Conclusion of a Framework Agreement by the subsidiary Izostal S.A. with GAZ-SYSTEM S.A. in the scope of supply of pipes for investment tasks implemented by OGP Gaz-System S.A. - Parts 1, 2, 3 and 4.

The Management Board of STALPROFIL S.A. (Company) with reference to current report 27/2019 of 19 July 2019 informs that on 16 August 2019, the subsidiary Izostal S.A. (Contractor) concluded a Framework Agreement with OGP GAZ-SYSTEM S.A. with with its registered office in Warsaw (Employer), in the scope of supply of pipes for investment tasks carried out by OGP Gaz-System S.A. - Parts 1, 2, 3 and 4.
The Framework Agreement, concluded as a result of an open public tender with the number: ZP/2018/11/0101/PI, sets out the conditions for granting and implementing Partial Agreements that may be concluded by the Employer during the term of the Framework Agreement. The conclusion of the Framework Agreement does not oblige, but only entitles the Employer to invite tenders for the implementation of Partial Orders (Partial Agreements). Under the Framework Agreement, the Employer will conduct any number of Executive Proceedings. The Employer will each time invite all Contractors with whom it has concluded a Framework Agreement to submit offers in the Executive Procedure. The criterion for the evaluation of bids in the Executive Procedure will always be the price (criterion weight - 100%).
The contract provides for awarding by the Employer to the Company as one of the Contractors of Partial Agreements (Partial Orders):
• for part 1: for the supply of brand new, insulated and painted internally (optionally laminated) steel pipes with a diameter of DN1000;
• for part 2: for the delivery of brand new, insulated and painted internally (optionally laminated) steel pipes DN700;
• for part 3: for the delivery of brand new, insulated and painted internally (optionally laminated) steel pipes with a diameter of DN500;
• for part 4: for the delivery of brand new, externally insulated and internally painted casing pipes with a diameter from DN700 to DN1200.
Individual Partial Agreements will be concluded separately as the final result of the Executive Procedure.

The Framework Agreement is concluded for a period of 8 years, starting from the date of its signing by both Parties. The Parties to the Framework Agreement are entitled to conclude Partial Agreements whose deadline exceeds the duration of the Framework Agreement, provided that the Partial Agreement will be signed with the Contractor within 8 years from the date of signing the Framework Agreement.
The total remuneration for the implementation of Partial Agreements under the Framework Agreement will not exceed PLN 2,793,155 thousand PLN net, which constitutes 3,435,580 thousand PLN gross.
Under the Framework Agreement, the Employer envisages the delivery of pipes, with a total length of approximately 1,707 km, for investment tasks carried out by OGP Gaz-System S.A.
The Contractor shall provide the Employer with a guarantee of the quality of the goods delivered as part of the given lot for a period of 36 months, counted from the date of signing by the Parties of the acceptance protocol of the lot without reservations on the part of the Employer.
The agreement contains the following important provisions regarding the possible imposition of contractual penalties:
1. The Contractor shall pay the Employer contractual penalties for:
• a delay not exceeding 30 days in the implementation of the task under the Partial Agreement, in the amount of 0.2% of the Contractor's net remuneration for the implementation of the task, for each day of delay,
• a delay exceeding 30 days in the implementation of the task under the Partial Agreement, in the amount of 0.3% of the Contractor's net remuneration for the implementation of the task, for each day of delay over 30 days,
• a delay in removing defects found during the quality guarantee period or warranty for defects, in the amount of 0.05% of net remuneration for the task under the Partial Agreement (in which the defect occurred in the above-mentioned period) for each day of delay,
• withdrawal by the Employer or the Contractor from the Partial Agreement for reasons attributable to the Contractor - 20% of the total net remuneration of the Contractor for the Subject of the Partial Agreement.
2. The total amount of contractual penalties charged to the Contractor is limited to 20% of the Contractor's net remuneration for the Subject of the Partial Agreement.
3. The liability of the Parties towards each other in relation to the implementation of the Partial Agreement is limited to 100% of the gross remuneration indicated in the Partial Agreement.
The Contractor is obliged to provide, before signing a given Partial Agreement, a security on due performance of the contract in the amount of 10% of the total gross contractual remuneration of the Partial Agreement.
Other terms of the contract do not differ from the standard terms used for this type of contract.
The Company's Management Board considers the information described to be significant due to the high value of the Framework Agreement. Possible implementation of Partial Agreements concluded under these Framework Agreements may have an impact on the increase in revenues of the STALPROFIL S.A. Capital Group.