Vigo Photonics S.A.

Capital/Financing Update • Sep 12, 2024

Report Content CONCLUSION OF A CONDITIONALFINANCING AGREEMENT AND A WARRANT AGREEMENT WITH THE EUROPEAN INVESTMENTBANK

The Management Board of VigoPhotonics S.A. with its registered office in Ożarów Mazowiecki (the_quot;Company_quot;, _quot;Issuer_quot;), hereby announces that on September 12, 2024, theCompany entered into a financing agreement with the European InvestmentBank (the _quot;EIB_quot;) (the _quot;Financing Agreement_quot; or _quot;Agreement_quot;) under theInvestEU program, which aims to provide financing for projects ofstrategic importance to the economy that contribute to theimplementation of EU policy objectives. Under the Agreement, the EIB hasundertaken to grant the Company financing in the form of a venture debtloan in the maximum amount of EUR 21,000,000 (i.e. the equivalent of PLN90,014,400 converted at the average exchange rate of the National Bankof Poland on September 11, 2024, EUR 1 = PLN 4.2864). In addition, onSeptember 12, 2024, the Company also entered into an agreement with theEIB on the issue of subscription warrants to the EIB (the _quot;WarrantAgreement_quot;).

The purpose of the FinancingAgreement concluded with the EIB is to support the continuation of theresearch and development work of the Company and the Issuer's CapitalGroup aimed at developing photonic integrated circuit (PIC) technology,as well as infrared (IR) detectors and modules. The Issuer's ManagementBoard plans to allocate the majority of potential funds to thedevelopment of the Company's research and development activities relatedto the development of photonic integrated circuit (PIC) technology andinfrared (IR) detectors and modules. The projects implemented by theIssuer are aimed at improving the current technology and existingprojects and developing new products in new technologies in order toachieve _quot;best-in-class parameters_quot; and the most modern level ofadvancement in the scope of developed technologies.

The financing will be paid inthree tranches: Tranche A in the amount of EUR 6,000,000, Tranche B inthe amount of EUR 7,000,000 and Tranche C in the amount of EUR8,000,000. The tranches may be paid to the Company within a period of 12to 36 months (depending on the given tranche) from the date of entryinto force of the Agreement. The Company is obliged to repay each of thepaid tranches in one installment after 6 years from its launch. Theinterest rate for each of the tranches will be 8% per annum. Interest oneach tranche will be payable in the balloon formula, i.e. together withthe repayment of the capital after 6 years from the launch of a giventranche. The Financing Agreement is conditional and will enter intoforce subject to obtaining the consent of one of the banks financing theCompany's operations, within a period not longer than 6 months from thedate of signing the Financing Agreement. Upon fulfilment of theconditions set out in the Agreement, including the condition of theCompany effectively issuing and registering subscription warrants infavour of EIB in accordance with the terms set out in the WarrantAgreement (described in detail below), the payment of Tranche A will bepossible.

Upon fulfillment of theconditions specified in the Agreement, including the condition ofeffective issuance and registration by the Company of subscriptionwarrants in favour of the EIB in accordance with the conditionsspecified in the Warrant Agreement (described in detail below), thepayment of Tranche A will be possible. Other conditions for the paymentof Tranche B include: (i) obtaining the level of revenues and EBITDAmargin specified in the agreement; and (ii) obtaining by the Companyadditional financing in an amount of at least PLN 20,000,000,originating e.g. from grants, funds or EU financing. Other conditionsfor the payment of Tranche C include: (a) obtaining the level ofrevenues and EBITDA margin specified in the agreement; (ii) obtaining bythe Company additional financing in an amount of at least PLN35,000,000, originating e.g. from grants, funds or EU financing; (iii)obtaining by the Company the first industrial implementation of photonicintegrated circuit (PIC) technology, including at least the signing ofthe terms of obtaining debt and equity financing and a strategy ofcooperation with key suppliers.

The additional consideration forTranche A, Tranche B and Tranche C will be the issue by the Company tothe EIB of subscription warrants representing a total of 8% of the fullyissued share capital and conditional capital of the Company (the_quot;Warrants_quot;), which will be acquired free of charge by the EIB and willentitle the holder to acquire shares in the Company (the _quot;Shares_quot;) at anominal price of PLN 1.00. Both the EIB and the Company will be able tocancel the payment of unpaid Tranches if their payment is no longerjustified in the context of the purpose and conditions resulting fromthe content of the Agreement. The EIB may cancel the unused part of thefinancing or demand early repayment of the financing together withaccrued interest and all other amounts accrued or remaining to be repaidunder the Agreement in the situations and in the manner specified in theAgreement. In particular, the obligation to early repayment of thefinancing received by the Company, except for the situation of issuingwritten consent of the EIB, may arise if: (a) the control over theCompany changes; (b) Mr Adam Piotrowski or Mr Marcin Szrom; or at least2 of the following persons: Przemysław Kalinowski, WłodzimierzStrupiński or Marcin Ratajczyk, will cease to actively participate inthe management of the Company; (c) the Company will lose control over atleast 50% of the share capital of its material subsidiaries; (e) theIssuer will dispose of certain assets without the consent of the EIB,except for the exceptions indicated in the Finance Agreement.

The most important provisions ofthe Warrant Agreement are as follows:

(i) The Warrants will be acquiredby EIB free of charge and will entitle the holder to acquire theCompany's Shares at an issue price equal to the nominal value of eachShare;

(ii) The rights from the Warrantsto acquire the Shares may be exercised within a period of 10 years fromthe date of conclusion of the Warrant Agreement, but after the expiry ofthese 10 years the Company will be obliged to issue new warrants for thenext 10 years reflecting the conditions described above;

(iii) The Warrant Agreementregulates the conditions for exercising the rights from the Warrants toacquire the Shares, making this right dependent in particular on thepayment of subsequent tranches of financing under the FinancingAgreement and the occurrence of other events specified in the WarrantAgreement. In the event of non-payment of a specific tranche, EIB willnot be entitled to exercise the rights from the Warrants related to it;

(iv) The Warrants will betransferable on the terms specified in the Warrant Agreement, includingin the event of the expiry of the Financing Agreement, in the event ofrepayment of the financing, sale of the assets of the Company orcompanies from the capital group of the Company (except for the casespermitted in the Financing Agreement) or acquisition of control over theCompany (understood as the direct or indirect acquisition of controlover at least 50% of the share capital of the Company). The WarrantAgreement specifies the principles for the sale and acquisition ofWarrants, including the obligation of the Company to acquire Warrantsfrom their holder for a fee for the purpose of redemption in the casesspecified in the Warrant Agreement, consistent with and concurrent withthe terms specified in the Financing Agreement;

(v) According to the WarrantAgreement, the EIB will have the right to demand the Company torepurchase or redeem the Warrants (under the irrevocable option, theso-called Put Option). In the event that the EIB requests the repurchaseor redemption of the Warrants (under the put option) by the Issuer, theCompany will be obliged to pay to the EIB an appropriate repurchase orredemption fee, the amount of which should correspond to the fair marketvalue of the Warrants (this amount will be determined on the basis of adetailed procedure provided for in the Warrant Agreement, and theCompany will have the right to challenge it). The total amount that theCompany will be obliged to pay to the EIB for exercising the discussedright may not exceed EUR 17 million. Additionally, in the scope of theirrevocable put option, the Warrant Agreement also regulates theCompany's protection against excessive cash outflow by spreading anypayments under this option to the EIB into partial payments, with3-month intervals between each payment. In such case, the entire paymentunder the put option should be paid within 2 years;

(vi) In the event of theoccurrence of certain events causing dilution of the Company's sharecapital, EIB will be entitled to acquire additional subscriptionwarrants, subject to the exceptions provided for in the WarrantAgreement, including the established minimum issue price of shares abovewhich EIB will not be entitled to acquire additional subscriptionwarrants or an issue intended for a strategic investor.

The Warrant Agreement alsoregulates the Company's obligations in terms of obtaining the EIB'sconsent to perform certain activities and information obligationstowards the EIB. In the performance of the Warrant Agreement, theManagement Board of the Company will convene an Extraordinary GeneralMeeting, to which it will submit for consideration appropriateresolutions necessary for the effective issue of Warrants to the EIB.

Regardless of the signedAgreement and Warrant Agreement, the Company will continue itsactivities aimed at securing other sources of financing for itsoperations. The Company does not rule out the possibility that in theevent that the Company obtains alternative financing on more favourableterms, the Agreement and Warrant Agreement will not be implemented.

Decisions on the use of specificsolutions will be dictated by the interests of the Company and itsshareholders and will depend on external economic conditions affectingthe implementation of the Company's plans.

In the opinion of the Issuer'sManagement Board, the signed Agreement with the EIB and the WarrantAgreement may contribute to building the Company's long-term positionwithin the framework of the adopted strategy and will have a positiveimpact on the assessment and perception of the Company on theinternational market.