MRV Engenharia e Participações : Material Fact - Approval of AHS Investment Proposal

MRV ENGENHARIA E PARTICIPAÇÕES S.A.

Corporate Taxpayers' Registry (CNPJ) No. 08.343.492/0001-20

Company Register Identification Number (NIRE) 31.300.023.907

Publicly-held Company

Material Fact

Belo Horizonte, January 31, 2020 - MRV ENGENHARIA E PARTICIPAÇÕES S.A. ("Company" or "MRV"), pursuant to article 157, paragraph 4, of Law No. 6,404, dated as of December 15, 1976, as amended ("Brazilian Corporations Law"), and the Regulation CVM No. 358/02 and Regulation CVM No. 565/15, in addition to the material facts disclosed by the Company on September 3, 4, and 16, and October 1, and 22 and November 21, 2019, and December 26, 2020, hereby informs the following to its shareholders and the market in general. The Company hereby informs that it has approved today, in an extraordinary shareholders' meeting, the structure of the investment to be made in AHS Residential, LLC ("AHS Residential"), as described below:

1. AHS Merger. To merge the totality of the indirect stake of Rubens Menin in AHS Residential at its NAV value. Thus, the only investment in AHS Residential will be through the Company, eliminating potential conflicts of interest ("Merger");
2. Issuance of Stock Warrant. In order to reconcile the interest of the controlling shareholder, Rubens Menin, regarding the prospect of growth and appreciation of AHS Residential with the demands of the Independent Committee, a earn-out structure was created by means of stock warrants issued by the Company, which entitle the holder the right to subscribe shares equivalent to (a) two percent (2%) of the Company's capital stock on the date hereof, if the internal rate of return (IRR) of the investment made by the Company in AHS Residential, in Dollars, is greater than fifteen percent (15%) per annum; or (b) three percent (3%) of the Company's capital stock on the date hereof, if the internal rate of return (IRR) of the investment made by the Company in AHS Residential, in Dollars, is greater than twenty percent (20%) per annum; in both cases, as determined during the fiscal year of 2027;
3. Amendment to the Bylaws - Adequacy of the Bylaws to the new Novo Mercado Regulation.Adjustment to certain provisions of the bylaws and exclusion of the specific provisions for public tender offer in order to bring the bylaws into line with the provisions of the new Novo Mercado Regulation;

1. Amendment to the Bylaws - Review and approval of transactions with related parties. The board of directors has the authority to approve transactions of fifty million Brazilian Reais (BRL 50,000,000.00) or more; and the board of officers has the authority to approve transactions of a lower amount. In addition, MRV will implement a new policy for transactions with related parties;
2. Amendment to the Bylaws - Authority of the Board of Directors to resolve on new business opportunities.The board of directors has authority to examine and evaluate any business opportunities offered to the Company by its shareholders and/or managers, voluntarily or pursuant to applicable laws, regulations or contractual provisions;
3. Amendment to the Bylaws - Election by slate. Inclusion of the procedure for election by slate for the election of the board of directors.
4. Amendment to the Bylaws - Audit Committee. Inclusion of the provisions for the creation of the audit committee in the bylaws, provided that its installation should take place on the next ordinary shareholders' meeting of the Company.

Below, a comparative representation of the approved proposal and the current scenario:

Current Scenario:

Approved Proposal:

The Company further informs that the business plan presented on September 4 and available at the websites of CVM (http://www.cvm.gov.br), B3 (http://www.b3.com.br) and the Company (http://ri.mrv.com.br) will remains as disclosed, i.e., estimated at two hundred and thirty-six million dollars (USD 236,000.000.00) to subscribe directly to the units issued by AHS Development and, indirectly, to the units issued by AHS Residential in the next four (4) years, which may vary according to the resolution of the Board of Directors regarding the attractiveness and the Brazilian and American business environment and the business strategies to be implemented. The minority shareholders of AHS Residential will be responsible for following up on the subscriptions of equity interest or opting for dilution of their equity interest as determined by the NAV at the time. The funds received by AHS Residential in the context of the investment will be used to expand operation of AHS Residential in the United States.

The Company reaffirms its commitment to the best corporate governance practices and understands that the process of discussion of the best Transaction structure with the minority shareholders of the Company places MRV at the leading edge of such processes.

Additional Information

For detailed information on the transaction, as well as additional information on the Transaction, please visit the websites of CVM (http://www.cvm.gov.br), B3 (http://www.b3.com.br) and the Company (http://ri.mrv.com.br), as well as the headquarters of the Company.

Belo Horizonte, January 31, 2020

Ricardo Paixão Pinto Rodrigues

Executive Director of Finance and Investor Relations