8-K

OneSpaWorld Holdings Limited

Date: March 25, 2019

/s/ Stephen B. Lazarus

Stephen B. Lazarus

Chief Operating Officer and Chief Financial Officer

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 19, 2019

OneSpaWorld Holdings Limited

(Exact name of registrant as specified in its charter)

Commonwealth of The Bahamas

001-38843

Not Applicable

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

Office of Lennox Paton Corporate Services Limited

Bayside Executive Park, Buildings 3, West Bay Street, P.O. Box N-4875

City of Nassau, Island of New Providence, Commonwealth of The Bahamas

N/A

(Address of principal executive offices)

(Zip Code)

Tel: (242) 502-5000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencements communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

☒	Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Introductory Note

On March 19, 2019, OneSpaWorld Holdings Limited (“OneSpaWorld”) consummated the previously announced business combination (the “Business Combination”) pursuant to that certain Business Combination Agreement, dated as of November 1, 2018 (as amended, supplemented or otherwise modified from time to time, the “Transaction Agreement”), by and among Steiner Leisure Limited, an international business company incorporated under the laws of the Commonwealth of The Bahamas (“Steiner Leisure”), Steiner U.S. Holdings, Inc., a Florida corporation, Nemo (UK) Holdco, Ltd., a limited company formed under the laws of England and Wales, Steiner UK Limited, a limited company formed under the laws of England and Wales, Steiner Management Services LLC, a Florida limited liability company, Haymaker Acquisition Corp., a Delaware corporation (“Haymaker”), Dory US Merger Sub, LLC, a Delaware limited liability company, Dory Acquisition Sub, Limited, an international business company incorporated under the laws of the Commonwealth of The Bahamas, Dory Intermediate LLC, a Delaware limited liability company, and Dory Acquisition Sub, Inc., a Delaware corporation.

“OSW Predecessor” is comprised of the net assets and operations of (i) the following wholly-owned subsidiaries of Steiner Leisure: OneSpaWorld LLC, Steiner Spa Asia Limited, Steiner Spa Limited, and Steiner Marks Limited, (ii) the following respective indirect subsidiaries of Steiner Leisure: Mandara PSLV, LLC, Mandara Spa (Hawaii), LLC, Florida Luxury Spa Group, LLC, Steiner Transocean U.S., Inc., Steiner Spa Resorts (Nevada), Inc., Steiner Spa Resorts (Connecticut), Inc., Steiner Resort Spas (California), Inc., Steiner Resort Spas (North Carolina), Inc., OSW SoHo LLC, OSW Distribution LLC, Steiner Training Limited, STO Italy S.r.l., One Spa World LLC, Mandara Spa Services LLC, OneSpaWorld Limited, OneSpaWorld (Bahamas) Limited (formerly known as Steiner Transocean Limited), OneSpaWorld Medispa LLC, OneSpaWorld Medispa Limited, OneSpaWorld Medispa (Bahamas) Limited, Mandara Spa (Cruise I), LLC, Mandara Spa (Cruise II), LLC, Steiner Transocean (II) Limited, The Onboard Spa by Steiner (Shanghai) Co., Ltd., Mandara Spa LLC, Mandara Spa Puerto Rico, Inc., Mandara Spa (Guam), L.L.C., Mandara Spa (Bahamas) Limited, Mandara Spa Aruba N.V., Mandara Spa Polynesia Sarl, Mandara Spa (Saipan), Inc., Mandara Spa Asia Limited, PT Mandara Spa Indonesia, Spa Services Asia Limited, Mandara Spa Palau, Mandara Spa (Malaysia) Sdn. Bhd., Mandara Spa Ventures International Sdn. Bhd., Spa Partners (South Asia) Limited, Mandara Spa (Maldives) PVT LTD, and Mandara Spa (Fiji) Limited, (iii) Medispa Limited, a majority-owned subsidiary of Steiner Leisure, and (iv) the timetospa.com website owned by Elemis USA, Inc. (formerly known as Steiner Beauty Products, Inc.).

At the closing of the Business Combination, OneSpaWorld became the ultimate parent company of Haymaker and OSW Predecessor. Unless the context otherwise requires, “we,” “us,” “our” and the “Company” refer to OneSpaWorld Holdings Limited and its subsidiaries.

Item 1.01

Entry into a Material Definitive Agreement.

Credit Agreement

On March 19, 2019, Dory Intermediate LLC (“Dory Intermediate”) entered into (i) senior secured first lien credit facilities (the “First Lien Credit Facilities”) with Dory Acquisition Sub, Inc. (“Dory Acquisition”), Goldman Sachs Lending Partners LLC, as administrative agent, and certain lenders, consisting of (x) a term loan facility of $208.5 million (of which $20 million was borrowed by Dory Acquisition) (the “First Lien Term Loan Facility”), (y) a revolving loan facility of up to $20 million (the “First Lien Revolving Facility”) and (z) a delayed draw term loan facility of $5 million (the “First Lien Delayed Draw Facility”), and (ii) a senior secured second lien term loan facility of $25 million (the “Second Lien Term Loan Facility” and, together with the First Lien Term Loan Facility, the “Term Loan Facilities”; the New Term Loan Facilities, together with the First Lien Revolving Facility and the First Lien Delayed Draw Facility, are referred to as the “New Credit Facilities”) with Cortland Capital Market Services LLC, as administrative agent, and Neuberger Berman Alternative Funds, Neuberger Berman Long Short Fund, as lender. The New First Lien Revolving Facility included borrowing capacity available for letters of credit up to $5 million. Any issuance of letters of credit reduces the amount available under the New First Lien Revolving Facility. The New First Lien Term Loan Facility matures seven years after March 19, 2019, the New First Lien Revolving Facility matures five years after March 19, 2019 and the New Second Lien Term Loan Facility matures eight years after March 19, 2019.

Loans outstanding under the First Lien Credit Facilities will accrue interest at a rate per annum equal to LIBOR plus a margin of 4.00%, with one step down to 3.75% upon achievement of a certain leverage ratio, and undrawn amounts under the First Lien Revolving Facility will accrue a commitment fee at a rate per annum of 0.50% on the average daily undrawn portion of the commitments thereunder, with one step down to 0.325% upon achievement of a certain leverage ratio. Loans outstanding under the Second Lien Term Loan Facility will accrue interest at a rate per annum equal to LIBOR plus 7.50%.

The obligations under the Credit Facilities are guaranteed by OneSpaWorld and each of its direct or indirect wholly-owned subsidiaries organized under the laws of the United States and the Commonwealth of The Bahamas, in each case, other than certain excluded subsidiaries, including, but not limited to, immaterial subsidiaries, non-profit subsidiaries, and any other subsidiary with respect to which the burden or cost of providing a guarantee is excessive in view of the benefits to be obtained by the lenders therefrom.

The Term Loan Facilities require Dory Intermediate to make certain mandatory prepayments, with (i) 100% of net cash proceeds of all non-ordinary course asset sales or other dispositions of property, subject to the ability to reinvest such proceeds and certain other exceptions, and subject to step downs if certain leverage ratios are met and (ii) 100% of the net cash proceeds of any debt incurrence, other than debt permitted under the definitive agreements (but excluding debt incurred to refinance the Credit Facilities). Dory Intermediate also is required to make quarterly amortization payments equal to .25% of the original principal amount of the First Lien Term Loan Facility commencing after the first full fiscal quarter after the closing date of the Credit Facilities (subject to reductions by optional and mandatory prepayments of the loans). Dory Intermediate may prepay (i) the First Lien Credit Facilities at any time without premium or penalty, subject to payment of customary breakage costs and a customary “soft call,” and (ii) the Second Lien Term Loan Facility at any time without premium or penalty, subject to a customary make-whole premium for any voluntary prepayment prior to the date that is 30 months following the closing date of the Credit Facilities (the “Callable Date”), following by a call premium of (x) 4.0% on or prior to the first anniversary of the Callable Date, (y) 2.50% after the first anniversary but on or prior to the second anniversary of the Callable Date, and (z) 1.50% after the second anniversary but on or prior to the third anniversary of the Callable Date.

The First Lien Revolving Facility contains a financial covenant and the Credit Facilities contain a number of traditional negative covenants including negative covenants related to the following subjects: consolidations, mergers, and sales of assets; limitations on the incurrence of certain liens; limitations on certain indebtedness; limitations on the ability to pay dividends; and certain affiliate transaction.

The Credit Facilities also contain certain customary representations and warranties, affirmative covenants and events of default. If an event of default occurs, the lenders under the Credit Facilities are entitled to take various actions, including the acceleration of amounts due under the Credit Facilities and all actions permitted to be taken by a secured creditor, subject to customary intercreditor provisions among the first and second lien secured parties.

The foregoing descriptions of the First Lien Term Loan Facility, First Lien Revolving Facility, First Lien Delayed Draw Facility and Second Lien Term Loan Facility do not purport to be complete and are qualified in their entirety by the terms and conditions of the First Lien Term Loan Facility, First Lien Revolving Facility and Second Lien Term Loan Facility, which are attached hereto as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference.

Registration Rights Agreement

On March 19, 2019, in connection with the closing of the Business Combination (the “Closing”), OneSpaWorld, Steiner Leisure and Haymaker Sponsor, LLC (“Haymaker Sponsor”), entered into a Registration Rights Agreement (the “Registration Rights Agreement”). The Registration Rights Agreement provides for customary registration rights, including demand and piggyback rights subject to cut-back provisions. In addition, OneSpaWorld has agreed to use its commercially reasonable efforts to file a shelf registration statement to register Steiner Leisure’s and Haymaker Sponsor’s shares within 45 days of the Closing. At any time, and from time to time, after the shelf registration statement has been declared effective by the Securities and Exchange Commission (“SEC”), Steiner Leisure will be entitled to make up to three demands, and Haymaker Sponsor will be entitled to make up to three demands per year, that a resale of shares of OneSpaWorld reasonably expected to exceed $10,000,000 in gross offering price pursuant to such

shelf registration statement be made pursuant to an underwritten offering. Pursuant to the Registration Rights Agreement, Steiner Leisure and Haymaker Sponsor will agree not to sell, transfer, pledge or otherwise dispose of their OneSpaWorld Shares (as defined in the Registration Rights Agreement) during the seven days before and 90 days after the pricing of any underwritten offering of OneSpaWorld, subject to certain exceptions, and Steiner Leisure and Haymaker Sponsor will enter into a customary lock-up agreement to such effect. Steiner Leisure and Haymaker Sponsor will agree not to assign or delegate their rights, duties or obligations under the Registration Rights Agreement for a period of six months following the Closing, subject to certain exceptions.

The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Registration Rights Agreement, which is attached hereto as Exhibit 10.3 and is incorporated herein by reference.

Lock-up Agreement

On March 19, 2019, in connection with the Business Combination, Haymaker Sponsor, Steiner Leisure, and directors and officers of OneSpaWorld and Haymaker, and (solely for the purpose of certain provisions thereof) Haymaker (the “Lock-up Parties”), entered into a Lock-up Agreement (the “Lock-up Agreement”) with OneSpaWorld that, among other things, modifies that certain lock-up agreement, dated as of October 24, 2017, by and among Haymaker, Haymaker Sponsor, and the directors and officers of Haymaker. Pursuant to the Lock-up Agreement, the Lock-up Parties agreed that they would not, subject to certain limited exceptions, transfer or sell their OneSpaWorld Shares for a period of six months after the consummation of the Business Combination.

The foregoing description of the Lock-up Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Lock-up Agreement, which is attached hereto as Exhibit 10.4 and is incorporated herein by reference.

Warrant Agreement

On March 19, 2019, in connection with the Closing, OneSpaWorld entered into an Amended and Restated Warrant Agreement (the “Warrant Agreement”), by and between OneSpaWorld and Continental Stock Transfer & Trust Company pursuant to which the obligations of Haymaker under the Original Warrant Agreement (as defined in the Warrant Agreement) are now obligations of OneSpaWorld and are no longer obligations of Haymaker.

The foregoing description of the Warrant Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Warrant Agreement, which is attached hereto as Exhibit 10.5 and is incorporated herein by reference.

2019 Equity Incentive Plan

The OneSpaWorld board of directors approved the 2019 Equity Incentive Plan (the “2019 Plan”) on March 18, 2019 and our shareholder approved the 2019 Plan on March 18, 2019. The purpose of the 2019 Plan is to make available incentives that will assist OneSpaWorld to attract, retain, and motivate employees, including officers, consultants and directors. OneSpaWorld may provide these incentives through the grant of share options, share appreciation rights, restricted shares, restricted share units, performance shares and units and other cash-based or share-based awards. Awards may be granted under the 2019 Plan to OneSpaWorld’s employees, including officers, directors or consultants or those of any present or future parent or subsidiary corporation or other affiliated entity. A total of 7,000,000 OneSpaWorld Shares will be initially authorized and reserved for issuance under the plan.

The foregoing description of the 2019 Plan does not purport to be complete and is qualified in its entirety by the terms and conditions of the 2019 Plan, which is attached hereto as Exhibit 10.6 and is incorporated herein by reference.

Indemnity Agreements

On March 19, 2019, we entered into indemnity agreements with each of our directors and executive officers. Each indemnity agreement provides for indemnification and advancement by the Company of certain expenses and costs relating to claims, suits or proceedings arising from service to the Company or, at our request, service to other entities, as officers or directors to the maximum extent permitted by applicable law.

The foregoing description of the indemnity agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the indemnity agreements, a form of which is attached hereto as Exhibit 10.7 and is incorporated herein by reference.

Item 2.01

Completion of Acquisition or Disposition of Assets.

The disclosure set forth in the “Introductory Note” above is incorporated into this Item 2.01 by reference. On March 6, 2019, the Business Combination was approved by the shareholders of Haymaker at a special meeting (the “Special Meeting”). The Business Combination was completed on March 19, 2019.

Consideration to Haymaker’s Shareholders and Warrant Holders in the Business Combination

Upon completion of the Business Combination, the public stockholders of Haymaker received an aggregate of 31,713,387 common shares par value $0.0001 per share, of OneSpaWorld ( the “OneSpaWorld Shares”), with each public stockholder receiving one OneSpaWorld Share in exchange for each share of Class A common stock, par value $0.0001 per share, of Haymaker (“Class A Shares”) held at the Closing; in addition, each warrant to purchase Class A Shares (the “Haymaker Warrants”) became exercisable for one OneSpaWorld Share, on the same terms and conditions as those applicable to the warrants to purchase Class A Shares.

In addition, 3,000,000 OneSpaWorld Shares and the right to receive 1,600,000 OneSpaWorld Shares upon the occurrence of certain events were issued to Haymaker Sponsor and other former holders of Class B common stock of Haymaker (the “Founders”), in exchange for such shares of Class B common stock of Haymaker, and the Haymaker Warrants held by Haymaker Sponsor became exercisable for 3,408,186 OneSpaWorld Shares, after giving effect to the forfeiture of warrants to purchase 4,591,814 OneSpaWorld Shares.

Consideration Payable to Steiner Leisure in the Business Combination

The consideration paid to Steiner Leisure in connection with the Business Combination consisted of: (i) 14,155,274 OneSpaWorld Shares (valued at $141,552,740 based on a $10.00 per share price), (ii) 1,486,520 OneSpaWorld Warrants, (iii) $611,671,249 in cash and (iv) the right to receive up to an additional 5,000,000 OneSpaWorld Shares upon the occurrence of certain events.

The material terms and conditions of the Merger Agreement are described in the section entitled “The Transaction Agreement and Related Agreements” starting on page 127 of Amendment No. 4 to the Registration Statement on Form S-4, filed by OneSpaWorld with the SEC on February 14, 2019 (the “Registration Statement”), and is incorporated herein by reference.

On March 20, 2019, Steiner Leisure completed the sales of 5,607,144 OneSpaWorld Shares to certain investors in a private placement for total proceeds of $56,071,440.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for the post- combination business. Specifically, forward-looking statements may include statements relating to:

•

the benefits of the Business Combination;

•

the future financial performance of the Company following the Business Combination;

•

changes in the market for our services;

•

expansion plans and opportunities; and

•

other statements preceded by, followed by or that include the words “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words or phrases.

These forward-looking statements are based on information available as of the date of this Current Report on Form 8-K and our management’s current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date. OneSpaWorld undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

•

the outcome of any legal proceedings that may be instituted against OneSpaWorld following announcement of the consummated Business Combination and transactions contemplated thereby;

•

the inability to obtain or maintain the listing of our common shares or warrants on The Nasdaq Stock Market following the Business Combination;

•

the risk that the Business Combination disrupts current plans and operations as a result of the announcement and consummation of the transactions described herein;

•

the inability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of the combined business to grow and manage growth profitably;

•

costs related to the Business Combination;

•

changes in applicable laws or regulations;

•

the possibility that OneSpaWorld may be adversely affected by other economic, business, and/or competitive factors; and

•

other risks and uncertainties indicated or incorporated by reference in this Current Report on Form 8-K, including those set forth in the section entitled “Risk Factors” beginning on page 45 of the Registration Statement, and are incorporated herein by reference.

Business

The business of OneSpaWorld is described in the section entitled “Business of OneSpaWorld after the Business Combination” beginning on page 166 of the Registration Statement and is incorporated herein by reference.

Risk Factors

The risk factors related to our business and operations are described in the section entitled “Risk Factors” beginning on page 45 of the Registration Statement and is incorporated herein by reference.

Selected Historical Financial Information

The following tables contain selected historical financial data for OSW Predecessor as of and for the years ended December 31, 2018, 2017 and 2016, derived from the audited combined financial statements of OSW Predecessor incorporated herein by reference. The selected historical financial data of OSW Predecessor is not intended to be an indicator of its or OneSpaWorld’s financial condition or results of operations in the future.

The information below is only a summary and should be read in conjunction with the section entitled “OSW Predecessor Management’s Discussion and Analysis of Financial Condition and Results of Operations” included below in this Current Report on Form 8-K and the audited combined financial statements of OSW Predecessor, and the notes related thereto, included as Exhibit 99.2 to this Current Report on Form 8-K.


	Year Ended December 31,
*(In thousands)*	2018			2017			2016
Revenues
Service Revenues	$	410,927		$	383,686		$	362,698
Product Revenues		129,851			122,999			113,586

Total Revenues		540,778			506,685			476,284

Cost of Revenue and Operating Expenses
Cost of Services		352,382			332,360			318,001
Cost of Products		110,793			107,990			106,259
Administrative		9,937			9,222			10,432
Salary and Payroll Taxes		15,624			15,294			14,454
Amortization of Intangible Assets		3,521			3,521			3,521

Total Cost of Revenues and Operating Expenses		492,257			468,387			452,667

Income from Operations		48,521			38,298			23,617

Other Income (Expense), net
Interest Expense		(34,099	)		—			—
Interest Income		238			408			340
Other (Expense) / Income		171			(217	)		(178	)

Total Other Income (Expense), net		(33,690	)		191			162

Income Before Provision for Income Taxes		14,831			38,489			23,779
Provision for Income Taxes		1,088			5,263			5,615

Net Income	$	13,743		$	33,226		$	18,164

Adjusted EBITDA⁽¹⁾	$	58,622		$	55,902		$	51,746
Unlevered After-Tax Free Cash Flow	$	52,913		$	52,774		$	48,020
% Conversion		90.3	%		94.4	%		92.8	%


	As of December 31,
*(In thousands)*	2018			2017
Balance Sheet Data (At Period End):
Working Capital⁽²⁾	$	22,419		$	17,252
Total Assets		272,659			267,072
Total Liabilities		400,242			41,791
Total Equity (Deficit)		(127,583	)		225,281

(1)

OSW Predecessor defines Adjusted EBITDA as Net Income plus Provision for Income Taxes, Other Income, Non-Controlling Interest, Interest Expense, and Depreciation & Amortization, with adjustments for non-recurring items, related party transactions, contribution from the historical timetospa.com channel, purchase price accounting adjustments relating to the 2015 Transaction (as defined below), discrepancies between cash and booked Provision for Income Taxes and non-cash contract expenses. See “Unaudited Pro Forma Condensed Combined Financial Statements.” OSW Predecessor defines Unlevered After-Tax Free Cash Flow as Adjusted EBITDA minus capital expenditures and cash taxes paid.

(2)	Working capital calculated as current assets less current liabilities, less cash and cash equivalents.

The following table reconciles Net Income to Adjusted EBITDA and Unlevered After-Tax Free Cash Flow for the years ended December 31, 2018, 2017 and 2016:


*(In thousands)*	Year Ended December 31,
*(In thousands)*	2018			2017			2016
Net Income	$	13,743		$	33,226		$	18,164
Provision for Income Taxes		1,088			5,263			5,615
Other Income		(409	)		(191	)		(162	)
Non-Controlling Interest^(a)		(3,857	)		(2,109	)		(3,261	)
Interest Expense		34,099			—			—
Non-GAAP Management Adjustments^(b)		—			(1,208	)		270
Related Party Adjustments^(c)		2,860			9,925			18,953
timetospa.com Adjustments^(d)		—			(805	)		(1,388	)
Depreciation & Amortization		10,055			9,829			12,884
Addback for Non-Cash Prepaid Expenses^(e)		1,043			1,972			671

Adjusted EBITDA	$	58,622		$	55,902		$	51,746
Capital Expenditures		(4,983	)		(2,683	)		(3,081	)
Cash Taxes^(f)		(726	)		(445	)		(645	)

Unlevered After-Tax Free Cash Flow	$	52,913		$	52,774		$	48,020
% Conversion^(g)		90.3	%		94.4	%		92.8	%

(a)	Non-Controlling Interest refers to amounts paid to a joint venture partner of OSW Predecessor.

(b)	Non-GAAP Management Adjustments refers to adjustments for certain one-time income or expenses and reflects timing discrepancies for certain cash income or expense items.

(c)	Related Party Adjustments refers to adjustments to reflect the impact of agreements with related parties for the full periods presented.

(d)

As a result of its planned separation from Steiner Leisure, OSW Predecessor is no longer operating timetospa.com as a standalone e-commerce business with focused marketing efforts and paid search advertising, as it had operated the channel through December 31, 2017. timetospa.com is now a post-cruise sales tool where guests may continue their wellness journey after disembarking. This adjustment removes the impact of timetospa.com in the historical financial period due to this change in business model and to assist in comparing such periods with later periods.

(e)	Addback for Non-Cash Prepaid Expenses refers to non-cash expenses incurred in connection with certain contracts.

(f)	Cash Taxes refers to cash taxes paid or payable.

(g)	Unlevered After-Tax Free Cash Flow Conversion is calculated as Adjusted EBITDA less Capital Expenditures and Provision for Income Taxes, divided by Adjusted EBITDA.

Unaudited Pro Forma Condensed Combined Financial Information

The following unaudited pro forma condensed combined financial information is provided to aid you in your analysis of the financial aspects of the Business Combination. Upon consummation of the Business Combination, Haymaker became an indirect wholly-owned subsidiary of OneSpaWorld.

The historical combined financial statements of OSW Predecessor are included in this Current Report on Form 8-K. Further, prior to the Business Combination, OneSpaWorld had no material operations, assets or liabilities.

The unaudited pro forma condensed combined income statement for the year ended December 31, 2018 was derived from OSW Predecessor’s audited combined income statement for the year ended December 31, 2018 and Haymaker’s audited statement of operations for the year ended December 31, 2018.

The unaudited pro forma condensed combined income statement for the year ended December 31, 2018 gives pro forma effect to the Business Combination as if it had occurred on January 1, 2018. The unaudited pro forma condensed combined balance sheet as of December 31, 2018 gives effect to the Business Combination as if it was completed on December 31, 2018.

This information should be read together with (i) Haymaker’s historical financial statements and related notes for the year ended December 31, 2018, as well as “Haymaker’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in Haymaker’s Annual Report on Form 10-K, and (ii) OSW Predecessor’s historical consolidated financial statements and related notes for the year ended December 31, 2018 as well as “OSW Predecessor Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included elsewhere in this Current Report on Form 8-K.

The unaudited pro forma condensed combined financial statements give effect to the Business Combination in accordance with the acquisition method of accounting for business combinations, with Haymaker deemed to be the accounting acquirer because, among other reasons:

•

cash consideration was transferred from Haymaker to the Sellers; and

•

former Haymaker stockholders and Haymaker Sponsor in connection with the Business Combination, own, in the aggregate, 56.8% of the OneSpaWorld Shares, which represents a controlling interest in OneSpaWorld, immediately after giving effect to the Business Combination.

The unaudited pro forma condensed combined financial statements reflect adjustments to the historical financial information that are expected to have a continuing impact on the results of the combined company, factually supportable and directly attributable to the following events and transactions:

•

the Business Combination;

•

the payment of the cash consideration to the Sellers;

•

the closing of the Primary Private Placement;

•

the conversion of each Class A Share into the right to receive one fully paid and non-assessable OneSpaWorld Share;

•

each Haymaker Public Warrant becoming exercisable for one OneSpaWorld Share, on the same terms and conditions as those applicable to the Haymaker Public Warrants;

•

the Founder Shares converting into 6.7 million OneSpaWorld Shares (3.7 million, subject to certain adjustments, of which were transferred and forfeited to OneSpaWorld) and the right to receive 1.6 million OneSpaWorld Shares upon the occurrence of certain events. Such deferred OneSpaWorld shares are not included in the EPS calculations set forth below;

•

the repayment of $352.4 million of outstanding indebtedness, of OSW Predecessor as of December 31, 2018 and the entry into the Debt Financing at the time of the Business Combination;

•

each of the Founder Warrants becoming exercisable for one OneSpaWorld Share; and

•

the redemption of 1,286,613 Class A Shares by Haymaker’s public stockholders in accordance with Haymaker’s amended and restated certificate of incorporation.

Haymaker provided its public stockholders with the opportunity to redeem, upon the closing of the Business Combination, each Class A Share then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the closing of the Business Combination) in the Trust Account, which held the proceeds (including interest, which was net of taxes payable) of the Haymaker IPO.

The unaudited pro forma condensed combined financial information is for illustrative purposes only. The actual results may differ significantly from those reflected in the pro forma financial statements for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma financial statements and actual amounts. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined company will experience. OSW Predecessor and Haymaker have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

PRO FORMA CONDENSED COMBINED INCOME STATEMENT

For the year ended December 31, 2018

(Dollars in thousands, except per share amounts)

(unaudited)


	Haymaker			OSW Predecessor			Pro Forma Adjustments				Pro Forma
Service revenues	$	—		$	410,927		$	—			$	410,927
Product revenues		—			129,851			—				129,851

Total revenues		—			540,778			—				540,778
Cost of services		—			352,382			(235	)	(a.)		352,147
Cost of products		—			110,793			—				110,793
Administrative		4,691			9,937			(3,862	)	(a.), (g.)		10,766
Salary and payroll taxes		—			15,624			—				15,624
Amortization of intangible assets		—			3,521			13,950		(b.)		17,471

Total cost of revenues and operating expenses		4,691			492,257			9,853				506,801

Income (loss) from operations		(4,691	)		48,521			(9,853	)			33,977
Unrealized gain on securities held in Trust		449			—			(449	)	(c.)		—
Interest expense		—			(34,099	)		19,247		(d.)		(14,852	)
Interest income		5,656			238			(5,656	)	(c.)		238
Other income		—			171			—				171

Total other income (expense), net		6,105			(33,690	)		13,142				(14,443	)

Income from continuing operations before provision for income taxes		1,414			14,831			3,289				19,534
Provision for income taxes		1,017			1,088			—		(e.)		2,105

Net income from continuing operations	$	397		$	13,743		$	3,289			$	17,429

Net Income attributable to non-controlling interest		—			3,857			—				3,857

Net income attributable to parent	$	397		$	9,886		$	3,289			$	13,572

Earnings per common share (f.)
Basic	$	(0.44	)*								$	0.22
Diluted	$	(0.44	)*								$	0.20
Weighted average common shares
Basic		9,911,510										61,118,298
Diluted		9,911,510										68,118,298

*	Net loss per common share – basic and diluted excludes interest income attributable to common stock subject to redemption of $4,773,466 for the year ended December 31, 2018.

PRO FORMA CONDENSED COMBINED BALANCE SHEETS

As of December 31, 2018

(Dollars in thousands, except per share data)

(unaudited)


	Haymaker		OSW Predecessor			Pro Forma Adjustments				Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	221	$	15,302		$	(3,196	)	(a.)	$	12,327
Accounts receivable, net		—		25,352			—				25,352
Inventories, net		—		32,265			2,295		(b.)		34,560
Other current assets		93		8,041			—				8,134

Total current assets		314		80,960			(901	)			80,373
Note receivable due from affiliate of the Parent		—		—			—				—
Investments held in Trust Account		336,671		—			(336,671	)	(a.)		—
Property and equipment, net		—		16,239			11,815		(c.)		28,054
Intangible assets, net		—		131,517			493,483		(d.)		625,000
Goodwill		—		33,864			78,171		(e.)		112,035
Deferred tax assets		—		4,265			(4,172	)	(f.)		93
Other noncurrent assets, net		—		5,814			731		(i.)		6,545

Total assets	$	336,985	$	272,659		$	242,456			$	852,100

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	—	$	7,595		$	—			$	7,595
Accounts payable - related parties		—		6,553			—				6,553
Accrued expenses		3,805		27,211			(3,684	)	(g.)		27,332
Income tax payable		1,012		670			—				1,682
Other current liabilities		—		1,210			—				1,210

Total current liabilities		4,817		43,239			(3,684	)			44,372
Deferred rent		—		645			—				645
Deferred tax liabilities		94		—			77		(f.)		171
Income tax contingency		—		3,918			—				3,918
Long-term debt		—		352,440			(113,347	)	(i.)		239,093
Deferred underwriting fees		12,150		—			(12,150	)	(j.)		—

Total liabilities	$	17,061	$	400,242		$	(129,104	)		$	288,199

Shareholders’ equity:
Common stock subject to possible redemption	$	314,924	$	—		$	(314,924	)	(k.)	$	—
Preferred stock, $0.0001 par value		—		—			—				—
Class A common stock, $0.0001 par value		—		—			4		(k.), (m.)		4
Class B convertible common stock, $0.0001 par value		1		—			(1	)	(m.)		—
Additional paid-in capital		4,266		—			556,952		(o.)		561,218
Non-controlling interest		—		3,586			2,169		(n.)		5,755
Accumulated earnings (loss)		733		(130,520	)		126,711		(l.), (h.)		(3,076	)
Accumulated Other Comprehensive Loss		—		(649	)		649		(l.)		—

Total shareholders’ equity	$	319,924	$	(127,583	)	$	371,560			$	563,901

Total liabilities and shareholders’ equity	$	336,985	$	272,659		$	242,456			$	852,100

Notes to Unaudited Pro Forma Combined Financial Statements

1. Basis of Pro Forma Presentation

Overview

The unaudited pro forma condensed combined financial statements have been prepared assuming the Business Combination is accounted for using the acquisition method of accounting with Haymaker as the acquiring entity and OSW Predecessor as the acquiree. Under the acquisition method of accounting, Haymaker’s assets and liabilities will retain their carrying assets and the assets and liabilities of OSW, including its predecessor’s assets and liabilities, will be recorded at their fair values measured as of the acquisition date. The excess of the purchase price over the estimated fair values of net assets acquired will be recorded as goodwill. The pro forma adjustments have been prepared as if the Business Combination and the other related transactions had taken place on December 31, 2018 in the case of the unaudited pro forma condensed combined balance sheet and on January 1, 2018 in the case of the unaudited pro forma condensed combined income statements.

The acquisition method of accounting is based on Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 805, Business Combinations (“ASC 805”), and uses the fair value concepts defined in FASB ASC 820, Fair Value Measurements (“ASC 820”). ASC 805 requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date by Haymaker, who was determined to be the accounting acquirer.

Under ASC 805, acquisition-related transaction costs are not included as a component of consideration transferred but are accounted for as expenses in the periods in which such costs are incurred, or if related to the issuance of debt, capitalized as debt issuance costs. Acquisition-related transaction costs expected to be incurred as part of the business combination, include estimated fees related to the issuance of long-term debt, as well as advisory, legal and accounting fees.

The unaudited pro forma condensed combined financial statements should be read in conjunction with (i) Haymaker’s historical financial statements and related notes for the year ended December 31, 2018, as well as “Haymaker’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in Haymaker’s Annual Report on Form 10-K, (ii) OSW Predecessor’s historical combined financial statements and related notes for the year ended December 31, 2018 as well as “OSW Predecessor Management’s “Discussion and Analysis of Financial Condition and Results of Operations,” included elsewhere in this Current Report on Form 8-K.

The pro forma adjustments represent management’s estimates based on information available as of the date of this Current Report on Form 8-K and are subject to change as additional information becomes available and additional analyses are performed. The unaudited pro forma condensed combined financial statements do not reflect possible adjustments related to restructuring or integration activities that have yet to be determined or transaction or other costs following the Business Combination that are not expected to have a continuing impact. In addition, the unaudited pro forma condensed combined financial statements do not reflect additional costs and expenses that OneSpaWorld may incur as a public company (other than those incurred by Haymaker and reflected in the unaudited pro forma condensed combined financial statements). Further, one-time transaction-related expenses anticipated to be incurred prior to, or concurrent with, closing the Business Combination and the other related transactions are not included in the unaudited pro forma condensed combined income statements. However, the impact of such transaction expenses is reflected in the unaudited pro forma condensed combined balance sheet as a decrease to retained earnings and a decrease to cash, unless otherwise noted.

2. Preliminary Allocation of Purchase Price

The total purchase consideration for the Business Combination has been allocated to the assets acquired, liabilities assumed, and non-controlling interest for purposes of the unaudited pro forma condensed combined financial information based on their estimated relative fair values. The allocation of the purchase consideration herein is preliminary. The final allocation of the purchase consideration for the Business Combination will be determined after the completion of a thorough analysis to determine the fair value of all assets acquired, liabilities assumed and non-controlling interest but in no event later than one year following the completion of the Business Combination.

Accordingly, the final acquisition accounting adjustments could differ materially from the preliminary amounts presented in these unaudited pro forma condensed combined financial statements.

Any increase or decrease in the fair value of the assets acquired, liabilities assumed and non-controlling interest, as compared to the information shown herein, could also change the portion of the purchase consideration allocable to goodwill and could impact the operating results of OneSpaWorld following the Business Combination due to differences in the allocation of the purchase consideration, depreciation and amortization related to some of these assets and liabilities. The purchase consideration was preliminarily allocated as follows:


(In thousands)
Cash paid to Selling Equityholders	$	659,065
Equity consideration paid to Selling Equityholders		141,552

	$	800,617

Cash and cash equivalents	$	15,302
Accounts receivable, net		25,352
Inventories, net		34,560
Other current assets		8,041
Property and equipment, net		28,054
Intangible assets, net		625,000
Other noncurrent assets, net		5,814
Deferred tax asset		93
Goodwill		112,035
Current liabilities		(43,239	)
Deferred tax liabilities		(77	)
Other long-term liabilities		(4,563	)
Non-controlling interest		(5,755	)

Net assets acquired	$	800,617

The estimated value of the equity consideration paid, or deemed paid, to the Sellers includes OneSpaWorld Shares with an assumed fair value of approximately $141.6 million. The estimated value of the aggregate equity consideration issued to the Sellers of $85.5 million reflects an assumed per share market value of common shares of OneSpaWorld of $10.00.

The consideration above does not include five million of deferred shares, with an assumed value of $50.0 million (reflecting an assumed per share value of $10.0 per share), issued to the Sellers.

Preliminary identifiable intangible assets in the unaudited pro forma condensed combined financial information consist of intangibles derived from retail concession agreements, lease agreements, a trade name and a licensing agreement. Retail concession agreements and lease agreements (collectively, “agreements”) were valued through application of the multi-period excess earnings method. Under this method, revenues, operating expenses and other costs associated with these agreements were estimated in order to derive cash flows attributable to the existing agreements. The resulting cash flows were then discounted to present value at rates reflective of the risk and return expectations of the agreements to arrive at the fair value of the agreements

as of December 31, 2018. The amortization related to the agreements is reflected as unaudited pro forma adjustments to the unaudited pro forma condensed combined income statements using the straight line method of amortization. Company management has determined the estimated remaining useful lives of the retail concession agreements and lease agreements based on the projected economic benefits associated with these interests. The tradename and licensing agreement were valued through application of the relief from royalty method. Under this method a royalty rate is applied to the revenues associated with the tradename to capture value associated with use of the name as if licensed. The resulting royalty savings are then discounted to present value at rates reflective of the risk and return expectations of the interests to derive their respective fair values as of December 31, 2018. Company management has determined that the trade name is preliminarily estimated to have an indefinite useful life while the licensing agreement life is estimated based on the projected economic benefits associated with this interest.

The preliminary allocation of the purchase consideration to property and equipment was based on the fair value of such assets determined using the trending method of the cost approach. Depreciation expense for property and equipment was preliminarily estimated based on a straight line methodology, which approximates the remaining weighted useful life of such underlying assets. The fair value of the inventory was determined through use of the replacement cost approach.

The amount that will ultimately be allocated to these identified intangible assets, property and equipment and inventory and the related amount of amortization and depreciation, may differ materially from this preliminary allocation.

Goodwill represents the excess of the total purchase consideration over the fair value of the underlying net assets, largely arising from the workforce and extensive efficient distribution network that has been established by OSW Predecessor.

3. Pro Forma Adjustments and Assumptions

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Business Combination and other transactions described above and has been prepared for informational purposes only. The unaudited pro forma condensed combined income statements are not necessarily indicative of what the actual results of operations would have been had the Business Combination taken place on the date indicated, nor is it indicative of the future consolidated results of operations of the combined company. The unaudited pro forma condensed combined financial information is based upon the historical consolidated financial statements of Haymaker and OSW Predecessor and should be read in conjunction with their historical financial statements included elsewhere in Haymaker’s Annual Report on Form 10-K and this Current Report on Form 8-K.

The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give effect to pro forma events that are (1) directly attributable to the Business Combination, the Primary Private Placement and the Debt Financing, (2) factually supportable, and (3) with respect to the income statements, expected to have a continuing impact on the results of OneSpaWorld.

There were no intercompany balances or transactions between Haymaker and OSW Predecessor as of the dates and for the periods of these unaudited pro forma combined financial statements.

The pro forma combined consolidated provision for income taxes does not necessarily reflect the amounts that would have resulted had the companies filed consolidated income tax returns during the periods presented.

The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined income statements are based upon the number of OneSpaWorld’s shares outstanding, assuming the Business Combination and the Primary Private Placement occurred on January 1, 2018.

Pro Forma Adjustments to the Income Statements:

(a)	Represents the adjustment to depreciation of $0.2 million for the year ended December 31, 2018. The adjustment is reflecting the impact of the changes in fair values of property and equipment, based on the preliminary purchase price allocation.

(b)

Represents the adjustment to amortization of $14.0 million for the year ended December 31, 2018 reflecting the impact of the changes in fair value of intangible assets based on the preliminary purchase price allocation. Amortization of the acquired intangible assets will be recognized on a straight line basis over the estimated useful life, which represents the projected economic benefits associated with the acquired intangible assets.

(c)	Represents the adjustment to eliminate the historical interest income and unrealized gains of Haymaker associated with the funds that were held in the Trust Account, which were used to fund portions of the cash consideration and debt refinancing in connection with the Business Combination.

(d)	Represents the removal of previous interest on the OSW Predecessor debt repaid at the closing by the Seller. An adjustment has also been made that represents the increased interest expense related to the issuance of new debt in connection with the Business Combination.

The pro forma interest expense assumes a weighted average interest rate of approximately 5.59% on the Initial Term Facility ($208.5 million), Second Lien Term Facility ($25.0 million) and Revolving Credit Facility ($12.4 million). Each 1/8% change in the assumed rate would create a $0.3 million change in annual interest expense.

Included in the adjustments to interest expense is deferred financing expense of $1.1 million for the year ended December 31, 2018.

(e)

This adjustment represents the estimated income tax effect of the pro forma adjustments. The tax effect of the pro-forma adjustments was calculated using the historical statutory rates in effect for the periods presented. The blended statutory rate is 0% due to the fact that the pro forma adjustments predominately relate to businesses that are in zero tax rate jurisdictions.

(f)

Pro forma basic earnings per share was computed by dividing pro forma net income attributable to OneSpaWorld common shareholders by the weighted average of Class A Shares, as if such shares were issued and outstanding as of January 1, 2018. Basic shares outstanding were calculated based on the following common shares outstanding:


	At December 31, 2018
OneSpaWorld Shares held by Haymaker Public Stockholders		31,713,387
OneSpaWorld Shares held by Haymaker Sponsor		3,000,000
OneSpaWorld Shares held by Private Placement Investors		12,249,637
OneSpaWorld Shares held by Sellers		14,155,274

Total common shares outstanding		61,118,298
Equity consideration - Employee option pool		7,000,000

Diluted shares outstanding		68,118,298

Pro forma dilutive earnings per share was computed using the “treasury stock buyback” method to determine the potential dilutive effect of its outstanding options. The employee option pool is the number of options available for issue at the time of closing, but no options were issued at that time.

The currently outstanding Haymaker Public Warrants, the Founder Warrants and the Private Placement Warrants with an exercise price of $11.50 per share became exercisable for one OneSpaWorld Share. The Haymaker Public Warrants, the Founder Warrants and the Private Placement Warrants are not dilutive on a pro forma basis and have been excluded from the diluted number of OneSpaWorld Shares outstanding at the time of closing; however, the potential dilutive impact will ultimately be recognized based on the actual market price on the date of measurement.

Similarly, the Founder Shares that became converted into the right to receive 1,600,000 OneSpaWorld Shares upon the occurrence of certain events are not dilutive on a pro forma basis and would have been excluded from the diluted number of OneSpaWorld Shares outstanding at the time of the closing.

(g)

The adjustment represents the removal of $3.9 million of transaction fees incurred in the year ended December 31, 2018. Transaction costs are eliminated from pro forma income statements because they are nonrecurring charges that are directly attributable to the transaction.

Pro Forma Adjustments to the Balance Sheet:

(a)

Represents the net adjustment to cash associated with Haymaker’s payment of cash consideration in the Business Combination:

Pro forma net adjustment to cash associated with purchase adjustments (in thousands):


(In thousands)	Scenario 1
Haymaker cash previously held in Trust Account (1)	$	336,671
Proceeds from the primary private placement (2)		122,496
Proceeds from new debt (3)		245,900
Shareholder redemptions (4)		(12,866	)
Cash consideration (5)		(659,065	)
Payment of transaction costs (6)		(36,332	)

Net adjustment to cash	$	(3,196	)

(1)

Represents the adjustment related to the reclassification of the cash equivalents held in the Trust Account in form of investments to cash and cash equivalents to reflect the fact that these investments were available for use in connection with the Business Combination and the payment of a portion of the cash consideration.

(2)	Represents the shares and warrants OneSpaWorld issued and sold to the Private Placement Investors for gross proceeds of approximately $122.5 million.

(3)	Represents additional funds raised through the new loans.

(4)	Represents cash paid for redemptions of Haymaker common shares.

(5)	Represents the cash consideration portion of the total consideration that is expected to be paid to effectuate the Business Combination prior to any Sellers’ costs and amounts to be paid under the escrow agreement.

(6)	Reflects the impact of estimated transaction costs of $36.3 million including fees and costs attributable to debt and equity consideration.

(b)

Represents the adjustment to inventory to reflect their estimated fair values on the preliminary purchase price allocation (see Note 2).

(c)

Represents the adjustment to property and equipment to (i) reflect the adjustment to the respective fixed asset category to reflect their estimated fair values based on the preliminary purchase price allocation, and (ii) to eliminate the historical accumulated depreciation (see Note 2).

(d)

Represents the adjustment to intangible assets to reflect their estimated fair values on the preliminary purchase price allocation (see Note 2).

(e)

Represents the adjustment to goodwill based on the preliminary purchase price allocation (see Note 2).


(In thousands)
Concession Agreements	$	598,300
Lease Agreements		19,300
Trade Name		5,900
Licensing Agreement		1,500

	$	625,000

(f)

Represents the adjustment to the deferred tax assets and liability. The deferred taxes are primarily related to the difference between the financial statement and tax basis for depreciation and amortization. The basis difference primarily results from the Business Combination where Haymaker receives a step-up value adjustment on certain assets for financial accounting purposes.

(g)

Represents the payment of accrued transaction expenses of $3.7 million.

(h)

Represents the transaction cost expense at closing going against retained earnings. Of the $36.3 million, $3.8 million has been recognized in retained earnings. This figure represents the total estimated transaction expense net of deferred financing fees (note i), the Private Placement fee that reduces additional paid in capital (note o), the accrued transaction expenses (note g) and the deferred underwriting costs accrued by Haymaker (note j).

(i)

Represents the repayment of OSW Predecessor debt ($352.4 million) at the closing by the Seller and the issuance of $245.9 million of new long-term debt in the form of an Initial Term Facility ($208.5 million) and Second Lien Term Facility ($25.0 million) and Revolving Credit Facility of ($12.4 million). The adjustment reflects related deferred financing costs of $7.5 million, of which $0.7 million has been allocated to other non-current assets as it relates to the Revolving Credit Facility, and the remainder has been netted against long-term debt. These unaudited pro forma condensed combined financial statements are presented as such to better reflect indebtedness following the Business Combination.

(j)

Represents the payment of deferred underwriting costs of $12.2 million.

(k)

Represents an adjustment to reflect that at the time of issuance, certain Haymaker common stock was subject to a possible redemption and, as such, an amount of $314.9 million was classified as redeemable equity in Haymaker’s historical consolidated balance sheet as of December 31, 2018. As of the balance sheet, $12.9 million of common stock of Haymaker was redeemed at an assumed redemption price of $10.00 per Class A Share and the remaining outstanding common stock of $302.0 million has been reclassified from redeemable equity to additional paid-in capital and Class A common stock, $0.0001 par value.

(l)

Represents the elimination of OSW Predecessor’s accumulated deficit of $130.5 million and accumulated other comprehensive loss of $0.6 million.

(m)

Represents the Founder Shares being converted into 6.7 million OneSpaWorld Shares (3.7 million, subject to certain adjustments, of which were transferred and forfeited to OneSpaWorld) and the right to receive 1.6 million OneSpaWorld Shares upon the occurrence of certain events. Such deferred OneSpaWorld shares are not included in the EPS calculations set forth above.

(n)

Represents the adjustment to non-controlling interest to reflect the estimated fair values on the preliminary purchase price allocation (see Note 2).

(o)

Represents the pro forma adjustment to additional paid-in capital.


(In thousands)
Reverse Haymaker historical APIC	$	—
Conversion of redeemable shares held by Haymaker’s public stockholders to APIC, net of par amount		302,054
Increase to APIC attributable to the stock issued to the Selling Equityholders		141,552
Increase to APIC attributable to the Private Placement		122,496
Reduction to APIC attributable to the Private Placement fee		(9,150	)

Pro forma adjustment to APIC	$	556,952

OSW Predecessor Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of OSW Predecessor’s audited financial condition and results of operations should be read in conjunction with the information presented in “Selected Historical Financial Information” included above in this Current Report on Form 8-K and the audited combined financial statements of OSW Predecessor, and the notes related thereto, included as Exhibit 99.2 to this Current Report on Form 8-K. In addition to historical information, the following discussion contains forward-looking statements, such as statements regarding OneSpaWorld’s expectation for future performance, liquidity and capital resources that involve risks, uncertainties and assumptions that could cause actual results to differ materially from OneSpaWorld’s expectations. OneSpaWorld’s actual results may differ materially from those contained in or implied by any forward-looking statements. Factors that could cause such differences include those identified below and those described in the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Unaudited Pro Forma Condensed Combined Financial Statements,” included above in this Current Report on Form 8-K, and in the section entitled “Risk Factors” beginning on page 45 of the Registration Statement, which is incorporated herein by reference. OneSpaWorld assumes no obligation to update any of these forward-looking statements.

The information for the years ended December 31, 2018, 2017 and 2016 are derived from OSW Predecessor’s audited combined financial statements and the notes thereto included elsewhere in this Current Report on Form 8-K.

Any reference to “OneSpaWorld” refers to OneSpaWorld Holdings Limited and its consolidated subsidiaries on a forward-looking basis or, as the context requires, to the historical results of OSW Predecessor. Any reference to “OSW Predecessor” refers to the entities comprising the “OneSpaWorld” business prior to the consummation of the Business Combination.

Overview

OneSpaWorld is the pre-eminent global operator of health and wellness centers onboard cruise ships and a leading operator of health and wellness centers at destination resorts worldwide. OneSpaWorld’s highly-trained and experienced staff offer guests a comprehensive suite of premium health, fitness, beauty and wellness services and products onboard 163 cruise ships and at 67 destination resorts globally. With over 80% market share in the highly attractive outsourced maritime health and wellness market, OneSpaWorld is the unquestioned market leader at approximately 10x the size of its closest maritime competitor. Over the last 50 years, OneSpaWorld has built its leading market position on its depth of staff expertise, broad and innovative service and product offerings, expansive global recruitment, training and logistics platform as well as decades-long relationships with cruise and destination resort partners. Throughout its history, OneSpaWorld’s mission has been simple—helping guests look and feel their best during and after their stay.

At its core, OneSpaWorld is a global services company. OneSpaWorld serves a critical role for its cruise line and destination resort partners, operating a highly complex and increasingly important aspect of its cruise line and destination resort partners’ overall guest experience. Decades of investment and know-how have allowed OneSpaWorld to construct an unmatched global infrastructure to manage the complexity of its operations, which in 2017 included nearly 8,000 annual voyages with visits to over 1,100 ports of call around the world. OneSpaWorld has consistently expanded its onboard offering with innovative and leading-edge service and product introductions, and developed the powerful back-end recruiting, training and logistics platforms to manage its operational complexity, maintain its industry-leading quality standards, and maximize revenue per center. The combination of its renowned recruiting and training platform, deep labor pool, global logistics and supply chain infrastructure and proven revenue management capabilities represents a significant competitive advantage that OneSpaWorld believes is not economically feasible to replicate.

Matters Affecting Comparability

Supply Agreement

OSW Predecessor purchases beauty products for resale from an entity (the “Supplier Entity”) that was, during the periods presented, a wholly-owned subsidiary of Steiner Leisure. OSW Predecessor and the Supplier Entity entered into an agreement, effective as of January 1, 2017 (subsequently amended in 2018), which established the prices at which beauty products will be purchased by OSW Predecessor from the Supplier Entity for a term of 10 years (the “Supply Agreement”). The Supply Agreement has had a positive impact on OSW Predecessor’s business as it has reduced the cost of products for retail goods and has lowered the cost of products used in services. The prices of beauty products purchased by OSW Predecessor from the Supplier Entity prior to 2017 were not comparable to those set forth under the Supply Agreement and applicable to future periods. As a result, OSW Predecessor’s operations and financial condition in periods prior to January 1, 2017 differ materially from those ended after that date.

The Supply Agreement was effective as of January 1, 2017, however, existing inventories of products purchased prior to the effectiveness of the Supply Agreement were not fully depleted until the end of the third quarter of 2017. Beginning October 1, 2017, the cost of products used in services and cost of products reflect the actual pricing under the Supply Agreement because, at that time, all inventory on hand was purchased under the terms of the Supply Agreement.

In order to quantify the impact of the Supply Agreement on the comparability of OSW Predecessor’s financial statements between periods, the following table sets forth the decrease in cost of products used in services and cost of products that would have been reflected in the financial statements of OSW Predecessor for the periods presented if all inventory on hand during such periods was purchased under the terms of the Supply Agreement (i.e., as if no existing inventories of products purchased prior to the effectiveness of the Supply Agreement were sold during the periods presented):


*(in thousands)*	2018		2017		2016
Decrease in Cost of Products Used in Services	$	—	$	4,170	$	7,824
Decrease in Cost of Products		—		5,214		10,589

Total	$	—	$	9,384	$	18,413

In order to further quantify the impact of the Supply Agreement on the comparability of OSW Predecessor’s financial statements between periods, the following table sets forth the increase in cost of products used in services and cost of products that would have been reflected in the financial statements of OSW Predecessor for the periods presented if all inventory on hand during such periods was purchased prior to the effectiveness of the Supply Agreement:


	For the Year Ended December 31,
	2018		2017
Increase in Cost of Products Used in Services	$	8,886	$	3,282
Increase in Cost of Products		13,844		5,897

Total	$	22,730	$	9,179

timetospa.com Business Model

As a result of its planned separation from Steiner Leisure, OSW Predecessor is no longer operating timetospa.com as a standalone e-commerce business with focused marketing efforts and paid search advertising, as it had operated the channel through December 31, 2017. timetospa.com is now a post cruise sales tool where guests may continue their wellness journey after disembarking. Revenue and net income in the years ended December 31, 2017 and 2016 are not directly comparable to revenue and net income in the year ended December 31, 2018 due to this change in the timetospa.com business model.

Key Performance Indicators

In assessing the performance of its business, OSW Predecessor considers several key performance indicators used by management. These key indicators include:

•

Ship Count. The number of ships, both on average during the period and at period end, on which OSW Predecessor operates health and wellness centers. This is a key metric that impacts revenue and profitability.

•

Average Weekly Revenue Per Ship. A key indicator of productivity per ship. Revenue per ship can be affected by the various sizes of health and wellness centers and categories of ships on which OSW Predecessor serves.

•

Average Revenue Per Shipboard Staff Per Day. OSW Predecessor utilizes this performance metric to assist in determining the productivity of its onboard staff, which OSW Predecessor believes is a critical element of its operations.

•

Destination Resort Count. The number of destination resorts, both on average during the period and at period end, on which OSW Predecessor operates the health and wellness centers. This is a key metric that impacts revenue and profitability.

•

Average Weekly Revenue Per Destination Resort Health and Wellness Center. A key indicator of productivity per destination resort health and wellness center. Revenue per destination resort health and wellness center in a period can be affected by the mix of North American and Asian centers for such period because North American centers are typically larger and produce substantially more revenues per center than Asian centers. Additionally, average weekly revenue can also be negatively impacted by renovations of OSW Predecessor’s destination resort health and wellness centers.

The following table sets forth the above key performance indicators for the periods presented:


	As of and for the Year Ended December 31,
	2018		2017		2016
Average Ship Count		156.7		154.0		151.0
Period End Ship Count		163		157		156
Average Weekly Revenue Per Ship	$	60,421	$	56,999	$	53,741
Average Revenue Per Shipboard Staff Per Day	$	474	$	446	$	427
Average Resort Count		61.9		51.6		48.1
Period End Resort Count		67		54		50
Average Weekly Revenue Per Resort	$	13,927	$	16,400	$	18,765

Key Financial Definitions

Revenues. Revenues consist primarily of sales of services and sales of products to cruise ship passengers and destination resort guests. The following is a brief description of the components of OSW Predecessor’s revenues:

•

Service revenues. Service revenues consist primarily of sales of health and wellness services, including a full range of massage treatments, facial treatments, nutritional/weight management consultations, teeth whitening, mindfulness services and medi-spa services to cruise ship passengers and destination resort guests. OSW Predecessor bills its services at rates which inherently include an immaterial charge for products used in the rendering of such services, if applicable.

•

Product revenues. Product revenues consist primarily of sales of health and wellness products such as facial skincare, body care, orthotics and detox supplements to cruise ship passengers, destination resort guests and timetospa.com customers.

Cost of services. Cost of services consists primarily of an allocable portion of payments to cruise lines (which are derived as a percentage of service revenues or a minimum annual rent or a combination of both), an allocable portion of wages paid to shipboard employees, an allocable portion of staff-related shipboard expenses, costs related to recruitment and training of shipboard employees, wages paid directly to destination resort employees, payments to destination resort venue owners, the allocable cost of products consumed in the rendering of a service and health and wellness center depreciation. Cost of services has historically been highly variable; increases and decreases in cost of services are primarily attributable to a corresponding increase or decrease in service revenues. Cost of services has tended to remain consistent as a percentage of service revenues.

Cost of products. Cost of products consists primarily of the cost of products sold through OSW Predecessor’s various methods of distribution, an allocable portion of wages paid to shipboard employees and an allocable portion of payments to cruise lines and destination resort partners (which are derived as a percentage of product revenues or a minimum annual rent or a combination of both). Cost of products has historically been highly variable, increases and decreases in cost of products are primarily attributable to a corresponding increase or decrease in product revenues. Cost of products has tended to remain consistent as a percentage of product revenues.

Administrative. Administrative expenses are comprised of expenses associated with corporate and administrative functions that support OSW Predecessor’s business, including fees for professional services, insurance, headquarter rent and other general corporate expenses. OSW Predecessor expects administrative expenses to increase due to additional legal, accounting, insurance and other expenses related to becoming a public company.

Salary and payroll taxes. Salary and payroll taxes are comprised of employee expenses associated with corporate and administrative functions that support OSW Predecessor’s business, including fees for employee salaries, bonuses, payroll taxes, pension/401K and other employee costs.

Amortization of intangible assets. Amortization of intangible assets are comprised of the amortization of intangible assets with definite useful lives (e.g. customer contracts, trade names, long-term leases) and amortization expenses associated with the acquisition of Steiner Leisure Limited on December 9, 2015 by certain investment vehicles managed by Catterton Management Company, L.L.C. (the “2015 Transaction”).

Other income (expense), net. Other income (expense) consists of royalty income, interest income, interest expense and minority interest expense.

Provision for income taxes. Provision for income taxes includes current and deferred federal income tax expenses, as well as state and local income taxes. See “—Critical Accounting Policies—Income Taxes.”

Net income. Net income consists of income from operations less other income (expense) and provision for income taxes.

Revenue Drivers and Business Trends

OSW Predecessor’s revenues and financial performance are impacted by a multitude of factors, including, but not limited to:

•

The number of ships and destination resorts in which OSW Predecessor operates health and wellness centers. Revenue is impacted by net new ship growth and the increase in the number of destination resort health and wellness centers in each period.

•

The size and offering of new health and wellness centers. OSW Predecessor has focused its attention on the innovation and provision of higher value added and price point services such as medi-spa and advanced facial techniques, which require treatment rooms equipped with specific equipment and staff trained to perform these services. As OSW Predecessor’s cruise line partners continue to invest in new ships with enhanced health and wellness centers that allows for more advanced treatment rooms and larger staff sizes, OSW Predecessor is able to increase the availability of these services, driving an overall shift towards a more attractive service mix.

•

Expansion of value-added services and products across modalities in existing health and wellness centers. OSW Predecessor continues to expand its higher value added and price point offerings in existing health and wellness centers, including introducing premium medi-spa services, resulting in higher guest spend.

•

The mix of ship count across contemporary, premium, luxury and budget categories. Revenue generated per shipboard health and wellness center differs across contemporary, premium, luxury and budget ship categories due to the size of the health and wellness centers, services offered, guest demographics and guest spending patterns.

•

The mix of cruise geography and itinerary. Revenue generated per shipboard health and wellness center is influenced by each cruise itinerary including the number of sea versus port days, which impact center utilization, as well as the geographic sailing region which may impact the offering of services and products to best address guest preferences.

•

Collaboration with cruise line partners including targeted marketing and promotion initiatives as well as implementation of proprietary technologies to increase center utilization via pre-booking and pre-payment. OSW Predecessor is now directly marketing and distributing promotions to onboard passengers as a result of enhanced collaboration with select cruise line partners. OSW Predecessor has also begun to implement proprietary pre-booking and pre-payment technology platforms that interface with its cruise line partners’ pre-cruise planning systems. These areas of increased collaboration with cruise line partners are resulting in higher revenue generation across its health and wellness centers.

•

The impact of weather. OSW Predecessor’s health and wellness centers onboard cruise ships and in select destination resorts may be negatively affected by hurricanes. The negative impact of hurricanes is highest during peak hurricane season from August to October.

The effect of each of these factors on OSW Predecessor’s revenues and financial performance varies from period to period.

Results of Operations

Comparison of Results for the Years Ended December 31, 2018 (audited) and December 31, 2017 (audited)


*($ in thousands)*	Year Ended December 31,												Change
*($ in thousands)*	2018			% of Total Revenue			2017			% of Total Revenue			$			%
Revenues
Service Revenues	$	410,927			76.0	%	$	383,686			75.7	%	$	27,241			7.1	%
Product Revenues		129,851			24.0	%		122,999			24.3	%		6,852			5.6	%

Total Revenues		540,778			100.0	%		506,685			100.0	%		34,093			6.7	%

Cost of Revenues and Operating Expenses
Cost of Services		352,382			65.2	%		332,360			65.6	%		20,022			6.0	%
Cost of Products		110,793			20.5	%		107,990			21.3	%		2,803			2.6	%
Administrative		9,937			1.8	%		9,222			1.8	%		715			7.8	%
Salary and Payroll Taxes		15,624			2.9	%		15,294			3.0	%		330			2.2	%
Amortization of Intangible Assets		3,521			0.7	%		3,521			0.7	%		0			0.0	%

Total Cost of Revenues and Operating Expenses		492,257			91.0	%		468,387			92.4	%		23,870			5.1	%

Income from Operations		48,521			9.0	%		38,298			7.6	%		10,223			26.7	%

Other Income (Expense), net
Interest Expense		(34,099	)		6.3	%		0			0.0	%		(34,099	)		NM
Interest Income		238			0.0	%		408			0.1	%		(170	)		(41.4	%)
Other (Expense)/Income		171			0.0	%		(217	)		0.0	%		388			NM

Total Other Income, net		(33,690	)		6.2	%		191			0.0	%		(33,881	)		NM

Income Before Provision for Income Taxes		14,831			2.7	%		38,489			7.6	%		(23,658	)		(61.5	%)
Provision for Income Taxes		1,088			0.2	%		5,263			1.0	%		(4,175	)		(79.3	%)

Net Income	$	13,743			2.5	%	$	33,226			6.6	%	$	(19,483	)		(58.6	%)

Revenues. Revenues increased approximately 6.7%, or $34.1 million, to $540.8 million in 2018, from $506.7 million in 2017. The increase was driven by six incremental net new shipboard health and wellness centers added to the fleet, 14 incremental net new destination resort health and wellness centers opened, a continued trend towards larger and enhanced shipboard health and wellness centers as well as increased guest spend on higher-priced services, product innovation and improved collaboration with partners such as the continued rollout of new direct marketing initiatives onboard. The revenue increase was offset by one-time changes in the business model for the timetospa.com website.

For the year ended December 31, 2018, the 20 incremental net new health and wellness centers contributed $20.1 million, the increase in average price of services and products sold contributed $15.3 million and the increase in the volume of services sold at existing health and wellness centers contributed $1.0 million in increased revenue, respectively, offset by a decrease of $2.2 million due to the change in timetospa.com website business model. The revenue growth over this time period was relatively proportional between service and product revenues:

•

Service revenues. Service revenues increased approximately 7.1%, or $27.2 million, to $410.9 million in 2018, from $383.7 million in 2017.

•

Product revenues. Product revenues increased approximately 5.6%, or $6.9 million, to $129.9 million in 2018, from $123.0 million in 2017.

The productivity of shipboard health and wellness centers increased for 2018 compared to 2017 as evidenced by an increase in both average weekly revenues and revenues per shipboard staff per day. Average weekly revenues increased by 6.0% to $60,421 in 2018, from $56,999 in 2017, and revenues per shipboard staff per day increased by 6.3% over the same time period. OSW Predecessor had an average of 2,852 shipboard staff members in service in 2018 compared to an average of 2,809 shipboard staff members in service in 2017.

The productivity of destination resort health and wellness centers, measured by average weekly revenues, decreased 12.9% to $13,927 in 2018, from $16,400 in 2017. The decrease in productivity was primarily driven by one large destination resort health and wellness center being under renovation as well as the addition of smaller health and wellness centers in Asia that generate lower revenue and the closure of a large health and wellness center in Las Vegas.

Cost of services. Cost of services increased $20.0 million in 2018 compared to 2017. The increase was primarily attributable to an increase in service revenues which accounted for an increase of $23.6 million, offset by the effect of reduced costs under the Supply Agreement which decreased cost of services by $4.2 million. Cost of services as a percentage of service revenues decreased to 85.8% in 2018, from 86.6% in 2017. The decrease was primarily attributable to the effect of the Supply Agreement.

Cost of products. Cost of products increased $2.8 million in 2018 compared to 2017. The increase was primarily attributable to an increase in product revenues which accounted for an increase of $6.1 million and an increase in payments to cruise and destination resort partners of $3.0 million, offset by the effect of the Supply Agreement which decreased cost of products by $5.2 million. Cost of products as a percentage of product revenues decreased to 85.3% in 2018, from 87.8% in 2017. The decrease was attributable to the effect of reduced costs under the Supply Agreement.

Administrative. Administrative expenses increased $0.7 million in 2018 compared to 2017. The increase in administrative expenses was driven primarily by expenses incurred in connection with the Business Combination.

Salary and payroll taxes. Salary and payroll taxes increased $0.3 million in 2018 compared to 2017. The increase was primarily related to additional merit-based compensation.

Amortization of intangible assets. Amortization of intangible assets remained flat at $3.5 million in 2018 and 2017.

Other income (expense), net. Other income (expense), net decreased $33.9 million in 2018 compared to 2017. This decrease was primarily attributable to an increase in interest expense related to internal restructuring, which resulted in debt previously held at the parent level being assigned to OSW Predecessor in anticipation of the Business Combination.

Provision for income taxes. Provision for income taxes decreased $4.2 million in 2018 compared to 2017. This decrease was primarily due to a favorable impact of the Tax Cuts and Jobs Act of 2017 (the “Act”) which resulted in a lower U.S. federal tax rate effective January 1, 2018. Cash taxes as a percentage of income before provision for income taxes for the years ended December 31, 2018 and 2017 were 4.9% and 1.2%, respectively.

Net income. Net income was $13.7 million in 2018 compared to net income of $33.2 million in 2017. This increase in net income was due to all of the factors described above.

Comparison of Results for the Years Ended December 31, 2017 (audited) and December 31, 2016 (audited)


*($ in thousands)*	Year Ended December 31,												Change
*($ in thousands)*	2017			% of Total Revenue			2016			% of Total Revenue			$			%
Revenues
Service Revenues	$	383,686			75.7	%	$	362,698			76.2	%	$	20,988			5.8	%
Product Revenues		122,999			24.3	%		113,586			23.9	%		9,413			8.3	%

Total Revenues		506,685			100.0	%		476,284			100.0	%		30,401			6.4	%

Cost of Revenues and Operating Expenses
Cost of Services		332,360			65.6	%		318,001			66.8	%		14,359			4.5	%
Cost of Products		107,990			21.3	%		106,259			22.3	%		1,731			1.6	%
Administrative		9,222			1.8	%		10,432			2.2	%		(1,210	)		(11.6	%)
Salary and Payroll Taxes		15,294			3.0	%		14,454			3.0	%		840			5.8	%
Amortization of Intangible Assets		3,521			0.7	%		3,521			0.7	%		0			0.0	%

Total Cost of Revenues and Operating Expenses		468,387			92.4	%		452,667			95.0	%		15,720			3.5	%

Income from Operations		38,298			7.6	%		23,617			5.0	%		14,681			62.2	%

Other Income (Expense), net
Interest Income		408			0.1	%		340			0.1	%		68			20.0	%
Other (Expense)/Income		(217	)		0.0	%		(178	)		0.0	%		(39	)		21.9	%

Total Other Income, net		191			0.0	%		162			0.0	%		29			17.9	%

Income Before Provision for Income Taxes		38,489			7.6	%		23,779			5.0	%		14,710			61.9	%
Provision for Income Taxes		5,263			1.0	%		5,615			1.2	%		(352	)		(6.3	%)

Net Income	$	33,226			6.6	%	$	18,164			3.8	%	$	15,062			82.9	%

Revenues. Revenues increased approximately 6.4%, or $30.4 million, to $506.7 million in 2017, from $476.3 million in 2016. The increase was driven by one incremental net new shipboard health and wellness center added to the fleet, four net new destination health and wellness resort centers opened, a continued trend towards larger and enhanced health and wellness centers as well as increased guest spending on higher-priced services, product innovation and improved collaboration with partners such as continued rollout of new direct marketing initiatives onboard.

For the year ended December 31, 2017, the five incremental net new health and wellness centers contributed $5.7 million, the increase in average price of services and products sold contributed $12.6 million and the increase in the volume of services sold at existing health and wellness centers contributed $12.0 million in increased revenue, respectively. The revenue growth over this time period was driven more from products than services:

•

Service revenues. Service revenues increased approximately 5.8%, or $21.0 million, to $383.7 million in 2017, from $362.7 million in 2016.

•

Product revenues. Product revenues increased approximately 8.3%, or $9.4 million, to $123.0 million in 2017, from $113.6 million in 2016.

The productivity of shipboard health and wellness centers increased for 2017 compared to 2016 as evidenced by an increase in both average weekly revenues and revenues per shipboard staff per day. Average weekly revenues increased by 6.1% to $56,999 in 2017, from $53,741 in 2016, and revenues per shipboard staff per day increased by 4.3% over the same time period. OSW Predecessor had an average of 2,809 shipboard staff members in service in 2017 compared to an average of 2,708 shipboard staff members in service in 2016.

The productivity of destination resort health and wellness centers, measured by average weekly revenues, decreased 12.6% to $16,400 in 2017, from $18,765 in 2016. The decrease in productivity was primarily driven by one large destination resort health and wellness center being under renovation, the addition of smaller health and wellness centers in Asia that generate lower revenue and the impact of hurricanes in 2017.

Cost of services. Cost of services increased $14.4 million in 2017 compared to 2016. The increase was primarily attributable to an increase in service revenues which accounted for an increase of $18.4 million, offset by the effect of reduced costs under the Supply Agreement which decreased cost of services by $3.6 million. Cost of services as a percentage of service revenues decreased to 86.6% in 2017, from 87.7% in 2016. The decrease was primarily attributable to the effect of reduced costs under the Supply Agreement and an increase in higher margin services.

Cost of products. Cost of products increased $1.7 million in 2017 compared to 2016. The increase was primarily attributable to an increase in product revenues which accounted for an increase of $7.1 million, offset by the effect of reduced costs under the Supply Agreement which decreased cost of products by $5.4 million. Cost of products as a percentage of product revenues decreased to 87.8% in 2017, from 93.5% in 2016. The decrease was attributable to the effect of reduced costs under the Supply Agreement.

Administrative. Administrative expenses decreased $1.2 million in 2017 compared to 2016. The decrease in administrative expenses was driven partially by a continued decrease in corporate marketing expenses and corporate overhead related to the timetospa.com business.

Salary and payroll taxes. Salary and payroll taxes increased $0.8 million in 2017 compared to 2016. The increase in salary and payroll taxes was driven primarily by additional merit-based compensation and headcount additions to support growth in the business.

Amortization of intangible assets. Amortization of intangible assets remained flat at $3.5 million in 2017 and 2016.

Other income (expense), net. Other income (expense), net remained flat at income of $0.2 million in 2017 and 2016.

Provision for income taxes. Provision for income taxes decreased $0.4 million in 2017 compared to 2016, driven primarily by the reevaluation of deferred tax assets in 2017 in connection with a decrease in the U.S. federal tax rate, offset by the effect of a reduction in tax reserves related to an examination by a foreign taxing authority of dividends paid by a wholly-owned subsidiary of Steiner Leisure. Cash taxes as a percentage of income before provision for income taxes for the years ended December 31, 2017 and 2016 was 1.2% and 2.7%, respectively.

Net income. Net income was $33.2 million in 2017 compared to net income of $18.2 million in 2016. This increase in net income was due to all of the factors described above.

Liquidity and Capital Resources

Overview

OSW Predecessor has historically funded its operations with cash flow from operations, except with respect to certain expenses and operating costs that had been paid by Steiner Leisure on behalf of OSW Predecessor, and, when needed, with borrowings under its credit facility. Steiner Leisure has paid on behalf of OSW Predecessor expenses associated with the allocation of Parent corporate overhead and costs associated with the purchase of products from related parties and forgiven by Steiner Leisure. Historical operating cash flows exclude the OSW Predecessor’s expenses and operating costs paid by Steiner Leisure on behalf of OSW Predecessor. Consequently, OSW Predecessor’s combined historical cash flows may not be indicative of cash flows had actually OSW Predecessor been a separate stand-alone entity or future cash flows of OSW Predecessor.

OSW Predecessor’s principal uses for liquidity have been distributions to Steiner Leisure, debt service and working capital. OSW Predecessor believes its sources of liquidity and capital will be sufficient to finance its continued operations, growth strategy and additional expenses it expects to incur as a public company for at least the next twelve months.

Cash Flows

The following table shows summary cash flow information for the years ended December 31, 2018, 2017 and 2016 (audited).


	Year Ended December 31,
*(in thousands)*	2018			2017			2016
Net Income	$	13,743		$	33,226		$	18,164
Depreciation & Amortization		10,055			9,829			12,884
Amortization of Deferred Financing Costs		1,243			—			—
Provision for Doubtful Accounts		18			18			18
Allocation of Parent Corporate Overhead¹		11,731			11,666			11,250
Deferred Income Taxes		(1	)		3,350			(472	)
Change in Working Capital¹		(4,402	)		12,029			34,807

Cash Flow from Operating Activities¹		32,387			70,118			76,651
Capital Expenditures		(4,983	)		(2,683	)		(3,081	)
Note Receivable from Parent		—			—			(5,446	)
Cash Flow Used in Investing Activities		(4,983	)		(2,683	)		(8,527	)
Net Distributions to Parent¹		(15,690	)		(60,893	)		(70,348	)
Distribution to NCI		(4,867	)		(4,606	)		(1,159	)

Cash Flow Used in Financing Activities¹		(20,557	)		(65,499	)		(71,507	)
Effect of Exchange Rates		(216	)		124			(480	)

Net Increase (Decrease) in Cash and Cash Equivalents	$	6,631		$	2,060		$	(3,863	)

(1)

Allocation of Parent Corporate Overhead was paid by Steiner Leisure on behalf of OSW Predecessor. Additionally, Change in Working Capital was benefited by costs associated with the purchase of inventory from related parties and forgiven by Steiner Leisure, which were reported as a non-cash reduction to accounts payable-related parties of $0, $0 and $32,987, for the years ended December 31, 2018, 2017 and 2016, respectively. The amounts related to the allocation of Parent corporate overhead and costs associated with the purchase of products from related parties and forgiven by Steiner Leisure were considered non-cash contributions and enabled OSW Predecessor to make increased cash distributions to Steiner Leisure, which are classified in financing cash outflows.

Comparison of Results for the Years Ended December 31, 2018 (audited) and December 31, 2017 (audited)

Operating activities. OSW Predecessor’s net cash provided by operating activities decreased $37.7 million to $32.4 million in 2018, from $70.1 million in 2017. This decrease was due primarily to an unfavorable change in operating assets and liabilities as well as a lower net income. The unfavorable change in operating assets and liabilities was largely driven by a change in the payment terms, the effect of reduced costs under the Supply Agreement and the depletion of existing inventories of products purchased prior to the effectiveness of the Supply Agreement of $9.4 million in 2017. The unfavorable change in net income was primarily due to interest expense of $34.1 million in 2018 related to an internal restructuring, which resulted in debt previously held at the parent level being assigned to OSW Predecessor in anticipation of the Business Combination.

Investing activities. OSW Predecessor’s net cash used by investing activities increased $2.3 million to $5.0 million in 2018, from $2.7 million in 2017. This increase was largely driven by the renovation of a destination resort health and wellness center.

Financing activities. OSW Predecessor’s net cash used by financing activities decreased $44.9 million to $20.6 million in 2018, from $65.5 million in 2017. This decrease was largely due to a decrease in distributions to Steiner Leisure and its affiliates.

Comparison of Results for the Years Ended December 31, 2017 (audited) and December 31, 2016 (audited)

Operating activities. OSW Predecessor’s net cash provided by operating activities decreased $6.5 million to $70.1 million in 2017, from $76.7 million in 2016. This decrease was due primarily to an unfavorable change in operating assets and liabilities, partially offset by higher net income. The unfavorable change in operating assets and liabilities was largely driven by a change in the payment terms, the effect of reduced costs under the Supply Agreement and the depletion of existing inventories of products purchased prior to the effectiveness of the Supply Agreement of $9.4 million in 2017. The increase in net income was due to the reasons described above under “—Results of Operations—Comparison of Results for the Years Ended December 31, 2017 (audited) and December 31, 2016 (audited).”

Investing activities. OSW Predecessor’s net cash used by investing activities decreased $5.8 million to $2.7 million in 2017, from $8.5 million in 2016. This decrease was due to a loan from OSW Predecessor to a wholly-owned subsidiary of Steiner Leisure for €5.0 million in 2016.

Financing activities. OSW Predecessor’s net cash used by financing activities decreased $6.0 million to $65.5 million in 2017, from $71.5 million in 2016. This decrease was due to distributions to Steiner Leisure and its affiliates.

Seasonality

A significant portion of OSW Predecessor’s revenues are generated onboard cruise ships. Certain cruise lines, and, as a result, OSW Predecessor, have experienced varying degrees of seasonality as the demand for cruises is stronger in the Northern Hemisphere during the summer months and during holidays. Accordingly, the third quarter and holiday periods generally result in the highest revenue yields for OSW Predecessor. Further, cruises and destination resort health and wellness centers have been negatively affected by the frequency and intensity of hurricanes. The negative impact of hurricanes is highest during peak hurricane season from August to October.

Off-Balance Sheet Arrangements

Other than the operating lease arrangements described below, OSW Predecessor has no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition, changes in financial condition, income or expenses, results of operations, liquidity, capital expenditures or capital resources.

Contractual Obligations

The following table summarizes certain of OSW Predecessor’s obligations as of December 31, 2018 and the estimated timing and effect that such obligations are expected to have on liquidity and cash flows in future periods (in millions):


	Payment due by period
	Total		2019		2020-2021		2022-2023		Thereafter
Cruise Line Agreements⁽¹⁾⁽³⁾	$	130,677	$	122,677	$	8,000	$	—	$	—
Operating Leases⁽²⁾⁽³⁾		23,444		3,443		5,341		4,397		10,263

Total	$	154,121	$	126,120	$	13,341	$	4,397	$	10,263

(1)

Cruise Line Agreements. A large portion of OSW Predecessor’s revenues are generated on cruise ships. OSW Predecessor has entered into agreements of varying terms with the cruise lines under which services and products are paid for by cruise passengers. These agreements provide for OSW Predecessor to pay the cruise line commissions for use of their shipboard facilities, as well as fees for staff shipboard meals and accommodations. These commissions are based on a percentage of revenue, a minimum annual amount, or a combination of both. Some of the minimum commissions are calculated as a flat dollar amount, while others are based upon minimum passenger per diems for passengers actually embarked on each cruise of the respective vessel. Staff shipboard meals and accommodations are charged by the cruise lines on a per staff per day basis. OSW Predecessor recognizes all expenses related to cruise line commissions, minimum arrears payment, and staff shipboard meals and accommodations, generally, as they are incurred and includes such expenses in cost of revenues in the accompanying combined statements of income. For cruises in process at period end, an accrual is made to record such expenses in a manner that approximates a pro-rata basis. In addition, staff-related expenses such as shipboard employee commissions are recognized in the same manner.

(2)

Operating Leases. OSW Predecessor leases office and warehouse space, as well as office equipment and automobiles, under operating leases. OSW Predecessor also makes certain payments to the owners of the destination resorts where destination resort health and wellness centers are located. Destination resort health and wellness centers generally require rent based on a percentage of revenues. In addition, as part of the rental arrangements for some of the destination resort health and wellness centers, OSW Predecessor is required to pay a minimum annual rental regardless of whether such amount would be required to be paid under the percentage rent arrangement. Substantially all of these arrangements include renewal options ranging from three to five years. Rental expense incurred under operating leases for the years ended December 31, 2018, 2017 and 2016 were $9.5 million, $8.8 million and $9.5 million, respectively.

(3)	The amounts presented represent minimum annual commitments under OSW Predecessor’s cruise line agreements and operating lease obligations. Certain minimum annual commitments, if any, are not currently determinable for fiscal years other than 2019.

Critical Accounting Policies

General. OSW Predecessor’s combined financial statements include the accounts of the wholly-owned direct and indirect subsidiaries of Steiner Leisure listed in Note 1 and include the accounts of a company partially owned by OneSpaWorld Medispa (Bahamas) Limited, in which OneSpaWorld (Bahamas) Limited (100% owner of OneSpaWorld Medispa (Bahamas) Limited) has a controlling interest. The combined financial statements also include the accounts and results of operations associated with the timetospa.com website owned by Elemis USA, Inc. OSW Predecessor’s combined financial statements do not represent the financial position and results of operations of a legal entity but rather a combination of entities under common control of OSW Predecessor that have been “carved out” of Steiner Leisure’s consolidated financial statements and reflect significant assumptions and allocations. All significant intercompany transactions and balances have been eliminated in combination.

OSW Predecessor’s combined financial statements include the assets, liabilities, revenues and expenses specifically related to OSW Predecessor’s operations. OSW Predecessor receives services and support from various functions performed by Steiner Leisure and costs associated with these functions have been allocated to OSW Predecessor. These allocations are necessary to reflect all of the costs of doing business and include costs related to certain Steiner Leisure corporate functions including, but not limited to, senior management, legal, human resources, finance, IT and other shared services that have been allocated to OSW Predecessor based on direct usage or benefit where identifiable, with the remainder allocated on a pro rata basis determined by an estimate of the percentage of time Steiner Leisure employees devoted to OSW Predecessor, as compared to total time available or by the headcount of employees at Steiner Leisure’s corporate headquarters that are fully dedicated to OSW Predecessor’s entities in relation to the total employee headcount. These allocated costs are reflected in salary and payroll taxes and administrative expenses in the combined statements of income.

Management considers these allocations to be a reasonable reflection of the utilization of services by or benefit provided to OSW Predecessor. However, the allocations may not be indicative of the actual expenses that would have been incurred had OSW Predecessor operated as an independent, stand-alone entity.

OSW Predecessor believes the assumptions and allocations underlying the accompanying combined financial statements and notes to the combined financial statements are reasonable, appropriate and consistently applied for the periods presented. OSW Predecessor believes the combined financial statements reflect all costs of doing business.

OSW Predecessor’s combined financial statements have been prepared in conformity with GAAP.

OSW Predecessor has identified the policies outlined below as critical to its business operations and an understanding of its results of operations. This discussion is not intended to be a comprehensive description of all accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management’s judgment in their application. The impact on OSW Predecessor’s business operations and any associated risks related to these policies is discussed under results of operations, below, where such policies affect its reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, please see Note 2 in the Notes to the Combined Financial Statements of OSW Predecessor attached as Exhibit 99.2 to this Current Report on Form 8-K. Note that OSW Predecessor’s preparation of its combined financial statements included in this this Current Report on Form 8-K requires it to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of its financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will be consistent with those estimates.

Cost of revenues includes:

•

Cost of services. Cost of services consists primarily of the cost of product consumed in the rendering of a service, an allocable portion of wages paid to shipboard employees, an allocable portion of payments to cruise lines (which are derived as a percentage of service revenues or a minimum annual rent or a combination of both), an allocable portion of staff-related shipboard expenses, costs related to recruitment and training of shipboard employees, wages paid directly to destination resort employees, payments to destination resort venue owners, and health and wellness facility depreciation.

•

Cost of products. Cost of products consists primarily of the cost of products sold through OneSpaWorld’s various methods of distribution, an allocable portion of wages paid to shipboard employees, an allocable portion of payments to cruise lines and destination resort partners (which are derived as a percentage of product revenues or a minimum annual rent or a combination of both).

Cost of revenues may be affected by, among other things, sales mix, production levels, exchange rates, changes in supplier prices and discounts, purchasing and manufacturing efficiencies, tariffs, duties, freight and inventory costs and increases in fuel costs. Certain cruise line and destination resort health and wellness center agreements provide for increases in the percentages of services and products revenues and/or, as the case may be, the amount of minimum annual payments over the terms of those agreements. These payments may also be increased under new agreements with cruise lines and destination resort health and wellness center owners that replace expiring agreements.

Cost of products includes the cost of products sold through various methods of distribution.

Operating expenses include administrative expenses, salaries and payroll taxes. In addition, operating expenses include amortization of certain intangibles relating to acquisitions.

Revenue Recognition. OSW Predecessor recognizes revenues earned as services are provided and as products are sold. All taxable revenue transactions are presented on a net-of tax basis. Revenue from gift certificate sales is recognized upon gift certificate redemption and upon recognition of “breakage” (non-redemption of a gift certificate after a specified period of time). OSW Predecessor does not charge administrative fees on unused gift cards, and OSW Predecessor’s gift cards do not have an expiration date. Based on historical redemption rates, a relatively stable percentage of gift certificates will never be redeemed. OSW Predecessor uses the redemption recognition method for recognizing breakage related to certain gift certificates for which it has sufficient historical information. Under the redemption recognition method, revenue is recorded in proportion to, and over the time period gift cards are actually redeemed. Breakage is recognized only if OSW Predecessor determines that it does not have a legal obligation to remit the value of unredeemed gift certificates to government agencies under the unclaimed property laws in the relevant jurisdictions. OSW Predecessor determines the gift certificate breakage rate based upon historical redemption patterns. At least three years of historical data, which is updated annually, is used to estimate redemption patterns.

Long-Lived Assets. OSW Predecessor reviews long-lived assets for impairment whenever events or changes in circumstances indicate, based on estimated future cash flows, that the carrying amount of these assets may not be fully recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset (asset group) to future undiscounted cash flows expected to be generated by the asset (asset group). An asset group is the lowest level of assets and liabilities for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. When estimating future cash flows, OSW Predecessor considers:

•

only the future cash flows that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset group;

•

potential events and changes in circumstance affecting key estimates and assumptions; and

•

the existing service potential of the asset (asset group) at the date tested.

If an asset (asset group) is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset (asset group) exceeds its fair value. When determining the fair value of the asset (asset group), OSW Predecessor considers the highest and best use of the assets from a market- participant perspective. The fair value measurement is generally determined through the use of independent third-party appraisals or an expected present value technique, both of which may include a discounted cash flow approach, which reflects assumptions of what market participants would utilize to price the asset (asset group).

Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Assets to be abandoned, or from which no further benefit is expected, are written down to zero at the time that the determination is made and the assets are removed entirely from service.

Income Taxes. OSW Predecessor’s U.S. entities, other than those that are domiciled in U.S. territories, file their U.S. tax return as part of a consolidated tax filing group, while OSW Predecessor’s entities that are domiciled in U.S. territories file specific returns. In addition, OSW Predecessor’s foreign entities file income tax returns in their respective countries of incorporation, where required. For the purposes of OSW Predecessor’s combined financial statements included in this Current Report on Form 8-K, OSW Predecessor accounts for income taxes under the separate return method of accounting. This method requires the allocation of current and deferred taxes to OSW Predecessor as if it were a separate taxpayer. Under this method, the resulting portion of current income taxes payable that is not actually owed to the tax authorities is written-off through equity.

Accordingly, income taxes payable in the combined balance sheets, as of December 31, 2018 and 2017 reflects current income tax amounts actually owed to the tax authorities, as of those dates, as well as the accrual for uncertain tax positions. The write-off of current income taxes payable not actually owed to the tax authorities is included in net Parent investment in the accompanying combined balance sheets, as of December 31, 2018 and 2017. Deferred income taxes are recognized based upon the tax consequences of “temporary differences” by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Deferred income tax provisions and benefits are based on the changes to the asset or liability from period to period. A valuation allowance is provided on deferred tax assets if it is determined that it is more likely than not that the deferred tax assets will not be realized. The majority of OSW Predecessor’s income is generated outside of the United States.

OSW Predecessor believes a large percentage of its shipboard service income is foreign-source income, not effectively connected to a business it conducts in the United States and, therefore, not subject to U.S. income taxation.

OSW Predecessor recognizes interest and penalties within the provision for income taxes in the combined statements of income. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued, therefore, will be reduced and reflected as a reduction of the overall income tax provision.

OSW Predecessor recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount of benefit, determined on a cumulative probability basis, which is more than 50% likely of being realized upon ultimate settlement.

Recently Issued and Accounting Pronouncements

With the exception of those discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the year ended December 31, 2018 that are of significance, or potential significance, to OSW Predecessor based on its current operations. The following summary of recent accounting pronouncements is not intended to be an exhaustive description of the respective pronouncement.

In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvement to Topic 606, Revenue from Contracts with Customers to clarify the Accounting Standards Codification or to correct unintended application of the guidance as part of an on-going project on its agenda about technical corrections and improvements and to increase awareness of the proposals and to expedite improvements to ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”).

In May 2014, the FASB issued ASU 2014-09. The core principle of the guidance in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in this ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry specific guidance throughout the Industry Topics of the ASC. Additionally, ASU 2014-09 supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts.

In periods subsequent to the initial issuance of this ASU, the FASB has issued additional ASU’s clarifying items within Topic 606, as follows:

•

In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”). The amendments in ASU 2016-08 serve to clarify the implementation guidance on principal versus agent considerations.

•

In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”). The purpose of ASU 2016-10 is to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance (while retaining the related principles for those areas).

•

In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2016-12”). The purpose of ASU 2016-12 is to address certain issues identified to improve Topic 606 by enhancing guidance on assessing collectability, presentation of sales taxes and other similar taxes collected from customers, noncash consideration and completed contracts and contract modifications at transition.

The FASB issued updates ASU 2016-08, ASU 2016-10 and ASU 2016-12 to provide guidance to improve the operability and understandability of the implementation guidance included in ASU 2014-09. ASU 2016-08, ASU 2016-10 and ASU 2016-12 have the same effective date and transition requirements of ASU 2015-14, which defers the effective date and transition of ASU 2014-09 annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019, with early adoption permitted. The Company plans to adopt this standard, other related revenue standard clarifications and technical guidance effective for the annual period ending December 31, 2019 and quarterly periods beginning January 1, 2020. The Company has elected the modified retrospective transition approach. Under this method, the standard will be applied only to the most current period presented and the cumulative effect of applying the standard will be recognized at the date of initial application. The Company is progressing through its implementation plan and is continuing to evaluate the impact of the standard on its processes, accounting systems, controls and financial disclosures. The Company is not able to determine at this time if the adoption of this guidance will have a material impact on the Company’s combined financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”) to increase transparency and comparability among organizations by recognizing rights and obligations resulting from leases as lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The update requires lessees to recognize for all leases with a term of 12 months or more at the commencement date: (a) a lease liability or a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (b) a right-of-use asset or a lessee’s right to use or control the use of a specified asset for the lease term. Under the update, lessor accounting remains largely unchanged. The update requires a modified retrospective transition approach for leases existing at, or entered into after the beginning of the earliest comparative period presented in the financial statements and do not require any transition accounting for leases that expire before the earliest comparative period presented. The update is effective retrospectively for annual periods beginning after December 15, 2019, and interim periods beginning after December 15, 2020, with early adoption permitted. OSW Predecessor is not able to determine at this time if the adoption of this guidance will have a material impact on OSW Predecessor’s combined financial statements.

In March 2016, the FASB issued ASU 2016-04, “Recognition of Breakage for Certain Prepaid Stored-Value Products (a consensus of the FASB Emerging Issues Task Force).” ASU 2016-04 requires entities that sell certain prepaid stored-value products redeemable for goods, services or cash at third-party merchants to derecognize liabilities related to those products for breakage (i.e., the value that is ultimately not redeemed by the consumer). This guidance is effective for annual periods beginning after December 15, 2018. Early adoption is permitted. Entities can use either a full retrospective approach, meaning they would apply the guidance to all periods presented, or a modified retrospective approach, meaning they would apply it only to the most current period presented with a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. OSW Predecessor is currently evaluating the methods and impact of adopting this new guidance on its combined financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326).” This ASU amends the Board’s guidance on the impairment of financial instruments. The ASU adds to GAAP an impairment model (known as the current expected credit losses model) that is based on an expected losses model rather than an incurred losses model. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. The ASU is also intended to reduce the complexity of GAAP by decreasing the number of impairment models that entities use to account for debt instruments. The update is effective for fiscal years beginning after December 15, 2020. OSW Predecessor is currently assessing the future impact the adoption of this guidance will have on its combined financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under existing guidance. The update is effective for annual periods beginning after December 15, 2018. The amendments should be applied using a retrospective transition method to each period presented. OSW Predecessor does not anticipate the adoption of this guidance will have a material impact on its combined financial statements.

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory” (“ASU 2016-16”). This ASU was issued as part of the Board’s initiative to reduce complexity in accounting standards. This ASU eliminates an exception in ASC 740, which prohibits the immediate recognition of income tax consequences of intra-entity asset transfers other than inventory. Under ASU 2016-16, entities will be required to recognize the immediate current and deferred income tax effects of intra-entity asset transfers, which often involve a subsidiary of a company transferring intellectual property to another subsidiary. The new guidance will be effective for annual periods beginning after December 15, 2018. This ASU’s amendments should be applied on a modified retrospective basis, recognizing the effects in retained earnings as of the beginning of the year of adoption. OSW Predecessor does not anticipate the adoption of this guidance will have a material impact on its combined financial statements.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” This ASU requires that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.

Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The update is effective for annual periods beginning after December 15, 2018. OSW Predecessor does not anticipate the adoption of this guidance will have a material impact on its combined financial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” This ASU assists entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses by clarifying the definition of a business. The definition of a business affects many areas of accounting including acquisition, disposals, goodwill and consolidation. The update is effective for annual periods beginning after December 31, 2018. The amendments in this update should be applied prospectively on or after the effective date. OSW Predecessor does not anticipate the adoption of this guidance will have a material impact on OSW Predecessor’s combined financial statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). This ASU simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Previously, in computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. The new guidance is effective for an entity’s annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently assessing the future impact the adoption of this guidance will have on its combined financial statements.

In February 2016, the FASB issued ASU 2016-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis” (“ASU 2016-02”). The amendments in this topic are intended to improve and simplify targeted areas of the consolidation guidance. ASU 2016-02 modifies the method for determining whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities. Further, it eliminates the presumption that a general partner should consolidate a limited partnership and impacts the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. The ASU was effective for annual periods beginning after December 15, 2016. The adoption of this guidance, as of January 1, 2017, did not have a material impact on OSW Predecessor’s combined financial statements.

In July 2016, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory.” ASU 2015-11 simplifies the subsequent measurement of inventory by replacing today’s the lower of cost or market test with a lower of cost and net realizable value test. The guidance applies only to inventories for which cost is determined by methods other than last-in first-out (“LIFO”) and the retail inventory method (“RIM”). The guidance was effective for fiscal years beginning after December 15, 2016. The adoption of this guidance, as of January 1, 2017, on a prospective basis, did not have a material impact on OSW Predecessor’s combined financial statements.

Inflation and Economic Conditions

OneSpaWorld does not believe that inflation has had a material adverse effect on its revenues or results of operations. However, public demand for activities, including cruises, is influenced by general economic conditions, including inflation. Periods of economic softness could have a material adverse effect on the cruise industry and hospitality industry upon which OneSpaWorld is dependent. Such a slowdown has adversely affected OneSpaWorld’s results of operations and financial condition in certain prior years. Recurrence of the more severe aspects of the recent adverse economic conditions, as well as periods of fuel price increases, could have a material adverse effect on OneSpaWorld’s results of operations and financial condition during the period of such recurrence. Weakness in the U.S. Dollar compared to the U.K. Pound Sterling and the Euro also could have a material adverse effect on OneSpaWorld’s results of operations and financial condition.

U.S. Tax Reform

On December 22, 2017, the U.S. enacted significant changes to tax law following the passage and signing of The Tax Cuts and Jobs Act (“TCJA”). The Company has completed the analysis of the tax accounting implications of the TCJA during the year ended December 31, 2018 in accordance with the terms of SEC Staff Bulletin 118. The Company did not record any adjustments in the year ended December 31, 2018 to provisional amounts that were material to its combined financial statements.

Quantitative and Qualitative Disclosures of Market Risks

OneSpaWorld’s future income, cash flows and fair values relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates.

Concentration of credit risk. Financial instruments that potentially subject OSW Predecessor to significant concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. OSW Predecessor maintains cash and cash equivalents with high quality financial institutions. As of December 31, 2018, 2017 and 2016, OSW Predecessor had three cruise companies that represented greater than 10% of accounts receivable. OSW Predecessor does not normally require collateral or other security to support normal credit sales. OSW Predecessor controls credit risk through credit approvals, credit limits, and monitoring procedures.

Accounts receivable are stated at amounts due from customers, net of an allowance for doubtful accounts. OSW Predecessor records an allowance for doubtful accounts with respect to accounts receivable using historical collection experience, and generally, an account receivable balance is written off once it is determined to be uncollectible. OSW Predecessor reviews the historical collection experience and considers other facts and circumstances and adjusts the calculation to record an allowance for doubtful accounts as appropriate. If OSW Predecessor’s current collection trends were to differ significantly from historic collection experience, OSW Predecessor would make a corresponding adjustment to the allowance. As of December 31, 2018 and 2017, the allowance for doubtful accounts was $0.6 million and $0.5 million, respectively. Bad debt expense is included within administrative operating expenses in the combined statements of income and is immaterial of the years ended December 31, 2018, 2017 and 2016.

Interest rate risk. OneSpaWorld is subject to interest rate risk in connection with borrowing based on a variable interest rate. Derivative financial instruments, such as interest rate swap agreements and interest rate cap agreements, may be used for the purpose of managing fluctuating interest rate exposures that exist from OneSpaWorld’s variable rate debt obligations that are expected to remain outstanding. Interest rate changes do not affect the market value of such debt, but could impact the amount of OneSpaWorld’s interest payments, and accordingly, OneSpaWorld’s future earnings and cash flows, assuming other factors are held constant.

Foreign currency risk. The fluctuation in currency exchange rates is not a significant risk for OneSpaWorld, as most of its revenues are earned and expenses are incurred in U.S. Dollars.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information regarding the beneficial ownership of the OneSpaWorld Shares as of March 22, 2019 by:

•

each person who is the beneficial owner of more than 5% of the OneSpaWorld Shares;

•

each person who became an executive officer or director of the Company at or after the Closing and prior to the filing of this Current Report on Form 8-K; and

•

all executive officers and directors of the Company as a group post-Business Combination.

The SEC has defined “beneficial ownership” of a security to mean the possession, directly or indirectly, of voting power and/or investment power over such security. A shareholder is also deemed to be, as of any date, the beneficial owner of all securities that such shareholder has the right to acquire within 60 days after that date through (a) the exercise of any option, warrant or right, (b) the conversion of a security, (c) the power to revoke a trust, discretionary account or similar arrangement, or (d) the automatic termination of a trust, discretionary account or similar arrangement. In computing the number of OneSpaWorld Shares beneficially owned by a person and the percentage ownership of that person, OneSpaWorld Shares subject to options or other rights (as set forth above) held by that person that are currently exercisable, or will become exercisable within 60 days thereafter, are deemed outstanding, while such shares are not deemed outstanding for purposes of computing percentage ownership of any other person. Each person named in the table has sole voting and investment power with respect to all of the OneSpaWorld Shares shown as beneficially owned by such person, except as otherwise indicated in the table or footnotes below.

The beneficial ownership percentages set forth in the table below do not take into account (i) the issuance of any OneSpaWorld Shares (or options to acquire OneSpaWorld Shares) under the 2019 Plan and (ii) the issuance of any OneSpaWorld Shares upon the exercise of outstanding OneSpaWorld Warrants to purchase OneSpaWorld Shares.

Unless otherwise indicated, the Company believes that all persons named in the table below have sole voting and investment power with respect to all shares of OneSpaWorld Share beneficially owned by them. To the Company’s knowledge, no shares of OneSpaWorld Share beneficially owned by any executive officer, director or director nominee have been pledged as security.

Beneficial ownership of OneSpaWorld Share is based on 61,118,298 shares of OneSpaWorld Shares issued and outstanding as of the Closing.

Unless otherwise indicated, the address of each person named below is c/o OneSpaWorld, 770 South Dixie Highway, Suite 200, Coral Gables, FL 33146.


Beneficial Owner	Number of OneSpaWorld Shares		Percentage of All OneSpaWorld Shares
Executive Officers, Directors:
Leonard Fluxman		—		—
Steven J. Heyer⁽¹⁾		3,000,000		4.9	%
Glenn J. Fusfield		—		—
Marc Magliacano		—		—
Andrew R. Heyer⁽¹⁾		3,000,000		4.9	%
Walter F. McLallen		—		—
Jeffrey E. Stiefler		—		—
Michael J. Dolan		—		—
Stephen W. Powell		2,500		*
Stephen B. Lazarus		—		—
All executive officers and directors as a group (10 individuals)		3,002,500		4.9	%
Other 5% Shareholders:
Steiner Leisure⁽²⁾		8,548,130		14.0	%
Haymaker Sponsor ⁽¹⁾		3,000,000		4.9	%
Templeton Investment Counsel, LLC⁽³⁾		6,244,281		10.2	%
Neuberger Berman Group LLC and certain of its affiliates⁽⁴⁾		5,000,000		8.2	%

*	Less than 1 percent

(1)	Steven J. Heyer and Andrew R. Heyer are the managing members of Haymaker Sponsor and jointly have voting and dispositive power of the securities held by such entity. Accordingly, Messrs. Heyer and Heyer may be deemed to have or share beneficial ownership of such shares.

(2)

Steiner Leisure is 100% owned by Nemo Parent, Inc., an international business company incorporated under the laws of the Commonwealth of the Bahamas. Nemo Parent, Inc. is 100% owned by Nemo Investor Aggregator, Limited, a Cayman Islands exempted company. Nemo Investor Aggregator, Limited is governed by a board of directors consisting of seven directors. Each director has one vote, and the approval of a majority of the directors is required to approve an action of Nemo Investor Aggregator, Limited. Under the so-called “rule of three,” if voting and dispositive decisions regarding an entity’s securities are made by three or more individuals, and a voting or dispositive decision requires the approval of a majority of those individuals, then none of the individuals is deemed a beneficial owner of the entity’s securities. Based upon the foregoing analysis, no director of Nemo Investor Aggregator, Limited exercises voting or dispositive control over any of the securities held by

Steiner Leisure, even those in which he or she directly holds a pecuniary interest. Accordingly, none of them will be deemed to have or share beneficial ownership of such shares. The address for Steiner Leisure is Suite 104A, Saffrey Square, Nassau, The Bahamas. The address for Nemo Investor Aggregator, Limited is c/o Mourant Ozannes Corporate Services (Cayman) Ltd., 94 Solaris Avenue, PO Box 1348, Camana Bay, Grand Cayman KY1-1108, Cayman Islands. The address for Nemo Parent, Inc. is c/o Lennox Paton Corporate Services Ltd., 3 Bayside Executive Park, West Bay Street, Nassau, The Bahamas.

(3)

Templeton Investment Counsel, LLC (“TIC, LLC”) is an indirect wholly owned subsidiary of Franklin Resources, Inc.(“FRI”), which is the beneficial owner of these shares for purposes of Rule 13d-3 under the Exchange Act in its capacity as the investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940 and other accounts. When an investment management contract (including a sub-advisory agreement) delegates to TIC, LLC investment discretion or voting power over the securities held in the investment advisory accounts that are subject to that agreement, FRI treats TIC, LLC as having sole investment discretion or voting authority, as the case may be, unless the agreement specifies otherwise. Accordingly, TIC, LLC reports for purposes of Section 13(d) of the Exchange Act that it has sole investment discretion and voting authority over the securities covered by any such investment management agreement, unless otherwise specifically noted. The voting and investment powers held by TIC, LLC are exercised independently from FRI, the investment management subsidiaries and their other affiliates. Furthermore, internal policies and procedures of TIC, LLC and FRI establish informational barriers that prevent the flow between TIC, LLC and FRI and its other affiliates of information that relates to the voting and investment powers over the securities owned by their investment management clients. Consequently, TIC, LLC, on the one hand, and FRI and its other affiliates, on the other hand, report the securities over which they hold investment and voting power separately from each other for purposes of Section 13 of the Exchange Act. The address of TIC, LLC is 300 S. E. 2nd Street, Fort Lauderdale, Florida 33301.

(4)

Neuberger Berman Group LLC and certain of its affiliates may be deemed to be the beneficial owners of the securities for purposes of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, because it or certain affiliated persons, including Neuberger Berman Investment Advisers LLC, the adviser or sub-adviser to the funds holding the securities, and NB Equity Management GP LLC, the General Partner of NB All Cap Alpha Fund L.P., a “feeder” fund operating in a “master-feeder” structure and the owner of all or substantially all the outstanding shares of NB All Cap Alpha Master Fund Ltd., have shared power to retain, dispose of or vote the securities owned by the funds pursuant to the terms of investment management, advisory and/or sub-advisory agreements with the funds. Neuberger Berman Group LLC or its affiliated persons do not, however, have any economic interest in the securities held by the funds. The address of Neuberger Berman Group LLC, Neuberger Berman Investment Advisers LLC, NB Equity Management GP LLC is 1290 Avenue of the Americas, New York, NY 10104.

Directors and Executive Officers

Information with respect to the Company’s directors and executive officers immediately after the Closing is set forth in the Registration Statement in the section entitled “Management of OneSpaWorld after the Business Combination” beginning on page 229 of the Registration Statement and is incorporated herein by reference.

On March 18, 2019, each of Messrs. Steven J. Heyer, Glenn J. Fusfield, Andrew R. Heyer, Walter F. McLallen, Jeffrey E. Stiefler, Michael J. Dolan and Stephen W. Powell were appointed to serve as directors of the post-combination company effective upon consummation of the Business Combination; Marc Magliacano was appointed to serve as a director of the post-combination company starting on March 22, 2019. The size of the Board is nine members. Biographical information for Messrs. Magliacano, Powell and Dolan is set forth in the Registration Statement in the section entitled “Management of OneSpaWorld After the Business Combination” beginning on page 229 of the Registration Statement and is incorporated herein by reference. Biographical information for Messrs. Steven J. Heyer, Walter F. McLallen, Jeffrey E. Stiefler and Andrew R. Heyer are set forth in the Registration Statement in the section entitled “Business of Haymaker and Certain Information About Haymaker—Directors, Executive Officers and Corporate Governance” beginning on page 215 of the Registration Statement, and is incorporated herein by reference. Biographical information for Messrs. Leonard Fluxman, Stephen B. Lazarus and Glenn J. Fusfield are set forth in the Registration Statement in the section entitled “Business of OneSpaWorld After the Business Combination—Management and Executive Compensation of OSW Predecessor—Management—Executive Officers” beginning on page 180 of the Registration Statement and is incorporated herein by reference.

The Board appointed Messrs. McLallen, Powell and Dolan to serve on the Audit Committee, with Mr. McLallen serving as the chair of the committee. The Board appointed Messrs. Dolan, Powell and Magliacano to serve on the Compensation Committee, with Mr. Dolan serving as its Chairperson. The Board appointed Messrs. Dolan and McLallen to serve on the Nominating and Governance Committee, with Mr. Dolan serving as its Chairman. Information with respect to the Company’s Audit Committee, Compensation Committee and Nominating and Governance Committee is set forth in the Registration Statement in the section entitled “Management of OneSpaWorld After the Business Combination—Board Committees” beginning on page 231 of the Registration Statement and is incorporated herein by reference.

Executive Compensation

The compensation of OSW Predecessor’s named executive officers before the Business Combination is set forth in the Registration Statement in the section entitled “Business of OneSpaWorld After the Business Combination—Management and Executive Compensation of OSW Predecessor—Management—Executive Compensation” beginning on page 181 of the Registration Statement and is incorporated herein by reference.

The compensation for the Company’s executive officers after the Closing of the Business Combination is described in the section entitled “Management of OneSpaWorld After the Business Combination—OneSpaWorld Executive Compensation After the Business Combination” beginning on page 235 of the Registration Statement and is incorporated herein by reference.

Director Compensation

The compensation for the Company’s directors upon the Closing of the Business Combination is generally described in the Registration Statement in the section entitled “Management of OneSpaWorld After the Business Combination—Director Compensation” beginning on page 241 of the Registration Statement and is incorporated herein by reference.

Certain Relationships and Related Transactions

The description of certain relationships and related transactions is included in the Registration Statement in the section entitled “Certain Relationships and Related Transactions” beginning on page 257 of the Registration Statement and is incorporated herein by reference.

The information set forth in the sections entitled “Registration Rights Agreement” and “Indemnity Agreements” in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Director Independence

Nasdaq listing standards require that a majority of the Board be independent. An “independent director” is defined generally as a person other than an officer or employee of a company or its subsidiaries or any other individual having a relationship which in the opinion of the board of directors of such company, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director.

All of our directors have been declared independent by the Board pursuant to the rules of Nasdaq except Mr. Fluxman, our Executive Chairman, and Mr. Fusfield, our Chief Executive Officer.

Legal Proceedings

None.

Market Price of and Dividends on the Registrant’s Common Equity and Related Shareholder Matters

Market Information and Holders

Historical market price information regarding the Company is not provided because, as of the date of this Current Report on Form 8-K, there has been no established public market for the OneSpaWorld Shares and OneSpaWorld Warrants for a full quarterly period or any interim period for which financial statements are included, or required to be included, in this Current Report on Form 8-K.

As of March 19, 2019, there are no outstanding options to purchase OneSpaWorld Shares, 24,500,000 OneSpaWorld Warrants to purchase OneSpaWorld Shares and no other securities convertible into shares of the Company. The Company has reserved a total of 7,000,000 shares of OneSpaWorld Shares for issuance pursuant to the 2019 Plan, subject to certain adjustments set forth in the 2019 Plan.

As of March 22, 2019, there were approximately 33 holders of OneSpaWorld Shares.

In connection with the Closing, the OneSpaWorld Shares began listing on Nasdaq under the symbol “OSW.”

Dividends

It is the policy of OneSpaWorld to only make distributions to its shareholders if OneSpaWorld’s shareholders’ equity exceeds the sum of the paid-up and called-up share capital plus the reserves as required to be maintained by the OneSpaWorld Memorandum and Articles of Association (“Distributable Profits”).

Any amount remaining out of distributable profits is added to OneSpaWorld’s reserves as the OneSpaWorld Board determines. After reservation by the OneSpaWorld Board of any distributable profits, the OneSpaWorld Board, upon the request of the shareholders, may declare a dividend. The OneSpaWorld Board is permitted, subject to certain requirements, to declare interim dividends without the approval of the shareholders of OneSpaWorld. Interim dividends may be declared as provided in the OneSpaWorld Memorandum and Articles of Association and may be distributed to the extent that the shareholders’ equity, based on interim financial statements, exceeds the paid-up and called-up share capital and the reserves that must be maintained under the OneSpaWorld Memorandum and Articles of Association. Interim dividends are deemed advances on the final dividend to be declared with respect to the fiscal year in which the interim dividends have been declared. OneSpaWorld may reclaim any distributions, whether interim or not interim, made in contravention of certain restrictions of Bahamian law from shareholders that knew or should have known that such distribution was not permissible. In addition, on the basis of Bahamian case law, if after a distribution OneSpaWorld is not able to pay its due and collectable debts, then OneSpaWorld’s shareholders or directors who at the time of the distribution knew or reasonably should have foreseen that result may be liable to OneSpaWorld’s creditors.

Distributions shall be payable in the currency determined by the OneSpaWorld Board at a date determined by the OneSpaWorld Board. The OneSpaWorld Board will set the record date to establish which shareholders are entitled to the distribution, such date not being earlier than the date on which the distribution was announced. Claims for payment of dividends and other distributions not made within three years from the date that such dividends or distributions became payable will lapse, and any such amounts will be considered to have been forfeited to OneSpaWorld.

OneSpaWorld has not paid any cash dividends on the OneSpaWorld Shares to date. The Board intends to evaluate adopting a policy of paying cash dividends. In evaluating any dividend policy, the Board may consider OneSpaWorld’s financial condition and results of operations, certain tax considerations, capital requirements, alternative uses for capital, industry standards and economic conditions. Whether OneSpaWorld adopts such a dividend policy and the frequency and amount of any dividends declared on the OneSpaWorld Shares will be within the discretion of the Board.

Description of the Company’s Securities

A description of the OneSpaWorld Shares and OneSpaWorld Warrants is included in the Registration Statement in the section entitled “Description of OneSpaWorld Securities” beginning on page 242 of the Registration Statement and is incorporated herein by reference.

The Company has authorized 250,000,000 common shares with a par value of $0.0001 per share. The outstanding common shares are duly authorized, validly issued, fully paid and non-assessable. As of March 22, 2019, there were 61,118,298 common shares outstanding, held of record by approximately 33 holders and 24,500,000 warrants outstanding held of record by approximately 33 holders. Such numbers do not include Depository Trust Company participants or beneficial owners holding shares through nominee names.

Indemnification of Directors and Officers

The information set forth under Item 1.01 of this Current Report on Form 8-K under “Indemnity Agreements” is incorporated by reference herein.

Financial Statements, Supplementary Data and Exhibits

The information set forth under Item 9.01 of this Current Report on Form 8-K is incorporated by reference herein.

Item 2.03

Creation of a Direct Financial Obligation of an Obligation under an Off-Balance Sheet Arrangement of the Registrant.

The information set forth under Item 1.01 of this Current Report on Form 8-K under “Credit Agreement” and the information contained in Part II, Item 20 of the Registration Statement is incorporated by reference herein.

Item 3.02

Recent Sales of Unregistered Securities

On November 1, 2018, OneSpaWorld entered into certain subscription agreements (the “Subscription Agreements”) with the certain investors pursuant to which, among other things, such investors agreed to subscribe for and purchase, and OneSpaWorld agreed to issue and sell to such investors newly issued 17,856,781 OneSpaWorld Shares and 3,105,294 OneSpaWorld Warrants for gross proceeds of approximately $122,496,370 (the “Private Placements”).

On March 19, 2019, OneSpaWorld completed the sales of 17,856,781 OneSpaWorld Shares and 3,105,294 OneSpaWorld Warrants to such investors as contemplated by the Subscription Agreements. The proceeds from the Private Placements were used to fund a portion of the cash payment payable in connection with the consummation of the Business Combination.

Item 3.03

Material Modification to Rights of Security Holders.

On March 18, 2019, in connection with the consummation of the Business Combination, the Company’s Memorandum of Association and Articles of Association were amended and restated. The material terms of the Company’s Amended and Restated Memorandum of Association and Articles of Association and the general effect upon the rights of holders of the OneSpaWorld Shares are included in the Registration Statement under the section entitled “Comparison of Stockholders Rights” beginning of page 249 of the Registration Statement and is incorporated herein by reference.

A copy of the Amended and Restated Memorandum of Association and Articles of Association of the Company is attached as Exhibit 3.1 to this Current Report on Form 8-K.

Item 4.01

Changes in the Registrant’s Certifying Accountant.

Appointment of the Company’s Independent Registered Public Accounting Firm

On March 25, 2019, the OneSpaWorld Audit Committee appointed Ernst & Young LLP (“E&Y”) as the Company’s registered public accounting firm. E&Y audited the combined balance sheets of OSW Predecessor as of December 31, 2018, 2017 and 2016, and the related combined statements of income, comprehensive income, equity and cash flows for the years ended December 31, 2018, 2017 and 2016 and for the period from December 9, 2015 through December 31, 2015 (Successor), and for the period from January 1, 2015 through December 8, 2015 (Predecessor).

Item 5.01

Changes in Control of the Registrant.

The disclosure set forth under “Introductory Note” and “Item 2.01. Completion of Acquisition or Disposition of Assets” above is incorporated in this Item 5.01 by reference.

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Information with respect to the Company’s directors and executive officers immediately after and in connection with the consummation of the Business Combination is set forth in the Registration Statement in the section entitled “Management of OneSpaWorld after the Business Combination” beginning on page 229 and is incorporated herein by reference.

The information set forth under “Item 2.01. Completion of Acquisition or Disposition of Assets—Directors and Executive Officers,” “—Executive Compensation” and “—Director Compensation” and under “Item 1.01. Entry into a Material Definitive Agreement—2019 Equity Incentive Plan” of this Current Report on Form 8-K is incorporated herein by reference.

Item 5.03

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

The disclosure set forth in Item 3.03 of this Current Report on Form 8-K is incorporated in this Item 5.03 by reference.

Item 5.06

Change in Shell Company Status.

As a result of the Business Combination, which fulfilled the definition of an “initial business combination” as required by Haymaker’s organizational documents, Haymaker and the Company ceased to be a shell company upon the closing of the Business Combination. The material terms of the Business Combination are described in the Registration Statement in the section entitled “Proposal No. 1—The Business Combination Proposal” beginning on page 140 of the Registration Statement and is incorporated herein by reference.

Item 5.07

Submission of Matters to a Vote of Security Holders.

Haymaker reported the results of the Special Meeting on a Current Report on Form 8-K filed on March 6, 2019. 1,286,613 shares of Haymaker common stock were redeemed in connection with the Closing.

Item 7.01

Regulation FD Disclosure.

On March 19, 2019, the Company issued a press release announcing the consummation of the Business Combination, which is included in this Current Report on Form 8-K as Exhibit 99.1.

Item 9.01

Financial Statements and Exhibits.

(a) Financial statements of businesses acquired

The audited combined financial statements of OSW Predecessor for the years ended December 31, 2018, 2017 and 2016 is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

(b) Exhibits


Exhibit Number		Exhibit Description

3.1		Amended and Restated Memorandum of Association and Articles of Association of OneSpaWorld Holdings Limited

10.1		First Lien Credit Agreement, by and among OneSpaWorld Holdings Limited, Dory Intermediate LLC, Dory Acquisition Sub, Inc., the lenders party thereto and Goldman Sachs Lending Partners LLC, as the Administrative Agent and as the Collateral Agent

10.2		Second Lien Credit Agreement, by and among OneSpaWorld Holdings Limited, Dory Intermediate LLC, the lenders party thereto and Cortland Capital Market Services LLC, as the Administrative Agent and as the Collateral Agent

10.3		Registration Rights Agreement, by and among OneSpaWorld Holdings Limited, Steiner Leisure Limited, Haymaker Sponsor, LLC and, solely for the purpose of certain provisions thereof, Haymaker Acquisition Corp.

10.4		Lock-up Agreement, by and among OneSpaWorld Holdings Limited, Steiner Leisure Limited, Haymaker Sponsor, LLC, directors and officers of OneSpaWorld Holdings and Haymaker Acquisition Corp., and solely for the purpose of certain provisions thereof, Haymaker Acquisition Corp.

10.5		Amended and Restated Warrant Agreement, by and between OneSpaWorld Holdings Limited and Continental Stock Transfer & Trust Company

10.6		2019 Equity Incentive Plan

10.7		Form of Indemnity Agreement (incorporated by reference to Exhibit 10.7 to Amendment No. 2 to the Registration Statement on Form S-4 filed by OneSpaWorld Holdings Limited with the Securities and Exchange Commission on January 22, 2019)

99.1		Press Release, dated March 19, 2019

99.2		Audited combined financial statements of OSW Predecessor as of December 31, 2018 and 2017 and for the years ended December 31, 2018, 2017 and 2016

SIGNATURE

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

EX-3.1

Exhibit 3.1

COMMONWEALTH OF THE BAHAMAS

New Providence

Company under the

International Business Companies Act 2000

AMENDED AND RESTATED

MEMORANDUM

AND

ARTICLES OF ASSOCIATION

ONESPAWORLD HOLDINGS LIMITED

Incorporated the 5th day of October, 2018

COMMONWEALTH OF THE BAHAMAS

THE INTERNATIONAL BUSINESS COMPANIES ACT 2000

AMENDED AND RESTATED

MEMORANDUM OF ASSOCIATION

ONESPAWORLD HOLDINGS LIMITED

NAME

1.	The name of the company is OneSpaWorld Holdings Limited (the “Company”).

REGISTERED OFFICE

2.	The registered office of the Company will be at Ocean Centre, Montagu Foreshore, East Bay Street, Nassau, New Providence, The Bahamas, the postal address of which is P.O. Box SS-19084, Nassau, New Providence, Bahamas.

REGISTERED AGENT

3.	The Registered Agent of the Company will be at Ocean Centre, Montagu Foreshore, East Bay Street, Nassau, New Providence, The Bahamas, the postal address of which is P.O. Box SS-19084, Nassau, New Providence, Bahamas.

OBJECTS AND POWERS

4.	The objects for which the Company is established are to engage in any act or activity that is not prohibited under any law for the time being in force in The Bahamas.

The Company shall have all such powers as are permitted by any law for the time being in force in The Bahamas, irrespective of corporate benefit, to perform all acts and engage in all activities necessary or conducive to the conduct, promotion or attainment of the objects or purposes of the Company.

The directors may by resolution of directors exercise all the powers of the Company to borrow money and to mortgage or charge its undertakings and property or any part thereof to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the Company or of any third party.

7.	Any mortgage or charge of the undertaking and property of the Company shall for the purposes of Section 80 of the Act be regarded as in the usual or regular course of the business carried on by the Company.

CURRENCY

8.	Shares in the Company shall be issued in the currency of the United States of America.

AUTHORISED CAPITAL

9.	The authorised capital of the Company is US$250,000,000.00

CLASSES, NUMBER AND PAR VALUE OF SHARES

10.	The authorised capital is made up of 250,000,000 common shares, par value US$0.0001 per share (the “Common Shares”), and 0 preferred shares, par value US$0.0001 per share (the “Preferred Shares”).

SHARE RIGHTS AND LIMITATIONS

11.

The following is a statement fixing certain of the designations and the powers, voting rights, preferences and relative, participating, optional and other rights of the Common Shares and the Preferred Shares, and the qualifications, limitations or restrictions thereof, and of the authority with respect thereto expressly granted to the Board of Directors of the Company (the “Board of Directors” or the “Board”) to fix any such provisions not fixed by this Memorandum of Association or the Articles of Association of the Company:

(a)

The Board of Directors is hereby expressly vested with the authority to adopt a resolution or resolutions providing for the issue of authorised but unissued Preferred Shares, which shares may be issued from time to time, in one or more series and in such amounts as may be determined by the Board of Directors in such resolution or resolutions. The powers, voting rights, designations, preferences and relative, participating, optional or other special rights, if any, of each series of Preferred Shares and the qualifications, limitations or restrictions, if any, of such preferences and/or rights (collectively, the “Series Terms”), shall be such as are stated and expressed in the resolution or resolutions providing for the issue of such series of Preferred Shares (the “Series Terms Resolution”) adopted by the Board of Directors. The powers of the Board of Directors with respect to the Series Terms of a particular series (any of which powers may, by resolution of directors, be specifically delegated to one or more of its committees, except as prohibited by law) shall include, but not be limited to, determination of the following:

(i)

The number of shares constituting that series and the distinctive designation of that series;

(ii)

The dividend rate on the shares of that series, whether such dividends, if any, shall be cumulative, and, if so, the date or dates from which dividends payable on such shares shall accumulate, and the relative rights of priority, if any, of payment of dividends on shares of that series;

(iii)

Whether that series shall have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights;

(iv)

Whether that series shall have conversion privileges with respect to shares of any other class or classes of shares or of any other series of any class of shares, and, if so, the terms and conditions of such conversion upon the occurrence of such events as the Board of Directors shall determine;

(v)

Whether the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including their relative rights of priority, if any, of redemption, the date or dates upon or after which they shall be redeemable, provisions regarding redemption notices, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;

(vi)

Whether that series shall have a sinking fund for the redemption or purchase of shares of that series by the Company, and, if so, the terms and amount of such sinking fund;

(vii)

The rights of the shares of that series in the event of a voluntary or involuntary liquidation, dissolution, or winding up of the Company, and the relative rights of priority, if any, of payment of shares of that series;

(viii)

The conditions or restrictions upon the creation of indebtedness of the Company or upon the issuance of additional Preferred Shares or other capital shares ranking on parity therewith, or prior thereto, with respect to dividends or distribution of assets upon liquidation;

(ix)

The conditions or restrictions with respect to the issuance of, payment of dividends upon, or the making of other distributions to, or the acquisition or redemption of, shares ranking junior to the Preferred Shares or to any series thereof with respect to dividends or distribution of assets upon liquidation;

(x)

Any other designations, preferences, powers and rights and any qualifications, limitations or restrictions thereon as may be fixed by resolution or resolutions of the Board of Directors under the International Business Companies Act 2000; and

(xi)

Any of the Series Terms, including voting rights, of any series may be made dependent upon facts ascertainable outside this Memorandum of Association and the Series Terms Resolution, provided that the manner in which such facts shall operate upon such Series Terms is clearly and expressly set forth in this Memorandum of Association or in the Series Terms Resolution.

(b)

Subject to the rights of the holders of any series of Preferred Shares set forth in any Series Terms Resolution, the Board of Directors may, in its discretion, out of funds legally available for the payment of dividends and at such times and in such manner as determined by the Board of Directors, declare and pay dividends on the Common Shares of the Company.

(c)

In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, after payment or provision for the payment of the debts and other liabilities of the Company and the payment or setting aside for payment of any preferential amount due to the holders of any series of Preferred Shares, the holders of Common Shares, subject to the rights of the holders of any class or series of shares ranking on a parity with the Common Shares as to the payments or distributions in such event, shall be entitled to receive ratably any and all assets of the Company remaining to be paid or distributed.

(d)

The holders of the Common Shares shall be entitled at all meetings of shareholders to one vote for each such share held by them.

(e)

Holders of Common Shares shall have no cumulative voting rights and no preemptive rights.

(f)

Unless otherwise provided in a Series Terms Resolution with respect to a particular series of Preferred Shares, all Preferred Shares redeemed or acquired by the Company (as a result of conversion or otherwise) shall be retired and restored to the status of authorised but unissued shares.

(g)

Unless otherwise provided with respect to a particular series of Preferred Shares in a Series Terms Resolution, no holder of capital shares of the Company shall have any preemptive or other right, except as such rights are expressly provided by contract, to purchase or subscribe for or receive any shares of any class or series of the Company, whether now or hereafter authorised, or any warrants, options, bonds, debentures or other securities convertible into, exchangeable for or carrying any right to purchase any shares of any class or series of the Company.

VARIATION OF CLASS RIGHTS

12.

If at any time the authorised capital is divided into different classes or series of shares, the rights attached to any class or series (unless otherwise provided by the terms of issue of the shares of that class or series) may, whether or not the Company is being wound up, be varied with the consent in writing of the holders of not less than a majority of the issued shares of that class or series and of the holders of not less than a majority of the issued shares of any other class or series of shares which may be affected by such variation.

13.

The rights conferred upon the holders of the shares of any class or series (including any class or series issued with preferred or other rights) shall not, unless otherwise expressly provided by the terms of issue of the shares of that class or series, be deemed to be varied by the creation or issue of further shares ranking senior to or pari passu therewith.

REGISTERED SHARES

14.	Shares may be issued only as registered shares.

LIABILITY OF SHAREHOLDERS

15.	The liability of shareholders is limited to the amount, if any, unpaid on the shares respectively held by them.

AMENDMENT OF MEMORANDUM AND ARTICLES OF ASSOCIATION

16.

The Company may amend this Memorandum of Association and/or the Articles of Association by a resolution of shareholders or by a resolution of directors. Notwithstanding anything to the contrary in this Memorandum of Association (including Clauses 16 and 17), if SLL (as defined in the Articles) is a shareholder of the Company or has a contingent right to the Contingent Shares (as defined in the Business Combination Agreement), the Company shall not amend, alter or repeal this Article 16 or any of Articles 124 through 132 of the Articles of Association in manner that adversely affects SLL without the prior written consent of SLL. Notwithstanding anything to the contrary in the Articles, so long as any director designated by SLL pursuant to the Director Designation Agreement (as defined herein) serves as a member of the Board, the Company shall not amend, alter or repeal any of Articles 133 through 137 in a manner that adversely affects the Steiner Group or any Steiner Group Related Persons (each as defined in the Director Designation Agreement) without the prior written consent of SLL.

17.

In addition, the Board of Directors may, to the extent permitted by law, from time to time establish, modify, amend or rescind the Articles, regulations and procedures of the Company not inconsistent with the provisions of the Transfer Restrictions (as defined in the Articles) for purposes of determining whether any Transfer of Company Securities would result in the Company’s (or any of its subsidiaries’) status as a CFC (as defined in the Articles) and for the orderly application, administration and implementation of the Transfer Restrictions.

DEFINITIONS

18.	Unless otherwise defined in this Memorandum of Association, the meanings of words in this Memorandum of Association are as defined in the Articles of Association of the Company.

Adopted: [ ], 2018

COMMONWEALTH OF THE BAHAMAS

THE INTERNATIONAL BUSINESS COMPANIES ACT 2000

AMENDED AND RESTATED

ARTICLES OF ASSOCIATION

ONESPAWORLD HOLDINGS LIMITED

TABLE OF CONTENTS


Article	Description	Page

1-7	DEFINITIONS		1-2
8-12	REGISTERED SHARES		3
13-23	SHARES, AUTHORISED CAPITAL AND CAPITAL		3-4
24-26	LIEN ON SHARES		5
27-29	TRANSFER OF SHARES		5
30-34	TRANSMISSION OF SHARES		6
35-40	REDUCTION OR INCREASE IN AUTHORISED CAPITAL		6-7
41-66	MEETINGS AND CONSENTS OF SHAREHOLDERS		7-11
67-75	DIRECTORS		11-12
76-81	POWERS OF DIRECTORS		12-13
82-93	PROCEEDINGS OF DIRECTORS		13-14
94-97	OFFICERS		14
98-99	CONFLICT OF INTERESTS		14-15
100-111	LIMITATION OF LIABILITY OF DIRECTORS; INDEMNIFICATION		15-17
112	SEAL		18
113-123	DIVIDENDS		18-19
124-132	RESTRICTIONS ON TRANSFER AND OWNERSHIP		19-25
133-137	BUSINESS OPPORTUNITIES		25-26
138	FISCAL YEAR		26
139	BOOKS AND RECORDS		26
140	NOTICES		27
141-142	VOLUNTARY WINDING UP AND DISSOLUTION		27
143	CONTINUATION		27
144	GOVERNING LAW		27

DEFINITIONS

1.	In these Articles, if not inconsistent with the subject or context, the words and expressions standing in the first column of the following table shall bear the meanings set opposite them respectively in the second column thereof.


Words		Meaning
Act		The International Business Companies Act 2000 including any modification, extension, re-enactment or renewal thereof and any regulations made thereunder.

Articles		These Articles of Association as they may from time to time be further amended.

Auditor		The person for the time being performing the duties of auditor of the Company (if any).

capital		The sum of the aggregate par value of all outstanding shares with par value of the Company and shares with par value held by the Company as treasury shares plus

		(a) the aggregate of the amounts designated as capital of all outstanding shares without par value of the Company and shares without par value held by the Company as treasury shares, and

		(b) the amounts as are from time to time transferred from surplus to capital by a resolution of directors.

cause		For removal of a director shall mean and be deemed to exist only if (a) the director whose removal is proposed has committed, been convicted of or pled guilty or nolo contendere to a criminal offence involving dishonesty or any felony by a court of competent jurisdiction, (b) such director has been found by the affirmative vote of a majority of the directors then in office at any regular or extraordinary meeting of the directors called for that purpose, or by a court of competent jurisdiction, to have engaged in conduct that constitutes fraud, gross negligence or willful misconduct in the performance of such director’s duties to the Company, (c) such director has been adjudicated by a court of competent jurisdiction to be mentally incompetent, which mental incompetency directly affects such person’s ability to perform his or her obligations as a director, or (d) the director has engaged in conduct which constitutes a breach of his or her fiduciary duties to the Company.

Director Designation Agreement		The Director Designation Agreement, dated November 1, 2018, by and among the Company, Haymaker Acquisition Corp., a Delaware corporation, and SLL.

Memorandum		The Memorandum of Association of the Company as it may from time to time be amended.

person		An individual, a corporation, a limited liability company, a trust, the estate of a deceased individual, a partnership, government (or an agency or subdivision thereof) or an unincorporated association of persons.

resolution of directors		(a) A resolution approved at a duly constituted meeting of directors or of a committee of directors of the Company by the affirmative vote of a simple majority of the directors present who voted and did not abstain; or

		b) a resolution consented to in writing by a simple majority of all directors or of all members of the committee of directors, as the case may be;

		except where a director is given more than one vote, he or she shall be counted by the number of votes he or she casts for the purpose of establishing a majority.


resolution of shareholders		(a) A resolution approved at a duly constituted meeting of the shareholders of the Company by the affirmative vote of

		(i) a simple majority of the votes of the shareholders present and entitled to vote thereon and who voted and did not abstain; or

		(ii) a simple majority of the votes of the shareholders of each class or series of shares present and entitled to vote thereon as a class or series and who voted and did not abstain and of a simple majority of the votes of the remaining shareholders present and entitled to vote thereon and who voted and did not abstain; or

		(b) a resolution consented to in writing by all of the votes of the shareholders entitled to vote thereon.

Seal		Any seal which has been duly adopted as the Common Seal of the Company.

securities		Shares and debt obligations of every kind, and options, warrants and rights to acquire shares or debt obligations.

shareholder		A person who holds shares in the Company.

SLL		Steiner Leisure Limited, an international business company incorporated under the laws of the Commonwealth of The Bahamas.

surplus		The excess, if any, at the time of the determination of the total assets of the Company over the sum of its total liabilities, as shown in its books of account, plus its issued and outstanding share capital.

treasury shares		Shares in the Company that were previously issued but were repurchased, redeemed or otherwise acquired by the Company and not cancelled.

“Written” or any term of like import includes (a) words typewritten, printed, painted, engraved, lithographed, photographed or represented or reproduced by any mode of reproducing words in a visible form, including telex, telefax, telegram, or cable and (b) electronic transmission. “Electronic transmission” is any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

3.	Save as aforesaid any words or expressions defined in the Act shall bear the same meaning in these Articles.

4.	Terms not defined in these Articles or in the Act shall have the meaning given to them in the Memorandum.

5.	Whenever the singular or plural number, or the masculine, feminine or neuter gender is used in these Articles, it shall equally, where the context admits, include the others.

6.	The realisable value in relation to the assets of the Company shall mean such value as the directors may decide upon as the value of the assets, which value in the absence of fraud shall be conclusive unless a question of law is involved.

7.	A reference to money in these Articles is, unless otherwise stated, a reference to the currency in which shares in the Company shall be issued according to the provisions of the Memorandum.

REGISTERED SHARES

The shares of the Company shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its shares shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Company. Subject to such conditions as the directors may reasonably determine for the issue of Certificates, every shareholder holding registered shares in the Company shall be entitled, upon the request of such shareholder, to a certificate which shall be signed by a director or officer of the Company and under the Seal specifying the share or shares held by him and the signature of the director or officer and the Seal may be stamped thereon; provided, that the Board has not provided for such shares to be uncertificated.

9.	All certificates (including global certificates) and book-entry positions evidencing uncertificated shares issued by the Company representing Company Securities shall bear a conspicuous legend substantially in the form as follows:

“THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO SIGNIFICANT OWNERSHIP AND TRANSFER RESTRICTIONS PURSUANT TO ARTICLES 124 THROUGH 132 OF THE AMENDED AND RESTATED ARTICLES OF ASSOCIATION OF ONESPAWORLD HOLDINGS LIMITED (THE “COMPANY”), AS IT MAY BE AMENDED FROM TIME TO TIME. THE COMPANY WILL FURNISH A COPY OF ITS AMENDED AND RESTATED MEMORANDUM OF ASSOCIATION TO THE HOLDER OF RECORD OF THIS CERTIFICATE WITHOUT CHARGE UPON A WRITTEN REQUEST ADDRESSED TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS.”

10.

The Company shall have the power to make appropriate notations upon its share transfer records and instruct any transfer agent, registrar, securities intermediary or depository with respect to the requirements of the Transfer Restrictions for any uncertificated Company Securities or Company Securities held in an indirect holding system.

11.

Any shareholder receiving a share certificate for registered shares shall indemnify and hold the Company and its directors and officers harmless from any loss or liability which it or they may incur by reason of any wrongful or fraudulent use or representation made by any person by virtue of the possession thereof. If a share certificate for registered shares be worn out or defaced, the directors may upon surrender thereof for cancellation issue a new one in its stead and if it be lost or destroyed, the directors may upon the loss or destruction being established to their satisfaction and upon such indemnity being given to the Company as it by resolution of directors may determine issue a new one in its stead.

12.	If several persons are registered as holders of any shares, any one of such persons may give an effectual receipt for any dividend payable in respect of such shares.

SHARES, AUTHORISED CAPITAL AND CAPITAL

13.

Subject to the provisions of these Articles, the Memorandum and to any resolution of shareholders, the unissued shares of the Company shall be at the disposal of the directors who may without prejudice to any rights previously conferred on the holders of any existing shares or class or series of shares offer, allot, grant options over or otherwise dispose of shares to such persons, at such times and upon such terms and conditions as the Company may by resolution of directors determine.

14.	Shares in the Company shall be issued for money, services rendered, personal property, an estate in real property, a promissory note or other binding obligation to contribute money or property or any combination of the foregoing as shall be determined by a resolution of directors.

15.

Shares in the Company may be issued for such amount of consideration as the Company may from time to time by resolution of directors determine, except that in the case of shares with par value, the amount shall not be less than the par value, and in the absence of fraud the decision of the directors as to the value of the consideration received by the Company in respect of the issue is conclusive unless a question of law is involved. The consideration in respect of the shares with par value constitutes capital to the extent of the par value and the excess constitutes surplus.

16.

A share issued by the Company upon conversion of, or in exchange for, another share or a debt obligation or other security in the Company, shall be treated for all purposes as having been issued for money equal to the consideration received or deemed to have been received by the Company in respect of the other share, debt obligation or security.

17.	Treasury shares may be disposed of by the Company on such terms and conditions (not otherwise inconsistent with these Articles) as the Company may by resolution of directors determine.

18.	The Company may issue fractions of a share and a fractional share shall have the same corresponding fractional liabilities, limitations, preferences, privileges, qualifications, restrictions, rights and other attributes of a whole share of the same class or series of shares.

19.

Upon the issue by the Company of a share without par value, if an amount is stated in the Memorandum to be authorised capital represented by such shares then each share shall be issued for no less than the appropriate proportion of such amount which shall constitute capital, otherwise the consideration in respect of the share constitutes capital to the extent designated by the directors and the excess constitutes surplus, except that the directors shall designate as capital an amount of the consideration that is at least equal to the amount that the share is entitled to as a preference, if any, in the assets of the Company upon liquidation of the Company.

20.

The Company may purchase, redeem or otherwise acquire and hold its own shares but no purchase, redemption or other acquisition shall be made unless the directors determine that immediately after the purchase, redemption or other acquisition the Company will be able to satisfy its liabilities as they become due in the ordinary course of its business and the realisable value of the assets of the Company will not be less than the sum of its total liabilities, other than deferred taxes, as shown in the books of account.

21.	A determination by the directors under the preceding Article is not required where shares are purchased, redeemed or otherwise acquired:

(a)

pursuant to a right of a shareholder to have his shares redeemed or to have his shares exchanged for money or other property of the Company;

(b)

in exchange for newly issued shares in the Company;

(c)

by virtue of the provisions of Section 81 of the Act; or

(d)

pursuant to a court order.

22.	Shares that the Company purchases, redeems or otherwise acquires pursuant to Article 20 may be cancelled or held as treasury shares unless the shares are purchased, redeemed or otherwise acquired out of capital pursuant to Section 34 of the Act in which case they shall be cancelled.

23.

Where shares in the Company are held by the Company as treasury shares or are held by another company of which the Company holds, directly or indirectly, shares having more than 50 percent of the votes in the election of directors of the other company, the shareholders of the Company shall not be entitled to vote in respect of such shares or to have dividends paid thereon and such shares shall not be treated as outstanding for any purpose except for purposes of determining the capital of the Company.

LIEN ON SHARES

24.

The Company shall have a first and paramount lien on every share issued for a promissory note or for any other binding obligation to contribute money or property or any combination thereof to the Company, and the Company shall also have a first and paramount lien on every share standing registered in the name of a shareholder, whether singly or jointly with any other person or persons, for all the debts and liabilities of such shareholder or his estate to the Company, whether the same shall have been incurred before or after notice to the Company of any interest of any person other than such shareholder, and whether the time for the payment or discharge of the same shall have actually arrived or not, and notwithstanding that the same are joint debts or liabilities of such shareholder or his estate and any other person, whether a shareholder of the Company or not. The Company’s lien on a share shall extend to all dividends payable thereon. The directors may at any time either generally, or in any particular case, waive any lien that has arisen or declare any share to be wholly or in part exempt from the provisions of this Article.

25.

In the absence of express provisions regarding sale in the promissory note or other binding obligation to contribute money or property, the Company may sell, in such manner as it may by resolution of directors determine, any share on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable nor until the expiration of twenty one days after a notice in writing, stating and demanding payment of the sum presently payable and giving notice of the intention to sell in default of such payment, has been served on the holder for the time being of the share.

26.

The net proceeds of the sale by the Company of any shares on which it has a lien shall be applied in or towards payment or discharge of the binding obligation in respect of which the lien exists so far as the same is presently payable and any residue shall (subject to a like lien for debts or liabilities not presently payable as existed upon the share prior to the sale) be paid to the holder of the share immediately before such sale. In order to give effect to any such sale, the Board may authorise an agent to transfer the shares sold to the purchaser thereof. The purchaser shall be registered as the holder of the shares and such holder shall not be bound to see to the application of the purchase money, nor shall such holder’s title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale.

TRANSFER OF SHARES

27.	Subject to the Transfer Restrictions, all transfers of shares may be effected by transfer in writing in the usual common form, or in such other form as the Board of Directors may accept.

28.	The instrument of transfer of a share shall be signed by or on behalf of the transferor and transferee, and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the Register of Shareholders in respect thereof.

29.

The Company or any transfer agent, on the application of the transferor or transferee of a share in the Company, shall enter in the share register the name of the transferee of the share except that (a) the Board or the transfer agent may decline to register a transfer of shares unless the instrument of transfer is accompanied by the certificate or certificates for the shares, if any, and such other evidence as the Board or the transfer agent may reasonably require to show the right of the transferor to make the transfer and (b) the registration of transfers may be suspended and the share register closed at such times and for such periods as the Board may from time to time determine provided always that such registration shall not be suspended and the share register closed for more than 60 days in any period of 12 months. Notwithstanding the foregoing, the Company or any transfer agent shall not be required to transfer shares that are subject to restrictive legends unless the conditions to transfer have been satisfied.

TRANSMISSION OF SHARES

30.

The executor or administrator of a deceased shareholder, the guardian of an incompetent shareholder or the trustee of a bankrupt shareholder shall be the only person recognized by the Company as having any title to his or her share but they shall not be entitled to exercise any rights as a shareholder of the Company until they have proceeded as set forth in the following three Articles.

31.

The production to the Company of any document which is evidence of probate of the will, or letters of administration of the estate, or confirmation as personal representative of a deceased shareholder or of the appointment of a guardian of an incompetent shareholder or the trustee of a bankrupt shareholder shall be accepted by the Company even if the deceased, incompetent or bankrupt shareholder is domiciled outside The Bahamas if the document evidencing the grant of probate or letters of administration, confirmation as personal representative, appointment as guardian or trustee in bankruptcy is issued by a foreign court which had competent jurisdiction in the matter. For the purpose of establishing whether or not a foreign court had competent jurisdiction in such a matter the directors may obtain appropriate legal advice. The directors may also require an indemnity to be given by the executor, administrator, guardian or trustee in bankruptcy.

32.

Any person becoming entitled by operation of law or otherwise to a share or shares in consequence of the death, incompetence or bankruptcy of any shareholder may be registered as a shareholder upon such evidence being produced as may reasonably be required by the directors. An application by any such person to be registered as a shareholder shall for all purposes be deemed to be a transfer of shares of the deceased, incompetent or bankrupt shareholder and the directors shall treat it as such.

33.

Any person who has become entitled to a share or shares in consequence of the death, incompetence or bankruptcy of any shareholder may, instead of being registered himself, request in writing that some person to be named by him be registered as the transferee of such share or shares and such request shall likewise be treated as if it were a transfer.

34.	What amounts to incompetence on the part of a person is a matter to be determined by the court having regard to all the relevant evidence and the circumstances of the case.

REDUCTION OR INCREASE IN AUTHORISED CAPITAL

35.

The Company may amend the Memorandum to increase or reduce its authorised capital and in connection therewith the Company may in respect of any unissued shares, increase or reduce the number of such shares, increase or reduce the par value of any such shares or effect any combination of the foregoing.

36.	The Company may amend the Memorandum to

(a)

divide the shares, including issued shares, of a class or series into a larger number of shares of the same class or series; or

(b)

combine the shares, including issued shares, of a class or series into a smaller number of shares of the same class or series;

provided, however, that where shares are divided or combined under (a) or (b) of this Article, the aggregate par value of the new shares must be equal to the aggregate par value of the original shares.

37.	The capital may by a resolution of directors be increased by transferring an amount out of the surplus of the Company to capital.

38.	Subject to the provisions of the two (2) next succeeding Articles, the capital may by resolution of directors be reduced by:

(a)

returning to shareholders any amount received by the Company upon the issue of any of its shares, the amount being surplus to the requirements of the Company,

(b)

cancelling any capital that is lost or not represented by assets having a realisable value or

(c)

transferring capital to surplus for the purpose of purchasing, redeeming or otherwise acquiring shares that the directors have resolved to purchase, redeem or otherwise acquire.

39.

No reduction of capital shall be effected that reduces the capital to an amount that immediately after the reduction is less than the aggregate par value of all outstanding shares with par value and all shares with par value held by the Company as treasury shares and the aggregate of the amounts designated as capital of all outstanding shares without par value and all shares without par value held by the Company as treasury shares that are entitled to a preference, if any, in the assets of the Company upon liquidation of the Company.

40.

No reduction of capital shall be effected unless the directors determine that immediately after the reduction the Company will be able to satisfy its liabilities as they become due in the ordinary course of its business and that the realisable value of the assets of the Company will not be less than its total liabilities, other than deferred taxes, as shown in the books of the Company, and its remaining issued and outstanding share capital.

MEETINGS AND CONSENTS OF SHAREHOLDERS

41.	Annual meetings of the shareholders shall be held during each fiscal year of the Company. The date, time and place of annual meetings of shareholders shall be as determined by resolution of directors.

42.	The directors of the Company may convene special meetings of the shareholders of the Company at such times and in such manner and places within or outside The Bahamas, or by means of remote communication, as the directors consider necessary or desirable.

43.

Upon the written request of shareholders holding not less than a majority of the outstanding voting shares in the Company, the directors shall convene a meeting of shareholders. If a special meeting is requested by such shareholders, a written request, specifying the business proposed to be transacted, shall be delivered personally or sent by first class mail, by express delivery or electronic transmission, to the Secretary of the Company. Upon receipt of such a request, the Secretary shall cause notice of such meeting to be given, within 45 days after the date the request was delivered to the Secretary, to the shareholders entitled to vote on such proposal, in accordance with the provisions of these Articles. Except as provided below, if the notice is not given by the Secretary within 45 days after the date the request was delivered to the Secretary, then the person or persons requesting the meeting may specify the time and place of the meeting and give notice thereof; provided, however, that at least 10 days’ notice of such meeting is required to be given to the shareholders.

44.

In order that the Company may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of shares or for the purpose of any other lawful action, the directors may fix, but shall not be required to so fix, a record date; provided, however, that such record date shall not precede the date upon which the action of the directors fixing such record date is taken.

45.

Notice of the place (if any), date, hour, the record date for determining the shareholders entitled to vote at the meeting (if such date is different from the record date for shareholders entitled to notice of the meeting), and means of remote communication, if any, of every meeting of shareholders shall be given by the Company not less than ten (10) days nor more than sixty (60) days before the meeting (unless a different time is specified by the Act) to every shareholder entitled to vote at the meeting as of the record date for determining the shareholders entitled to notice of the meeting. Notice of any meeting need not be given to any shareholder who shall, either before or after the meeting, submit a waiver of notice or who shall attend such meeting, except when the shareholder attends for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Any shareholder so waiving notice of the meeting shall be bound by the proceedings of the meeting in all respects as if due notice thereof had been given. Attendance of a shareholder at a meeting shall constitute a waiver of notice of such meeting, except when the shareholder attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully convened.

46.	A meeting of shareholders may be held in contravention of the requirement to give notice if shareholders holding not less than ninety (90) percent of;

(a)

the total number of shares of the shareholders entitled to vote on all matters to be considered at the meeting, or

(b)

the votes of each class or series of shares where shareholders are entitled to vote thereon as a class or series together with an absolute majority of the remaining votes,

have waived notice of the meeting; and for this purpose presence at the meeting shall be deemed to constitute waiver.

47.	The inadvertent failure of the directors to give notice of a meeting to a shareholder, or the fact that a shareholder has not received notice, shall not invalidate the meeting.

48.

If a quorum pursuant to Article 55 is present at any meeting, (a) in all matters other than the election of directors, the affirmative vote of the majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, and (b) directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors, unless a different vote is required by these Articles or the Memorandum or under applicable law, in which case such express provision shall govern and control the decision of such question. Shareholders may act only at meetings duly called and shareholders may not act by written consent or otherwise outside of such meeting. Only those matters set forth in the notice of a special meeting may be considered or acted upon at that meeting, unless otherwise required by law.

49.

If shareholder approval is required (a) for the adoption of any agreement for the merger of the Company with or into any other entity or for the consolidation of the Company with or into any other entity or (b) to authorise any sale, lease, exchange or other transfer of all or substantially all of the assets of the Company to any person, the affirmative vote of at least 66 2/3% of the shares entitled to vote thereon is required to approve such transaction; provided, however, that if such transaction is approved in advance by the directors, such transaction may be approved by the affirmative vote of a majority of the shares entitled to vote thereon.

50.	A shareholder may be represented at a meeting of shareholders by a proxy who may speak and vote on behalf of the shareholder including otherwise than on a poll and that proxy need not to be a shareholder.

51.	An instrument appointing a proxy shall be produced at the place appointed for the meeting before the time for holding the meeting at which the person named in such instrument proposes to vote.

52.	An instrument appointing a proxy shall be in such form as the Chairman of the meeting shall accept as properly evidencing the wishes of the shareholder appointing the proxy. Only shareholders who are individuals may appoint proxies.

53.	The following shall apply in respect of co-ownership of shares:

(a)

if two (2) or more persons hold shares together each of them may be present in person or by proxy at a meeting of shareholders and may speak as a shareholder;

(b)

if only one of them is present in person or by proxy such person may vote on behalf of all of them, and

(c)

if two (2) or more are present in person or by proxy they must vote as one.

54.	A shareholder shall be deemed to be present at a meeting of shareholders if such shareholder participates by telephone or other electronic means and all shareholders participating in the meeting are able to hear each other.

55.

A meeting of shareholders is duly constituted if, at the commencement of the meeting, there are present in person or by proxy shareholders representing not less than fifty (50) percent of the votes of the shares or class or series of shares entitled to vote on resolutions of shareholders to be considered at the meeting. If a quorum be present, notwithstanding the fact that such quorum may be represented by only one person then such person may resolve any matter and a certificate signed by such person accompanied where such person be a proxy by the proxy form or a copy thereof shall constitute a valid resolution of shareholders. A quorum, once established, shall not be broken by the subsequent withdrawal of enough votes to leave less than a quorum. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the chair of the meeting or the shareholders entitled to vote thereat, present in person or represented by proxy, shall have power, by the affirmative vote of a majority in voting power thereof, to adjourn the meeting from time to time, in the manner provided in Article 57, until a quorum shall be present or represented.

56.

At every meeting of shareholders, the Chairman of the Board of Directors shall preside as chairman of the meeting. If there is no Chairman of the Board of Directors or if the Chairman of the Board of Directors is not present at the meeting, the shareholders present shall choose some one of their number to be the chairman. If the shareholders are unable to choose a chairman for any reason, then the person representing the greatest number of voting shares present in person or appointed under an instrument of proxy in prescribed form at the meeting shall preside as chairman failing which the oldest individual shareholder or representative of a shareholder present shall take the chair.

57.

Any meeting of the shareholders, annual or special, may be adjourned from time to time to reconvene at the same or some other place, if any, and notice need not be given of any such adjourned meeting if the time, place, if any, thereof and the means of remote communication, if any, are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Company may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. If after the adjournment a new record date is fixed for shareholders entitled to vote at the adjourned meeting, the Board shall fix a new record date for notice of the adjourned meeting and shall give notice of the adjourned meeting to each shareholder of record entitled to vote at the adjourned meeting as of the record date fixed for notice of the adjourned meeting.

58.	If within one hour from the time appointed for the meeting a quorum is not present or represented, the meeting, if convened upon the requisition of shareholders, shall be dissolved; in any other case it may be adjourned in accordance with Articles 55 and 57 until a quorum is present or represented.

59.

At any meeting of the shareholders, the chairman shall be responsible for deciding in such manner as he or she shall consider appropriate whether any resolution has been carried or not and the result of his decision shall be announced to the meeting and recorded in the minutes thereof. If the chairman shall have any doubt as to the outcome of any resolution put to the vote, he or she shall cause a poll to be taken of all votes cast upon such resolution, but if the chairman shall fail to take a poll then any shareholder present in person or by proxy who disputes the announcement by the chairman of the result of any vote may immediately following such announcement demand that a poll be taken and the chairman shall thereupon cause a poll to be taken. If a poll is taken at any meeting, the result thereof shall be duly recorded in the minutes of that meeting by the chairman.

60.

Any person other than an individual shall be regarded as one shareholder and subject to the specific provisions hereinafter contained for the appointment of representatives of such persons the right of any individual to speak for or represent such shareholder shall be determined by the law of the jurisdiction where, and by the documents by which, the person is constituted or derives its existence. In case of doubt, the directors may in good faith seek legal advice from any qualified person and unless and until a court of competent jurisdiction shall otherwise rule, the directors may rely and act upon such advice without incurring any liability to any shareholder.

61.	Directors of the Company may attend and speak at any meeting of shareholders of the Company and at any separate meeting of the holders of any class or series of shares of the Company.

62.

Any person other than an individual which is a shareholder of the Company may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of shareholders of the Company, and the person so authorised shall be entitled to exercise the same powers on behalf of the person which such representative represents as that person could exercise if it were an individual shareholder of the Company.

63.

The chairman of any meeting at which a vote is cast by proxy or on behalf of any person other than an individual may call for a copy of such proxy or authority authenticated by the certificate of a Notary Public which shall be produced within seven (7) days of being so requested or the votes cast by such proxy or on behalf of such person shall be disregarded.

64.

Reserved.

65.	Any action required or permitted to be taken by the shareholders of the Company may be effected at either a duly called meeting of the shareholders of the Company or by any unanimous consent of the shareholders entitled to so vote thereon.

66.

At an annual meeting of the shareholders, only such business shall be conducted as shall have been properly brought before the meeting. In addition to any other applicable requirements, to be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the directors, (b) brought before the meeting by or at the direction of the directors, or (c) otherwise properly brought before the meeting by a shareholder. For business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary and be present at the meeting. To be timely for the first annual meeting of shareholders after the Company’s initial public offering of its shares, a shareholder’s notice must be received at the corporate office of the Company not later than the later of (a) the 75th day prior to the scheduled date of the annual meeting and (b) the 10th day following the day on which public announcement of the date of such annual meeting is first made by the Company. For all subsequent annual meetings, a shareholder’s notice shall be timely if received by the Company at its corporate office not less than 75 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting (the “Anniversary Date”); provided, however, that in the event the annual meeting is scheduled to be held on a date more than 30 days before the Anniversary Date or more than 60 days after the Anniversary Date, a notice shall be timely if received by the

Company at its corporate office not later than the close of business on the later of (a) the 75th day prior to the scheduled date of such annual meeting or (b) the 10th day following the day on which public announcement of the date of such annual meeting is first made by the Company. A shareholder’s notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting, and the reasons for conducting such business at such annual meeting, (b) the name and address, as they appear on the Company’s books, of the shareholder proposing such business, (c) the class and number of shares of the Company which are beneficially owned by the shareholder, (d) the names of any other beneficial owners of such shares, (e) any material interest of the shareholder in such business and (f) the names and addresses of other shareholders known by the shareholder proposing such business to support such proposal and the class and numbers of shares beneficially owned by such shareholders. Notwithstanding anything in these Articles to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Article 66. If the directors or a designated committee thereof determines that any shareholder proposal was not made in a timely fashion in accordance with the procedures of this Article 66 or that the information provided in a shareholder’s notice does not satisfy the information requirements of this Article 66 in any material respect (a “Non-Compliance Determination”), such proposal shall not be presented for action at the annual meeting in question. If neither the directors nor such committee makes a determination as to the validity of any shareholder proposal in the manner set forth above, the presiding officer of an annual meeting shall determine whether the shareholder proposal was made in accordance with the terms of this Article 66. If such presiding officer makes a Non-Compliance Determination with respect to such proposal, such proposal shall not be presented for action at the annual meeting in question. If the directors, a designated committee thereof or the presiding officer determines that a shareholder proposal was made in accordance with the requirements of this Article 66, the presiding officer shall so declare at the annual meeting and ballots shall be provided for use at the meeting with respect to such proposal.

DIRECTORS

67.

The first directors of the Company shall be elected by the subscribers to the Memorandum, subject to the terms of these Articles and the Director Designation Agreement; and thereafter, the directors shall be elected by the shareholders or the directors for such term as the shareholders or the directors, as the case may be, determine, subject to the terms of these Articles, the Director Designation Agreement and the Business Combination Agreement (as defined in Article 125(c)).

68.

The minimum number of directors shall be one (1) and the maximum number shall be ten (10), and the number of directors shall be determined from time to time by the directors. The directors shall be divided into three (3) classes designated as Class A, Class B and Class C, respectively. Directors shall initially be assigned to each class by resolution of directors and in accordance with the terms of the Director Designation Agreement. At the first annual meeting of the Company the term of office of the Class A Directors shall expire and Class A Directors shall be elected for a full term of three (3) years. At the succeeding annual meeting of the Company, the term of office of the Class B Directors shall expire and Class B Directors shall be elected for a full term of three (3) years. At the third annual meeting of the Company, the term of office of the Class C Directors shall expire and Class C Directors shall be elected for a full term of three (3) years. At each succeeding annual meeting of the Company, directors shall be elected for a full term of three (3) years to succeed the directors of the class whose terms expire at such annual meeting. Notwithstanding the foregoing provisions of this Article, each director shall hold office until the expiration of his term, until his successor shall have been duly elected and qualified or until his earlier death, resignation or removal. No decrease in the number of directors constituting the directors shall shorten the term of any incumbent director.

69.

Each director shall hold office for the term, if any, fixed by resolution of shareholders or by resolution of directors, as the case may be, or until his earlier death, resignation or removal, or in the case of a company upon the making of an order for the winding up or dissolution of the company or upon the removal of a defunct company by the Registrar otherwise than pursuant to a winding up order.

70.

Subject to any rights of the holders of Preferred Shares, if and when issued, to elect directors and to remove any directors whom the holders of any such shares have the right to elect, any director of the Company may be removed from office (a) with or without cause by a vote of a majority of the directors then in office or (b) with cause by shareholder resolution.

71.	A director may resign his office by giving written notice of his resignation to the Company and the resignation shall have effect from the date the notice is received by the Company or from such later date as may be specified in the notice.

72.	A vacancy in the Board of Directors may be filled by a resolution of shareholders or by a resolution of a majority of the remaining directors.

73.	The directors may, by a resolution of directors, fix the emoluments of directors with respect to services to be rendered in any capacity to the Company.

74.	A director shall not require a share qualification, and may be an individual or a company.

75.	Articles 67 through 74 shall be subject to the Director Designation Agreement in all respects.

POWERS OF DIRECTORS

76.

The business and affairs of the Company shall be managed by the directors who may pay all expenses incurred preliminary to and in connection with the formation and registration of the Company and may exercise all such powers of the Company as are not by the Act or by the Memorandum or these Articles required to be exercised by the shareholders of the Company, subject to any delegation of such powers as may be authorised by these Articles and to such requirements as may be prescribed by a resolution of shareholders; but no requirement made by a resolution of shareholders shall prevail if it be inconsistent with these Articles nor shall such requirement invalidate any prior act of the directors which would have been valid if such requirement had not been made.

77.	The directors may, by a resolution of directors, appoint any person, including a person who is a director, to be an officer or agent of the Company and the directors may remove any such person so appointed.

78.

Every officer or agent of the Company has such powers and authority of the directors, including the power and authority to affix the Seal, as are set forth in these Articles or in the resolution of directors appointing the officer or agent but the directors may revoke or vary such powers. No officer or agent has any power or authority with respect to matters requiring a resolution under this Article or under Articles 73, 77 and 81.

79.

Any director which is a body corporate may appoint in writing any person its duly authorised representative for the purpose of representing it at meetings of the Board of Directors and the person so appointed shall be entitled to exercise the same powers on behalf of such body corporate as the body corporate could exercise if it were an individual director.

80.

The continuing directors may act notwithstanding any vacancy in their body, save that if their number is reduced to their knowledge below the number fixed by or pursuant to these Articles as the necessary quorum for a meeting of directors, the continuing directors or director may act only for the purpose of appointing directors to fill any vacancy that has arisen or summoning a meeting of shareholders.

81.

All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for moneys paid to the Company, shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as shall from time to time be determined by resolution of directors.

PROCEEDINGS OF DIRECTORS

82.

The directors or any committee thereof may meet at such times and in such manner and places within or outside The Bahamas, or by means of remote communication, as the directors may determine to be necessary or desirable; however, the directors shall hold an annual meeting each year as soon as practicable after the annual meeting of the shareholders.

83.	A director shall be deemed to be present at a meeting of directors if he or she participates by telephone or other electronic means and all directors participating in the meeting are able to hear each other.

84.

A director shall be given not less than forty-eight (48) hours’ notice of meetings of directors, but a meeting of directors held without forty-eight (48) hours’ notice having been given to all directors shall be valid if all the directors entitled to vote at the meeting who do not attend, waive notice of the meeting and for this purpose, the presence of a director at a meeting shall constitute waiver on his part.

85.

A meeting of directors is duly constituted for all purposes if there are present not less than one half of the total number of directors, unless there are only two (2) directors in which case the quorum shall be two (2). Where any director is participating in a meeting in accordance with the provisions of Article 83 he or she shall be counted for the purpose of determining whether the meeting is duly constituted.

86.

If the Company shall have only one (1) director the provisions herein contained for meetings of the directors shall not apply but such sole director shall have full power to represent and act for the Company. In all matters as are not by the Act or the Memorandum or these Articles required to be exercised by the shareholders of the Company, in lieu of minutes of a meeting such sole director shall record in writing and sign a note or memorandum of all matters requiring a resolution of directors. Such a note or memorandum shall constitute sufficient evidence of such resolution for all purposes.

87.

At every meeting of the directors the Chairman of the Board of Directors shall preside as chairman of the meeting. If there is no Chairman of the Board of Directors or the Chairman of the Board of Directors is not present at the meeting, the directors present shall choose some one of their number to be chairman of the meeting.

88.

An action that may be taken by the directors or a committee of directors at a meeting may be taken without a meeting if all directors or members of such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writings or electronic transmissions are filed with the minutes of proceedings of the Board of Directors or committee.

89.	The directors shall cause the following corporate records to be kept:

(a)

minutes of all meetings of directors, shareholders, committees of directors, committees of officers and committees of shareholders;

(b)

copies of all resolutions consented to by directors, shareholders, committees of directors, committees of officers and committees of shareholders; and

(c)

such other accounts and records as the directors by resolution of directors consider necessary or desirable in order to reflect the financial position of the Company.

90.	The books, statutory registers, records and minutes shall be kept at the registered office of the Company.

91.	Subject to the provisions of the Director Designation Agreement, the directors may, by resolution of directors, designate one or more committees, each consisting of one or more directors.

92.

Each committee of directors has such powers and authorities of the directors, including the power and authority to affix the Seal, as are set forth in the resolution of directors establishing the committee, except that no committee has any power or authority to amend the Memorandum or these Articles, to appoint directors, fix the emoluments of directors, or to appoint officers or agents of the Company.

93.

The meetings and proceedings of each committee of directors consisting of two (2) or more directors shall be governed mutatis mutandis by the provisions of these Articles regulating the proceedings of directors so far as the same are not superseded by any provisions in the resolution establishing the committee.

OFFICERS

94.

The Company may by resolution of directors appoint officers of the Company at such time as shall be considered necessary or expedient. Such officers may consist of a Chairman of the Board of Directors, a Chief Executive Officer, a Chief Financial Officer, a Chief Operating Officer and one or more Vice Presidents, Secretaries and Treasurers and such other officers as may from time to time be deemed desirable. Any number of offices may be held by the same person.

95.

The officers shall perform such duties as shall be prescribed at the time of their appointment subject to any modification in such duties as may be prescribed thereafter by resolution of directors or resolution of shareholders, but in the absence of any specific allocation of duties it shall be the responsibility of the Chairman of the Board of Directors to preside at meetings of directors and shareholders and to manage the day to day affairs of the Company, and the other officers to perform such duties as may be delegated to them by the directors or the Chairman of the Board.

96.	The emoluments of all officers shall be fixed by resolution of directors.

97.

The officers of the Company shall hold office until their successors are duly elected, but any officer elected or appointed by the directors may be removed at any time, with or without cause, by resolution of directors. Any vacancy occurring in any office of the Company may be filled by resolution of the remaining directors.

CONFLICT OF INTERESTS

98.

No contract or other transaction between the Company and one or more interested directors shall be either void or voidable because of such relationship or interest, because such director or directors are present at the meeting of the Board of Directors or a committee thereof which authorises, approves or ratifies such contract or transaction, or because his or their votes are counted for such purpose, if:

(a)

The fact of such relationship or interest is disclosed or known to the Board of Directors or committee which authorises, approves or ratifies the contract or transactions by a vote or consent sufficient for the purpose without counting the votes or consents of such interested directors;

(b)

the fact of such relationship or interest is disclosed or known to the shareholders entitled to vote and they authorise, approve or ratify such contract or transaction by vote or written consent; or

(c)

the contract or transaction is fair and reasonable as to the Company at the time it is authorised by the board, a committee or the shareholders.

99.	A director who has an interest in any particular business to be considered at a meeting of directors or shareholders may be counted for purposes of determining whether the meeting is duly constituted.

LIMITATION OF LIABILITY OF DIRECTORS; INDEMNIFICATION

100.

No person who may be entitled to indemnification hereunder (a “Covered Person”) shall be liable to the Company for any loss or damage incurred by the Company as a result (whether direct or indirect) of the carrying out of their functions as a director, officer, employee or agent of the Company (or, to the extent requested to be performed by the Company, their functions as an officer director, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) unless that liability arises through the actual fraud or willful misconduct by such person. No person shall be found to have committed actual fraud or willful misconduct under the Indemnification Provisions (as defined below) unless or until a court of competent jurisdiction shall have made a finding to that effect. Each shareholder agrees to waive any claim or right of action he or she might have, whether individually or by or in the right of the Company, against any director or officer of the Company on account of any action taken by such director or officer, or the failure of such director or officer to take any action in the performance of his duties with or for the Company; provided that such waiver shall not extend to any matter in respect of any actual fraud or willful misconduct which may attach to such director or officer.

101.

The Company shall indemnify and hold harmless to the fullest extent permitted by applicable law (as now or, to the extent providing greater benefit to any Covered Person, as hereafter in effect) any person (other than any Auditor) who was or is a party or witness to (or is threatened to be made a party or witness to) any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) directly or indirectly by reason of the fact that he or she is or was a director, officer, employee or agent of the Company, or, while serving as a director, officer, employee or agent of the Company, is or was serving (at the request of the Company) any other corporation, partnership, joint venture, trust or other enterprise in any capacity, against all liabilities, damages, costs, expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in (or not opposed to) the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful; provided, in no event shall any person be entitled to be indemnified, held harmless or advanced any amounts hereunder in respect of any liability, damage, cost, expense, judgment, fine or amount paid in settlement (if any) that such person may incur by reason of their own actual fraud or intentional misconduct. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful. Notwithstanding this Article 101 or the provisions of Article 102 hereof, except as otherwise provided in Article 106 hereof, the Company shall be required to indemnify a Covered Person in connection with a proceeding (or part thereof) commenced by such Covered Person only if the commencement of such proceeding (or part thereof) by the Covered Person was authorised in the specific case by the directors.

102.

director, officer, employee or agent of the Company, or, while serving as a director, officer, employee or agent of the Company, is or was serving (at the request of the Company) another corporation, partnership, joint venture, trust or other enterprise in any capacity against all liabilities, damages, costs, expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with the defence or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company and except that no such indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Company, unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such other court shall deem proper.

103.

Any indemnification under Articles 101 or 102 (unless ordered by a court) shall be made by the Company only as authorised in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Articles 101 or 102. Such determination shall be made, with respect to a person who is a director, officer, employee or agent at the time of such determination, (a) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (b) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (c) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (d) by the shareholders.

104.

Expenses incurred by any Covered Person, officer or director in defending a civil or criminal action, suit or proceeding shall be paid by the Company to the fullest extent permitted by law in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Company as authorised in these Articles. Any such expenses incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Company deems appropriate. Without duplication of the foregoing, to the extent that a present or former director, officer, employee or agent of the Company shall be successful on the merits or otherwise in defence of any action, suit or proceeding referred to in Articles 101 or 102, or in defence of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith. If it shall be determined by a final judgment or other final adjudication that any such indemnified person was not entitled to indemnification with respect to or advancements of such judgment, costs or expenses, then such party shall not be indemnified with respect to such judgment, costs or expenses and any advancement shall be returned to the Company (without interest) by the indemnified person.

105.

The indemnification and advancement of expenses provided by, or granted pursuant to, the Indemnification Provisions shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may at any time be entitled under any other Article, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office. The provisions of the Indemnification Provisions shall not be deemed to preclude the indemnification of (or advancement of expenses to) any person who is not specified in Article 101 or 102 but whom the Company has the power or obligation to indemnity under the provisions of applicable law or otherwise.

106.

If a claim for indemnification (following the final disposition of a proceeding) or advancement of expenses under the Indemnification Provisions is not paid in full within 90 days after a written claim therefor has been received by the Company, the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the

expense of prosecuting such claim to the fullest extent permitted by law. In any such action, the Company shall have the burden of proving that the claimant was not entitled to the requested indemnification or advancement of expenses under applicable law.

107.

The Company may purchase and maintain insurance in relation to any person who is or was a director, an officer or a liquidator of the Company, or who at the request of the Company is or was serving as a director, an officer or a liquidator of, or in any other capacity is or was acting for, another company or a partnership, joint venture, trust or other enterprise, against any liability asserted against the person and incurred by the person in that capacity, whether or not the Company has or would have had the power to indemnify the person against the liability as provided in these Articles.

108.

Neither the repeal nor modification of any Article of these Articles under the heading Limitation of Liability of Directors; Indemnification (the “Indemnification Provisions”), nor the adoption of any provision in these Articles or in the Memorandum inconsistent with any of the Indemnification Provisions, shall adversely affect any right or protection afforded to any person described in Article 100 by any of the Indemnification Provisions prior to such repeal, modification or adoption of an inconsistent provision.

109.

The indemnification and advancement of expenses provided by, or granted pursuant to, the Indemnification Provisions shall, unless otherwise provided when authorised or ratified, be contract rights and continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. The Company’s obligation, if any, to indemnify or to advance expenses to any person who was or is serving at its request another corporation, partnership, joint venture, trust or other enterprise in any capacity shall be reduced by any amount such person may collect as indemnification or advancement of expenses from such other company, partnership, joint venture, trust or other enterprise.

110.

The directors may authorise the Company to enter into a contract with any person who is or was a director, officer, employee or agent of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise providing for indemnification rights equivalent to or, if the directors so determine, greater than those provided in the Indemnification Provisions.

111.

For the purposes of the Indemnification Provisions, (a) references to (i) the “Company” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the Indemnification Provisions with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued, (ii) “other enterprises” shall include employee benefit plans, (iii) “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan, and (iv) “serving at the request of the Company” shall include service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries, and (b) a person who acted in good faith and in a manner he or she reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interest of the Company” as referred to in the Indemnification Provisions.

SEAL

112.

The Company may have more than one Seal and references herein to the Seal shall be references to every Seal which shall have been duly adopted by resolution of directors. The directors shall provide for the safe custody of the Seal and for an imprint thereof to be kept at the registered office. Except as otherwise expressly provided herein the Seal when affixed to any written instrument shall be witnessed and attested to by the signature of a director or an officer or any other person so authorised from time to time by resolution of directors. Such authorization may be before or after the Seal is affixed, may be general or specific and may refer to any number of sealings. The directors may provide for a stamp of the Seal and of the signature of any director, officer or authorised person which may be reproduced by printing or other means on any instrument and it shall have the same force and validity as if the Seal had been affixed to such instrument and the same had been signed as hereinbefore described.

DIVIDENDS

113.

The Company may by a resolution of directors declare and pay dividends in money, shares, or other property. In the event that dividends are paid in specie the directors shall have responsibility for establishing and recording in the resolution of directors authorizing the dividends, a fair and proper value for the assets to be so distributed.

114.	The directors may from time to time pay to the shareholders such interim dividends as appear to the directors to be justified by the profits of the Company.

115.	The directors may, before declaring any dividend, set aside out of the profits of the Company such sum as they think proper as a reserve fund, and may invest the sum so set apart as a reserve fund upon such securities as they may select.

116.

No dividend shall be declared and paid unless the directors determine that immediately after the payment of the dividend the Company will be able to satisfy its liabilities as they become due in the ordinary course of its business and the realisable value of the assets of the Company will not be less than the sum of its total liabilities, other than deferred taxes, as shown in its books of account, and its issued and outstanding share capital.

117.	Notice of any dividend that may have been declared shall be given to each shareholder in manner hereinafter mentioned and all dividends unclaimed for three (3) years after having been declared may be forfeited by resolution of directors for the benefit of the Company.

118.	No dividend shall bear interest as against the Company and no dividend shall be paid on treasury shares or shares held by another company of which the Company holds, directly or indirectly, shares having more than fifty (50) percent of the vote in electing directors.

119.	A share issued as a dividend by the Company shall be treated for all purposes as having been issued for money equal to the surplus that is transferred to capital upon the issue of the share.

120.	In the case of a dividend of authorised but unissued shares with par value, an amount equal to the aggregate par value of the shares shall be transferred from surplus to capital at the time of the distribution.

121.

In the case of a dividend of authorised but unissued shares without par value, the amount designated by the directors shall be transferred from surplus to capital at the time of the distribution, except that the directors shall designate as capital an amount that is at least equal to the amount that the shares are entitled to as a preference, if any, in the assets of the Company upon liquidation of the Company.

122.	A division of the issued and outstanding shares of a class or series of shares into a larger number of shares of the same class or series having a proportionately smaller par value shall not constitute a dividend of shares.

123.	The record date for shareholders entitled to receive dividends shall be established in accordance with Article 41.

RESTRICTIONS ON TRANSFER AND OWNERSHIP

124.

Purpose. It is in the best interests of the Company and its shareholders that certain restrictions on the Transfer of Company Securities (each defined below) be established, as more fully set forth in the Articles under the heading Restrictions on Transfer and Ownership (the “Transfer Restrictions”), as any such Transfer may threaten the preservation of certain tax attributes of the Company and its subsidiaries.

125.	Definitions. The following capitalized terms shall have the following respective meanings (and any references to any portions of the Code or the Treasury Regulations thereunder shall include any amendment thereto and any successor provisions):

(a)

“Acquire” means the acquisition, directly or indirectly and including by operation of law, of ownership of Company Securities by any means, including, without limitation: (i) the acquisition of any option, warrant, convertible security, pledge or other security interest or similar right to acquire Company Securities or the exercise of such an existing right that results in an acquisition of Company Securities; (ii) the entering into of any swap, hedge or other arrangement that results in the acquisition of any of the economic benefits of ownership of Company Securities from the owner of such Company Securities; or (iii) any other direct or indirect acquisition (including the direct or indirect acquisition of an ownership interest in a Prohibited Transferee) resulting in the direct, indirect, or constructive ownership of such Company Securities under Section 958 of the Code. The terms “Acquires” and “Acquisition” shall have the same meaning, mutatis mutandis.

(b)

“Beneficial Ownership,” “Beneficially Owned” and “Beneficially Owns” have the meanings specified in Rule 13d-3 promulgated under the United States Securities Exchange Act of 1934, as amended, including the provision that any member of a “group” will be deemed to have beneficial ownership of all securities beneficially owned by other members of the group, and a Person’s beneficial ownership of securities will be calculated in accordance with the provisions of such Rule; provided, however, that a Person will be deemed to be the beneficial owner of any security which may be acquired by such Person upon the conversion, exchange or exercise of any rights, options, warrants or similar securities to subscribe for, purchase or otherwise acquire (x) capital stock of any Person or (y) securities directly or indirectly convertible into, or exercisable or exchangeable for, such capital stock of such Person.

(c)

“Business Combination Agreement” means that certain Business Combination Agreement, dated November 1, 2018, by and among Dory Intermediate LLC, SLL, Steiner U.S. Holdings, Inc., Nemo (UK) Holdco, Ltd., Steiner UK Limited, Steiner Management Services LLC, SLL, in its capacity as representative of Sellers, Haymaker Acquisition Corp, the Company, Dory US Merger Sub, LLC, Dory Intermediate LLC, Dory Acquisition Sub, Limited, and Dory Acquisition Sub, Inc. (as amended from time to time in accordance with its terms).

(d)

“CFC” shall mean a foreign corporation that is a “controlled foreign corporation” within the meaning of Section of 957 of the Code, determined without regard to any attribution under Section 958 of the Code of stock of such foreign corporation to any subsidiary of the Company.

(e)

“Closing Date” shall have the meaning ascribed to it in the Business Combination Agreement.

(f)

“Code” means the United States Internal Revenue Code of 1986, as amended from time to time.

(g)

“Committee” means the Board of Directors of the Company, or a committee of the Board to which the Board has delegated authority with respect to the Transfer Restrictions.

(h)

“Company Securities” means: (i) Common Shares; (ii) Preferred Shares; (iii) any other interests that would be treated as “stock” of the Company for purposes of Section 958 of the Code, including pursuant to Treasury Regulation Section 1.958-2(e); and (iv) warrants, rights or options to acquire shares or interests described in clauses (i)-(iii) and “Company Security” shall have a corresponding meaning.

(i)

“Disposition” means, with respect to any Person other than the Company, the sale, transfer, exchange, assignment, conveyance, pledge, distribution, contribution, or other disposition of such Company Securities by such Person. A “Disposition” also shall include the issuance or grant of a warrant, right or option to acquire Company Securities held by such Person.

(j)

“Ownership Cap” means 9.99%

(k)

“Percentage Stock Ownership” means, with respect to any Person, such Person’s percentage stock ownership of Company Securities as determined under Section 958 of the Code, applicable Treasury Regulations and other official guidance.

(l)

“Person” means an individual, corporation, estate, trust, association, limited liability company, partnership, joint venture or similar organization or entity within the meaning of Section 958 of the Code and applicable Treasury Regulations.

(m)

“Prohibited Transferee” means a Person whose Percentage Stock Ownership is in excess of the Ownership Cap.

(n)

“Signing Date” means the date of the execution of the Business Combination Agreement.

(o)

“Steiner Holders” means, collectively, (a) SLL and (b) any Steiner Permitted Transferee of Company Securities.

(p)

“Steiner Permitted Transferee” means any Person to whom any Company Securities initially held by SLL are transferred who, at the time of such transfer, is an Affiliate (as defined in the Business Combination Agreement) of such Person.

(q)

“Transfer” means any Acquisition or Disposition of Company Securities.

(r)

“Treasury Regulation” means any Treasury regulation, in effect from time to time, promulgated under the Code.

(s)

“United States” means the United States of America.

126.	Transfer Limitations.

(a)

Except as otherwise provided in Article 126(b) or Article 127, no Person shall be permitted to make a Transfer, whether in a single transaction (with any transactions occurring on the same day being treated as a single transaction) or series of related transactions, and any such purported Transfer will be void ab initio, (i) if and to the extent that after giving effect to such purported Transfer: the purported transferee (or any other Person by reason of the purported transferee’s Acquisition) would become a Prohibited

Transferee; or (ii) if the purported transferee is a Prohibited Transferee or the purported Transfer would increase the Percentage Stock Ownership of any Prohibited Transferee (any such purported Transfer described in this Article 126(a), a “Prohibited Transfer”).

(b)

The restrictions set forth in Article 126(a) shall not apply to a proposed Transfer, and the proposed Transfer shall not be treated as a Prohibited Transfer hereunder, if the transferor or the transferee obtains approval of the proposed Transfer by the Committee (at a meeting of the Committee or by written consent of the Committee). As a condition to granting its approval pursuant to this Article 126(b), the Committee may, as determined in its sole discretion, require and/or obtain (at the expense of the transferor and/or transferee) such documentation, information and action, if any, as it determines, including, without limitation, representations and warranties from the transferor and/or transferee, such opinions of counsel to be rendered by counsel selected by (or acceptable to) the Committee, and such other advice, in each case as to such matters as the Committee determines in its sole discretion is appropriate. Any such approval, once granted, shall be irrevocable, provided that such information, documentation and representations and warranties upon which such approval was based remain true, accurate and complete prior to the applicable Transfer.

(c)

The restrictions set forth in Article 126(a) shall not preclude the settlement of any transaction in the Company Securities through the facilities of The Depository Trust Company (or any successor or similar settlement service), it being understood, however, that any such settlement shall not negate or otherwise affect the treatment of a Transfer as a Prohibited Transfer hereunder.

127.	Exceptions to Transfer Limitations.

(a)

The Transfer of Company Securities to the Steiner Holders pursuant to the Business Combination Agreement (or any related agreement) shall not be treated as a Prohibited Transfer and the Steiner Holders shall not be considered to be a Prohibited Transferee for purposes of such Transfer;

(b)

The Transfer of Company Securities by the Company to the Investors (as defined in the Business Combination Agreement) or, in the case of an agreement described in clause (z), the applicable transferee shall not be treated as a Prohibited Transfer and no such Investor or transferee shall be considered to be Prohibited Transferee for purposes of such Transfer in each case, so long as such Transfer is effected pursuant to (x) an agreement that is entered into on or prior to the Signing Date, (y) an agreement described in clause (x) that is modified after the Signing Date in a manner that is not prohibited by the Business Combination Agreement or (z) an agreement entered into after the Signing Date and prior to the Closing Date, in a manner that is (i) not prohibited by the Business Combination Agreement or (ii) otherwise agreed by the parties to the Business Combination Agreement;

(c)

The Transfer of Company Securities by the Steiner Holders to the Investors or, in the case of an agreement described in clause (z), the applicable transferee shall not be treated as a Prohibited Transfer and no such Investor or transferee shall be considered to be a Prohibited Transferee for purposes of such Transfer, in each case, so long as such Transfer is effected pursuant to (x) an agreement that is entered into on or prior to the Signing Date, (y) an agreement described in clause (x) that is modified after the Signing Date in a manner that is not prohibited by the Business Combination Agreement or (z) an agreement entered into after the Signing Date and prior to the Closing Date, in a manner that is (i) not prohibited by the Business Combination Agreement or (ii) otherwise agreed by the parties to the Business Combination Agreement; and

(d)

Any Transfer of Company Securities by the Steiner Holders (or any of their permitted transferees pursuant to this Article 127(d)) that is permitted under the Business Combination Agreement shall not be treated as a Prohibited Transfer and the applicable transferee shall not be considered to be a Prohibited Transferee for purposes of such Transfer

128.	Treatment of Excess Securities.

(a)

(i)

No employee or agent of the Company shall record any Prohibited Transfer, and the purported transferee of a Prohibited Transfer (the “Purported Transferee”) shall not be recognized as a shareholder of the Company for any purpose whatsoever in respect of the Company Securities that are the subject of the Prohibited Transfer (the “Excess Securities”). The Purported Transferee shall not be entitled with respect to such Excess Securities to any rights of shareholders of the Company, including, without limitation, the right to vote such Excess Securities, to receive dividends or distributions, whether liquidating or otherwise, in respect thereof and to effect any Transfer thereof. Once the Excess Securities have been acquired in a Transfer that is in accordance with this Article 128 and is not a Prohibited Transfer, such Company Securities shall cease to be Excess Securities. For this purpose, any Transfer of Excess Securities not in accordance with the provisions of this Article 128 shall also be a Prohibited Transfer.

(ii)

The Company may require, including, but not limited to, as a condition to the registration of the Transfer of any Company Securities or the payment of any dividend or distribution on any Company Securities, that the proposed transferee or payee furnish to the Company all information reasonably requested by the Company with respect to all the direct or indirect ownership interests in such Company Securities. The Company may make such arrangements or issue such instructions to its stock transfer agent as may be determined by the Committee to be necessary or advisable to implement this Article 128, including, without limitation, authorizing such transfer agent to require an affidavit from a proposed transferee or payee regarding such Person’s direct, indirect, and constructive ownership of stock and other evidence that a Transfer will not be prohibited by the Transfer Restrictions as a condition to registering any Transfer or paying any dividend or distribution.

(b)

(i)

If a Prohibited Transfer has occurred: (1) the Prohibited Transfer and, if applicable, the registration of such Prohibited Transfer, shall be void ab initio and have no legal effect; and (2) upon written demand by the Company, the Purported Transferee (if identified by the Company or otherwise) shall transfer or cause to be transferred any certificate or other evidence of ownership of the Excess Securities within the Purported Transferee’s possession or control, together with any dividends or other distributions that were received by the Purported Transferee from the Company with respect to the Excess Securities (the “Prohibited Distributions”), to an agent designated and controlled by the Committee (the “Agent”).

(ii)

If a Prohibited Transfer has occurred, the Agent shall thereupon sell to a buyer or buyers the Excess Securities transferred to it pursuant to this Article 128(b)(ii) in one or more arm’s-length transactions (including over a national securities exchange on which the Company Securities may be traded, if possible); provided, however, that the Agent, in its sole discretion, shall effect such sale or sales in an orderly fashion and shall not be required to effect any such sale within any specific time frame if, in the Agent’s sole discretion, such sale or sales would

disrupt the market for the Company Securities or otherwise would adversely affect the value of the Company Securities; provided further that any such sale by the Agent must not constitute a Prohibited Transfer. If the Purported Transferee has resold the Excess Securities before receiving the Company’s demand to surrender the Excess Securities to the Agent, the Purported Transferee shall be deemed to have sold the Excess Securities for the Agent, and shall be required to transfer to the Agent any Prohibited Distributions and the proceeds of such sale (in the form received, i.e., whether in cash or other property), and the Agent shall thereupon identify and sell any non-cash consideration to a buyer or buyers in one or more arm’s-length transactions (including over a national securities exchange, if possible), except to the extent the Company grants written permission to the Purported Transferee to retain a portion of such sale proceeds not exceeding the amount that the Purported Transferee would have received from the Agent pursuant to Article 128(c) if the Agent, rather than the Purported Transferee, had resold the Excess Securities.

(c)

Except for Prohibited Distributions that are to be returned to the Purported Transferor in accordance with Article 128(b)(ii), the Agent shall apply any proceeds or any other amounts received by it by and in accordance with this Article 128 as follows:

(i)

first, such amounts shall be paid to the Agent to the extent necessary to cover its costs and expenses incurred in connection with its duties hereunder;

(ii)

second, any remaining amounts shall be paid to the Purported Transferee, up to the amount paid by the Purported Transferee for the Excess Securities (or the fair market value at the time of the Prohibited Transfer, in the event the purported Transfer of the Excess Securities was, in whole or in part, a gift, inheritance or similar Transfer); and

(iii)

third, any remaining amounts, subject to the limitations imposed by the following proviso, shall be paid to one or more organizations qualifying under Section 501(c)(3) of the Code selected by the Committee; provided, however, that if the Excess Securities (including any Excess Securities arising from a previous Prohibited Transfer not sold by the Agent in a prior sale or sales) represent a Percentage Stock Ownership interest in the Company greater than the Ownership Cap, then such remaining amounts shall be paid to two or more unrelated organizations qualifying under Section 501(c)(3) of the Code selected by the Committee, such that no organization qualifying under Section 501(c)(3) of the Code shall possess Percentage Stock Ownership in the Company in excess of the Ownership Cap.

(iv)

The recourse of any Purported Transferee in respect of any Prohibited Transfer shall be limited to the amount payable to the Purported Transferee pursuant to clause (ii) above. Except to the extent used to cover the reasonable and documented out-of-pocket costs and expenses incurred by the Agent in performing its duties hereunder, in no event shall the proceeds of any sale of Excess Securities pursuant to this Article 128 inure to the benefit of the Company.

(d)

If the Purported Transferee or the Purported Transferor fails to surrender the Excess Securities (as applicable) or the proceeds of a sale thereof to the Agent within thirty (30) days from the date on which the Company makes a demand pursuant to Article 128(b), then the Company shall, in such manner and at such time, as determined by the Committee, use its best efforts to enforce the provisions hereof, which may include the institution of legal proceedings to compel the surrender. Nothing in this Article 128(d) shall (i) be deemed inconsistent with any Prohibited Transfer of the Excess Securities provided in the Transfer Restrictions being void ab initio or (ii) preclude the Company in its discretion from immediately bringing legal proceedings without a prior demand.

(e)

In the event of any Prohibited Transfer that does not involve a transfer of Company Securities within the meaning of the Act, the application of Article 128(b)-(d) shall be modified as described in this Article 128(e). In such case, no such Purported Transferee shall be required to dispose of any interest that is not a Company Security, but such Purported Transferee and/or any Person whose ownership of Company Securities is attributed to such Purported Transferee (such Purported Transferee or other Person, a “Remedial Holder”) shall be deemed to have disposed of and shall be required to dispose of sufficient Company Securities (which Company Securities shall be disposed of in the inverse order in which they were acquired) to cause such Purported Transferee, following such disposition, not to be in violation of the Transfer Restrictions. Such disposition shall be deemed to occur simultaneously with the Transfer giving rise to the application of this provision, and such number of Company Securities that are deemed to be disposed of shall be considered Excess Securities and shall be disposed of through the Agent as provided in Article 128(b)-(d), except that the maximum aggregate amount payable to a Remedial Holder in connection with such sale shall be the fair market value of such Excess Securities at the time of the Prohibited Transfer. A Remedial Holder shall not be entitled, with respect to such Excess Securities, to any rights of shareholders of the Company, including, without limitation, the right to vote such Excess Securities and to receive dividends or distributions, whether liquidating or otherwise, in respect thereof, if any, following the time of the Prohibited Transfer. All expenses incurred by the Agent in disposing of such Excess Securities shall be paid out of any amounts due to such Remedial Holder. The purpose of this Article 128(e) is to extend the restrictions in Article 128(b)-(d) to situations in which there is a Prohibited Transfer without a direct Transfer of Company Securities, and this Article 128(e), along with the other provisions of the Transfer Restrictions, shall be interpreted to produce the same results, with differences as the context requires, as a direct Transfer of Company Securities.

129.

Liability. To the fullest extent permitted by law, any shareholder subject to the provisions of the Transfer Restrictions who knowingly violates the provisions of the Transfer Restrictions shall be liable to the Company for, and shall indemnify and hold the Company and its subsidiaries harmless against, any and all damages suffered by the Company or its subsidiaries as a result of such violation, including, but not limited to, United States federal, state or local taxes, together with any interest, penalties and additions to tax, imposed on the Company or any of its subsidiaries as a result of the Company or any of its subsidiaries being treated as a CFC and attorneys’, accountants’ and auditors’ fees incurred in connection with such violation.

130.	Compliance.

(a)

The Committee shall have the power to, in good faith, decide all matters necessary for determining compliance with the Transfer Restrictions, including, without limitation, determining (A) the identification of Prohibited Transferees, (B) whether a Transfer is a Prohibited Transfer, (C) whether to exempt a Transfer, (D) the Percentage Stock Ownership of any Prohibited Transferee or other Person, (E) whether an instrument constitutes a Company Security, (F) the amount (or fair market value) due to a Purported Transferee or Purported Transferor pursuant to the Transfer Restrictions, (G) to interpret any provision of the Transfer Restrictions, and (H) any other matter that the Committee determines to be relevant. The good faith determination of the Committee, upon the advice of outside counsel, on such matters shall be conclusive and binding on all persons and entities for the purposes of the Transfer Restrictions.

(b)

Without affecting or limiting any of the rights of SLL under the Business Combination Agreement, nothing contained in the Transfer Restrictions shall limit the authority of the Committee to take such other action to the extent permitted by law as it deems reasonably necessary or advisable to assist the Company and its shareholders in

preventing the Company or any of its subsidiaries from being treated as a CFC. Without limiting the generality of the foregoing but subject to the rights of SLL under the Business Combination Agreement, in the event of a change in law making one or more of the following actions reasonably necessary or desirable, the Committee may, by adopting a written resolution, (A) modify the ownership interest percentage in the Company or the Persons covered by the Transfer Restrictions, (B) modify the definitions of any terms set forth in the Transfer Restrictions or (C) modify the terms of the Transfer Restrictions as appropriate, in each case, in order to prevent the Company or any of its subsidiaries from being treated as a CFC, as a result of any changes in applicable Treasury Regulations or otherwise; provided, however, that the Committee shall not cause there to be such modification unless it determines, by adopting a written resolution, that such action is reasonably necessary or advisable to prevent the Company or any of its subsidiaries from being treated as a CFC or that the continuation of these restrictions is no longer reasonably necessary to prevent the Company or any of its subsidiaries from being treated as a CFC.

(c)

In the case of an ambiguity in the application of any of the provisions of the Transfer Restrictions, including any definition used herein, the Committee shall have the power to, determine the application of such provisions with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. In the event the Transfer Restrictions require an action by the Committee but fails to provide specific guidance with respect to such action, the Committee shall have the power to determine the action to be taken so long as such action is not contrary to the provisions of the Transfer Restrictions. All such actions, calculations, interpretations and determinations that are done or made by the Committee shall be conclusive and binding on the Company, the Agent, and all other parties for all other purposes of the Transfer Restrictions.

131.

Severability. If any provision or provisions of the Transfer Restrictions shall be held invalid, illegal or unenforceable as applied to any person or entity or circumstances for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of the Transfer Restrictions (including, without limitation, each portion of any sentence of the Transfer Restrictions containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.

132.

The restrictions on transfer and ownership imposed by the Transfer Restrictions will expire on the close of business on the date the Committee publicly announces that it has determined that such restrictions are no longer necessary or desirable to prevent the Company or any of its subsidiaries from being treated as a CFC.

BUSINESS OPPORTUNITIES

133.

In recognition and anticipation of the facts that: (a) directors, managers, officers, shareholders, partners, managing members, employees and/or agents of the Steiner Group (each of the foregoing, a “Steiner Group Related Person”) may serve as directors, officers, employees and agents of the Company or one or more of its subsidiaries); and (b) the Steiner Group engages, and shall continue to engage in the same or similar activities or related lines of business as those in which the Company, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Company or any of its subsidiaries, directly or indirectly, may engage, the provisions of Articles 133 through 137 are set forth to regulate and define the conduct of certain affairs of the Company as they may involve the shareholders and the Steiner Group Related Persons, and the powers, rights, duties and liabilities of the Company and its officers, directors and shareholders in connection therewith.

134.

To the fullest extent permitted by applicable law, the Steiner Group and the Steiner Group Related Persons shall have no duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the Company or any of its subsidiaries. To the fullest extent permitted by applicable law, the Company, on behalf of itself and its subsidiaries, renounces any interest, duty or expectancy of the Company or any of its subsidiaries in, or in being offered an opportunity to participate in, or being presented with, any potential transaction or matter which may be a corporate opportunity for either the Steiner Group or any Steiner Group Related Person, on the one hand, and the Company and its subsidiaries, on the other. Except to the extent expressly assumed by contract, to the fullest extent permitted by applicable law (including the Statute), the Steiner Group and the Steiner Group Related Persons shall have no duty to communicate or offer any such corporate opportunity to the Company or any of its subsidiaries and shall not be liable to the Company, any of its subsidiaries or any of their respective equityholders for breach of any fiduciary or other duty (of whatever nature) as a director, officer, employee, equityholder or agent of the Company or any of its subsidiaries by reason of the fact that such party directly or indirectly pursues, exploits or acquires such corporate opportunity for the Steiner Group, itself, himself or herself, directs such corporate opportunity to another person (including any Steiner Group member or any Steiner Group Related Person), or does not communicate information regarding such corporate opportunity to the Company.

135.

Except as provided elsewhere in these Articles, the Company, on behalf of itself and its subsidiaries, hereby renounces any interest or expectancy of the Company or any of its subsidiaries in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for both the Company or any of its subsidiaries and the Steiner Group, about which a director and/or officer of the Company who is also a Steiner Group Related Person acquires knowledge.

136.

To the extent a court might hold that the conduct of any activity related to a corporate opportunity that is renounced in these Articles to be a breach of duty to the Company, its subsidiaries or any of their equityholders, the Company, on behalf of itself and its subsidiaries, hereby waives, to the fullest extent permitted by applicable law, any and all claims and causes of action that the Company or any of its subsidiaries may have for such activities. To the fullest extent permitted by applicable law, the provisions of these Articles apply equally to activities conducted in the future and that have been conducted in the past.

137.	As used in Articles 133 through 137, the following definitions shall apply:

137.1

“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under the United States Securities Exchange Act of 1934, as amended; and

137.2

“Steiner Group” shall mean Nemo Investor Aggregator and SLL, and their respective Affiliates, and the respective successors and assigns of the foregoing.

FISCAL YEAR

138.	The fiscal year of the Company shall be determined by the Board of Directors.

BOOKS AND RECORDS

139.

The directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to inspection by the shareholders not being directors, and no shareholder (not being a director) shall have any right of inspecting any account or book or document of the Company except as conferred by statute or authorised by the directors.

NOTICES

140.

Any notice, information or written statement to be given by the Company to shareholders shall be in writing and delivered personally or mailed to the shareholders at their address appearing on the books of the Company. Without limiting the manner by which notice otherwise may be given effectively to shareholders, any notice, information or written statement may be given to shareholders by means of electronic transmission in accordance with the Act.

VOLUNTARY WINDING UP AND DISSOLUTION

141.	The Company may voluntarily commence to wind up and dissolve by resolution of shareholders or by resolution of directors.

142.

If the Company shall be wound up (whether the liquidation is voluntary, under supervision, or by the Court) the Liquidator may, with the authority of a resolution of shareholders, divide among the shareholders in specie or kind the whole or any part of the assets of the Company and whether or not the assets shall consist of property of one kind or shall consist of properties of different kinds, and may for such purpose set such value as he or she deems fair upon any one or more class or classes of property and may determine how such division shall be carried out as between the shareholders or different classes of shareholders.

CONTINUATION

143.	The Company may by resolution of shareholders or by a resolution passed unanimously by all directors of the Company continue as a company incorporated under the laws of a jurisdiction outside The Bahamas in the manner provided under those laws.

GOVERNING LAW

144.	Except as otherwise specifically provided for herein, Bahamian law shall govern all aspects of these Articles.

signature page to follow

COMMONWEALTH OF THE BAHAMAS

New Providence

Company under the International Business

Companies Act 2000

AMENDED AND RESTATED

MEMORANDUM

AND

ARTICLES OF ASSOCIATION

ONESPAWORLD HOLDINGS LIMITED

Incorporated the [ ] day of [ ], 2018

Prepared by:

H & J Corporate Services Ltd.

Ocean Centre

Montagu Foreshore

East Bay Street

Nassau, New Providence

Bahamas

EX-10.1

Exhibit 10.1

EXECUTION VERSION

FIRST LIEN CREDIT AGREEMENT

dated as of March 19, 2019

among

OneSpaWorld Holdings Limited,

as Holdings,

Dory Intermediate LLC,

as Lead Borrower,

Dory Acquisition Sub, Inc.,

as U.S. Borrower,

The Lenders Party Hereto

and

Goldman Sachs Lending Partners LLC,

as Administrative Agent and Collateral Agent

Goldman Sachs Lending Partners LLC,

as Sole Lead Arranger and Sole Bookrunner

TABLE OF CONTENTS


		Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS			2

Section 1.01	Defined Terms		2
Section 1.02	Other Interpretive Provisions		71
Section 1.03	Accounting Terms		72
Section 1.04	Rounding		73
Section 1.05	References to Agreements, Laws, Etc.		73
Section 1.06	Times of Day; Rates		73
Section 1.07	Timing of Payment or Performance		73
Section 1.08	Currency Equivalents Generally		73
Section 1.09	Letter of Credit Amounts		73
Section 1.10	Limited Condition Acquisitions		74
Section 1.11	Permitted Reorganizations		74
Section 1.12	Change of Currency		75
Section 1.13	Cashless Rollovers		75
Section 1.14	[Reserved]		75
Section 1.15	LIBOR Discontinuation		75

ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS			76

Section 2.01	The Loans		76
Section 2.02	Borrowings, Conversions and Continuations of Loans		76
Section 2.03	Letters of Credit		78
Section 2.04	[Reserved]		87
Section 2.05	Prepayments		87
Section 2.06	Termination or Reduction of Commitments		95
Section 2.07	Repayment of Loans		95
Section 2.08	Interest		96
Section 2.09	Fees, Closing Payments and Exit Payments		97
Section 2.10	Computation of Interest, Fees and Closing Payments		98
Section 2.11	Evidence of Indebtedness		98
Section 2.12	Payments Generally		99
Section 2.13	Sharing of Payments		101
Section 2.14	Incremental Credit Extensions		101
Section 2.15	Extensions of Term Loans, Revolving Credit Commitments and Delayed Draw Term Loan Commitments		106
Section 2.16	Defaulting Lenders		109
Section 2.17	Permitted Debt Exchanges		111
Section 2.18	Refinancing Amendments		114

ARTICLE III TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY			115

Section 3.01	Taxes		115
Section 3.02	Illegality		119
Section 3.03	Inability to Determine Rates		120
Section 3.04	Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurocurrency Rate Loans		121
Section 3.05	Funding Losses		122

- i -


Section 3.06	Matters Applicable to All Requests for Compensation	123
Section 3.07	Replacement of Lenders under Certain Circumstances	124
Section 3.08	Survival	125

ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS		125

Section 4.01	Closing Date	125
Section 4.02	Conditions to Delayed Draw Term Facility Credit Extension	129
Section 4.03	Conditions to Certain Subsequent Credit Extensions	129

ARTICLE V REPRESENTATIONS AND WARRANTIES		130

Section 5.01	Existence, Qualification and Power; Compliance with Laws	130
Section 5.02	Authorization; No Contravention	130
Section 5.03	Governmental Authorization; Other Consents	131
Section 5.04	Binding Effect	131
Section 5.05	Financial Statements; No Material Adverse Effect	131
Section 5.06	Litigation	132
Section 5.07	Ownership of Property; Liens; Insurance	132
Section 5.08	Environmental Compliance	132
Section 5.09	Taxes	133
Section 5.10	Compliance with ERISA	133
Section 5.11	Labor Matters	133
Section 5.12	Subsidiaries; Equity Interests	133
Section 5.13	Margin Regulations; Investment Company Act	134
Section 5.14	Disclosure	134
Section 5.15	Intellectual Property; Licenses, Etc.	134
Section 5.16	Solvency	134
Section 5.17	Collateral Documents	134
Section 5.18	Patriot Act; Anti-Money Laundering Laws	135
Section 5.19	Anti-Corruption Laws	135
Section 5.20	Sanctioned Persons	135
Section 5.21	Use of Proceeds	135
Section 5.22	Classification as Priority Lien Obligations; etc.	135
Section 5.23	Material Contracts	136

ARTICLE VI AFFIRMATIVE COVENANTS		136

Section 6.01	Financial Statements	136
Section 6.02	Certificates; Other Information	137
Section 6.03	Notices	139
Section 6.04	Maintenance of Existence	139
Section 6.05	Maintenance of Properties	140
Section 6.06	Maintenance of Insurance	140
Section 6.07	Compliance with Laws	140
Section 6.08	Books and Records	140
Section 6.09	Inspection Rights	140
Section 6.10	Covenant to Guarantee Obligations and Give Security	141
Section 6.11	Use of Proceeds	142
Section 6.12	Further Assurances and Post-Closing Covenants	143
Section 6.13	Designation of Subsidiaries	143
Section 6.14	Payment of Taxes	144

- ii -


Section 6.15	[Reserved]	144
Section 6.16	[Reserved]	144
Section 6.17	Compliance with Anti-Terrorism Laws and Anti-Corruption Laws	144
Section 6.18	Performance of Material Contracts	145
Section 6.19	Lender Conference Calls	145
Section 6.20	Credit Enhancements	145
Section 6.21	Access to Information for GS Investor Lenders	145

ARTICLE VII NEGATIVE COVENANTS		146

Section 7.01	Liens	146
Section 7.02	Investments	151
Section 7.03	Indebtedness	155
Section 7.04	Fundamental Changes	160
Section 7.05	Dispositions	162
Section 7.06	Restricted Payments	165
Section 7.07	Transactions with Affiliates	168
Section 7.08	Prepayments, Etc. of Indebtedness	169
Section 7.09	Financial Covenant	170
Section 7.10	[Reserved]	170
Section 7.11	Nature of Business and Fiscal Year	170
Section 7.12	Holdings Covenant	171
Section 7.13	Amendments or Waivers of Organizational Documents and Certain Related Agreements	172
Section 7.14	Amendments or Waivers with respect to Certain Indebtedness	172

ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES		172

Section 8.01	Events of Default	172
Section 8.02	Remedies Upon Event of Default	174
Section 8.03	Exclusion of Immaterial Subsidiaries	175
Section 8.04	Application of Funds	175
Section 8.05	Right to Cure	176

ARTICLE IX ADMINISTRATIVE AGENT AND OTHER AGENTS		177

Section 9.01	Appointment and Authorization of Agents	177
Section 9.02	Delegation of Duties	178
Section 9.03	Liability of Agents	179
Section 9.04	Reliance by Agents	179
Section 9.05	Notice of Default	180
Section 9.06	Credit Decision; Disclosure of Information by Agents	180
Section 9.07	Indemnification of Agents	181
Section 9.08	Agents in their Individual Capacities	181
Section 9.09	Successor Agents	181
Section 9.10	Administrative Agent May File Proofs of Claim; Credit Bidding	182
Section 9.11	Collateral and Guarantee Matters	184
Section 9.12	Other Agents; Arrangers and Managers	186
Section 9.13	Appointment of Supplemental Administrative Agents	186
Section 9.14	Withholding Tax	187
Section 9.15	GS Investor Provision	187
Section 9.16	Certain ERISA Matters	188

- iii -


ARTICLE X MISCELLANEOUS		189

Section 10.01	Amendments, Etc.	189
Section 10.02	Notices and Other Communications; Facsimile Copies	192
Section 10.03	No Waiver; Cumulative Remedies	195
Section 10.04	Attorney Costs and Expenses	195
Section 10.05	Indemnification by the Borrower	195
Section 10.06	Payments Set Aside	197
Section 10.07	Successors and Assigns	197
Section 10.08	Confidentiality	204
Section 10.09	Setoff	205
Section 10.10	Counterparts	206
Section 10.11	Integration	206
Section 10.12	Survival of Representations and Warranties	206
Section 10.13	Severability	206
Section 10.14	GOVERNING LAW, JURISDICTION, SERVICE OF PROCESS	207
Section 10.15	WAIVER OF RIGHT TO TRIAL BY JURY	208
Section 10.16	Binding Effect	208
Section 10.17	Judgment Currency	208
Section 10.18	Lender Action	208
Section 10.19	USA PATRIOT Act	209
Section 10.20	Obligations Absolute	209
Section 10.21	No Advisory or Fiduciary Responsibility	209
Section 10.22	Acknowledgment and Consent to Bail-In of EEA Financial Institutions	210
Section 10.23	Use of Name, Logo, etc.	210
Section 10.24	Intercreditor Agreements	210

- iv -

SCHEDULES


1.01A	—	Excluded Subsidiaries
1.01B	—	Security Agreements
1.01C	—	Agreed Security Principles
1.01D	—	Material Contracts
2.01	—	Commitments
5.06	—	Litigation
5.12	—	Subsidiaries and Other Equity Investments
6.12(b)	—	Post-Closing Deliverables
7.01(c)	—	Existing Liens
7.03	—	Existing Indebtedness
7.07	—	Transactions with Affiliates
10.02	—	Administrative Agent’s Office, Certain Addresses for Notices

EXHIBITS

Form of


A	—	Committed Loan Notice
B	—	[Reserved]
C-1(A)	—	Term Note (Lead Borrower)
C-2(B)	—	Term Note (U.S. Borrower)
C-2	—	Revolving Credit Note
C-3	—	Delayed Draw Note
D	—	Compliance Certificate
E	—	Assignment and Assumption
F	—	Discounted Prepayment Option Notice
G	—	Lender Participation Notice
H	—	Discounted Voluntary Prepayment Notice
I	—	[Reserved]
J	—	Sponsor Affiliated Lender Notice
K	—	Prepayment Notice
L	—	Solvency Certificate
M	—	First Lien Intercreditor Agreement
N	—	Junior Lien Intercreditor Agreement
O	—	Intercompany Note
P	—	Successor Holdings Joinder

- v -

FIRST LIEN CREDIT AGREEMENT

This FIRST LIEN CREDIT AGREEMENT is entered into as of March 19, 2019, among Dory Intermediate LLC, a Delaware limited liability company, (the “Lead Borrower”), Dory Acquisition Sub, Inc., a Delaware corporation (the “U.S. Borrower” and, together with the Lead Borrower, the “Borrowers” and each, individually, a “Borrower”), OneSpaWorld Holdings Limited, a company organized under the laws of the Commonwealth of the Bahamas (“Initial Holdings”), Goldman Sachs Lending Partners LLC (“GS Lending Partners”), as Administrative Agent and Collateral Agent, and each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”).

PRELIMINARY STATEMENTS

Pursuant to that certain Business Combination Agreement, dated as of November 1, 2018 (as amended on January 7, 2019 by Amendment No. 1 to Business Combination Agreement and as further amended, supplemented or modified and in effect from time to time in the manner permitted pursuant to Section 4.01(c) of this Agreement, and including all schedules and exhibits thereto, the “Acquisition Agreement”), by and among inter alios, the Borrowers, Initial Holdings, the SPAC (as defined herein), Steiner UK Limited, Steiner Management Services, LLC, Dory US Merger Sub, LLC, Dory Acquisition Sub, Limited and Steiner Leisure Limited (in its capacity as a Seller (as defined therein) and as the representative for the Seller Parties (as defined therein) party thereto), (x) the SPAC will use funds available in the Trust Account (as defined in the Acquisition Agreement), which holds funds contributed from public investors and held by the SPAC for the purposes of undertaking business combinations (the “SPAC Trust Account”), subject to any redemptions required under applicable law or the governing documents of the SPAC to acquire equity interests in certain subsidiaries of the Sellers by way of a business combination, which shall include, but not be limited to (i) the purchase of equity interests of certain subsidiaries organized in the United States (the transactions described in this clause (i), the “U.S. Target Purchase” and the funds in the SPAC Trust Account remaining after the U.S. Target Purchase, the “SPAC Trust Account Remainder”) and (ii) the merger of Dory U.S. Merger Sub, LLC with and into the SPAC (the “U.S. Merger” and, together with the U.S. Target Purchase, collectively, the “Closing Date Acquisition”) and (y) following the U.S. Merger, the SPAC shall lend the SPAC Trust Account Remainder to Holdings (the “HAC Loan”), in each case, on the terms and subject to the conditions set forth in the Acquisition Agreement.

The Borrowers have requested that the Lenders extend credit (i) to the Borrowers in the form of Initial Term B Loans in an initial aggregate principal amount of $208,500,000, of which $20,000,000 shall be borrowed by the U.S. Borrower (the “U.S. Sub-facility”) and the remainder of which shall be borrowed by the Lead Borrower and (ii) to the Lead Borrower in the form of (A) Revolving Credit Commitments in an initial aggregate principal amount of $20,000,000 (the “Revolving Credit Facility”) and (B) Delayed Draw Term Loan Commitments in an initial aggregate principal amount of (x) $5,000,000 (the “Delayed Draw Term Facility”). The Revolving Credit Facility may include one or more Letters of Credit from time to time.

The proceeds of the Initial Term B Loans and the proceeds of the Revolving Credit Loans borrowed on the Closing Date, will be used to finance in part the Transactions and the Transaction Expenses and other purposes not prohibited by the terms of this Agreement.

From and after the Closing Date, the proceeds of (x) any Revolving Credit Loans and Letters of Credit will be used for working capital and general corporate purposes, including the funding of Permitted Acquisitions, other permitted Investments and/or any other transaction not prohibited by the terms of this Agreement and (y) the proceeds of any the Delayed Draw Term Loans will be used for purposes permitted under Section 6.11.

The applicable Lenders have indicated their willingness to lend, and the L/C Issuer has indicated its willingness to issue Letters of Credit, in each case, on the terms and subject to the conditions set forth herein.

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I

Definitions and Accounting Terms

Section 1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:

“Acceptable Discount” has the meaning specified in Section 2.05(d)(iii).

“Acceptance Date” has the meaning specified in Section 2.05(d)(ii).

“Accounting Changes” has the meaning specified in Section 1.03(d).

“Acquired EBITDA” means, with respect to any Acquired Entity or Business or any Converted Restricted Subsidiary for any period, the amount for such period of Consolidated EBITDA of such Acquired Entity or Business or Converted Restricted Subsidiary, as applicable, all as determined on a consolidated basis for such Acquired Entity or Business or Converted Restricted Subsidiary, as applicable.

“Acquired Entity or Business” means, for any period, any Person, property, business or asset acquired by any Borrower or any Restricted Subsidiary during such period (other than an Unrestricted Subsidiary), to the extent not subsequently sold, transferred or otherwise disposed of by such Borrower or such Restricted Subsidiary during such period.

“Acquisition” means the acquisition of (i) a Controlling equity or other ownership interest in another Person (including upon the exercise of an option, warrant or convertible or similar type security to acquire such a Controlling interest), whether by purchase of such equity or other ownership interest or upon exercise of an option or warrant for, or conversion of securities into, such equity or other ownership interest, or (ii) assets of another Person (whether by purchase, merger or otherwise) which constitute all or substantially all of the assets of such Person or of a line or lines of business conducted by such Person.

“Acquisition Agreement” has the meaning specified in the Preliminary Statements to this Agreement.

“Additional Lender” has the meaning specified in Section 2.14(d).

“Additional Refinancing Lender” means, at any time, any bank, financial institution or other institutional lender or investor (other than any such bank, financial institution or other institutional lender or investor that is a Lender at such time) that agrees to provide any portion of Credit Agreement Refinancing Indebtedness pursuant to a Refinancing Amendment in accordance with Section 2.18; provided, (x) each Additional Refinancing Lender shall be subject to the approval of (i) in the case of Refinancing Revolving Credit Commitments, the L/C Issuer, such approval not to be unreasonably withheld, conditioned or delayed, to the extent that each such Additional Refinancing Lender is not then an existing Revolving Credit Lender, an Affiliate of a then existing Revolving Credit Lender or an

Approved Fund and (ii) the Lead Borrower and (y) any such Additional Refinancing Lender that is a Sponsor Affiliated Lender shall be subject to the provisions of Section 10.07(j), mutatis mutandis, to the same extent as if such Credit Agreement Refinancing Indebtedness and related Obligations had been obtained by such Lender by way of assignment.

“Administrative Agent” means, subject to Section 9.13, GS Lending Partners, in its capacity as administrative agent under the Loan Documents, or any successor administrative agent appointed in accordance with Section 9.09.

“Administrative Agent’s Office” means the Administrative Agent’s address and account as set forth on Schedule 10.02, or such other address or account as the Administrative Agent may from time to time notify the Lead Borrower and the Lenders.

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Affiliated Debt Fund” means a Sponsor Affiliated Lender that is primarily engaged in, or advises funds or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course of business and the investment decisions of which are not Controlled by the private equity business of the SPAC or any Affiliate of the SPAC; provided, however, that an Affiliated Debt Fund shall exercise independent discretion from the private equity business of the SPAC and any Affiliate of the SPAC and its managers shall have fiduciary duties to third party investors that are independent of their duties to the direct or indirect equity holders of Holdings (or any parent entity thereof).

“Agent Parties” has the meaning specified in Section 10.02(c).

“Agent-Related Persons” means the Agents, together with their respective Affiliates, and the officers, directors, employees, agents, trustees, advisors, other representatives and successors and assigns of such Persons and Affiliates.

“Agents” means, collectively, the Administrative Agent, the Collateral Agent, and the Supplemental Administrative Agents (if any).

“Aggregate Commitments” means the Commitments of all the Lenders.

“Agreed Security Principles” means the principles set out in Schedule 1.01C.

“Agreement” means this Credit Agreement.

“Agreement Currency” has the meaning specified in Section 10.17.

“Anti-Corruption Laws” means all laws, rules or regulations relating to corruption or bribery, including, but not limited to, the United States Foreign Corrupt Practices Act of 1977, as amended.

“Anti-Money Laundering Laws” has the meaning specified in Section 5.18(b).

“Applicable Discount” has the meaning specified in Section 2.05(d)(iii).

“Applicable Indebtedness” has the meaning specified in the definition of “Weighted Average Life to Maturity.”

“Applicable Lending Office” means for any Lender, such Lender’s office, branch or affiliate designated for Eurocurrency Rate Loans, Base Rate Loans, L/C Advances or Letters of Credit, as applicable, as notified to the Administrative Agent, any of which offices may be changed by such Lender.

“Applicable Payment” has the meaning specified in Section 2.05(a)(i).

“Applicable Percentage” means, at any time (a) with respect to any Lender with a Commitment of any Class, the percentage equal to a fraction the numerator of which is the amount of such Lender’s Commitment of such Class at such time and the denominator of which is the aggregate amount of all Commitments of such Class of all Lenders (provided, (i) in the case of Section 2.16 when a Defaulting Lender shall exist, “Applicable Percentage” with respect to the Revolving Credit Facility shall be determined by disregarding any Defaulting Lender’s Revolving Credit Commitment under the Revolving Credit Facility, (ii) in the case of Section 2.16 when a Defaulting Lender shall exist, “Applicable Percentage” with respect to the Delayed Draw Term Facility shall be determined by disregarding any Defaulting Lender’s Delayed Draw Term Loan Commitment under the Delayed Draw Term Facility and (iii) if the Commitments under the Revolving Credit Facility have terminated or expired, the Applicable Percentages of the Lenders under such Revolving Credit Facility shall be determined based upon the Revolving Credit Commitments thereunder most recently in effect) and (b) with respect to the Loans of any Class, a percentage equal to a fraction the numerator of which is such Lender’s Outstanding Amount of the Loans of such Class and the denominator of which is the aggregate Outstanding Amount of all Loans of such Class.

“Applicable Rate” and the “Applicable Revolving Commitment Fee” means a percentage per annum equal to:

(a) until delivery of financial statements and a related Compliance Certificate for the first full fiscal quarter commencing on or after the Closing Date pursuant to Section 6.01: (I) with respect to the Initial Term B Loans, the Delayed Draw Term Loans and Revolving Credit Loans, (x) in each case, that are Base Rate Loans, 3.00% per annum and (y) in each case, that are Eurocurrency Rate Loans, 4.00% per annum and (II) with respect to the Applicable Revolving Commitment Fee, 0.50%; and

(b) thereafter, the percentages per annum set forth below, based upon the First Lien Senior Secured Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(a): with respect to each of the Initial Term B Loans, the Delayed Draw Term Loans, the Revolving Credit Loans and the Applicable Revolving Commitment Fee:


Pricing Level	First Lien Senior Secured Leverage Ratio		Applicable Rate for Base Rate Loans			Applicable Rate for Eurocurrency Rate Loans			Applicable Revolving Commitment Fee
I		³ 4.50:1.00		3.00	%		4.00	%		0.50	%
II		< 4.50:1.00		2.75	%		3.75	%		0.325	%

Any increase or decrease in the Applicable Rate or the Applicable Revolving Commitment Fee resulting from a change in the First Lien Senior Secured Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(a); provided, if a Compliance Certificate is not delivered within the time frame set forth in Section 6.02(a), the Applicable Rate or the Applicable Revolving Commitment Fee set forth in “Pricing Level I” shall automatically apply commencing with the first Business Day immediately following the due date of such Compliance Certificate and continuing until the first Business Day immediately following the delivery of such Compliance Certificate; provided further, if an Event of Default shall have occurred and be continuing upon the written request of the Required Lenders, the Applicable Rate or the Applicable Revolving Commitment Fee set forth in “Pricing Level I” shall automatically apply.

Notwithstanding anything to the contrary contained above in this definition or elsewhere in this Agreement, if it is subsequently determined that the First Lien Senior Secured Leverage Ratio set forth in any Compliance Certificate delivered to the Administrative Agent is inaccurate for any reason and the result thereof is that the Lenders received interest or fees for any period based on an Applicable Rate or the Applicable Revolving Commitment Fee that is less than that which would have been applicable had the First Lien Senior Secured Leverage Ratio been accurately determined, then, for all purposes of this Agreement, the “Applicable Rate” or the “Applicable Revolving Commitment Fee” for any day occurring within the period covered by such Compliance Certificate shall retroactively be deemed to be the relevant percentage as based upon the accurately determined First Lien Senior Secured Leverage Ratio for such period, and any shortfall in the interest or fees theretofore paid by the appliable Borrower for the relevant period pursuant to Section 2.08 and Section 2.09 as a result of the miscalculation of the First Lien Senior Secured Leverage Ratio shall be deemed to be (and shall be) due and payable under the relevant provisions of Section 2.08 or Section 2.09, as applicable, at the time the interest or fees for such period were required to be paid pursuant to such Section (and shall remain due and payable until paid in full, together with all amounts owing under Section 2.08 (other than Section 2.08(c)), in accordance with the terms of this Agreement); provided, notwithstanding the foregoing, so long as an Event of Default described in Section 8.01(a), (f) or (g) has not occurred with respect to any Borrower, such shortfall shall only be due and payable five (5) Business Days following the determination described above.

Notwithstanding the foregoing, the Applicable Rate or the Applicable Revolving Commitment Fee in respect of any Class of Extended Revolving Credit Commitments, Refinancing Revolving Credit Commitments, any Class of Refinancing Delayed Draw Term Loan Commitments, Extended Delayed Draw Term Loan Commitments, any Incremental Term Loans, Extended Term Loans, Revolving Credit Loans made pursuant to any Extended Revolving Credit Commitments, Revolving Credit Loans made pursuant to any Refinancing Revolving Credit Commitments or Delayed Draw Term Loans made pursuant to Refinancing Delayed Draw Term Loan Commitments or Extended Delayed Draw Term Loan Commitments shall be the applicable percentages per annum set forth in the relevant Incremental Facility Amendment, Refinancing Amendment or Extension Offer.

“Appropriate Lender” means, at any time, (a) with respect to Loans of any Class, the Lenders of such Class and (b) with respect to any Letters of Credit, (i) the relevant L/C Issuer and (ii) the Revolving Credit Lenders.

“Approved Foreign Bank” has the meaning specified in the definition of “Cash Equivalents.”

“Approved Fund” means (i) any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or, (c) an entity or an Affiliate of an entity that administers or manages a Lender or (ii) at any time that any GS Investor is a Lender hereunder, any Fund that is advised by (a) an Affiliate of a GS Investor Lender or (b) an entity or an Affiliate of an entity that advises a GS Investor Lender.

“Assignment and Assumption” means (a) an Assignment and Assumption substantially in the form of Exhibit E and (b) in the case of any assignment of Term Loans or the Delayed Draw Term Loans in connection with a Permitted Debt Exchange conducted in accordance with Section 2.17, such form of assignment (if any) as may have been requested by the Administrative Agent in accordance with Section 2.17(a)(viii) or any other form (including electronic documentation generated by an approved electronic platform) approved by the Administrative Agent.

“Attorney Costs” means and includes all reasonable and documented out-of-pocket fees, expenses and disbursements of any law firm or other external legal counsel.

“Attributable Indebtedness” means, on any date, in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP and Indebtedness incurred for the purpose of financing all or any part of the purchase price or cost of acquisition, repair, construction or improvement of fixed or capital assets that are used or useful in the business of such Person.

“Audited Financial Statements” means the audited financial statements of Holdings and its subsidiaries on a consolidated basis for the period ended December 31, 2017, December 31, 2016 and December 31, 2015, in each case prepared in accordance with GAAP.

“Auto-Extension Letter of Credit” has the meaning specified in Section 2.03(b)(iii).

“Available Amount” means, at any time (the “Available Amount Reference Time”), a cumulative amount (which shall not be less than zero) equal to the sum of $20,000,000, plus (in each case, without duplication):

(a) the Cumulative Excess Cash Flow Amount at such time; plus

(b) the amount of any capital contributions (including the proceeds and the fair market value (as reasonably determined by the Lead Borrower) of marketable securities or other property received by the Lead Borrower from any person other than a Loan Party (other than Holdings) or a Restricted Subsidiary) or Net Cash Proceeds from any Permitted Equity Issuance (or issuance of debt securities that have been converted into or exchanged for Qualified Equity Interests) (other than any Cure Amount or any other capital contributions or equity or debt issuances to the extent utilized in connection with other transactions permitted pursuant to Section 7.02(t), 7.06(j) or 7.08(iii)(A)) received by or made to the Lead Borrower (or any direct or indirect parent thereof and contributed by such parent to the Lead Borrower) during the period from and including the Business Day immediately following the Closing Date through and including the Available Amount Reference Time; plus

(c) to the extent not otherwise applied to prepay the outstanding Second Lien Term Loans in accordance with the terms of the Second Lien Credit Agreement, the aggregate amount of Retained Declined Proceeds during the period from the Business Day immediately following the Closing Date through and including the Available Amount Reference Time; plus

(d) to the extent not already reflected as a return of capital or deemed reduction in the amount of such Investment pursuant to clause (e) below or any other provision of Section 7.02, an amount equal to any net after-tax returns in cash and Cash Equivalents (including dividends, interest, distributions, returns of principal, sale proceeds, repayments, income and similar amounts) actually received by any Loan Party or Restricted Subsidiary in respect of any Investments pursuant to Section 7.02(n); minus

(e) the aggregate amount of the fair market value of (i) any Investments made pursuant to Section 7.02(n) (net of any return of capital in respect of such Investment or deemed reduction in the amount of such Investment, including, without limitation, upon the redesignation of any Unrestricted Subsidiary as a Restricted Subsidiary or the sale, transfer, lease or other disposition of any such Investment), (ii) any Restricted Payment made pursuant to Section 7.06(n) and (iii) any payments made pursuant to Section 7.08(iii)(C), in each case, during the period commencing on the Closing Date through and including the Available Amount Reference Time (and, for purposes of this clause (e), without taking account of the intended usage of the Available Amount at such Available Amount Reference Time).

“Available Amount Reference Time” has the meaning specified in the definition of “Available Amount”.

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“Bankruptcy Code” means Title 11 of the United States Code, as amended, or any similar federal or state law for the relief of debtors.

“Base Rate” means a fluctuating rate per annum, for any day, equal to the highest of:

(a) the Prime Rate;

(b) Federal Funds Rate plus ¹⁄₂ of 1.00%; and

“Base Rate Loan” means a Loan that bears interest at a rate based on the Base Rate.

“Beneficial Ownership Regulation” means 31 C.F.R § 1010.230, as amended or modified from time to time.

“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.

“Borrower Materials” has the meaning specified in Section 6.02.

“Borrowers” has the meaning specified in the Preliminary Statements to this Agreement. For the avoidance of doubt, no Borrower shall be designated as an “Immaterial Subsidiary”, “Securitization Subsidiary” and “Unrestricted Subsidiary” at any time.

“Borrowing” means Loans of the same Class, Type and currency, made, converted or continued on the same date and, in the case of Eurocurrency Rate Loans, as to which a single Interest Period is in effect.

“Borrowing Minimum” means (x) in the case of Revolving Credit Loans, $100,000 and (y) in the case of Term Loans, $1,000,000; provided that the Borrowing Minimum with respect to the Delayed Draw Term Loans shall be $1,000,000, or such lesser amount as reasonably agreed by the Administrative Agent and the Lenders in respect of such applicable Class.

“Borrowing Multiple” means (x) in the case of Revolving Credit Loans, $50,000, (y) in the case of Term Loans, $100,000, and (z) in the case of the Delayed Draw Term Loans, $1,000,000, in each case, or such other amount as reasonably agreed by the Administrative Agent and the Lenders in respect of such applicable Class.

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed, or are in fact closed; provided, when used in connection with a Eurocurrency Rate Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in Dollar deposits in the London interbank market.

“Capital Expenditures” means, for any period, the aggregate of, without duplication, (a) all expenditures (whether paid in cash or accrued as liabilities and including Capitalized Research and Development Costs and Capitalized Software Expenditures) by the Lead Borrower and its Restricted Subsidiaries during such period that, in conformity with GAAP, are or are required to be included as additions during such period to property, plant or equipment reflected in the consolidated balance sheet of the Lead Borrower and its Restricted Subsidiaries and (b) Capitalized Lease Obligations incurred by the Lead Borrower and its Restricted Subsidiaries during such period.

“Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a Capitalized Lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) prepared in accordance with GAAP.

“Capitalized Leases” means all leases that are required to be, in accordance with GAAP, recorded as capitalized leases; provided, for all purposes hereunder the amount of obligations under any Capitalized Lease shall be the amount thereof accounted for as a liability in accordance with GAAP; provided, that all obligations of any Person that are or would be characterized as an operating lease as determined in accordance with GAAP as in effect on the date hereof (whether or not such operating lease was in effect on such date) shall continue to be accounted for as an operating lease (and not as a Capitalized Lease or Capitalized Lease Obligation) for purposes of this Agreement regardless of any

change in GAAP following the Closing Date that would otherwise require such obligation to be recharacterized as a Capitalized Lease Obligation, to the extent that financial reporting shall not be affected hereby. For purposes of Section 7.01, a Capitalized Lease Obligation shall be deemed to be secured by a Lien on the property being leased and such property shall be deemed to be owned by the lessee.

“Capitalized Research and Development Costs” means research and development costs that are required to be, in accordance with GAAP, capitalized.

“Capitalized Software Expenditures” means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by a Person and its Restricted Subsidiaries during such period in respect of purchased software or internally developed software and software enhancements that, in conformity with GAAP, are required to be reflected as capitalized costs on the consolidated balance sheet of such Person and its Restricted Subsidiaries.

“Cash Collateral” has the meaning specified in Section 2.03(f).

“Cash Collateralize” has the meaning specified in Section 2.03(f).

“Cash Equivalents” means any of the following types of Investments, to the extent owned by Holdings or any Restricted Subsidiary:

(1) Dollars and, with respect to any Non-U.S. Subsidiaries, other currencies held by such Non-U.S. Subsidiary in the ordinary course of business;

(2) securities issued or directly and fully and unconditionally guaranteed or insured by the government of the United States, the United Kingdom, any participating member state of the European Union or any agency or instrumentality of the foregoing the securities of which are unconditionally guaranteed as a full faith and credit obligation of such government with maturities of 24 months or less from the date of acquisition;

(3) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, with any domestic or foreign commercial bank having capital and surplus of not less than $250,000,000 in the case of U.S. banks and $100,000,000 (or the Dollar Equivalent as of the date of determination) in the case of non-U.S. banks;

(4) repurchase obligations for underlying securities of the types described in clauses (2), (3) and (7) of this definition entered into with any financial institution meeting the qualifications specified in clause (3) above;

(5) commercial paper rated at least “P-1” by Moody’s or at least “A-1” by S&P, and in each case maturing within 24 months after the date of creation thereof and Indebtedness or preferred stock issued by Persons with a rating of “A” or higher from S&P or “A-2” or higher from Moody’s, with maturities of 24 months or less from the date of acquisition;

(6) marketable short-term money market and similar securities having a rating of at least “P-2” or “A-2” from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another nationally recognized statistical rating agency selected by the Lead Borrower) and in each case maturing within 24 months after the date of creation or acquisition thereof;

(7) readily marketable direct obligations issued by any state, commonwealth or territory of the United States or any political subdivision or taxing authority thereof having an Investment Grade Rating from Moody’s or S&P with maturities of 24 months or less from the date of acquisition;

(8) readily marketable direct obligations issued by any foreign government or any political subdivision or public instrumentality thereof, in each case having an Investment Grade Rating from Moody’s or S&P with maturities of 24 months or less from the date of acquisition;

(9) Investments with average maturities of 12 months or less from the date of acquisition in money market funds rated within the top three ratings category by S&P or Moody’s;

(10) with respect to any Non-U.S. Subsidiary: (i) obligations of the national government of the country in which such Non-U.S. Subsidiary maintains its chief executive office and principal place of business; provided such country is a member of the Organization for Economic Cooperation and Development, in each case maturing within one year after the date of investment therein, (ii) certificates of deposit of, bankers acceptances of, or time deposits with, any commercial bank which is organized and existing under the laws of the country in which such Non-U.S. Subsidiary maintains its chief executive office and principal place of business; provided such country is a member of the Organization for Economic Cooperation and Development, and whose short-term commercial paper rating from S&P is at least “A-1” or the equivalent thereof or from Moody’s is at least “P-1” or the equivalent thereof (any such bank being an “Approved Foreign Bank”), and in each case with maturities of not more than 270 days from the date of acquisition and (iii) the equivalent of demand deposit accounts which are maintained with an Approved Foreign Bank;

(11) Cash Equivalents of the types described in clauses (1) through (10) above denominated in Dollars; and

(12) investment funds investing at least 90% of their assets in Cash Equivalents of the types described in clauses (1) through (11) above.

Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clause (1) above; provided, such amounts are converted into any currency listed in clause (1) above as promptly as practicable and in any event within ten (10) Business Days following the receipt of such amounts.

“Cash Management Bank” means (i) each provider of any Cash Management Services to Holdings or any Restricted Subsidiary and (ii) each provider of Cash Management Services to Holdings or any Restricted Subsidiary, including any Cash Management Secured Bank.

“Cash Management Obligations” means obligations owed by Holdings or any Restricted Subsidiary to any Cash Management Bank in respect of any Cash Management Services.

“Cash Management Secured Bank” means any Person that is an Agent or a Lender or an Affiliate of any of the foregoing at the time it initially provides any Cash Management Services pursuant to a Secured Cash Management Agreement (or, in the case of Secured Cash Management Agreements existing on the Closing Date, on the Closing Date), whether or not such Person subsequently ceases to be an Agent or a Lender or an Affiliate of any of the foregoing.

“Cash Management Services” means any agreement or arrangement to provide cash management services, including treasury, depository, overdraft, credit card processing, credit or debit card, purchase card, electronic funds transfer, ACH transactions and other cash management arrangements.

“Casualty Event” means any event that gives rise to the receipt by the Lead Borrower or any of its Restricted Subsidiary of any insurance proceeds or condemnation awards in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace or repair such equipment, fixed assets or real property.

“CFC” means a controlled foreign corporation (within the meaning of Section 957 of the Code).

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued.

“Change of Control” means the earlier to occur of:

(a) at any time and for any reason whatsoever, (A) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) shall become the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under such Act), directly or indirectly, of more than thirty-five percent (35%) of the then outstanding voting stock of Holdings or its direct or indirect parent company and (B) at any time during any period of twelve (12) consecutive months, the Continuing Directors shall constitute less than a majority of the board of directors, managers or other governing body of Holdings;

(b) the (i) Lead Borrower ceasing to be a direct Wholly-Owned Subsidiary of Holdings or (ii) the U.S. Borrower ceasing to be a direct or indirect Wholly-Owned Subsidiary of Holdings; or

“Class” (a) when used with respect to Lenders, refers to whether such Lenders are Revolving Credit Lenders, Delayed Draw Term Lenders or Term Lenders, (b) when used with respect to Commitments, refers to whether such Commitments are Revolving Credit Commitments, Initial Term B Commitments, Delayed Draw Term Loan Commitments, Extended Revolving Credit Commitments, Incremental Revolving Credit Commitments, Refinancing Revolving Credit Commitments, Extended Delayed Draw Term Loan Commitments, Refinancing Delayed Draw Term Loan Commitments, Commitments in respect of any Incremental Term Loans, Commitments in respect of any Extended Term Loans or Refinancing Term Commitments and (c) when used with respect to Loans or a Borrowing, refers to whether such Loans, or the Loans comprising such Borrowing, are Revolving Credit Loans, Refinancing Revolving Credit Loans, Delayed Draw Term Loans, Refinancing Delayed Draw Term Loans, Initial Term B Loans, Incremental Term Loans, Refinancing Term Loans or Extended Term

Loans. Notwithstanding the above, Initial Term B Loans, Delayed Draw Term Loans, Incremental Term Loans, Refinancing Revolving Credit Loans, Refinancing Term Loans, Refinancing Delayed Draw Term Loans and Extended Term Loans that have different terms (including currencies) and conditions (together with the Commitments in respect thereof and any Lenders thereof) shall be construed to be in different Classes; provided that Incremental Term Loans or any Delayed Draw Term Loans in the form of increases to any then existing Class of Term Loans shall be construed as part of the same Class as such increased Term Loans.

“Closing Date” means the date on which all of the applicable conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 10.01 and the Initial Term B Loans are made to the Borrowers.

“Closing Date Acquisition” has the meaning specified in the Preliminary Statements to this Agreement.

“Closing Date Acquisition Guarantee and Lien Release” means the release and termination of the guarantees provided by, and the security interests granted by, certain of the Subsidiaries of the Lead Borrower pursuant to (i) the Credit Agreement, dated as of December 9, 2015 (as amended, restated, amended and restated, extended, renewed, supplemented, modified and otherwise changed from time to time), by and among Steiner Leisure Limited, an international business company incorporated under the laws of the Commonwealth of The Bahamas (“Steiner Leisure”), and certain of its Subsidiaries as borrowers, Newstar Financial, Inc., as administrative agent and collateral agent, and the other lenders from time to time party thereto, and (ii) the Credit Agreement, dated as of December 9, 2015 (as amended, restated, amended and restated, extended, renewed, supplemented, modified and otherwise changed from time to time), by and among Steiner Leisure and certain of its Subsidiaries as borrowers, PNC Bank, National Association, as the administrative agent and collateral agent, and other lenders from time to time party thereto, in each case, including by way of the discharge and satisfaction of the primary obligations under such facility.

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“Collateral” means all the “Collateral” (or similar term) as defined in the Collateral Documents and all other property of whatever kind and nature pledged or charged as collateral under any Collateral Document, and shall include the Mortgaged Properties.

“Collateral Agent” means the Administrative Agent, in its capacity as collateral agent under any of the Loan Documents, or any successor collateral agent appointed in accordance with Section 9.09.

“Collateral and Guarantee Requirement” means, at any time, subject to the Agreed Security Principles and the Intercreditor Agreement, the requirement that:

(a) the Collateral Agent shall have received each Collateral Document required to be delivered on the Closing Date pursuant to Section 4.01 or thereafter pursuant to Section 6.10 or Section 6.12 duly executed by each Loan Party that is a party thereto;

(b) all Obligations shall have been unconditionally guaranteed (the “Guarantees”) jointly and severally, by (i) Holdings, (ii) each Borrower (other than with respect to its own Obligations) and (iii) each other Restricted Subsidiary of Holdings that is a Material Subsidiary (other than, in the case of this clause (iii) any Excluded Subsidiary and any non-Wholly-Owned Subsidiary) (collectively, the “Guarantors” and each individually, a “Guarantor”);

(c) the Obligations and the Guarantees shall have been secured pursuant to the Security Agreements by a first-priority security interest in (i) all the Equity Interests of Borrowers and (ii) all other Equity Interests (other than Excluded Equity) held directly by Holdings, Borrowers or any Subsidiary Guarantor in any Subsidiary; provided, that in the case of Obligations of the U.S. Borrower under the U.S. Sub-facility, the security interest granted shall not include (1) any Equity Interests of any CFC or Foreign Subsidiary Holdco directly owned by the Lead Borrower in excess of 65% of the issued and outstanding voting Equity Interests (within the meaning of Section 1.956-2(c)(2) of the U.S. Treasury Regulations) and 100% of the issued and outstanding non-voting Equity Interests of each such Subsidiary or (2) any Equity Interests of any direct or indirect Subsidiary of any CFC directly owned by the Lead Borrower;

(d) except to the extent otherwise provided hereunder or under any Collateral Document, the Obligations and the Guarantees shall have been secured by a perfected security interest (other than in the case of mortgages, to the extent such security interest may be perfected by delivering certificated securities and instruments (in each case, accompanied by an undated stock power or other appropriate instrument of transfer executed in blank), filing personal property financing statements, or making any necessary filings with the United States Patent and Trademark Office, United States Copyright Office, or the World Intellectual Property Organization) in, and liens (including mortgages) on, substantially all tangible and intangible assets of Holdings, each Borrower and each other Guarantor (including, without limitation, accounts receivable, inventory, equipment, investment property, material intellectual property, other general intangibles (including contract rights), owned (but not leased) real property and proceeds of the foregoing), in each case, with the priority required by the Collateral Documents; provided, security interests in real property shall be limited to the Mortgaged Properties; provided further that, assets of any CFC shall not secure the Obligations of the U.S. Borrower under the U.S. Sub-facility;

(e) none of the Collateral shall be subject to any Liens other than Liens permitted by Section 7.01; and

(f) the Collateral Agent shall have received (i) counterparts of a Mortgage with respect to each Material Real Property required to be delivered pursuant to Section 6.10 and/or Section 6.12, as applicable, duly executed and delivered by the record owner of such property, (ii) a title insurance policy for such Mortgaged Property (or marked-up title insurance commitment having the effect of a title insurance policy) (the “Mortgage Policies”) issued by a Title Company insuring the Lien of each such Mortgage as a valid first priority Lien on the property described therein, free of any other Liens except as expressly permitted by Section 7.01 hereof, together with such endorsements, coinsurance and reinsurance as the Collateral Agent may reasonably request and to the extent available in each applicable jurisdiction at commercially reasonable rates, (iii) a Survey with respect to each Mortgaged Property; provided, however, that a Survey shall not be required to the extent that (A) an existing survey together with an “affidavit of no change” satisfactory to the Title Company is delivered to the Collateral Agent and the Title Company and (B) the Title Company removes the standard survey exception and provides reasonable and customary survey-related endorsements and other coverages in the applicable Mortgage Policy to the extent available in each applicable jurisdiction at commercially reasonable rates, (iv) a completed “Life-of-Loan” Federal Emergency Management Agency standard flood hazard determination with respect to each Mortgaged Property (together with a notice about special flood hazard area status and flood disaster assistance duly executed by the applicable Loan Party relating thereto), (v) if any portion of any improved Mortgaged Property is located in an area identified by the Federal Emergency Management Agency (or any successor agency) as a special flood hazard area with respect to which flood insurance has been made available under the

National Flood Insurance Act of 1968 (as now or hereafter in effect or successor act thereto), a copy of, or a certificate as to coverage under, and a declaration page relating to, the flood insurance policies required by Section 6.06 hereof, and in compliance with, the Flood Insurance Laws, each of which (A) shall be endorsed or otherwise amended to name the Collateral Agent as mortgagee and lender’s loss payee, (B) shall (1) identify the addresses of each property located in a special flood hazard area, (2) indicate the applicable flood zone designation, the flood insurance coverage and the deductible relating thereto and (3) provide that the insurer will give the Collateral Agent 45 days written notice of cancellation or non-renewal and (C) shall be otherwise in form and substance reasonably satisfactory to the Collateral Agent, (vi) such existing abstracts, existing appraisals, legal opinions (regarding the due execution and delivery and enforceability of each such Mortgage, the corporate formation, existence and good standing of the applicable mortgagor, and such other customary matters as may be reasonably requested by the Administrative Agent or the Collateral Agent (at the direction of the Required Lenders), and which shall be in form and substance reasonably acceptable to the Administrative Agent) and other documents as the Administrative Agent (at the direction of the Required Lenders) may reasonably request with respect to any such Mortgaged Property to the extent necessary to obtain the foregoing deliverables and (vii) evidence of payment of title insurance premiums and expenses and all mortgage recording, transfer, intangibles and stamp taxes, if applicable (provided that to the extent any Mortgaged Property is located in a jurisdiction which imposes mortgage recording taxes, intangibles tax, documentary tax or similar recording fees or taxes, the relevant Mortgage shall not secure an amount in excess of the fair market value of the Mortgaged Property subject thereto or another method is utilized to reduce such tax as permitted or required by applicable law), and fees payable in connection with recording the Mortgage, any amendments thereto and any fixture filings, to the extent necessary to be filed in the applicable jurisdiction, in each case in appropriate county land office(s). The Administrative Agent, Collateral Agent or the Lead Borrower shall give at least 45 days prior written notice to the Lenders prior to pledging any Material Real Property and upon confirmation from all Lenders that flood insurance due diligence and flood insurance compliance have been completed, the applicable Loan Parties may pledge such Material Real Property, with the understanding that in each case, the foregoing requirements set forth in this clause (f) shall be completed prior to the 90-day period within which the applicable Loan Party shall be obligated to provide the real estate deliverables set forth in Section 6.10 and/or Section 6.12 hereof; provided, that if such requirements are not completed during such period due to the relevant Lenders not being able to complete their respective flood insurance due diligence and flood insurance compliance, such 90-day period shall be extended for so long as is required to complete such flood diligence and related compliance.

The foregoing definition shall not require the creation or perfection of pledges of or security interests in, or the obtaining of title insurance or surveys with respect to, particular assets if and for so long as the Lead Borrower and the Administrative Agent agree in writing that the cost or other consequence (including any material adverse tax consequences) of creating or perfecting such pledges or security interests in such assets or obtaining title insurance or surveys in respect of such assets shall be excessive in view of the benefits to be obtained by the Lenders therefrom.

The Administrative Agent may grant extensions of time for the perfection of security interests in or the obtaining of title insurance and surveys with respect to particular assets (including extensions beyond the Closing Date for the perfection of security interests in the assets of the Loan Parties on such date) where it reasonably determines, in consultation with the Lead Borrower, that perfection cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required by this Agreement or the Collateral Documents.

Notwithstanding the foregoing provisions of this definition or anything in this Agreement or any other Loan Document to the contrary:

(A) Liens required to be granted from time to time pursuant to the Collateral and Guarantee Requirement shall be subject to exceptions and limitations set forth in the Collateral Documents and as agreed between the Administrative Agent and Holdings;

(B) the Collateral and Guarantee Requirement shall not apply to any of the following assets: (i) any fee-owned real property that is not a Material Real Property, any leasehold interests in real property (it being understood that no action shall be required with respect to creation or perfection of security interests with respect to such leases, including to obtain landlord waivers, estoppels or collateral access letters), (ii) motor vehicles and other assets subject to certificates of title, (iii) [reserved], (iv) [reserved], (v) any assets for which a pledge thereof or a security interest therein is prohibited by applicable Laws or a contractual obligation or would require obtaining the consent, approval, license or authorization of any Governmental Authority or applicable third party (other than Holdings, a Borrower or a Restricted Subsidiary) (but only for so long as such prohibition exists and, in the case of any contractual obligation, only to the extent such prohibition exists on the Closing Date, or in connection with any subsequently acquired Subsidiary which is joined, or required to be joined, as a Guarantor on the date of the acquisition thereof (provided such contractual obligation is not entered into in contemplation thereof)) which consent, approval, license or authorization has not been obtained after giving effect to applicable anti-nonassignment provisions of the UCC or other applicable Law; provided that, notwithstanding the foregoing, the Lead Borrower shall use commercially reasonable efforts to obtain the consent of the of the applicable third parties party to Material Contracts in effect on the Closing Date within those time periods set forth on Schedule 6.12(b), (vi) margin stock, (vii) to the extent requiring the consent of one or more third parties (other than Holdings, a Borrower or a Restricted Subsidiary) or prohibited by the terms of any applicable Organization Documents, joint venture agreement or shareholders’ agreement, Equity Interests in any Person other than (x) each of the Borrowers and (y) each of the other Wholly-Owned Material Subsidiaries that are Restricted Subsidiaries (except, in the case of this clause (y) to the extent such consent requirement or prohibition is existing at the time such Wholly-Owned Material Subsidiary becomes a Restricted Subsidiary and was not incurred in contemplation thereof) and provided that such consent requirement or prohibition was in effect on the Closing Date or, if later, at the time of the acquisition of such Equity Interests and not incurred in contemplation thereof after giving effect to applicable anti-nonassignment provisions of the UCC or other applicable Law, (viii) any governmental licenses or state or local franchises, charters and authorizations which are not permitted to be pledged under applicable Laws, after giving effect to the applicable anti-nonassignment provisions of the UCC or other applicable Law, (ix) any equipment or other asset subject to permitted liens securing permitted acquired debt (limited to the acquired assets) or permitted sale and leaseback transactions, in each case to the extent the contract or other agreement providing for such debt or sale and leaseback transaction requires the consent of any person as a condition to the creation of any other security interest on such equipment or asset and, in each case, such indebtedness, liens, transactions and prohibition or requirement is permitted under the Loan Documents, (x) any lease, license or other agreements, or any property subject to a purchase money security interest, or Capitalized Lease Obligation, in each case to the extent permitted under the Loan Documents, to the extent that a pledge thereof or a security interest therein would violate or invalidate such lease, license or agreement, purchase money debt, Capitalized Lease or similar arrangement, or create a right of termination in favor of any other party thereto (other than Holdings, a Borrower or a Restricted Subsidiary) (including pursuant to any “change of control” or similar provision), other than the proceeds and receivables thereof the assignment of which is expressly deemed effective under applicable Laws notwithstanding such

prohibition, (xi) any intent-to-use trademark application prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect thereto, to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark application under applicable federal law, (xii) Excluded Equity, (xiii) those assets as to which the Lead Borrower and the Administrative Agent reasonably determine that the cost or other consequences (including any material adverse tax consequences) of obtaining such a security interest or perfection thereof is excessive in relation to the benefit to the Lenders of the security to be afforded thereby, (xiv) assets excluded pursuant to the application of the Agreed Security Principles, (xv) any accounts or funds held or received on behalf of third parties and (xvi) any assets owned by a Subsidiary that is not a Loan Party (all of the foregoing, collectively, “Excluded Collateral”); provided, however, that “Excluded Collateral” shall not include any proceeds (including, for the avoidance of doubt, any proceeds constituting cash), substitutions or replacements of any Excluded Collateral unless such proceeds, substitutions or replacements would independently constitute Excluded Collateral; provided, further, changes to the definition of “Excluded Collateral” may be set forth in the applicable Security Agreements if agreed by the Lead Borrower and the Collateral Agent; provided, further, no action shall be required by the Loan Parties to perfect Liens on: (i) letter of credit rights and (ii) commercial tort claims reasonably expected to result in a recovery less than $500,000, in each case to the extent not perfected as supporting obligations by the filing of a UCC financing statement or other similar filing under other applicable Law in each case on the Collateral generally; and

(C) no deposit account control agreement, securities account control agreement or other control agreements or control arrangements shall be required with respect to any deposit account, securities account or other asset specifically requiring perfection through control agreements other than control by possession of pledged capital stock and promissory notes with a principal amount in excess of $500,000, on an individual basis; and

(D) control agreements (or perfection by control or similar arrangements) shall not be required with respect to any assets (including deposit or securities accounts); provided, for these purposes, “perfection by control” shall not refer to the possession of share certificates or other certificates or instruments representing or embodying the right to negotiable investment securities); and

(E) the provision of any Guarantee or Guaranty, and the creation, perfection, or maintenance of pledges of or security interests in any assets shall not be required to the extent provided in the Agreed Security Principles; and

(F) no actions in any jurisdiction or that are necessary to comply with Laws of any jurisdiction and no security agreements, pledge agreements, share charge (or mortgage) agreements or other Collateral Documents shall be governed under the Laws of any jurisdiction other than (w) the United States, any state thereof or the District of Columbia, (x) the jurisdiction of organization of a Loan Party to create or perfect a security interest in assets of such Loan Party, including any intellectual property registered outside such jurisdiction of organization (other than intellectual property registered with the United States Patent and Trademark Office or United States Copyright Office), except for the avoidance of doubt, U.S. trademarks that require registration with or filings with the World Intellectual Property Organization, (y) solely in the case of a security interest securing the Equity Interests in any Person, the jurisdiction of organization of any Loan Party and (z) solely in the case of Mortgages, the jurisdiction of each applicable Mortgaged Property; and

(G) no landlord, mortgagee or bailee waivers, including any estoppel, collateral access letters or similar type of waiver shall be required; and

(H) no notices shall be required to be sent to account debtors or other contractual third parties.

With respect to the Collateral Documents:

(i) access to the assets of a Guarantor, the maximum guaranteed or secured amount may be restricted or limited by limitation language agreed to reflect these principles and to the extent consistent with them, customary practice in the relevant jurisdiction to minimize stamp duty, notarization, registration or other applicable fees where the benefit of increasing the guaranteed or secured amount is disproportionate to the level of such fee, Taxes and duties or where registration, notarial or other fees are payable by reference to the stated amount secured in which case, any Collateral granted by that Guarantor shall be limited to the maximum recoverable amount under such limitation language;

(ii) where a class of assets to be secured includes material and immaterial assets, if the cost of granting Collateral over the immaterial assets is disproportionate to the benefit of such security interest, Collateral will be granted over the material assets only;

(iii) representations, covenants and undertakings shall only be included in each Collateral Document to the extent necessary under local law to confirm any registration or perfection of, or ensure the validity of, the Collateral or the creation, perfection or priority of the Lien or security interest created thereby and shall not be repeated;

(iv) the provisions thereof will not be unduly burdensome on the Guarantor or interfere unreasonably with the operation of its business or have an adverse effect on the commercial reputation of the Guarantor and will be limited to those required to create effective a security interest and not impose additional commercial obligations;

(v) any transactions (including, for the avoidance of doubt, the incurrence of Indebtedness, the granting of Liens, the making of Investments, Dispositions, and merger, consolidation, liquidation or winding up) permitted by the Loan Documents shall be permitted in the Collateral Documents;

(vi) information, such as lists of specified assets, will be provided, unless required to be provided more frequently by local law, annually (unless there has been no change in such information since the date of the last list delivered with a certificate regarding same) and if and, only to the extent, required by local law to be provided to perfect or register the Collateral Documents and, that this information can be provided without breaching confidentiality requirements or damaging business relationships or commercial reputation (prior to an Event of Default); and

(vii) subject to clause (iii) above, there will be no repetition or extension of clauses set out in this Agreement (or the other Loan Documents) such as those relating to notices, cost and expenses, indemnities, tax gross-up, distribution of proceeds and release of security interests other than if expressly required by local law to perfect the security interests granted thereby or make it enforceable or to facilitate the admissibility of a Collateral Document in court.

“Collateral Documents” means, collectively, the Security Agreements, the Mortgages, each of the mortgages, collateral assignments, Security Agreement Supplements, security agreements, pledge agreements or other similar agreements delivered to the Collateral Agent and the Lenders pursuant to Section 4.01(a), Section 6.10 or Section 6.12, the Guaranty and each of the other agreements, instruments or documents that creates or purports to create a Lien or Guarantee in favor of the Collateral Agent for the benefit of the Secured Parties.

“Commitment” means an Initial Term B Commitment, a Revolving Credit Commitment, a Delayed Draw Term Loan Commitment, an Extended Revolving Credit Commitment, an Incremental Revolving Credit Commitment, a Refinancing Revolving Credit Commitment, an Extended Delayed Draw Term Loan Commitment, a Refinancing Delayed Draw Term Loan Commitment, a commitment in respect of any Incremental Term Loans, or a commitment in respect of any Extended Term Loans or any combination thereof, as the context may require.

“Commitment Letter” means that certain Amended and Restated Commitment Letter dated as of January 8, 2019 by and among GS Lending Partners, the Principal Investors (as defined therein) and the SPAC.

“Committed Loan Notice” means a notice of (a) a Term Borrowing, (b) a Revolving Credit Borrowing, (c) a Delayed Draw Term Borrowing, (d) a conversion of Loans from one Type to the other or (e) a continuation of Eurocurrency Rate Loans pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

“Compensation Period” has the meaning specified in Section 2.12(c)(ii).

“Compliance Certificate” means a certificate substantially in the form of Exhibit D.

“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

“Consolidated Depreciation and Amortization Expense</