VIGO PHOTONICS SA (26/2024) ZAWARCIE WARUNKOWEJ UMOWY FINANSOWANIA I UMOWY WARRANTOWEJ Z EUROPEJSKIM BANKIEM INWESTYCYJNYM

Raport bieżący 26/2024

CONCLUSION OF A CONDITIONAL

FINANCING AGREEMENT AND A WARRANT AGREEMENT WITH THE EUROPEAN INVESTMENT

BANK

The Management Board of Vigo

Photonics S.A. with its registered office in Ożarów Mazowiecki (the

_quot;Company_quot;, _quot;Issuer_quot;), hereby announces that on September 12, 2024, the

Company entered into a financing agreement with the European Investment

Bank (the _quot;EIB_quot;) (the _quot;Financing Agreement_quot; or _quot;Agreement_quot;) under the

InvestEU program, which aims to provide financing for projects of

strategic importance to the economy that contribute to the

implementation of EU policy objectives. Under the Agreement, the EIB has

undertaken to grant the Company financing in the form of a venture debt

loan in the maximum amount of EUR 21,000,000 (i.e. the equivalent of PLN

90,014,400 converted at the average exchange rate of the National Bank

of Poland on September 11, 2024, EUR 1 = PLN 4.2864). In addition, on

September 12, 2024, the Company also entered into an agreement with the

EIB on the issue of subscription warrants to the EIB (the _quot;Warrant

Agreement_quot;).

The purpose of the Financing

Agreement concluded with the EIB is to support the continuation of the

research and development work of the Company and the Issuer's Capital

Group aimed at developing photonic integrated circuit (PIC) technology,

as well as infrared (IR) detectors and modules. The Issuer's Management

Board plans to allocate the majority of potential funds to the

development of the Company's research and development activities related

to the development of photonic integrated circuit (PIC) technology and

infrared (IR) detectors and modules. The projects implemented by the

Issuer are aimed at improving the current technology and existing

projects and developing new products in new technologies in order to

achieve _quot;best-in-class parameters_quot; and the most modern level of

advancement in the scope of developed technologies.

The financing will be paid in

three tranches: Tranche A in the amount of EUR 6,000,000, Tranche B in

the amount of EUR 7,000,000 and Tranche C in the amount of EUR

8,000,000. The tranches may be paid to the Company within a period of 12

to 36 months (depending on the given tranche) from the date of entry

into force of the Agreement. The Company is obliged to repay each of the

paid tranches in one installment after 6 years from its launch. The

interest rate for each of the tranches will be 8% per annum. Interest on

each tranche will be payable in the balloon formula, i.e. together with

the repayment of the capital after 6 years from the launch of a given

tranche. The Financing Agreement is conditional and will enter into

force subject to obtaining the consent of one of the banks financing the

Company's operations, within a period not longer than 6 months from the

date of signing the Financing Agreement. Upon fulfilment of the

conditions set out in the Agreement, including the condition of the

Company effectively issuing and registering subscription warrants in

favour of EIB in accordance with the terms set out in the Warrant

Agreement (described in detail below), the payment of Tranche A will be

possible.

Upon fulfillment of the

conditions specified in the Agreement, including the condition of

effective issuance and registration by the Company of subscription

warrants in favour of the EIB in accordance with the conditions

specified in the Warrant Agreement (described in detail below), the

payment of Tranche A will be possible. Other conditions for the payment

of Tranche B include: (i) obtaining the level of revenues and EBITDA

margin specified in the agreement; and (ii) obtaining by the Company

additional financing in an amount of at least PLN 20,000,000,

originating e.g. from grants, funds or EU financing. Other conditions

for the payment of Tranche C include: (a) obtaining the level of

revenues and EBITDA margin specified in the agreement; (ii) obtaining by

the Company additional financing in an amount of at least PLN

35,000,000, originating e.g. from grants, funds or EU financing; (iii)

obtaining by the Company the first industrial implementation of photonic

integrated circuit (PIC) technology, including at least the signing of

the terms of obtaining debt and equity financing and a strategy of

cooperation with key suppliers.

The additional consideration for

Tranche A, Tranche B and Tranche C will be the issue by the Company to

the EIB of subscription warrants representing a total of 8% of the fully

issued share capital and conditional capital of the Company (the

_quot;Warrants_quot;), which will be acquired free of charge by the EIB and will

entitle the holder to acquire shares in the Company (the _quot;Shares_quot;) at a

nominal price of PLN 1.00. Both the EIB and the Company will be able to

cancel the payment of unpaid Tranches if their payment is no longer

justified in the context of the purpose and conditions resulting from

the content of the Agreement. The EIB may cancel the unused part of the

financing or demand early repayment of the financing together with

accrued interest and all other amounts accrued or remaining to be repaid

under the Agreement in the situations and in the manner specified in the

Agreement. In particular, the obligation to early repayment of the

financing received by the Company, except for the situation of issuing

written consent of the EIB, may arise if: (a) the control over the

Company changes; (b) Mr Adam Piotrowski or Mr Marcin Szrom; or at least

2 of the following persons: Przemysław Kalinowski, Włodzimierz

Strupiński or Marcin Ratajczyk, will cease to actively participate in

the management of the Company; (c) the Company will lose control over at

least 50% of the share capital of its material subsidiaries; (e) the

Issuer will dispose of certain assets without the consent of the EIB,

except for the exceptions indicated in the Finance Agreement.

The most important provisions of

the Warrant Agreement are as follows:

(i) The Warrants will be acquired

by EIB free of charge and will entitle the holder to acquire the

Company's Shares at an issue price equal to the nominal value of each

Share;

(ii) The rights from the Warrants

to acquire the Shares may be exercised within a period of 10 years from

the date of conclusion of the Warrant Agreement, but after the expiry of

these 10 years the Company will be obliged to issue new warrants for the

next 10 years reflecting the conditions described above;

(iii) The Warrant Agreement

regulates the conditions for exercising the rights from the Warrants to

acquire the Shares, making this right dependent in particular on the

payment of subsequent tranches of financing under the Financing

Agreement and the occurrence of other events specified in the Warrant

Agreement. In the event of non-payment of a specific tranche, EIB will

not be entitled to exercise the rights from the Warrants related to it;

(iv) The Warrants will be

transferable on the terms specified in the Warrant Agreement, including

in the event of the expiry of the Financing Agreement, in the event of

repayment of the financing, sale of the assets of the Company or

companies from the capital group of the Company (except for the cases

permitted in the Financing Agreement) or acquisition of control over the

Company (understood as the direct or indirect acquisition of control

over at least 50% of the share capital of the Company). The Warrant

Agreement specifies the principles for the sale and acquisition of

Warrants, including the obligation of the Company to acquire Warrants

from their holder for a fee for the purpose of redemption in the cases

specified in the Warrant Agreement, consistent with and concurrent with

the terms specified in the Financing Agreement;

(v) According to the Warrant

Agreement, the EIB will have the right to demand the Company to

repurchase or redeem the Warrants (under the irrevocable option, the

so-called Put Option). In the event that the EIB requests the repurchase

or redemption of the Warrants (under the put option) by the Issuer, the

Company will be obliged to pay to the EIB an appropriate repurchase or

redemption fee, the amount of which should correspond to the fair market

value of the Warrants (this amount will be determined on the basis of a

detailed procedure provided for in the Warrant Agreement, and the

Company will have the right to challenge it). The total amount that the

Company will be obliged to pay to the EIB for exercising the discussed

right may not exceed EUR 17 million. Additionally, in the scope of the

irrevocable put option, the Warrant Agreement also regulates the

Company's protection against excessive cash outflow by spreading any

payments under this option to the EIB into partial payments, with

3-month intervals between each payment. In such case, the entire payment

under the put option should be paid within 2 years;

(vi) In the event of the

occurrence of certain events causing dilution of the Company's share

capital, EIB will be entitled to acquire additional subscription

warrants, subject to the exceptions provided for in the Warrant

Agreement, including the established minimum issue price of shares above

which EIB will not be entitled to acquire additional subscription

warrants or an issue intended for a strategic investor.

The Warrant Agreement also

regulates the Company's obligations in terms of obtaining the EIB's

consent to perform certain activities and information obligations

towards the EIB. In the performance of the Warrant Agreement, the

Management Board of the Company will convene an Extraordinary General

Meeting, to which it will submit for consideration appropriate

resolutions necessary for the effective issue of Warrants to the EIB.

Regardless of the signed

Agreement and Warrant Agreement, the Company will continue its

activities aimed at securing other sources of financing for its

operations. The Company does not rule out the possibility that in the

event that the Company obtains alternative financing on more favourable

terms, the Agreement and Warrant Agreement will not be implemented.

Decisions on the use of specific

solutions will be dictated by the interests of the Company and its

shareholders and will depend on external economic conditions affecting

the implementation of the Company's plans.

In the opinion of the Issuer's

Management Board, the signed Agreement with the EIB and the Warrant

Agreement may contribute to building the Company's long-term position

within the framework of the adopted strategy and will have a positive

impact on the assessment and perception of the Company on the

international market.

More information on page: http://biznes.pap.pl/en/reports/espi/all,0,0,0,1

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