) shall be the later of the date of the Borrower’s receipt of a Lender Conversion Notice and the date on which the Lender or its nominee becomes the legal and beneficial owner of the Shares (and cash or capital shares of Selina RY) and all steps necessary to effect that have been completed (and all relevant documents evidencing the same have been delivered to the Lender), unless the Borrower and the Lender agree in writing to another date. All calculations and determinations in respect of the foregoing shall be made by the Lender, whose determination shall be binding on the Parties.

 

(c) Effect of Conversion. From and after the Lender Conversion Date, assuming rightful delivery of the Lender Conversion Notice to the Borrower and the Parent and that the relevant Shares have become legally and beneficially owned by the Lender or its nominee and all steps necessary to effect such conversion have been completed (and all relevant documents evidencing the same have been delivered to the Lender) and all other amounts required to be paid by any Obligor under or in connection with the Transaction Documents have been repaid in full and that a new note has been issued to the Lender in connection with any outstanding principal amount not converted, this Note shall cease to be outstanding (as further provided herein) and interest thereon shall cease to accrue. Subject to the other terms and conditions of this Note and except for any outstanding principal amount not converted, all obligations of the Borrower in respect of the principal amount of this Note shall be discharged thereby and accordingly, thereupon, the Borrower shall have no further obligation with respect to the principal amount of this Note and this Note shall thereupon be cancelled and cease to have any effect. The Lender (or such nominee as it may specify) shall be treated as a shareholder of record of the Parent as of the Lender Conversion Date, irrespective of the date such Shares are credited to the Lender’s account with the applicable clearing system and/or depository or the date of delivery of the certificate evidencing the Shares, as the case may be, except for the additional authorizations required to issue any Shares or capital shares of Selina RY in lieu of interest pursuant to the Lender’s Conversion Right. The Parent’s and Borrower’s obligations to issue and deliver the Shares in accordance with the terms and subject to the conditions hereof are absolute and unconditional. Notwithstanding anything to the contrary contained in this Note, the Subscription Agreement or the Investors’ Rights Agreement, after the effective date of the Registration Statement, the Parent and Borrower shall, upon receipt of reasonably requested documentation and letters of representation, cause unlegended and unrestricted Shares to be delivered the Lender (or its designee) in connection with any sale of Shares with respect to which the Lender has entered into a contract for sale, and delivered a copy of the prospectus included as part of the particular Registration Statement to the extent applicable, and for which the Lender has not yet settled.

 

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(d) Status of Shares. Any Shares issued upon settlement of conversion shall satisfy the Equity Conditions.

 

1.7 The Parent’s Failure to Timely Convert. If the Parent shall fail, other than by reason of a failure of the Lender to comply with its obligations hereunder, on or prior to the applicable Share Delivery Date either (I) to issue and deliver a certificate to the Lender or credit the Lender’s balance account with the applicable depository and/or clearing system with respect to the number of Shares to which the Lender is entitled upon the Conversion (including pursuant to the Borrower Conversion Right) or (II) if the Registration Statement covering the resale of the Shares that are the subject of a Borrower Conversion Notice or the Lender Conversion Notice (in either case, the “Unavailable Conversion Shares”) is not available for the resale of such Unavailable Conversion Shares and the Parent fails to promptly (x) so notify the Lender and (y) deliver the Shares electronically without any restrictive legend by crediting such aggregate number of Shares to which the Lender is entitled pursuant to such Conversion (including pursuant to the Borrower Conversion Right) to the Lender’s or its designee’s balance account with the applicable depository and/or clearing system (the event described in the immediately foregoing clause (II) is hereinafter referred as a “Notice Failure” and together with the event described in clause (I) above, a “Conversion Failure”), then in addition to all other remedies available to the Lender, (A) if the Conversion Failure remains uncured on the third Business Day following such Share Delivery Date that the issuance of such Shares is not timely effected, the Parent shall pay cash to the Lender on each day thereafter that the Conversion Failure remains uncured in an amount equal to 1.0% of the product of (1) the sum of the number of Shares not issued to the Lender on or prior to the applicable Share Delivery Date and to which the Lender is entitled, and (2) the Weighted Average Price of the Shares on the applicable Conversion Date, as the case may be; provided, that if the Conversion Failure remains uncured for 30 days following such Share Delivery Date that the issuance of such Shares is not timely effected, the Parent shall pay cash to the Lender on each day thereafter that the Conversion Failure remains uncured in an amount equal to 1.5% of the product of (1) the sum of the number of Shares not issued to the Lender on or prior to the applicable Share Delivery Date and to which the Lender is entitled, and (2) the Weighted Average Price of the Shares on the applicable Conversion Date, as the case may be, and (B) the Lender, upon written notice to the Parent, may void its Lender Conversion Notice or the Borrower Conversion Notice, as the case may be, with respect to, and retain or have returned, as the case may be, any portion of this Note that has not been converted pursuant to such Lender Conversion Notice or Borrower Conversion Notice, as the case may be; provided that the voiding of a Lender Conversion Notice or the Borrower Conversion Notice, as applicable, shall not affect the Parent’s obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 1.7 or otherwise; provided, further, that in no event shall the amount of payments pursuant to this first sentence of Section 1.7 on account of a Conversion Failure, together with any interest accrued thereon in accordance with this Note, exceed 15% of the principal amount of this Note as set forth on the face of this Note. In addition to the foregoing, if, other than by reason of a failure of the Lender to comply with its obligations hereunder, on or prior to the applicable Share Delivery Date either (A) the Parent shall fail to issue and deliver a certificate to the Lender or credit the Lender’s balance account with the applicable depository and/or clearing system for the number of Shares to which the Lender is entitled upon the Conversion (including pursuant to the Borrower Conversion Right) or on any date of the Parent’s obligation to deliver Shares as contemplated pursuant to clause (y) below or (B) a Notice Failure occurs, and if on or after such Share Delivery Date the Lender purchases (in an open market transaction or otherwise) Shares corresponding to all or any portion of the number of Shares issuable upon such Conversion that the Lender is entitled to receive from the Parent and has not received from the Parent in connection with such Conversion Failure, then the Parent shall, within two (2) Trading Days after the Lender’s request and in the Lender’s discretion, either (x) pay cash to the Lender in an amount equal to the Lender’s total purchase price (including brokerage commissions, all stamp, registration, issuance and similar taxes and other out-of-pocket expenses, if any) for the Shares so purchased (the “Buy-In Price”), at which point the Parent’s obligation to issue and deliver such certificate or credit the Lender’s balance account with the applicable depository and/or clearing system for the Shares to which the Lender is entitled upon the Conversion (including pursuant to the Borrower Conversion Right) shall terminate, or (y) promptly honor its obligation to deliver to the Lender a certificate or certificates representing such Shares or credit the Lender’s balance account with the applicable depository and/or clearing system for such Shares and pay cash to the Lender in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of Shares, times (B) the Weighted Average Price of the Shares on the applicable Conversion Date or the applicable date of the Borrower Conversion Notice, as the case may be. Nothing herein shall limit the Lender’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Parent’s failure to timely deliver certificates representing the Shares (or to electronically deliver such Shares) upon Conversion (including pursuant to the Borrower Conversion Right) of this Note as required pursuant to the terms hereof.

 

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1.8 FRACTIONAL SHARES. No fractional shares will be delivered to the Lender upon conversion or repayment. In lieu of fractional shares otherwise issuable, the Lender will be entitled to receive, at the Lender’s sole discretion, either (i) an amount in cash equal to the fraction of a Share multiplied by the Last Reported Sale Price of the Shares on the Trading Day immediately preceding the Borrower Conversion Date or Lender Conversion Date, as applicable, or (ii) one additional whole Share.

 

1.9 PURCHASE OPTION. Subject to the terms and conditions set forth in this Note and in consideration for making payment for this Note, for a period of five years from the Closing Date, Lender shall have the right, exercisable in its sole discretion by providing a Lender Conversion Notice, to acquire up to 67.8% of the fully diluted shares in Selina RY for a purchase price of twenty million dollars ($20,000,000) (or, if less than 67.8%, such pro rata amount of $20,000,000) (the “Purchase Option”). Should the Lender exercise the Purchase Option, the parties agree to reasonably cooperate to enter into the documentation needed to ensure the due and timely performance of the Purchase Option.

 

Section 2. REPRESENTATIONS AND COVENANTS OF THE OBLIGORS

 

2.1 REPRESENTATIONS AND WARRANTIES: Each Obligor in respect of each member of the Restricted Group represents and warrants to the Lender on each day that any Indebtedness or other amounts are owing to the Lender under the Transaction Documents, that:

 

(a) it has the power to execute and to perform its obligations and liabilities under the Transaction Documents;

 

(b) it has taken all action necessary to authorize the execution of and the performance of its obligations and liabilities under the Transaction Documents;

 

(c) all Shares which may be issued to the Lender upon the exercise of any Conversion will, upon issuance, be duly authorized, validly issued and fully paid and free of any Liens and encumbrances and interests of any other Person;

 

(d) the execution and delivery of, and the performance by it of its obligations under, the Transaction Documents:

 

(i) will not result in a breach of any provisions of its organizational documents (including the Articles);

 

(ii) will not result in a breach of, or constitute a default under, any agreement or instrument to which it or by which it is bound;

 

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(iii) will not result in breach of any order, judgment or decree of any court or governmental agency to which the Parent is a party or by which the Parent is bound; and

 

(iv) does not require the approval of any governmental, quasi-governmental or regulatory body, including any anti-trust authority or anti-trust approval or in respect of matters relating to merger control, foreign direct investment, anti-money laundering, foreign exchange controls and any other requirements based on the identity, domicile, business or other characteristics of the Lender or any of its Affiliates;

 

(e) it is in compliance with all laws, including as to Taxes, applicable to its business, operations and performance of its obligations and liabilities under the Transaction Documents;

 

(f) no Default or Event of Default is continuing;

 

(g) all the Transaction Documents are legal, valid and binding upon it and all of the Liens created or purported to be created by the Security Documents create first ranking Liens and the Liens that they purport to create; and

 

(h) it is the legal and beneficial owner of all of the assets that are subject to the Liens created by the Security Documents; and

 

(i) in respect of all written information that has been provided to the Lender by or on behalf of the Parent, the Borrower or any other member of the Group on or before the date hereof (“Information”):

 

(i) all Information was true and accurate in all material respects as at the date of that Information;

 

(ii) any forecast contained in the Information was prepared on the basis of recent historical information and on the basis of reasonable assumptions, consistent with past practices of the Parent and was fair (as at the date of the relevant report or document containing the forecast) and arrived at after careful consideration;

 

(iii) the expressions of opinion or intention provided by or on behalf of the Borrower, the Parent or any other member of the Group for the purposes of the Information were made after careful consideration and (as at the date of the relevant report or document containing the expression of opinion or intention) were fair and based on reasonable grounds;

 

(iv) all projections contained in the Information were prepared in good faith on the basis of assumptions which were reasonable at the time at which they were prepared and supplied; and

 

(v) nothing has occurred or been omitted and no information has been given or withheld that results in the Information being untrue or misleading in any material respect in light of the circumstances under which such statements were or are made,

 

except, in the case of clauses (d)(ii) and (iii) and (e) as would not have a Material Adverse Effect.

 

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2.2 Stay, Extension and Usury Laws: Each Obligor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Note; and each Obligor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Lender, but shall suffer and permit the execution of every such power as though no such law has been enacted.

 

2.3 Statement as to Compliance: The Parent shall deliver to the Lender, within 10 days after the last day of each successive period of six calendar months ending on 30 June and 31 December in each calendar year (and within 14 days of any request by the Lender, which, absent a Default by any member of the Restricted Group hereunder, shall not be made more than two times per financial year), an Officer’s Certificate stating that a review of the activities of each member of the Restricted Group during the preceding six calendar month period has been made under the supervision of the signing Officer with a view to determining whether each member of the Restricted Group has kept, observed, performed and fulfilled each of their obligations and liabilities under this Note and the other Transaction Documents as of the date of the Officer’s Certificate, and further stating that, as to each such Officer signing such certificate to the best of his or her knowledge each member of the Restricted Group has kept, observed, performed and fulfilled each and every covenant contained in this Note and the other Transaction Documents in all material respects since the date of the Officer’s Certificate and none of them is in default in the performance or observance of any of the terms, provisions and conditions of this Note and the other Transaction Documents (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action such member of the Restricted Group is taking or proposes to take with respect thereto).

 

2.4 Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock:

 

(a) The Parent and each other Obligor shall not, and shall not cause or permit any member of the Restricted Group to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Parent shall not issue any Disqualified Stock and shall not permit any member of the Restricted Group to issue any shares of preferred stock.

 

(b) Section 2.4(a) shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):

 

(i) the incurrence by the Borrower and the Subsidiary Guarantors of Indebtedness represented by the Notes to be issued on the date of this Note and any Notes issued as scheduled PIK Interest under this Note and the incurrence by the Borrower or any Subsidiary Guarantor of a Note Guarantee at any time or under any other Transaction Document;

 

(ii) the Indebtedness outstanding as at the date hereof pursuant to the Senior Notes and the incurrence by the Parent of Indebtedness permitted to be incurred by it under Section 4.12 of the Convertible Bond Indenture, save that the Permitted Indebtedness set out in subparagraph (b)(i) of that definition in the Convertible Bond Indenture must not exceed the amount owed or owing by the Borrower or any Guarantor (without double counting) to the Lender under or in connection with the Transaction Documents;

 

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(iii) the incurrence by any member of the Restricted Group of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price, lease expense, rental payments or cost of design, construction, installation or improvement of property (real or personal), plant or equipment or other capital assets used in the business of the Parent or any member of the Restricted Group, whether through the direct purchase of assets or the Capital Stock of any Person owning such property, plant or equipment or other capital assets (including any Indebtedness deemed to be incurred in connection with such purchase) (it being understood that any such Indebtedness may be incurred after the acquisition or purchase or the construction, installation or the making of any improvement with respect to such property, plant or equipment or other capital assets) in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this subparagraph (iii);

 

(iv) the incurrence by the Parent or any member of the Restricted Group of Permitted Refinancing Indebtedness in exchange for, or the Net Proceeds of which are used to renew, refund, refinance, replace, redeem, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Note to be incurred under subparagraphs (b)(i) to (iii) above;

 

(v) the incurrence by the Parent or any member of the Restricted Group of intercompany Indebtedness between or among the Parent and any of its Subsidiaries; provided, however, that:

 

a. if the Borrower or any member of the Restricted Group is the obligor on such Indebtedness and the payee is not the Borrower or a member of the Restricted Group, such Indebtedness must be unsecured and ((A) except in respect of the intercompany current liabilities incurred in the ordinary course of business in connection with the cash management operations of the Parent and any member of the Restricted Group and (B) only to the extent legally permitted (the Parent and the Restricted Group having completed all procedures required in the reasonable judgment of directors or officers of the obligee or obligor to protect such Persons from any penalty or civil or criminal liability in connection with the subordination of such Indebtedness)) expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes or the other Transaction Documents, in the case of the Borrower, or any Note Guarantee, in the case of a Guarantor; and

 

b. (A) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Parent or a member of the Restricted Group and (B) any sale or other transfer of any such Indebtedness to a Person that is not either the Parent or a of a member of the Restricted Group shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Borrower or such member of the Restricted Group, as the case may be, that was not permitted by this subparagraph (v);

 

the issuance by any Subsidiary of the Parent to the Parent or to any other member of the Restricted Group of shares of preferred stock; provided, however, that:

 

a. any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Parent or a member of the Restricted Group; and

 

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b. any sale or other transfer of any such preferred stock to a Person that is not either the Parent or a member of the Restricted Group,

 

shall be deemed, in the case of each of (A) and (B), to constitute an issuance of such preferred stock by such member of the Restricted Group that was not permitted by this subparagraph (vi);

 

(vi) the incurrence by the Parent or any member of the Restricted Group of Hedging Obligations that are not incurred for speculative purposes but for the purpose of (x) fixing or hedging interest rate risk with respect to any Indebtedness that is permitted by the terms of this Note to be outstanding; (y) fixing or hedging currency exchange rate risk with respect to any currency exchanges; or (z) fixing or hedging commodity price risk, including the price or cost of raw materials, emission rights, manufactured products or related commodities, with respect to any commodity purchases or sales;

 

(vii) the Guarantee by the Parent or any Subsidiary of Indebtedness of the Parent or a member of the Restricted Group that was permitted to be incurred by another provision of this Section 2.4; provided that if the Indebtedness being Guaranteed is subordinated to the Notes or pari passu with a Note Guarantee, the guarantee must be subordinated, in the case of the Notes or subordinated or pari passu, as applicable, in the case of a Note Guarantee, in each case, to the same extent as the Indebtedness Guaranteed;

 

(viii) the incurrence by the Parent or any member of the Restricted Group of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within 30 Business Days of such incurrence;

 

(ix) the incurrence by the Parent or any member of the Restricted Group of Indebtedness arising from agreements of the Parent or any member of the Restricted Group providing for indemnification, obligations in respect of earnouts or other adjustments of purchase price or, in each case, similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets or Capital Stock of a member of the Restricted Group, provided that the maximum aggregate liability of the Parent and any member of the Restricted Group in respect of all such Indebtedness shall at no time exceed the gross proceeds, including the Fair Market Value of non-cash proceeds (measured at the time received and without giving effect to any subsequent changes in value), actually received by the Parent and any member of the Restricted Group in connection with such disposition;

 

(x) the incurrence by the Parent or any of member of the Restricted Group of Indebtedness in respect of (A) letters of credit, bid, performance, appeal, surety, reclamation, remediation, rehabilitation and similar bonds, completion guarantees, judgment, advance payment, customs, VAT or similar instruments issued for the account of the Parent and any member of the Restricted Group in the ordinary course of business in each case, other than an obligation for money borrowed (other than advances or credit for goods and services in the ordinary course of business and on terms and conditions that are customary in a Permitted Business and other than the extension of credit represented by such letter of credit, bond, Guarantee or other instrument itself), including Guarantees and obligations of the Parent or any of its Subsidiaries with respect to letters of credit or similar instruments supporting such obligations or in respect of self-insurance and workers compensation obligations; and (B) any customary cash management, cash pooling or netting or setting off arrangements;

 

(xi) the issuance of the Senior Secured Notes pursuant to the New Indenture;

 

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(xii) The Parent and each other Obligor shall not, and will not permit the Borrower or any member of the Restricted Group to, incur any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Borrower or any member of the Restricted Group unless such Indebtedness is also contractually subordinated in right of payment to the Notes or the member of the Restricted Group’s Note Guarantee (as applicable) on substantially identical terms.

 

2.5 Liens: (a) The Parent and each other Obligor shall not, and shall not permit any member of the Restricted Group to, directly or indirectly, create, incur, assume or suffer to exist any Lien of any kind securing Indebtedness upon any of their property or assets, now owned or hereafter acquired, except in the case of any property or asset that does not constitute Collateral:

 

(i) Permitted Liens,

 

(ii) if such Lien is not a Permitted Lien, to the extent that all payments due under this Note, the Notes and the Note Guarantees are secured on an equal and ratable basis (or in the case of Indebtedness which is subordinated in right of payment to the Notes or any Note Guarantees, prior or senior thereto, with the same relative priority as the Notes or such Note Guarantee, as applicable, shall have with respect to such subordinated Indebtedness) with the obligations so secured until such time as such obligations are no longer secured by a Lien; or

 

(b) The Parent and each other Obligor shall not, and will not permit the Borrower or any member of the Restricted Group to create, incur, assume or suffer to exist any Lien over any of its property or assets, or any proceeds therefrom, which is Collateral for the Transaction Documents except for the Liens created by the Security Documents.

 

2.6 Restricted Payments:

 

(a) The Parent shall not:

 

(i) declare or pay any dividend or similar distribution on account of the Parent’s Equity Interests (including, without limitation, any such payment or distribution made in connection with any merger, amalgamation or consolidation involving the Parent) or to the direct or indirect holders of the Parent’s Equity Interests in their capacity as such for so long as the Notes are outstanding, unless approved by the Lender;

 

(ii) permit any member of the Restricted Group to declare or pay any dividend or make any other payment or distribution on account of a member of the Restricted Group’s Equity Interests (including, without limitation, any such payment or distribution made in connection with any merger, amalgamation or consolidation involving the a member of the Restricted Group) or to the direct or indirect holders of the a member of the Restricted Group’s Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Borrower and other than dividends or distributions payable to the Parent or a Subsidiary of Selina RY);

 

(iii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, any such purchase, redemption, acquisition or retirement made in connection with any merger, amalgamation or consolidation involving the Parent) any Equity Interests of the Parent or any direct or indirect parent of the Parent, in each case held by Persons other than the Parent or any member of the Restricted Group;

 

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(iv) make any principal payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, prior to the Stated Maturity thereof, any Indebtedness of the Parent or any member of the Restricted Group that is expressly contractually subordinated in right of payment to the Notes or to any Note Guarantee (excluding any intercompany Indebtedness between or among the Parent and any member of the Restricted Group), except (i) a payment of principal at the Stated Maturity thereof or (ii) the purchase, repurchase or other acquisition of Indebtedness purchased in anticipation of satisfying a sinking fund obligation, principal installment or scheduled maturity, in each case due within one year of the date of such purchase, repurchase or other acquisition; or

 

(v) make any Restricted Investment,

 

(all such payments and other actions set forth in subparagraph (a)(i) to (v) being collectively referred to as “Restricted Payments”).

 

(b) The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Parent or any member of the Restricted Group, as the case may be, pursuant to the Restricted Payment. Unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness by virtue of its nature as unsecured Indebtedness.

 

2.7 Asset Sales:

 

(a) The Parent and each other Obligor shall not, and will not permit the Borrower or any member of the Restricted Group to consummate an Asset Sale unless at least 50% of the consideration received in the Asset Sale by the Parent or such member of the Restricted Group is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following will be deemed to be cash:

 

(i) any liabilities, as recorded on the most recent consolidated balance sheet of the Parent or any member of the Restricted Group (other than contingent liabilities and liabilities that are by their terms subordinated in right of payment to the Notes or any Note Guarantee) that are assumed by the transferee of any such assets pursuant to an agreement that releases the Parent or such other member of the Restricted Group from further liability or indemnifies the Parent or such member of the Restricted Group against further liabilities in full; and

 

(ii) Indebtedness (other than Subordinated Obligations of a member of the Restricted Group) of any member of the Restricted Group that is no longer a member of the Restricted Group as a result of such Asset Sale, to the extent that the Parent and each other member of the Restricted Group are released from any Note Guarantee of such Indebtedness in connection with such Asset Sale on or before its completion with the prior written consent of the Lender.

 

(b) The consideration received in the Asset Sale by the Parent or such member of the Restricted Group must be applied as approved by the Board of Directors of the Parent (and shall require the approval of the Lender’s nominee on the Board of Directors of the Parent).

 

2.8 Transactions with Affiliates: The Parent and the other Obligors shall not, and shall not permit any member of the Group to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Parent (each, an “Affiliate Transaction”) involving aggregate payments or consideration in excess of $1,000,000, unless:

 

(a) the Affiliate Transaction is on terms that are no less favorable to the Parent or the relevant Subsidiary than those that would have been obtained in a comparable transaction by the Parent or such Subsidiary with a Person who is not an Affiliate (as determined in good faith by a responsible financial or accounting officer of the Parent);

 

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(b) the Borrower delivers to the Lender:

 

(i) with respect to any Affiliate Transaction or series of related Affiliate Transactions, a resolution of the Board of Directors of the Parent set forth in an Officer’s Certificate certifying that such Affiliate Transaction complies with this Section 2.8 and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the Parent (including the Lender’s nominee on the Board of Directors of the Parent); and

 

(ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $4,000,000, an opinion of an accounting, appraisal or investment banking firm of international standing, or other recognized independent expert of international standing with experience appraising the terms and conditions of the type of transaction or series of related transactions for which an opinion is required, stating that the transaction or series of related transactions is (A) fair to the Parent or such Subsidiary from a financial point of view taking into account all relevant circumstances or (B) on terms not less favorable than might have been obtained in a comparable transaction at such time on an arm’s length basis from a Person who is not an Affiliate; or

 

(iii) the Affiliate Transaction is undertaken in connection with or to give effect to or to comply with any legal obligation of the Parent or any other Obligor which is in existence as at the date hereof provided that reasonable details of the same has been disclosed in writing to the Lender.

 

2.9 Limitation on Guarantees of Indebtedness by Restricted Group:

 

(a) The Parent and each other Obligor shall not permit any member of the Restricted Group, directly or indirectly, to Guarantee any Indebtedness of any other member of the Group (other than a Note Guarantee), save for the giving of any Guarantee by the Parent or any Obligor which is given in connection with or to give effect to or to comply with any legal obligation of the Parent or any other Obligor which is in existence as the date hereof, or any Guarantees replacing such existing Guarantees, or any future Guarantees to be entered into by any such Obligor that is of a similar type, nature (in that it covers similar underlying Indebtedness) as such existing Guarantees.

 

(b) The Parent and each other Obligor shall procure that each member of the Restricted Group that has not already given a Note Guarantee provides a Note Guarantee within 60 days of becoming a member of the Restricted Group. No Note Guarantee may be released, terminated, modified, waived or amended without the prior written consent of the Lender.

 

(c) Notwithstanding anything to the contrary herein:

 

(i) such member of the Restricted Group will be permitted to Guarantee Indebtedness permitted under Section 2.4(b)(vii);

 

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(ii) no Guarantee shall be required if such Guarantee:

 

a. could reasonably be expected to give rise to or result in any violation of applicable law that cannot be avoided;

 

b. would result in a breach of or is prohibited under any contractual obligation to which such member of the Restricted Group is a party as at the date hereof provided that the Parent and the relevant member of the Restricted Group are taking commercially reasonable steps to seek any permission or other action under the relevant contractual obligation to allow the Note Guarantee to be given and in respect of contractual obligations arising after the date of this Note seek to permit a Note Guarantee to be given under the terms of the relevant contractual obligation; and

 

c. each such Guarantee will be limited as necessary to recognize certain defenses generally available to guarantors (including those that relate to fraudulent conveyance or transfer, voidable preference, financial assistance, corporate purpose, capital maintenance or similar laws, regulations or defenses affecting the rights of creditors generally) or other considerations under applicable law.

 

2.10 Dividend and Other Payment Restrictions Affecting the Restricted Group:

 

(a) The Parent and each other Obligor shall not, and will not permit any member of the Restricted Group to, directly or indirectly, create or permit to exist or become effective any consensual Lien or restriction on the ability of any Subsidiary to:

 

(i) pay dividends or make any other distributions on its Capital Stock to the Parent or any member of the Restricted Group, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to the Parent or any member of the Restricted Group;

 

(ii) make loans or advances to the Parent or any member of the Restricted Group; or

 

(iii) sell, lease or transfer any of its properties or assets to the Parent or any member of the Restricted Group , provided that (A) the priority of any preferred stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock and (B) the subordination of (including the application of any standstill period to) loans or advances made to the Parent or any Subsidiary to other Indebtedness incurred by the Parent or any Subsidiary, in each case, shall not be deemed to constitute such an encumbrance or restriction,

 

in each case that would inhibit any Obligor from performing its obligations and liabilities under the Transaction Documents.

 

(b) However, the preceding restrictions will not apply to Liens or restrictions existing in respect of assets or properties other than those comprising the Collateral under or by reason of:

 

(i) this Note, the Notes, the Note Guarantees, the Security Documents;

 

(ii) applicable law, rule, regulation or order or the terms of any license, authorization, approval, concession or permit or similar restriction;

 

(iii) customary non-assignment and similar provisions in contracts, leases and licenses (including, without limitation, licenses of intellectual property) entered into in the ordinary course of business;

 

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(iv) purchase money obligations for property (including Capital Stock) acquired in the ordinary course of business, Capital Lease Obligations and mortgage financings that impose restrictions on the property purchased or leased of the nature set forth in Section 2.4(b)(iii);

 

(v) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;

 

(vi) provisions limiting the disposition or distribution of assets or property in, or transfer of Capital Stock of, joint venture agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements (including agreements entered into in connection with a Restricted Investment), which limitations are applicable only to the assets, property or Capital Stock that are the subject of such agreements;

 

(vii) supermajority voting requirements existing under corporate charters, bylaws, stockholders agreements and similar documents and agreements;

 

(viii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest;

 

(ix) encumbrances or restrictions contained in Hedging Obligations permitted from time to time hereunder;

 

(x) restrictions on cash or other deposits or net worth imposed by customers or suppliers or required by insurance, surety or bonding companies, in each case under contracts entered into in the ordinary course of business;

 

(xi) any customary provisions in joint venture, partnership and limited liability company agreements relating to joint ventures that are not member of the Restricted Group and other similar agreements; and

 

(xii) any agreement with a governmental entity providing for development financing.

 

2.11 Coupon Conditions: The Parent and each other Obligor shall not, and will not permit any member of the Restricted Group to, directly or indirectly, agree to, or undertake or covenant to comply with, any restrictions under any terms of Indebtedness that would impair the ability of any Obligor or member of the Restricted Group to pay interest on the Notes in cash or (with regard to Parent) settle the Notes with Shares or otherwise comply with any other provision in any Transaction Document.

 

2.12 Reports:

 

(a) So long as any Notes are outstanding, the Parent shall furnish to the Lender:

 

(i) within 120 days after the end of the Parent’s fiscal year, annual reports containing the following information: (A) audited consolidated balance sheet of the Parent as of the end of the two most recent fiscal years and audited consolidated income statements and statements of cash flow of the Parent for the two most recent fiscal years (and comparative information for the end of the prior fiscal year), including complete notes to such financial statements and the report of the independent auditors on the financial statements; (B) an operating and financial review of the audited financial statements, including a discussion of the results of operations including a discussion of financial condition and liquidity and capital resources, and a discussion of material commitments and contingencies and critical accounting policies; (C) a description of the business, all material affiliate transactions, Indebtedness and material financing arrangements and all material debt instruments; and (D) material risk factors and material recent developments, provided that for so long as the Parent is required to file an annual report on Form 20-F with the SEC, this obligation shall be satisfied by its prompt filing of such Form 20-F with the SEC;

 

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(ii) within 90 days following the end of the Parent’s first fiscal half-year in each fiscal year, semi-annual reports containing the following information: (A) an unaudited condensed consolidated balance sheet as of the end of such six-month period and unaudited condensed statements of income and cash flow for the year to date period ending on the unaudited condensed balance sheet date, and the comparable prior year periods for the Parent, together with condensed footnote disclosure; (B) an operating and financial review of the unaudited financial statements including a discussion of the consolidated financial condition and results of operations of the Parent and any material change between the current half-year period and the corresponding period of the prior year; and (C) material recent developments, provided that for so long as the Parent is filing such half-year information with the SEC, this obligation shall be satisfied by its filing of such information on a current report on Form 6-K with the SEC; and

 

(iii) within 90 days following the end of the Parent’s first and third fiscal quarter in each fiscal year, unaudited quarterly management reports presenting the Parent’s results of operations for the relevant fiscal quarter (without footnotes).

 

(b) All financial statements shall be prepared in accordance with IFRS on a consistent basis for the periods presented. Except as provided for above, no report need include separate financial statements for the Parent or Subsidiaries of the Parent or any disclosure with respect to the results of operations or any other financial or statistical disclosure not of a type included in the Form 20-F of the Parent filed with the SEC.

 

2.13 Wholly Owned Subsidiaries: The Borrower will at all times remain a wholly-owned Subsidiary of the Parent. The Borrower will not merge, consolidate, amalgamate or otherwise combine with or into another Person (whether or not the Borrower is the surviving corporation) or, other than in connection with the incurrence of a Permitted Lien, sell, assign, transfer, lease, convey or otherwise dispose of any material property or assets to any Person in one or more related transactions.

 

2.14 No Impairment of Security Interest or rights or interests of the Lender:

 

The Parent and each other Obligor shall not, and will not permit any member of the Restricted Group to, take or knowingly or negligently omit to take, any action which action or omission would have the result of materially impairing the security interest with respect to the Collateral or the rights or interests of the Lender under or in connection with the Transaction Documents for the benefit of the Lender and the Parent will not, and will not cause or permit any member of the Restricted Group to, grant to any Person other than the Lender and the other beneficiaries set forth in the Security Documents and any interest whatsoever in any of the Collateral or any right or interest which may materially adversely affect the rights or interests of the Lender.

 

2.15 Compliance with Laws & Policies: The Parent and each other Obligor shall not fail to, and shall procure that its Subsidiaries shall not fail to, comply with all laws to which each such party is subject if failure to so comply would have, or be reasonably likely to have, a Material Adverse Effect.

 

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2.16 Anti-Corruption Laws and Sanctions

 

(a) No part of the proceeds of the Note will be used, directly or to the knowledge of any member of the Group indirectly, for any payments that could constitute a violation of any applicable Anti-Corruption Law.

 

(b) Each member of the Group shall (and the Parent shall ensure that each other member of the Group will):

 

(i) in all respects, conduct its business in compliance with Sanctions; and

 

(ii) to the extent permitted by law, promptly upon becoming aware of them, supply to the Lender details of any material claim, action, suit, proceedings or investigation against it with respect to Sanctions by any Sanctions Authority.

 

(c) No member of the Group may knowingly use, lend, contribute or otherwise make available any part of the proceeds of the Note or other transaction contemplated by the Transaction Documents directly or indirectly:

 

(i) for the purpose, or with the effect, of financing any trade, business or other activities of any Restricted Person (including for the benefit of any Restricted Person) or in any country or territory, that, at the time of such funding, is or whose government is subject to Sanctions;

 

(ii) in any other manner that would result in a violation of Sanctions by any person;

 

(iii) engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or breaches or attempts to breach, directly or indirectly, any Sanctions applicable to it; or

 

(iv) fund all or part of any payment in connection with a Transaction Document out of proceeds directly or indirectly derived from business or transactions with a Restricted Person referred to in paragraph (c) of the definition thereof, or which would be prohibited by Sanctions or otherwise cause the Lender or any other person to be in breach of any Sanctions other than to the extent that such undertaking would result in a violation of Council Regulation (EC) No 2271/96, as amended (or any implementing law or regulation in any member state of the European Union) or any such similar applicable blocking or anti-boycott law or regulation in the United Kingdom.

 

(d) Each member of the Group shall ensure that reasonable controls and safeguards are in place designed to prevent any action being taken that would be contrary to paragraph (b) above.

 

2.17 Merger, Consolidation or Sale of Assets:

 

(a) The Borrower shall not, directly or indirectly (a) consolidate, amalgamate or merge with or into another Person (whether or not the Borrower is the surviving Person) or (b) voluntarily sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the Borrower’s properties or assets, in one or more related transactions, to another Person, except with the consent of the Parent’s Board of Directors (including the consent of the designated nominee of the Lender, as required pursuant to Section 4 of the Investors’ Rights Agreement).

 

(b) The Parent shall not, directly or indirectly (i) consolidate, amalgamate or merge with or into another Person (whether or not the Parent is the surviving Person) or (ii) voluntarily sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the Parent’s and its Subsidiaries’ properties or assets, in one or more related transactions, to another Person, except with the consent of the Parent’s Board of Directors (including the consent of the designated nominee of the Lender, as required pursuant to Section 4 of the Investors’ Rights Agreement).

 

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(c) No member of the Restricted Group may sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such member of the Restricted Group is the surviving Person), another Person, other than the Parent or the Borrower or another member of the Restricted Group, unless:

 

(i) immediately after giving effect to that transaction, no Default or Event of Default exists; and

 

(ii) either:

 

a. such member of the Restricted Group is the surviving corporation;

 

b. the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Parent, the Borrower or another member of the Restricted Group) unconditionally assumes, pursuant to a joinder to this Note on terms satisfactory to the Lender, all the obligations of such member of the Restricted Group under such Note, its Note Guarantee and the Security Documents, and any other Transaction Document to which its predecessor was party on terms set forth therein; and

 

c. the Net Proceeds of such sale or other disposition are applied as approved by the Board of Directors of the Parent (and shall require the approval of the Lender’s nominee on the Board of Directors of the Parent).

 

For purposes of this Section 2.17, the sale, lease, conveyance, assignment, transfer, or other disposition of all or substantially all of the properties and assets of one or more members of the Restricted Group, which properties and assets, if held by the Parent instead of a member of the Restricted Group, would constitute all or substantially all of the properties and assets of the Parent on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the assets of the Parent.

 

2.18 Most Favored Nation and Right of First Offer: The Parent and each Obligor shall not, and will procure that none of their Subsidiaries, enter into any transaction or series of transactions with a person who is not the Lender or an Affiliate of the Lender in connection with (a) the issuance or borrowing of Indebtedness, or (b) the issuance of Shares of the Parent and/or warrants and/or Related Rights in respect of such Shares, in each case having a value of $500,000 or more, without (i) notifying the Lender in writing (which may be by email) (such notice being a “MFN Notice”) of any such transaction or series of transactions before they are entered into together with reasonable details of the same; and (ii) with regard to Indebtedness, irrevocably offering and agreeing with the Lender the right to amend the terms of this Note which provide a return to the Lender (including the conversion price for Shares, Warrants, interest payment terms, original issue discounts, fees and other similar terms) to be on equivalent terms as the terms offered under the new Indebtedness, or (iii) with regard to the issuance of Shares and/or warrants and/or Related Rights in respect of such Shares, offering the Lender the right to participate in such transaction on terms no worse than the terms offered to the other person, provided, however, that, other than in respect of the Parent and the Borrower, nothing in this Section 2.18 shall grant the Lender any rights in respect of, or require the Parent or any Obligor to provide to the Lender any MFN Notice in respect of (x) any local partner, landlord and related funding and security agreements in existence at the date of this Note or to be entered into after the date hereof in respect of Capital Lease Obligations and/or (y) the use of Shares to settle liabilities of the Parent and/or any direct or indirect Subsidiary of the Parent. The Lender shall respond to any duly completed and delivered MFN Notice within a period of ten (10) Business Days or else the Lender shall be deemed to have waived its rights under this Section 2.18. The Lender’s rights under this Section 2.18 shall continue for only so long as a portion of this Note remains outstanding (but, for the avoidance of doubt, shall not continue following conversion of the Note or repayment of this Note, each in full), or in respect of the Warrants or any other warrants issued to the Lender or its nominee, until the earlier to occur of their expiry date or exercise date. The Lender’s rights under this Section 2.18 shall not apply to any conversion of Notes into Shares under the Convertible Bond Indenture.

 

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2.19 Transfer of IP and Related Intra-Group Agreements. The Parent shall, and shall procure that its Subsidiaries shall: (a) transfer all trademarks and other Intellectual Property owned by it and/or any other member of the Group in connection with the “Selina” brand and its derivate and cognate forms are transferred to a special purpose vehicle (“IP Holdco”) on terms (including as to the identity and jurisdiction of incorporation of its parent company) and in a jurisdiction approved by the Lender within 45 days of the date of this Note; (b) before or simultaneously with such transfer(s), enter into a licensing agreement with each other member of the Group to use such Intellectual Property on terms in form and substance satisfactory to the Lender; (c) IP Holdco, before such transfers take effect, shall grant Liens to the Lender over all of its property and assets and the parent of IP Holdco shall grant security over its shares in IP Holdco and all of its property and assets to the Lender and each of them shall enter into such restrictive covenants as the Lender may require in form and substance satisfactory to the Lender; and (d) before or simultaneously with such transfer(s), the Lender and IP Holdco shall have entered into a revenue sharing agreement on terms and in form and substance reasonably satisfactory to the Lender and the Parent.

 

2.20 Limitation on Selina RY’s activities. Selina RY and its Subsidiaries must not carry on any business, undertake any other activity or own any assets, incur any Indebtedness, give any Guarantee, create or permit to exist any Lien over its property or assets, make any loan, make any payment or sell any of its assets other than:

 

(a) any activity reasonably related to the offering, sale, issuance, incurrence and servicing, purchase, redemption, refinancing or retirement of the Notes or other Indebtedness permitted by the terms of this Note, the granting of Liens permitted under Section 2.5 and distributing, lending or otherwise advancing funds to the Parent or any member of the Restricted Group;

 

(b) any activity undertaken with the purpose of fulfilling any other obligations under the Notes, other Indebtedness permitted by the terms of this Note, the or any Security Document to which it is a party;

 

(c) a Permitted Business;

 

(d) Permitted Investments;

 

(e) any activity directly related to the establishment and/or maintenance of its corporate existence or otherwise complying with applicable law;

 

(f) the ownership of 100% of the shares of their respective Subsidiaries; and

 

(g) other activities not specifically enumerated above that are de minimis in nature.

 

2.21 No Intra-Group actions. For so long as any Notes are outstanding, none of the Parent nor any member of the Restricted Group will commence or take any action or facilitate any process or procedure referred to tin the definition of Bankruptcy Law, including a winding up, liquidation or other analogous proceeding in respect of the Borrower or the Parent or any other Guarantor.

 

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2.22 Collateral Over Shares in Selina Operations US Corp. The Parent shall: (a) transfer all of its shares in Selina Operations US Corp. (“Selina Operations”) to a direct wholly owned Subsidiary of the Parent with such transfer documentation being in form and substance to the Lender; (b) procure that such wholly owned Subsidiary of the Parent grants Liens over all of its assets (including all of the shares in Selina Operations) in favor of the Lender and in form and substance satisfactory to the Lender; and (c) becomes a Guarantor, in each case, before the date which one hundred and twenty (120) days after the date of this Note, provided, that the Parent shall not be subject to any specific obligation under this Section 2.22 if (i) the Lender has waived such obligation in writing; (ii) the fulfilment of such obligation would, in the opinion of the Lender (in its absolute discretion), result in a prohibitive cost, including tax cost to the Group; or (iii) the Parent is restricted from doing so under applicable law or contractual obligations specifically preventing the transfer existing as of the date of this Note, until any such impediment no longer applies. The Parent will use best efforts to overcome any such contractual obligations.

 

2.23 Non-circumvention. Each of the Borrower and the Parent hereby covenants and agrees that the Borrower, the Parent and Selina RY, as applicable, will not, by amendment to its governing documents or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all actions as may be required to protect the rights of the Lender. Without limiting the generality of the foregoing or any other provisions of this Note or of the other Transaction Documents, the Borrower and the Parent, as applicable, (a) shall not increase the par value of the Shares receivable upon conversion of this Note, (b) shall take all such actions as may be necessary or appropriate in order that the Parent and Selina RY, as applicable, may validly and legally issue fully paid Shares or share capital, as applicable, upon the conversion of this Note and (c) shall, so long as this Note is outstanding, take all action necessary to reserve and keep available the maximum amount of Shares out of its authorized and unissued common stock, solely for the purpose of effecting the conversion of this Note.

 

2.24 Bank Accounts. The Borrower and Selina Operations shall ensure that all bank accounts opened and maintained by it are, at all times, subject to valid Liens under the Security Documents in form and substance satisfactory to the Lender.

 

Section 3. GUARANTEE

 

3.1 Note Guarantees:

 

(a) Each of the Guarantors hereby fully and unconditionally guarantees, jointly and severally, to the Lender and its successors and assigns, the full payment of principal of, premium, if any, interest, fees, costs and expenses, if any, on, and all other monetary obligations of the Borrower and each other Guarantor under this Note and the Notes and any other Transaction Document (all the foregoing being hereinafter collectively called the “Note Obligations”). The Guarantors further agree that the Note Obligations may be extended or renewed, in whole or in part, without notice or further assent from the Guarantors and that the Guarantors will remain bound under this Section 3 notwithstanding any extension or renewal of any Note Obligation. All payments under such Note Guarantee will be made in U.S. dollars.

 

(b) Each of the Guarantors hereby agrees that its obligations hereunder are unconditional and shall be as if it were principal debtor and not merely surety, unaffected by, and irrespective of, any validity, irregularity or unenforceability of any Note or any other Transaction Document, any failure to enforce the provisions of any Note any other Transaction Document, any waiver, modification or indulgence granted to the Borrower or any other Guarantor with respect thereto by the Lender, or any other circumstance which may otherwise constitute a legal or equitable discharge of a surety or guarantor or defense of a guarantor (except payment in full). Each of the Guarantors hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger or bankruptcy of the Borrower or any other Guarantor, any right to require that the Lender pursue or exhaust its legal or equitable remedies against the Borrower or any other Guarantor prior to exercising its rights under the Note Guarantee (including, for the avoidance of doubt, any right which any Guarantor may have to require the seizure and sale of the assets of the Borrower to satisfy the outstanding principal of, interest, fees, costs and expenses, on or any other amount payable under each Note or any other amount payable under or in connection with any Transaction Document prior to recourse against any Guarantor or its assets), protest or notice with respect to any Note or the Indebtedness evidenced thereby and all demands whatsoever, and covenants that the Note Guarantee will not be discharged with respect to any Note except by payment in full of the principal thereof and interest, fees, costs and expenses, in respect of or thereon or as otherwise provided in this Note or any other Transaction Document, including Section 4.3. If at any time any payment of principal of, premium, if any, interest, fees, costs and expenses, if any, on such Note is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Borrower or any other Guarantor, the Guarantors’ obligations hereunder with respect to such payment shall be reinstated as of the date of such rescission, restoration or returns as though such payment had become due but had not been made at such times.

 

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(c) Each of the Guarantors also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees) incurred by the Lender or the Lender in enforcing any rights under this Section 3.1 and any other rights or remedies that it may have under or in connection with any Transaction Document.

 

3.2 Subrogation:

 

(a) Each Guarantor shall be subrogated to all rights of the Lender against the Borrower in respect of any amounts paid to the Lender by each Guarantor pursuant to the provisions of its Note Guarantee.

 

(b) Notwithstanding the foregoing, each Guarantor agrees that it shall not be entitled to any right of subrogation or indemnity in relation to the Lender in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the one hand, the Lender, on the other hand, the maturity of the obligations guaranteed hereby may be accelerated as provided in Section 5.2 for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and in the event of any declaration of acceleration of such obligations as provided in Section 5.2, such obligations (whether or not due and payable) will forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. The Guarantors will have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Lender under the Note Guarantee, in which case it shall be postponed until payment in full of all obligations guaranteed hereby.

 

3.3 Limitation on Guarantor Liability: Each Guarantor hereby confirms that it is the intention of the parties hereto that the Note Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance, for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar national, federal, local or state law or voidable preference, financial assistance or improper corporate benefit, or violate the corporate purpose of the relevant Guarantor or any applicable maintenance of share capital or similar laws or regulations affecting the rights of creditors generally under any applicable law or regulation to the extent applicable to any Note Guarantee. To effectuate the foregoing intention, the Lender and the Guarantors hereby irrevocably agree that the obligations of such Guarantor will be limited to the maximum amount (as may be set forth in a joinder agreement to this Note to the extent reasonably determined by the Borrower) that will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Section 3, result in the obligations of such Guarantor under its Note Guarantee not constituting either a fraudulent transfer or conveyance or voidable preference, financial assistance or improper corporate benefit, or violating the corporate purpose of the relevant Guarantor or any applicable capital maintenance or, in each case, any similar laws or regulations affecting the rights of creditors generally under any applicable law or regulation.

 

3.4 Notation Not Required: Neither the Borrower nor the Guarantors shall be required to make a notation on the Notes to reflect any Note Guarantee or any release, termination or discharge thereof.

 

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3.5 Successors and Assigns: This Section 3 shall be binding upon the Guarantors and each of their successors and assigns and shall inure to the benefit of the successors and assigns of the Lender and, in the event of any transfer or assignment of rights by the Lender, the rights and privileges conferred upon that party in this Note and in the Notes shall automatically extend to and be vested in such transferee or assigns, all subject to the terms and conditions of this Note.

 

3.6 No Waiver: Neither a failure nor a delay on the part of either the Lender in exercising any right, power or privilege under this Section 3 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Lender herein expressly specified are cumulative and are not exclusive of any other rights, remedies or benefits which either may have under this Section 3 at law, in equity, by statute or otherwise.

 

3.7 Modification: No modification, amendment or waiver of any provision of this Section 3, nor the consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Lender, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in the same, similar or other circumstance.

 

3.8 Releases: The Note Guarantee of a Subsidiary Guarantor shall be released upon the first to occur of:

 

(a) repayment in full of the Notes and all other amounts owing to the Lender under or in connection with the Transaction Documents;

 

(b) the sale or other disposition (including by way of consolidation or merger) of ownership interests in the Subsidiary Guarantor (directly or through a parent company) such that the Subsidiary Guarantor does not remain a Subsidiary where the same is approved by the Lender;

 

(c) the sale or disposition of all or substantially all the assets of the Subsidiary Guarantor (other than to another Subsidiary Guarantor), where the same is approved by the Lender; or

 

(d) the implementation of a Permitted Reorganization approved by the Lender,

 

and in each case, otherwise not prohibited by this Note Agreement, and the Lender shall agree to execute an amendment to this Note to release such Subsidiary Guarantor in full.

 

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Section 4. COLLATERAL AND SECURITY

 

4.1 Collateral and Security Documents: The due and punctual payment of the principal of, and premium on, if any, interest, fees, costs and expenses, on the Notes or any other amount under or in connection with any Transaction Document and any Note Guarantee when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of, premium on, if any, interest, fees, costs and expenses, or any other amount under or in connection with any Transaction Document if any, on the Notes and any Note Guarantee and performance of all other obligations and liabilities of the Borrower and any Guarantor to the Lender under this Note, any Note Guarantee and any other Transaction Document, according to the terms hereunder or thereunder, are secured as provided in the Security Documents which the Borrower and the Guarantors have entered into prior to or simultaneously with the execution of this Note. The Borrower and any Guarantor shall each take, and shall cause their respective Subsidiaries to take, upon request of the Lender, any and all actions reasonably required to cause the Security Documents to create and maintain, as security for the Obligations of the Borrower and any Guarantor hereunder, in respect of the Collateral, valid and enforceable perfected Liens in and on such Collateral in favor of the Lender.

 

4.2 Release of the Collateral: The Collateral will be released from the Lien over such Collateral:

 

(a) upon repayment in full of the Notes and all other amounts owing to the Lender under or in connection with the Transaction Documents;

 

(b) in the case of a security enforcement sale in accordance with the terms of the relevant Security Document or at law;

 

(c) upon the full and final payment and performance of all financial obligations of the Borrower and the Guarantors under the Notes and any other Transaction Document; and

 

(d) in connection with the implementation of a Permitted Reorganization approved by the Lender.

 

4.3 Authorization of Actions to be Taken by the Lender Under the Security Documents:

 

(a) Upon reasonable request of the Lender, the Borrower and Guarantors shall execute and deliver such further instruments and do such further acts as may be necessary to carry out more effectively the purposes of this Note and the other Transaction Documents.

 

(b) Subject to the provisions hereof, the Security Documents, the Lender shall have power to institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Collateral by any acts that may be unlawful or in violation of the Security Documents or this Note or any other Transaction Document, and such suits and proceedings as the Lender may deem expedient to preserve or protect its interests in the Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest under the Security Documents or be prejudicial to the interests of the Lender).

 

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4.4 Further Action: Each member of the Restricted Group shall take, or cause to be taken, all appropriate action, and to do or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the security over the Collateral as contemplated by the Security Documents and to facilitate the perfection of the same and to give effect to the rights and remedies created or intended to be created thereby.

 

Section 5. EVENTS OF DEFAULT AND REMEDIES AND MANDATORY PREPAYMENT.

 

5.1 EVENTS OF DEFAULT. The occurrence of any of the following events or conditions shall constitute an “Event of Default” hereunder:

 

(a) (i) the failure of the Parent to file, not later than twenty (20) Business Days following the Closing Date, with the SEC a resale registration statement on Form F-1 in order to register all of the Registrable Securities (as defined in the Investors’ Rights Agreement) for resale (the “Registration Statement”), (ii) the failure of the Parent to cooperate with the SEC to have the Registration Statement declared effective as soon as practicable after the filing thereof, and/or such Registration Statement is not declared effective by the SEC or does not otherwise become effective automatically on or before the applicable Effectiveness Deadline (as defined in the Subscription Agreement), or (iii) the Registration Statement when declared effective fails to register the Required Registration Amount (as defined in the Subscription Agreement) of Registrable Securities other than in any such case as a result of the failure by the Lender to comply with its obligations hereunder or under the Subscription Agreement of Investors’ Rights Agreement with respect to such Registration Statement;

 

(b) while the Registration Statement is required to be maintained effective pursuant to the terms of the Subscription Agreement, the Warrant Agreement and the Investors’ Rights Agreement, the effectiveness of the Registration Statement lapses for any reason (including, without limitation, the issuance of a stop order by the SEC) or such Registration Statement (or the prospectus contained therein) is unavailable to the Lender for the sale of its Registrable Securities in accordance with the terms of the Subscription Agreement, the Warrant Agreement and the Investors’ Rights Agreement (including, without limitation because of a failure to disclose such information as is necessary for sale to be made pursuant to such Registration Statement, a failure to register a sufficient number of Shares or Warrants or a failure to maintain the listing of the Shares), and such lapse or unavailability continues for a period of five (5) consecutive Trading Days or for more than an aggregate of ten (10) Trading Days in any 365-day period, other than in any such case as a result of the failure by the Lender to comply with its obligations hereunder or under the Subscription Agreement or the Investors’ Rights Agreement with respect to such Registration Statement;

 

(c) (i) the suspension of the Shares (as such, and not as a part of broader suspension of the Principal Exchange generally for securities of other issuers) from trading on an Eligible Exchange for a period of two (2) consecutive Trading Days or for more than an aggregate of five (5) Trading Days in any 365-day period or (ii) the failure of the Shares to be listed on an Eligible Market;

 

(d) Default in the payment when due of interest or (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on, the Notes or any other amount payable under the Notes, where such default has continued for a period of seven (7) days without remedy;

 

(e) any failure by any Obligor to comply with Section 2.19, Section 2.21 or Section 7.1(b);

 

(f) any failure by any Obligor to comply with any provision of any Transaction Document, (save for those referred to in paragraph 5.15.1(a) and paragraph 5.1(e) above), where failure to comply is capable of remedy and such failure has continued for a period of twenty one (21) days after the earlier of (i) notice of such failure has been provided by the Lender or (ii) the Obligor becoming aware of the failure to comply;

 

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(g) a Change of Control of the Parent, Selina RY, IP Holdco or the Borrower, without the prior written consent of the Lender;

 

(h) any representation or statement made or deemed to be made by any member of the Restricted Group under or in connection with any Transaction Document or any other documents delivered by or on behalf of a member of the Restricted Group under or pursuant to any Transaction Document is or proves to have been incorrect or misleading (if such representation does not contain a materiality concept, in any material respect) when made or deemed to be made (and all such representations are deemed made on each day that any Indebtedness is outstanding under any Transaction Document) unless the underlying circumstances (if capable of remedy) are remedied within twenty one (21) days of the earlier of (i) the Lender giving notice to the Parent or the relevant member of the Restricted Group and (ii) the Parent or such member of the Restricted Group becoming aware of such breach;

 

(i) a false or inaccurate certification by the Parent and Borrower that the Equity Conditions are satisfied or that there has been no Equity Conditions Failure or as to whether any Event of Default has occurred;

 

(j) the Parent fails to remove any restrictive legend on any certificate or any Shares issued to Lender upon conversion of this Note or the Warrants, including any Prepayment Warrants, as and when required by this Note or the Subscription Agreement or the Warrant Agreement, unless otherwise then prohibited by U.S. federal securities laws or as a result of the Lender to comply with its obligations hereunder, and any such failure remains uncured for at least three (3) days after notice from the Lender;

 

(k) in respect of any Indebtedness of the Parent or any member of the Restricted Group:

 

(i) any failure by the Parent or any member of the Restricted Group to pay when due US$1,000,000 or more of interest under any such Indebtedness to which it is a party, provided that any and all remedy or cure periods available to the Parent or relevant member of the Restricted Group under the terms of such Indebtedness have been observed or expired in accordance with their terms;

 

(ii) any failure by any member of the Restricted Group to pay when due US$4,000,000 or more of principal under any such Indebtedness to which it is a party, provided that any and all remedy or cure periods available to the relevant member of the Restricted Group under the terms of such Indebtedness have been observed or expired in accordance with their terms; or

 

(iii) in respect of any Indebtedness of US$5,000,000 principal or more: (A) any commitment for any Indebtedness of such member of the Restricted Group is cancelled or suspended by a creditor of any member of the Restricted Group as a result of an event of default (however described); or (B) any creditor of such member of the Restricted Group (excluding any co-funder or joint venture partner of such Restricted Group) becomes entitled to declare any Indebtedness of such member of the Restricted Group due and payable prior to its specified maturity as a result of an event of default (however described);

 

(l) in respect of any Capital Lease Obligation of any member of the Restricted Group, the counterparty to such Capital Lease Obligation having obtained a final judgment enforceable entered by a court or courts of competent jurisdiction against the relevant member of the Restricted Group for payment of an amount in excess of US$5,000,000 and such judgment has not been paid, discharged, stayed or fully bonded for a period for ten (10) days from when payment is due under such judgment against the relevant member of the Restricted Group; with the terms of such Indebtedness in respect of such unpaid premium;

 

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(m) (A) any security interest created by the Security Documents with respect to Collateral ceases to be in full force and effect, or as assertion by any member of the Restricted Group that any Collateral is not subject to a valid, perfected security interest; or (B) the repudiation by any member of the Restricted Group of any of its obligations or liabilities under the Security Documents;

 

(n) any Note Guarantee of any member of the Restricted Group is held in any judicial proceeding which is not subject to appeal to be unenforceable or invalid or ceases for any reason to be in full force and effect, or any member of the Restricted Group or any Person acting on behalf of any such member of the Restricted Group, repudiates, denies or disaffirms its obligations under its Note Guarantee or other payment obligations under the Transaction Documents;

 

(o) the entry by a court of competent jurisdiction of (A) a decree or order for relief in respect of any member of the Restricted Group in an involuntary case or proceeding under any applicable Bankruptcy Law or (B) a decree or order adjudging any member of the Restricted Group bankrupt or insolvent, or seeking reorganization (other than as permitted by this Agreement), adjustment arrangement or composition of or in respect of any member of the Restricted Group, adjustment arrangement or composition of or in respect of any member of the Restricted Group under any applicable law, or appointing a custodian, receiver, liquidator, assignee, Lender, sequestrator (or other similar official) of any member of the Restricted Group or of any substantial part of their respective properties or ordering the winding up or liquidation of their affairs, and any such decree, order or appointment pursuant to any Bankruptcy Law;

 

(p) (A) any member of the Restricted Group (1) commences a voluntary case or proceeding under any applicable Bankruptcy Law or any other case or proceeding to be adjudicated bankrupt or insolvent or (2) consents to the filing of a petition, application, answer or consent seeking a reorganization (other than as permitted by this Agreement), relief under any applicable Bankruptcy Law; (B) any member of the Restricted Group consents to the entry of a decree or order for relief in respect of any member of the Restricted Group in an involuntary case or proceeding under any applicable Bankruptcy Law or to the commencement of any bankruptcy or insolvency case or proceeding against it; (C) any member of the Restricted Group (1) consents to the appointment of, or taking possession by, a custodian, receiver, liquidator, administrator, supervisor, assignee, lender, sequestrator or similar official of any member of the Restricted Group or of all or substantially all of their respective properties, or (2) makes an assignment for the benefit of creditors; (D) by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors; or (E) enter into a composition, compromise, assignment or arrangement with any of its creditors (other than a Permitted Reorganization);

 

(q) any member of the Restricted Group has appointed to it a liquidator (other than in respect of a solvent liquidation), trustee, receiver, administrative receiver, administrator or similar officer of the whole or substantially the whole of its respective undertaking and assets, or, in each case, any analogous or similar proceeding in any jurisdiction outside of England and Wales or any member of the Restricted Group makes an application to court in connection with such appointment or is or is adjudicated or found bankrupt or insolvent or, subject to any payment delays, grace or cure periods as contemplated in Sections 6.3 and 6.6 hereof, or any actions permitted in accordance with Section 6.3 or Section 6.6, is unable to pay its debts as they fall due or its liabilities exceed its assets or any member of the Restricted Group takes any action (including without limitation, the making of an application or the giving of any notice, petition, proposal or convening a meeting) or any corporate action or legal proceedings are started or other procedure or steps are taken in connection with any of the foregoing paragraphs (j) or (k);

 

(r) the dissolution or termination of existence of any member of the Restricted Group;

 

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(s) any member of the Restricted Group suspends or ceases, or threatens to suspend or cease, to carry on the whole or a substantial part of its business or sells or otherwise disposes of the whole or any substantial part of its business, undertaking or assets, or threatens to do any of the same;

 

(t) it is or becomes unlawful for any member of the Restricted Group to perform any of its respective obligations under the Transaction Documents;

 

(u) the authority or ability of any member of the Restricted Group to conduct its business is limited or wholly or substantially curtailed by any seizure, expropriation, nationalization, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority or other person in relation to any member of the Restricted Group or any of its assets, and such curtailment has or is reasonably likely to have a Material Adverse Effect;

 

(v) the auditor of any member of the Restricted Group qualifies its audit opinion within such member’s audited annual consolidated financial statements delivered after the date of this Note (other than by way of a going concern emphasis of matter statement) and such qualification has a Material Adverse Effect as to such member’s ability to continue as a going concern; and/or

 

(w) any event or series of events occurs which has or is reasonably likely to have a Material Adverse Effect.

 

5.2 ACCELERATION; REMEDIES.

 

(a) In the case of an Event of Default with respect to any Obligor or any member of the Restricted Group, and such Event of Default is continuing after any applicable remedy or cure period, the Lender may declare all of the then outstanding Notes and other amounts owing to the Lender under the Transaction Documents to be due and payable immediately by providing written notice to the Borrower and the Parent and exercise any rights and/or remedies that it may have under the Transaction Documents, including the Collateral, and/or at law.

 

(b) Notwithstanding any provision of this Note to the contrary, if any Event of Default occurs under one or more of Sections 5.1(o) to 5.1(s), all amounts owing to the Lender under the Transaction Documents shall be automatically due and payable without further action by any party.

 

(c) If an Event of Default occurs and is continuing, the Lender may, but shall not be obliged, in its discretion to proceed to protect and enforce its rights and remedies by such appropriate judicial proceedings or other actions as the Lender shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Note or any other Transaction Document or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

 

(d) All rights of action and claims under this Note or the Notes or any other Transaction Document may be prosecuted and enforced by the Lender without the possession of any of the Notes or the production thereof in any proceeding relating thereto.

 

5.3 NOTICE OF DEFAULTS. Promptly upon becoming aware of the occurrence of any Default or Event of Default, the Borrower shall provide written notice to the Lender and the Parent describing the same and the steps being taken with respect thereto.

 

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5.4 MANDATORY PREPAYMENT.

 

(a) If the auditor of any member of the Restricted Group includes within its audit opinion in that member’s audited annual consolidated financial statements for the financial year ending December 31, 2024 or any subsequent year a going concern emphasis of matter statement, the Lender shall be entitled to declare all amounts then outstanding under the Notes and other amounts owing to the Lender under the Transaction Documents to be due and payable within sixty (60) days’ written notice to the Borrower or the Parent.

 

(b) If the Parent fails to obtain shareholder approval for the issuance of additional ordinary shares to allow the Parent to raise not less than $50,000,000 via equity investments in the Parent in accordance with Section 6.9 within six months from the date hereof, the Lender shall be entitled to declare all amounts then outstanding under the Notes owing to the Lender under the Transaction Documents and any interest accrued over the period, to be due and payable within fourteen (14) days’ written notice to the Borrower or the Parent.

 

Section 6. FURTHER COVENANTS.

 

6.1 EXISTENCE. Except as otherwise permitted hereunder, each Obligor shall, and shall cause its Subsidiaries whose equity becomes subject to a security interest from time to time, to at all times preserve and maintain in full force and effect its legal existence under the laws of the jurisdiction of its organization and take all reasonable action to maintain all rights, franchises, licenses and permits necessary in the normal conduct of its business except, other than with respect to the preservation of the existence of each of the Borrower, the Guarantor, the Parent or such other Subsidiary; provided that each of the Borrower, the Parent, Guarantors and any such other Subsidiary shall not be required to preserve any such existence (other than with respect to the preservation of existence of the Borrower or the Parent or the Guarantors, respectively), right, franchise, license or permit if an officer of such Person or such Person’s board of directors (or similar governing body, and in the case of the Parent, including the Lender’s nominee on the Board of Directors of the Parent) determines that the preservation thereof is no longer desirable in the conduct of the business of such Person or that the loss thereof is not disadvantageous in any material respect to the Borrower, the Guarantors or the Parent, respectively.

 

6.2 REGISTRATION RIGHTS. Each of the Borrower, the Guarantors and the Parent agrees that the Lender is entitled to the benefits of Section 9 of the Subscription Agreement and to the benefits of the Investors’ Rights Agreement. By its acceptance thereof, the Lender will have agreed to be bound by the terms of the Subscription Agreement and the Investors’ Rights Agreement.

 

6.3 DEBT SERVICE. The Parent covenants to use its best efforts to take such actions that would allow it to make payments on its Existing Debt in the amount of no more than $27,000,000 during the financial year ended December 31, 2023 and in an amount of no more than $20,000,000 during the financial year ended December 31, 2024, in each case in cash (each a “Debt Service Target”), and to that end, the Parent and its Subsidiaries, as applicable, may choose to convert any Existing Debt into equity instruments, make any payments in kind or defer interest payments on any Existing Debt, or take any other measures they deem appropriate to reduce the liabilities of the Parent and its Subsidiaries (subject to approval by the Parent’s Board of Directors, including the consent of the designated nominee of the Lender, to the extent applicable and not including any Indebtedness under the Transaction Documents or any other indebtedness due to the Lender or any Affiliate of the Lender). If the Parent does not achieve the Debt Service Target for the 2023 financial year or the 2024 financial year, then in lieu of other remedies available to Lender, the interest payable under Section 1.2 will be increased by 50 basis points for each $1,000,000 above the applicable Debt Service Target for a particular year specified above, with retroactive effect from the Closing Date until the date the interest is payable hereunder and subject to a maximum increase of 250 basis points, unless any such failure to achieve the Debt Service Target will not constitute an Event of Default under this Note.

 

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6.4 PAYMENT OF ACCRUED LIABILITIES. The Parent shall not apply cash or other assets of the Group against (or pay or discharge) Accrued Liabilities, except for up to:

 

(a) 4% of $40,000,000 (i.e. US$1,600,000) in cash funded from the first $40,000,000 of cash raised since April 1, 2023 until the date of this Note; plus

 

(b) on and from July 1, 2023, (i) $500,000 per month or (ii) the amount of cash equal to 15% of the Parent’s consolidated unlevered Free Cash Flow in aggregate on a quarterly basis.

 

No amount in excess of the amounts set forth above may be used to make any payment on any other Accrued Liability until the Maturity Date without the approval of the Parent’s Board of Directors, including the consent of the designated nominee of the Lender.

 

6.5 CONTINGENCY FUNDING. Notwithstanding any restrictions set out in Section 6.3 or Section 6.4, the Parent shall be entitled to apply an additional $1,000,000 per annum (subject to approval by the Parent’s Board of Directors, including the consent of the designated nominee of the Lender) to prevent the occurrence of a default or settle a legal claim in connection with any of its Existing Debt and/or Accrued Liabilities closing costs, deferred legal expenses, deferred rent, deferred people expenses and similar expenses, provided that if used, any such amount shall be deducted from the amount available for payments under Section 6.4(b)(ii) above over the following 12 months.

 

6.6 RENT REDUCTION. The Parent covenants to use its best efforts to take such actions that would allow it to achieve an average rent reduction of $800,000 per month ($9,600,000 in the aggregate for the Group) for each of the financial years ended December 31, 2023 and December 31, 2024 (the “Rent Reduction Target”), which reductions may be achieved through the deferral of rent beyond 2024, the abatement or the equitization of rent or a combination of these measures provided, that any such deferral of rent in respect of any lease does not result in any increase of the amount of rent due under that lease in the aggregate or the incurrence of any additional fees, costs or expenses. If the Parent does not achieve the Rent Reduction Target for one or both of the financial years, then in lieu of other remedies available to Lender, the interest payable under Section 1.2 will be increased by 50 basis points for each $1,000,000 below the target in aggregate for the Group for the relevant year specified above, with retroactive effect from the Closing Date and subject to a maximum increase of 250 basis points. Any such failure to achieve the Rent Reduction Target will not constitute an Event of Default under this Note.

 

6.7 COMPLIANCE WITH BUDGET; OVERSIGHT.

 

(a) Subject to, and with effect from the date of approval of the Overhead Budgets, the Parent shall use its best efforts not to exceed the expense line items, in the aggregate of $26 million, set out in the Overhead Budgets (and that, within such $26 million figure, the costs of maintaining the Parent’s listing on the Principal Exchange and/or as a public limited company will not exceed $4 million per annum) nor average more than $2,166,667 per month, and the agreed schedule of employee liabilities in respect of each of the financial years ended December 31, 2023 and December 31, 2024, unless with respect to either such period to the extent waived or modified with the consent of the Parent’s Board of Directors, including the consent of the designated nominee of the Lender, as required pursuant to the Investors’ Rights Agreement. The Parent’s Finance & Capital Allocation Committee, or such other committee as may be designated by the Parent’s Board of Directors from time to time, shall have monthly oversight over the corporate overhead budget.

 

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(b) If the Parent does not comply with any of the provisions set out in paragraph (i) for the 2023 financial year or the 2024 financial year, then in lieu of other remedies available to Lender, the interest payable under Section 1.2 will be increased by 50 basis points for each $1,000,000 above the applicable Overhead Budget for a particular year specified above, with retroactive effect from the Closing Date until the date the interest is payable hereunder and subject to a maximum increase of 250 basis points. Any such failure to achieve the Overhead Budget will not constitute an Event of Default under this Note.

 

6.8 EXPANSION. Notwithstanding any other provision of this Note to the contrary, the Parent shall ensure that (i) the expansion of hotel operations into a new country in which the Parent and its Subsidiaries do not have operations as of the date of this Note (the countries in which the Parent and its Subsidiaries currently have operations as of the date of this Note are set out in Exhibit D hereto) and (ii) the signing of leases for new hotels (i.e., hotels for which a lease agreement has not been signed as of the date of this Note) in countries which have a negative Unit Level Operating Profit at the time the lease is to be approved based on performance during most recently completed fiscal quarter are, in each case, approved by a simple majority of the Board of Directors of the Parent or greater, including approval by the designated nominee of the Lender, as required pursuant to Section 4 of the Investors’ Rights Agreement. In any other case, any action referred to in paragraphs (i) or (ii) above is allowed only if no capital investment is required from the Parent.

 

6.9 SHAREHOLDER APPROVAL AND CAPITAL RAISE. The Parent shall (a) convene a general meeting of shareholders within one hundred twenty (120) days from the Closing Date and obtain at such meeting shareholder approval for the issuance of the additional ordinary shares to allow the Parent to raise not less than $50,000,000 from the Finance Parties (and the Parent confirms that no shareholder approval is required for the issuance of any ordinary shares pursuant to the terms of this Agreement), via equity investments in the Parent or convertible loans to the Parent or a subsidiary of the Parent (such amount to be reduced by the PIPE Investment and other equity investments and convertible debt instruments made in the Parent after the date of this Note) and convert into equity (or release) all of the Indebtedness under the Convertible Bond Indenture at a price of $4.00 or higher per share; and (b) before the first anniversary of this Note, raise at least US$20,000,000 cash (the “Fundraising Target”) via additional equity investments into the Parent from third parties other than the Finance Parties, parties related to the Finance Parties, or pursuant to the PIPE Investment which shall count towards the Fundraising Target on a dollar-for-dollar basis, and/or permitted Asset Sales, which shall count towards the Fundraising Target at a rate of 50 cents for each dollar raised through such Asset Sales, provided that at all times at least US$10,000,000 is raised from equity offerings (which amount shall include $1,842,500 in amounts raised under subscription agreements prior to the date of this Note).

 

6.10 LENDER’S DIRECTOR APPOINTMENT RIGHT. During the term of the Note, the Lender shall have the right to appoint and maintain in office one natural person as director on the Board of Directors of Selina RY and to remove any director so appointed and, upon their removal, to appoint another person to act as a director in their place. An appointment or removal in accordance with this Section 6.10 shall be made by giving notice in writing to Selina RY and the Parent and, in the case of removal of a director, to the director being removed. The appointment or removal takes effect on the date on which the notice is received by Selina RY and the Parent or, if a later date is given in the notice, on that date.

 

6.11 AUTHORITY TO ALLOT SHARES. While any Indebtedness under this Note or the Transaction Documents remains outstanding or the Warrants, including the Prepayment Warrants, may be exercised, the Parent shall take all action necessary to ensure that it has authorities and approvals to allot and issue at least the number of Shares that the Lender could be entitled to under the terms of the Transaction Documents, including that are necessary to effect the conversion of this Note as well as for any Shares that may be issued arising from the conversion of interest under the Transaction Documents (the “Required Reserve Amount”). If at any time while this Note remains outstanding the Parent does not have a sufficient number of authorized Shares to satisfy its obligation to issue upon conversion of this Note at least a number of Shares equal to the Required Reserve Amount, then the Parent shall promptly take all corporate action, subject to any requirement to obtain shareholder approval under the Companies Act and/or the Articles, necessary to increase the Parent’s authorized Shares to at least a number of Shares equal to the Required Reserve Amount.

 

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6.12 PARENT AND REMOTE YEAR AGREEMENT. Within 30 days of the date of this Note, the Parent and Selina RY shall enter into a contract between them which provides that, among other things, no member of the Selina RY Group shall have any cancellation fees if they book a program in a hotel operated by any member of the Group and a cancellation period with advance notice of three months or more.

 

6.13 ANNOUNCEMENTS. The Parent and the Borrower must obtain the approval of the Lender prior to making any announcement or filing related to the Transaction Documents or transactions contemplated thereunder.

 

Section 7. ADDITIONAL SECURITY PROVISIONS.

 

7.1 SECURITY. The Note will be secured by, in form and substance satisfactory to the Lender:

 

(a) a pledge in favor of the Common Security Agent in the form of all of the equity capital of Selina RY and an assignment of intra-group receivables;

 

(b) the security and other matters referred to in Section 2.19 concerning IP HoldCo, such pledge to be entered into not more than forty-five (45) days after the Closing Date;

 

(c) a pledge in favor of the Common Security Agent of all of the current and future bank accounts of Selina Operations US Corp., excluding accounts holding customer funds, such pledge to be entered into as soon as practicable following the Closing Date and in no event later than 3 Business Days following the Closing Date; and

 

(d) a pledge in favor of the Common Security Agent of all of the current and future bank accounts of the Borrower, excluding accounts holding customer funds, such pledge to be entered into as soon as practicable following the Closing Date and in no event later than 3 Business Days following the Closing Date.

 

7.2 ADDITIONAL SECURITY. If on July 1, 2024, September 30, 2024 or December 31, 2024 (a “Test Date”), the ratio of (a) the Indebtedness of any member of the Group which is secured on the Collateral (the “Secured Indebtedness”) to (b) the consolidated EBITDA of the Collateral providers and the Guarantors (the “Debt Ratio”) is greater than 2:1 as of such date, then the Parent shall procure that members of the Group either:

 

(a) provide additional Guarantees and Collateral in form and substance acceptable to the Common Security Agent (at the direction of the Secured Parties) such that the total EBITDA of all the Guarantors and Collateral providers ensures that the Debt Ratio does not exceed 2:1, which additional Collateral and Guarantees shall be implemented by the date falling three (3) months after the date of the relevant Test Date, or

 

(b) prepay the principal amount of the Note or other Secured Indebtedness such that the Debt Ratio does not exceed 2:1, which prepayment shall be made by the date falling three (3) months after the date of the relevant Test Date.

 

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The Parent shall provide an Officer’s Certificate setting out in reasonable detail the calculations used for the above on July 1, 2024, September 30, 2024 and December 31, 2024 and each calculation shall be made on reasonable grounds and in good faith. Where the Lender disagrees with any such calculation, the method of calculation and the product of such calculations provided by written notice by the Lender to the Parent shall be binding upon the Parties. Failure to comply with any provision of this Section 7.2 (including, for the avoidance of doubt, the provision by the Officer’s Certificate on each of the dates specified above) shall be an Event of Default if such failure to comply is not remedied within fourteen (14) days.

 

7.3 SECURITY DOCUMENTS. On the date hereof, and subsequently at the request of the Lender, the Parent, the Borrower and any other Subsidiary which the Parent elects to utilize to provide security securing the Secured Obligations in favor of the Common Security Agent in accordance with Section 7.1 above shall enter into security documents in form and substance satisfactory to the Common Security Agent (at the direction of the Secured Parties) to create and perfect the security interests described in Section 7.1.

 

7.4 PERSONAL GUARANTEE. Mr. Rafael Museri and Mr Daniel Rudasevski, as the holders of management shares in Kibbutz, jointly and severally, shall sign a Personal Guarantee, duly notarized, on or before the Closing Date.

 

7.5 KIBBUTZ GUARANTEE. Kibbutz shall enter into a guarantee in respect of the Notes on or before the Closing Date in form and substance satisfactory to the Lender.

 

7.6 ADDITIONAL GUARANTORS. If a Default has occurred, the Parent shall ensure that any Subsidiary of the Parent which had a positive Free Cash Flow for at least the last 12 months will provide a Note Guarantee within 30 days of the occurrence of such Default, except where such Subsidiary is or would be prohibited by any legal or contractual obligations specifically preventing the provision of a Note Guarantee, until any such impediment no longer applies. The Parent shall (and shall procure that any such Subsidiary of the Parent will) use best efforts to overcome any such contractual obligations.

 

Within five (5) days of the occurrence of a Default, the Parent shall provide to the Lender an Officer’s Certificate setting forth the name(s) of any Subsidiaries which have had a positive Free Cash Flow for the last 12 months, and whether such Subsidiaries are contractually and legally able to provide a Note Guarantee (in each case in reasonable detail and with sufficiently detailed supporting information).

 

Section 8. MISCELLANEOUS.

 

8.1 WAIVER; AMENDMENT.

 

(a) Notwithstanding anything to the contrary contained in this Note, no delay or omission on the part of the Lender in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Note. No waiver of any right or amendment hereto shall be effective unless in writing and signed by the parties nor shall a waiver on one occasion be construed as a bar to or waiver of any such right on any future occasion. Without limiting the generality of the foregoing, the acceptance by the Lender of any late payment shall not be deemed to be a waiver of the Event of Default arising as a consequence thereof. Borrower and each Guarantor waives presentment, demand, notice, protest, and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note, and assents to any extensions or postponements of the time of payment or any and all other indulgences under this Note which from time to time may be granted by the Lender in Lender’s sole discretion in connection herewith regardless of the number or period of any extensions.

 

(b) Any waiver or amendment in relation to any requirements pursuant to Section 6 may be approved a simple majority of the Parent’s Board of Directors, as long as the designated nominee of the Lender, as required pursuant to Section 4 of the Investors’ Rights Agreement, has approved any such amendment or waiver.

 

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