Conclusion by the subsidiary Izostal SA of the Framework Agreement with Gaz-System SA for the supply of pipes for investment tasks carried out by OGP Gaz-System SA

The Management Board of STALPROFIL SA (the Company) in reference to the current report No. 33/2022 of August 24, 2022, informs that on September 30, 2022 it was informed about the conclusion by the subsidiary Izostal SA (Contractor) of the Framework Agreement (Agreement) with OGP Gaz-System SA with its seat in Warsaw (Ordering Party), for the supply of pipes for investment tasks carried out by OGP Gaz-System SA - Parts No. 1, 2, 3 and 4.
The Framework Agreement was concluded as a result of the procedure for the conclusion of the Framework Agreement in the form of an unlimited public tender: "Proceedings to conclude framework agreements for the supply of steel pipes for investment tasks carried out by OGP GAZ-SYSTEM SA", number ZP/2021/12/0129/PZ, for parts 1, 2, 3 and 4. This Agreement specifies the conditions for granting and implementing Partial Agreements that may be concluded by the Ordering Party during the term of the Framework Agreement. The conclusion of the Framework Agreement does not oblige, but only entitles the Ordering Party to invite tenders in the Enforcement Proceedings. Under the Framework Agreement, the Ordering Party will conduct any number of Enforcement Proceedings. The Ordering Party will each time invite all Contractors, with whom he concluded the Framework Agreement for the submission of offers in the Enforcement Procedure.
When selecting the best offer, the Ordering Party will use the following criteria: "Total gross price of the offer" - weight 95% and "Origin of the product" - weight 5%.
The contract provides for the awarding by the Ordering Party to the subsidiary Izostal SA as one of the Contractors of Partial Agreements:
- for lot 1: for the delivery of brand new, externally insulated and internally painted (optionally laminated) steel pipes with a diameter of DN1000;
- for lot 2: for the delivery of brand new, externally insulated and internally painted (optionally laminated) steel pipes with a diameter of DN700;
- for lot 3: for the supply of brand new, externally insulated and internally painted (optionally laminated) steel pipes with a diameter of DN500;
- for lot 4: for the supply of brand new, externally insulated (optionally laminated) casing pipes with a diameter from DN700 to DN1400.
Individual Partial Agreements will be concluded separately as the final result of the Enforcement Proceedings.
The Framework Agreement is concluded for a period of 4 years, starting from the date of its signing by both Parties. The Parties to the Framework Agreement are entitled to conclude Partial Agreements, the completion date of which exceeds the duration of the Framework Agreement, provided that the Partial Agreement is signed with the Contractor within 4 years from the date of signing the Framework Agreement.
The total remuneration allocated to the performance of Partial Agreements under the Framework Agreement will not exceed the amount of PLN 1,778,672,719.00 net, which constitutes PLN 2,187,767,444.37 gross.
On the basis of the Framework Agreement, the Ordering Party provides for the delivery of pipes with a total length of approximately 791 km for investment tasks carried out by OGP Gaz-System SA'
The Contractor will provide the Ordering Party with a quality guarantee and warranty for defects for the goods delivered under a given batch of the order for a period of 36 months, counted from the date of signing the batch acceptance protocol by the Parties without any reservations on the part of the Ordering Party.
The agreement contains the following significant provisions regarding the possible imposition of contractual penalties:
1. The Ordering Party has the right to charge the Contractor with a contractual penalty in the following cases and amounts:
1) for a delay not exceeding 30 days in the performance of the Task (if the Partial Agreement provides for the Tasks) or the delivery of Pipes (if the Partial Agreement does not provide for the Tasks) - in the amount of 0.2% of the Contractor's net remuneration for the performance of the Task or the performance of the Partial Agreement, respectively, for each day of delay,
2) for a delay exceeding 30 days in the implementation of the Task (if the Partial Agreement provides for the Tasks) or the delivery of the Pipes (if the Partial Agreement does not provide for the Tasks) - in the amount of 0.3% of the Contractor's net remuneration for the performance of the Task or the performance of the Partial Agreement, for each day of delay exceeding 30 days,
3) for the delay in removing the defects found, during the quality guarantee or warranty period for defects, in the amount of 0.05% of the net remuneration for the performance of the Task (in which the defect occurred in the above-mentioned period - if the Task was provided for) or for the Partial Agreement for each day of delay,
4) for the actually delivered share of products originating from the European Union Member States, countries with which the European Union has concluded agreements on equal treatment of entrepreneurs, or countries to which the provisions of Directive 2014/25/EU apply under the Council decision, lower than indicated in an offer in the Enforcement Procedure as Criterion P, in the amount of 7.5% of the Contractor's net remuneration referred to in the Partial Agreement,
5) for the Employer or the Contractor withdrawing from the Partial Agreement for reasons attributable to the Contractor - in the amount of 20% of the Contractor's net remuneration referred to in the Partial Agreement.
2. The total amount of contractual penalties charged to the Contractor is limited to 20% of the net contractual remuneration of the Partial Agreement.
Before the conclusion of the Partial Agreement, the Contractor shall each time provide a performance bond in the amount of 5% of the gross remuneration of the Partial Agreement.
The remaining terms of the agreement do not differ from the standard terms and conditions applied in this type of agreement.
The Management Board of the Company considers the information described as significant due to the high value of the Framework Agreement. The implementation of the Partial Agreements concluded under the Framework Agreement in question may have a significant impact on the revenues of the STALPROFIL SA Capital Group.