TRANSACTIONS WITH RELATED ENTITIES 51

Equity relations:

Alma Market S.A. is the controllingentity of the Group, and owns: 100% shares in Krakowski Kredens Tradycja Galicyjska Sp. z o.o.,

100% shares in Alma Development Sp. z o.o., 100% shares in Paradise Group Sp. z o.o., 100% shares in AM1 Sp. z o.o. , 100% shares in

AM2 Sp. z o.o., 100% shares in Flor Sp. z o.o., 99,5% of contribution in Kraków 1- AM1 limited liability partnership (Spólka z ograniczoną odpowiedzialnością Spółka komandytowa), 99.5% of contribution in Kraków2-AM1 limited liability partnership (Spółka z ograniczoną odpowiedzialnością spółka komandytowa), 99,5% of contribution in Tarnów- AM1 limited liability partnership (Spółka z ograniczoną odpowiedzialnością Spółka komandytowa), 99,5% of contribution in Nowy Targ -AM1 limited liability partnership (Spółka

z ograniczoną odpowiedzialnością spółka komandytowa), 99.5% of contribution in Flor Spółka limited liability partnership (Spółka z ograniczoną odpowiedzialnością spółka komandytowa), and 50% shares in Krakchemia S.A.

Parent Company:

Name: Alma Market Spółka Akcyjna

Seat/address: 30-964 Kraków, ul. Pilotów 6 e-mail: [email protected]

Tax Identification Number (NIP) : 676-001-67-31 National Registration Court (KRS) : 0000019474

Auditor in 2010 : Kancelaria Biegłych Rewidentów „KONTO” Sp. z o.o.

The Board: The Supervisory Board:

Chairperson - Jerzy Mazgaj Chairperson of Supervisory Board - Barbara Mazgaj Vice Chairperson - Mariusz Wojdon Vice Chairperson of Supervisory Board - Andrzej Wyrobiec Vice Chairperson - Małgorzata Moska Secretary of the Supervisory Board - Wojciech Mazgaj

Member - Gwidon Wójcik Member - Anna Wyroba

Related entities of ALMA MARKET S.A.:

1) Krakowski Kredens Tradycja GalicyjskaSpółka z ograniczoną odpowiedzialnością (limited liability) 2) Alma Development Spółka z ograniczoną odpowiedzialnością (limited liability)

3) Paradise Group Spółka z ograniczoną odpowiedzialnością (limited liability) 4) AM1 Spółka z ograniczoną odpowiedzialnością (limited liability)

5) AM2 Spółka z ograniczoną odpowiedzialnością (limited liability) 6) Flor Spółka z ograniczoną odpowiedzialnością (limited liability)

7) KRAKÓW 1 – AM1 Spółka z ograniczoną odpowiedzialnością Spółka komandytowa (limited liability partnership) 8) KRAKÓW 2 – AM1 Spółka z ograniczoną odpowiedzialnością Spółka komandytowa (limited liability partnership) 9) TARNÓW – AM1 Spółka z ograniczoną odpowiedzialnością Spółka komandytowa (limited liability partnership) 10) NOWY TARG-AM1 Spółka z ograniczoną odpowiedzialnością Spółka komandytowa (limited liability partnership) 11) FLOR Spółka z ograniczoną odpowiedzialnością Spółka komandytowa (limited liability partnership)

12) Krakchemia Spółka Akcyjna (public listed company)

In the fourth quarter of 2010 ALMA MARKET S.A. acquired 100% of shares in Flor Sp. z o. o., 99,5% of contribution in Kraków2 – AM1 Spółka z ograniczoną odpowiedzialnością Spółka komandytowa and 99,5% of contribution in Flor Spółka z ograniczoną odpowiedzialnością Spółka komandytowa. Due to the above, entities covered by consolidated annual report have changed in comparison to the comparative period of the previous year.

Non-capital relations:

„PREMIUM CIGARS” Sp. z o.o. in Krakow

„PREMIUM CIGARS” Sp. z o.o. is an entity related to Alma Market SA via its key shareholder and Chairman of the Management Boardof Alma Market SA. Jerzy Mazgaj holds 75% of shares and votes on GSM of Premium Cigars Sp. z o.o.

The key shareholder of ALMA MARKET S.A. is Mr. Jerzy Mazgaj, who holds as at 31 December 2010 – directly and indirectly- 1 500 000 of shares (27,63%), that gives 3 729 204 votes (47,63%) on General Shareholders Meeting.

Jerzy Mazgaj, together with his wife (who is the Chairperson of the Supervisory Board) concluded with Alma Market SA the preliminary lease agreement of their property situated in Krakow. The Supervisory Board of Alma Market SA accepted the said lease agreement.

Alma Market S.A. intends to start the use of the building after obtaining all necessary documents for the building rearrangement to fit ALMA store. Then ALMA is planning to sign the lease agreement.

By the time when the building will be rearranged:

a) part of the building is rented to the subsidiary Krakowski Kredens Tradycja Galicyjska Sp. z o.o., where it conducts retail sales of its products under the own label.

b) part of the building is rented to the subsidiary Paradise Group sp. z o.o., where it has its office.

Jerzy Mazgaj together with his wife Barbara Mazgaj (who is the Chairperson of the Alma Market S.A. Supervisory Board) are the owners of the property at 33 Jodłowa street, which was rented to the Paradise Group sp. Z o.o. subsidiary.

Jerzy Mazgaj together with his wife Barbara Mazgaj (who is the Chairperson of the Alma Market S.A. Supervisory Board) are employed in Paradise Group under the working contract.

Jerzy Mazgaj granted a long term loan under the arms' length rule to the related entity „Paradise Group” Spółka z ograniczoną odpowiedzialnością (limited liability company) amounting to PLN 7 300 thousand before acquiring 100% of shares by Alma Market SA in the said company. During 2010 Jerzy Mazgaj – the Chairperson of ALMA MARKET SA granted the loans to Paradise Group Sp. z o.o. amounting to PLN 4 050 thousand. As at 31 December 2010 the loans equal to PLN 11 700 thousand.

During neither the current period nor during the preceding periods Alma Market SA concluded with neither Mr. Jerzy Mazgaj nor Ms Barbara Mazgaj any transactions that were not revealed above.

All transactions concluded between related entities were typical and routine transactions concluded on an arm’s length basis and are presented in the below tables.

Below are presented balances and settlements with Premium Cigars Sp. z o. o., which is a related entity of Alma Market SA via its main shareholder and a Chairman.

I. Net revenues from sale of commodities, services and fixed assets

for 12 months

2010 2009

Affiliated companies

Revenues from sale of commodities and materials 2 1 Revenues from the sale of services - 8

2 9

II. Purchase of materials, commodities, services and fixed assets

for 12 months 2010 2009 Affiliated companies Purchase of materials 16 1 Purchase of merchandises 638 770 654 771

III. Accounts balances as at the reporting date from sales/purchase of goods/services/fixed assets:

As at 2010-12-31

As at 2009-12-31

Receivables from related entities - - Liabilities towards related entities 243 295

IV. Key Management Compensations – information on remunerations of key executive officers

Total value of remunerations and other employment related charges for key management (i.e. executives and supervisors) Financial year ended at 31

December 2010 2009 Parent Company Management 1 914 1 599 Supervisory Board 408 377 Subsidiaries

Managers in the Parent Company 572 518 including those acting as:

- supervisors in the subsidiaries 94 84

- managers in the subsidiaries 444 434

Supervisors in the Parent Company 48 - including those acting as:

- supervisors in the subsidiaries 48 -

- managers in the subsidiaries - -

Value of salaries, awards and other benefits, including benefits arising from incentive or bonus programs based on the Parent Company’s capital, including the programs based on bonds with priority right, convertible bonds, subscription warrants (in cash, in kind or any other form) repaid, due or potentially due, separately for each person regardless of the fact that they were included in cost or resulted from profit distribution – all are presented in the below tables:

Total value of remunerations and other employment related charges, individually for each executive on the position in 2010

Function / Position Name and surname

In the Parent Company In the subsidiaries

2010 2009 2010 2009

Chairperson/ General Director Jerzy Mazgaj 1 316 1 225 538 494 Vice Chairperson/ Managing and

Financial Director Mariusz Wojdon 406 374 34 24

Vice Chairperson/ Sales Director Małgorzata Moska (*) 192 - - - (*) – remuneration and other employment charges concern solely the period starting from 21 June 2010, i.e. since the day when Ms

Małgorzata Moska was appointed on the function of the Vice Chairperson.

Total value of remunerations and other employment related charges, individually for each supervisor on the position in2010

Function Name and surname In the parent company In the subsidiaries

2010 2009 2010 2009

Chairperson Barbara Mazgaj 163 158 48 - Vice chairperson Andrzej Wyrobiec 43 - - - Secretary Wojciech Mazgaj 82 79 - - Member Marek Dybalski 19 40 - - Member Witold Sobkowicz 19 40 - - Member Gwidon Wójcik 41 40 - -

Incentive or bonus programs for the benefit of key management based on the capital, including programs based on bonds with priority right, convertible bonds and subscription warrants.

On 25th of July 2008, General Shareholders’ Meeting of ALMA MARKET SA voted for changing the value of conditional increase (of the share capital) by issuance of new ordinary bearer G-series shares of a nominal value 1 PLN each. It was agreed that the number of new shares issuance must not exceed 200 000 shares. Pursuant to the resolution free of charge subscription warrants are offered. The said warranties entitle to acquire G-series shares within the new Incentive Program in years 2009-2011.

On 19 June 2009 GSM set an issue price at PLN 19,00 per share. This is the price at which G-series shares can be purchased if the market conditions of the Incentive Program are fulfilled. Pursuant to paragraph 2 clause 5 of resolution nr 30/06/2008 voted by GSM on 25 July 2008, The Supervisory Board in December 2009 voted for the resolution which set the Regulations on the Incentive Program and its details. In January 2011 the Board voted on the details of the A-series warrants issuance and G-series shares issuance. In January 2011 TRIGON Dom Maklerski SA seated in Krakow signed a contract on providing the services of the deposits trustee. TRIGON Dom Maklerski SA will also conduct other activities related to the Warrants and G-series shares.

Details of the Incentive Program

The right to acquire warrants entitling to the purchase of the ordinary bearer G-series shares is assigned to the following persons: (i) Company's key managers, (ii) Alma Market Capital Group key managers, (iii) other key persons of Alma Market or Alma Market capital Group, regardless the legal basis of their cooperation with the Company or Alma Market S.A. Capital Group. The maximum number of participants of the Incentive Program is 30 persons. The Supervisory Board set the List of Entitled Persons together with the number of Warrants, which are to be acquired by Entitled Persons under the conditions set in the Incentive Program Regulations. Changes and Amendments to the List of Entitled Persons as well as in the number of Warrants may only concern Warrants of the standby pool. Shares may be acquired only in exchange of contributions in cash in the respective years when the Program is realized (i.e. 2009, 2010, 2011 in tranches) Shares will be made acquirable to the Entitled Persons in three tranches, proportionally to the number of the owned Warrants.

The Entitled Persons may acquire subscription Warrants entitling to the purchase of shares in the following year:

1. If a monthly average Company share price on the Warsaw Stock Market in December 2009 will be higher at least by 15% than a monthly average Company share price on the Warsaw Stock Market in December 2008 – they have a right to acquire 66,000 Warrants the maximum (Tranche I),

2. If a monthly average Company share price on the Warsaw Stock Market in December 2010 will be higher at least by 15% than a monthly average Company share price on the Warsaw Stock Market in December 2009 – they have a right to acquire 66,000 Warrants the maximum (Tranche II),

3. If a monthly average Company share price on the Warsaw Stock Market in December 2011 will be higher at least by 15% than a monthly average Company share price on the Warsaw Stock Market in December 2010 – they have a right to acquire 68,000 Warrants the maximum (Tranche III),

A monthly average share price means the arithmetic average of the closing quotes in December of the respective calendar year.

If, due to not fulfilling the ratio for the said year of the Program, some Warrants are not utilized, they are not cancelled but postponed to the subsequent years o of the Program. In this case, accumulated number of Warrants will be assigned to the Entitled Persons in the following years if only the accumulated ratio for two or three years will be fulfilled.

Fulfilling all the criteria listed above grants the right to the Entitled Persons to acquire the Warrants in the number specified on the list. Tranche I will be offered to the entitled persons by 31 March 2010, Tranche II – by 31 January 2011, Tranche III – by 31 December 2011. By those days, Trustee should present to the Entitled Persons an offer of the Warrants' acquisition.

Every Entitled Person may accept an Offer in full or in parts or reject it. If any of Entitled Persons does not accept an offer in full or in part, The Offer expires (in full or in the rejected part). No answer by the deadline indicated in the Offer means that the Offer is rejected. Warrants let after rejection of the Offer make a standby pool, which may be distributed by the Supervisory Board for the benefit of the other Entitled Persons based on an additional resolution.

The list of persons entitled to participate in the Incentive Program and to acquire warrants to purchase G-series shares of Alma Market contains managers and executives, i.e. Jerzy Mazgaj – Chairperson of the Board, who is entitled to acquire 80,000 subscription warrants,

Mariusz Wojdon – Vice Chairperson of the Board, who is entitled to acquire 60,000 subscription warrants and Ms Małgorzata Moska – Vice Chairperson of the Board who is entitled to acquire 30,000 subscription warrants allowing to purchase G-series shares of Alma Market S.A.

Monthly average Company share price on Warsaw Stock Exchange in December 2010 met the condition of accumulated monthly average share price ratio for the two joint years of the Program (December 2009/2008 and December 2010/2009). Therefore the 14 entitled persons were offered in January 2011 Warrants to the Tranche I and II (132 000 Warrants).

To 10 March 2011 the persons owning Warrants were offered to acquire G-series shares. The said persons declared the execution of their rights to acquire 132.000 G-series ordinary shares of Alma Market SA. The said shares will be acquired after paying their price.

After acquisition, the Board will take steps to register the G-series ordinary shares by the National Depository of Securities according to its rules. The Board will also take actions aimed at floating shares onto the Warsaw Stock Exchange S.A. in Warsaw.