Echo Investment S.A.

M&A Activity • Feb 18, 2021

Conclusionof a preliminary share purchase agreement concerning the indirectacquisition of a majority stake of shares in Archicom S.A.

CurrentReport No.4/2021 dated 18 February 2021

TheManagement Board of ECHO Investment S.A. ("Issuer") informsthat on 17 February 2021 the Issuer concluded, with Mrs. DorotaJarodzka-Śródka, Mr. Kazimierz Śródka and Mr. Rafał Jarodzki ("Sellers"),a preliminary share purchase agreement ("Agreement")concerning the indirect acquisition of a majority stake of 16.945.487 shares,representing in aggregate approximately 66,01% of the share capitalcarrying in aggregate 21.039.375 votes at the general meeting, whichrepresents approximately 65,99% of the total number of votes in ArchicomS.A. ("Archicom") - whose shares are admitted to trading onthe main market of the Warsaw Stock Exchange. The acquisition of theabove shares in Archicom S.A. by the Issuer will be made indirectlythrough the acquisition of all of the shares in the share capital of thefollowing shareholders of Archicom S.A. - DKR Investment sp. zo.o. with its registered office in Wrocław ("DKRInvestment Shares") and DKR Invest S.A. with its registered officein Wrocław ("DKR Invest Shares"). At the same time,the parties agreed to exclude from the scope of the transaction thedevelopment business carried out by Archicom Polska S.A., a subsidiaryof Archicom, outside the territory of the city of Wrocław and adjacentmunicipalities as well as architectural and design services businesscarried out by Archicom Studio Projekt spółka z ograniczonąodpowiedzialnością sp.k. (jointly, "Transaction").The conclusion of a final share purchase agreement and the closing ofthe Transaction will be subject to the condition precedent that thePresident of the Office of Competition and Consumer Protection issuesclearance for the concentration effected by way of the Transaction.

Thetotal price for DKR Investment Shares and DKR Invest Shares will be PLN425.093.000 ("DKR Price"). The DKR Price shall be increasedby the amount of interest accrued thereon from 15 March 2021 until thedate of payment, calculated at an annual interest rate of 6%. Part ofthe DKR Price will be paid by way of set-off against the Sellers'obligation to pay bearer bonds with an aggregate nominal value of PLN 188.000.000,bearing interest at an annual rate of 5%, with a maturity date falling 3years and 6 months from the date of the final agreement ("Bonds"),which will be issued by the Issuer in connection with the Transactionand acquired by the Sellers. The Bonds will be admitted to organizedtrading on the Catalyst market in the Alternative Trading System (ATS)pursuant to the terms of issue corresponding to existing bond issues bythe Issuer.

Theclosing of the Transaction will be preceded by the restructuring of theArchicom group, including in particular:

1.1.thesale to Mrs. Dorota Jarodzka-Śródka and Mr. Rafał Jarodzki of all sharesheld by Archicom in the share capital of Archicom Polska S.A., being acompany conducting development activities particularly in the cities ofKraków, Łódź, Poznań and Trójmiasto, i.e. outside the Archicom group'score area of operations comprising of the city of Wrocław and adjacentmunicipalities, in consideration for PLN 131.000.000 (the "ArchicomPolska Price"), payable in two instalments, where:

a.thefirst installment (in an aggregate amount of PLN 77.500.000) shall bepaid on the day of closing of the Transaction, partly by way of transferfor the benefit of Archicom of Bonds (with an aggregate nominal value ofPLN 37.000.000), and for the remainder by the transfer of the Issuer'sconsideration to the Sellers in respect of payment of the DKR Price; and

b.thesecond installment, in the amount of PLN 53.500.000, increased byinterest accrued thereon over the period from the day of closing of theTransaction, until the date of payment of the second installment, calculatedat an annual interest rate of 5%, shall be payable by no later than 15June 2023;

2.2.thesale to Ms. Dorota Jarodzka-Śródka and Mr. Kazimierz Śródka of allshares held (indirectly) by Archicom in the share capital of ArchicomStudio Projekt sp. z o.o. and withdrawal by Archicom (as a limitedpartner) from Archicom Studio Projekt spółka z ograniczonąodpowiedzialnością sp.k, a project company providing architectural anddesign services to Archicom group companies, in respect of whichtransactions (sale and withdrawal) Archicom will receive (directly andindirectly) the total consideration in the amount of PLN 2.400.000,payable in full on the closing date of the Transaction; and

3.3.thesale by DKR Investment sp. z o.o. of 2.132.964 shares in the sharecapital of Archicom, representing in aggregate 8,31% of Archicom's sharecapital and carrying 4.246.578 votes at Archicom's general meeting,representing in aggregate 13,32% of the total number of votes in Archicom("Remaining Sellers' Shares") to a specialpurpose vehicle ("SPV") established by Mrs. DorotaJarodzka-Śródka and Mr. Rafał Jarodzki ("SPVShareholders").

Further, the transaction documentation provides forthe following material provisions, typical for this kind of transaction:

1.the non-competition clause imposed onthe Sellers' restricting conducting competing activities in Wrocław andin its vicinity, binding for a period of 2 years from the closing of theTransaction; subject to certain limitations and exceptions;

2.the representations and warranties ofMrs. Dorota Jarodzka-Śródka, concerning the Archicom group and itsbusiness activities; representations and warranties of the Sellersconcerning DKR Investment sp. z o.o. and DKR Invest S.A.;

3.the obligations of the parties relatingto actions aiming at satisfying the condition precedent for closing ofthe Transaction;

4.the obligations of the Sellers relatingto the period until the closing date of the Transaction, settlements inconnection with transactions (leakage) between Archicom groupcompanies and the Sellers (and their related parties) in the periodafter 30 June 2020, guarantees provided by the Sellers in connectionwith the Transaction (including in particular those relating toguarantees issued by Archicom to secure Archicom Polska S.A.'sobligations, to the extent that such guarantees will remain in forceafter the closing of the Transaction); these obligations will be securedon an appropriate part of the Bonds to which the Sellers are entitled(the pledge with a takeover right; Polish:zastaw z prawem przejęcia).

In connection with the Transaction, the Issuer willpurchase insurance policies relating in particular to therepresentations and warranties made by Mrs. Dorota Jarodzka-Śródka andthe other Sellers (warranties and indemnities insurance) andtitle to the material properties and shares in DKR Investment sp. zo.o., DKR Invest S.A., Archicom and its subsidiaries.

At closing of the Transaction, an option agreementwill be entered into pursuant to which the Issuer will be entitled toacquire, or designate an entity to acquire, by 15 March 2023 from theSPV Shareholders all of the shares in the share capital of an SPV, whichSPV will be entitled to the Remaining Sellers' Shares, on substantiallythe same terms as the acquisition of the DKR Investment Shares and theDKR Invest Shares under the Transaction (including, in particular, theconsideration for such acquisition will increased by the amount ofinterest accrued annually at the rate of 6% from 15 March 2021 until thedate of the exercise of the call option). In case the Issuer does notexercise its aforementioned right, on the basis of the option agreement,the SPV Shareholders shall be entitled to sell all shares in the sharecapital of the SPV to the Issuer or to the entity designated by theIssuer.

Legalgrounds:Art.17(1) of Regulation (EU) No 596/2014 of the European Parliament and ofthe Council of 16 April 2014 on market abuse (market abuse regulation)and repealing Directive 2003/6/EC of the European Parliament and of theCouncil and Commission Directives 2003/124/EC, 2003/125/EC and2004/72/EC - inside information.