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2021-07-14

Otello Corporation ASA: Vewd litigation update

Otello refers to its announcement of March 17, 2021, where it informed the market that MFC and Otello together with the Vewd Group's secured lenders (the "Lenders") had reached agreement that as an interim alternative to the appointment of a receiver, a special committee of the board of Last Lion Holdings Limited ("LLH") (the "Special Committee") would be appointed.

The three members of the Special Committee were appointed on April 26, 2021 pursuant to an order of the English Court dated 1 April 2021 and tasked with selling the company or raising finance so as to enable payment of the sums due to Otello as ordered by the English Court, after payment of sums due to the lenders under the Credit Agreement dated 19 December 2016 between Last Lion HoldCo AS, Vewd Software AS, the Lenders and Wilmington Trust National Association ("Wilmington Trust").

We have been informed of the resignation of the three members of the Special Committee. The Special Committee members have given as their reason for resigning, the exercise of certain rights by Wilmington Trust as agents for the Lenders under the Credit Agreement. Wilmington Trust, on behalf of the Lenders, has accelerated the loans and exercised certain rights and remedies under the Credit Agreement so as to remove Martez Moore from the boards of Last Lion HoldCo AS and Vewd Software AS and to enable the appointment of the Special Committee members directly to those boards. The reason provided by the Lenders for exercising rights and remedies was to preserve the value of the business, noting that, among other things, Mr. Moore had paid himself and his family (including his late wife's estate) millions of dollars since 2016.

The implications of these actions are not yet clear, although the Special Committee members have indicated that they are likely to accept the invitation to join the boards of Last Lion HoldCo AS and Vewd Software AS and that following such appointments they would remain committed to pursuing a sale and/or refinancing transaction that maximizes value. It is Otello's understanding that the investment bank that has been appointed by the Special Committee will continue and remains focused on achieving a successful sale or refinancing of the business through a competitive and robust process.

The English Court order requiring the establishment of the Special Committee remains in force and that order formally requires that alternative members will need to be appointed to the Special Committee. After three months from the appointment of the Special Committee (which falls on 26 July 2021), Otello has the right to terminate the Special Committee process and seek the appointment by the English Court of a Receiver in respect of LLH. In the absence of such termination by Otello, the appointment of the Special Committee will end on 1 October 2021, unless extended with the consent of Otello and the lenders. Following any such termination, Otello has the right to seek further relief from the English High Court including the appointment of a receiver in respect of LLH.

Petter Lade, CFO

Phone: +47 91143878

E-mail: petterl@otellocorp.com

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