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Elco Ltd (hereinafter: The Company) hereby respectfully informs that today the Company engaged in an agreement to sell its rights in the real estate in Ramat HaSharon (hereinafter: Real estate and the Agreement, respectively) with a third party not related to the Company and/or its controlling shareholders (hereinafter: the Buyer) and the main points thereof are as follows:

• In return for the Company's rights in the Real Estate the Company will receive the cash consideration in the amount of 135M NIS (hereinafter: Basic Consideration) with the addition of the repayment that the Company must pay the Israel Land Administration as said in section 2 below in the total amount of 46M NIS (hereinafter: Payment to the Administration) thereby totaling 181M NIS, plus due VAT (hereinafter: the Consideration), which the Buyer will pay in installments on the following dates: the majority of the Consideration (approx. 160M NIS) will paid to the Company in installments spread over a period of 24 months from the date of signing the transaction (each year approx. 50% of the said total will be paid), except an amount equaling 15% of the Basic Consideration to be paid to the Company on the date of completing the transaction as defined below, according to the mechanisms stipulated in the agreement.

The free flow that will be generated to the Company from this transaction is approx. 132M NIS.

• The Company will pay the Israel Land Administration permit fees, in cash (75%) and by bank guarantee (25%) for the transaction of changing the utilization and designation that includes granting the Company a 49 year lease with conditions that comply with the valid urban scheme that applies to the Real Estate, changing its designation from industrial to work and trade (hereinafter: Urban Scheme) in the total amount of approx. 46M NIS plus due VAT (hereinafter: Permit Fees) and the Buyer will repay them in three equal installments as aforesaid with the addition of annual interest in the rate of 5%. It is clarified that any amount deducted from the payment to the Israel Land Administration as part of objection proceedings and/or any other proceeding, will be in favor of the Buyer.

• The Buyer will pay the local committee in Ramat HaSharon and/or Municipality of Ramat HaSharon the entire betterment levy that applies to the Real Estate, including for the Urban Scheme, in the amount of approx. 22M NIS according to the decisive assessment received by the Company.

• There is a tenant in a certain part of the Real Estate (hereinafter: Rented Properties) that paid the Company rent fees in advance until September 2021, to remain with the Company. The balance of the advanced rent fees received by the Company is approx. 56M NIS as of the date of signing the Agreement. The date for completing the agreement was scheduled for not later than September 2021 (hereinafter: Date for Completing the Transaction) in which the tenant's rent of the Rented Properties as said ends.

• If the Buyer will decide to end the tenant's rent of the Rented Properties early, according to the terms of the rent agreement, the Buyer alone will have to indemnify the tenant for shortening the rent according to the terms of the rent agreement.

Additionally, the Date for Completing the Transaction might occur before the dates specified above or any one of them in one of the following cases:

• Advancing payment of the entire Considerations due to the Company based on the Agreement, according to the Buyer's discretion and then completing the transaction will be advanced to the date of paying the entire balance of the Consideration.

• If any amounts, which result from the Buyer's undertaking to sell parts of the Real Estate to third parties, equaling and/or exceeding the balance of the Consideration yet to be paid by the Buyer to the Company (including the balance of the Payment to the Administration yet to be recovered) will be accumulated in the trust account of the Buyer's representative, then completing the transaction and paying the entire balance of the Consideration will be advanced to a date that will occur within 30 days from the date of publishing the quarterly statement by the Buyer's representative attesting that funds were accumulated in trust as said.

• If the Date for Completing the Transaction will be advanced as aforesaid to before ending the rent of the Rented Properties, the tenant will continue to rent the property until the end of the rent period according to the rent agreement and in order to guarantee evacuation of the Rented Properties by the tenant at the end of the rent period, the Company will provide the Buyer with an autonomous bank guarantee in the amount of 7.5% from the Basic Consideration and an autonomous letter of guarantee (Company's guarantee) in the amount of an additional 7.5% of the Basic Consideration.

• It is emphasized that in the period until the Date for Completing the Transaction, the Company is entitled to rent out areas in the Real Estate that are not rented as of today and to receive the entire consideration for renting out these areas.

• As part of the Agreement certain liabilities were imposed on the Company in regard to the Real Estate and the Company's engagements on account thereof.

• As of the date of signing the Agreement, the Agreement (together with the advanced rent fees received as of the Date of Completing the Transaction) are expected to generate a profit before tax for the Company in the amount of approx. 67M NIS. The said profit will be included in the Company's books during the period until completing the transaction, including in accordance with the valuations of the Real Estate occasionally received until completing the transaction. This information concerning the Company's expected profit and the timing of recognizing it as well as information regarding the Company's expected cash flow in connection to the transaction as said in section 1 above is considered future forecast information based inter alia on the scope of consideration in the transaction, the Company's costs connected to the transaction known today as well as the assumption that the transaction will be completed and it might not be realized or might be realized differently than as foreseen, inter alia if the Company's said assumptions will not be realized.