Concluding a significant agreement with JT Zakład Budowy Gazociągów Sp. z o.o.

Date  of issue: 2011-05-11

Legal basis: Art. 56 Clause 1 Item 2 of the Offering Act – current and periodic information.

SUBJECT:
Concluding a significant agreement with JT Zakład Budowy Gazociągów Sp. z o.o.

CONTENT OF THE REPORT:
Izostal S.A. Board of Management (the Company) informs that on May 10, 2011 Izostal S.A. (the Supplier) settled another transaction of the steel pipes sales -   with JT Zakład Budowy Gazociągów Sp. z o.o. , with its registered office in Warszawa (the Buyer).  In result of the transaction, the total value of the steel pipes purchase/sales contracts concluded by the Company with JT Zakład Budowy Gazociągów Sp. z o.o. since January 5, 2011 amounted to PLN 13,535,450.31 (net).

In the reference period the highest value was contributed by the sales transaction of coated steel line pipes  and coated bends for the construction of a high pressure pipeline DN 500 from Jeleniów to Dziwiszów, concluded on March 7, 2011, to the amount of PLN 11,953,979.01 net. The Principal for the Buyer is OGP GAZ-SYSTEM S.A. in Warszawa.  The financial conditions of the concluded agreement do not deviate from the ones used commonly for such agreements.

The agreement includes the following contractual penalty clauses:
a) The Seller shall pay the contractual penalty to the Buyer for their failure to meet the delivery terms, in the amount of 0,3% of the net price of the contract value for each full day of delay.
b) The Buyer shall reimburse the Seller for the documented costs of demurrage of Seller's means of transportation, caused by the Buyer's fault, if the demurrage exceeds 12 hours.
c) The Seller shall pay the Buyer a contractual penalty for the withdrawal from the agreement for the reasons attributable to the Seller, in the amount of 25% of the contract value.
d) The Seller shall pay the Buyer a contractual penalty for the delay in rectification of defects attributable to the Seller in the amount of 0.06%  of the contract value for each day of delay, calculated from the day indicated as the day of a defect rectification.
e) The Buyer shall pay the Seller a contractual penalty for the withdrawal from the agreement attributable to the Buyer in the amount of 25% of the contract value, except for the situation, in which the necessity to withdraw from the agreement by the Buyer is the result of such a withdrawal by the Operator of Gas Transmission Pipelines, namely GAZ-SYSTEM S.A., represented by the Operator of Gas Transmission Pipelines GAZ-SYSTEM S.A, Division in Wrocław.

The Buyer may withdraw from the contract or reduce its scope, if such a necessity is the result of the reduction in the Buyer's scope of work or if the Operator of Gas Transmission Pipelines GAZ-SYSTEM S.A, represented by the Operator of Gas Transmission Pipelines GAZ-SYSTEM S.A, Division in Wrocław  withdraws from the contract.  In such a case the Buyer shall pay only for the received supplies.

Irrespective of the contractual penalties, the Parties may claim supplementary compensation –  to the amount of the incurred damage, on general principles.  The above provisions do not apply in the case of Force Majeure.

 The transactions concluded with the JT Zakład Budowy Gazociągów Sp. z o.o. in the above mentioned period of time meet the criterion of a significant agreement, because their total value exceeds 10% of the Company Equity.

Specific legal basis: §5 Clause 1 Item 3 of the Ordinance of the Minister of Finance of February 19, 2009 on current and periodic information disclosed by the issuers of commercial papers and the conditions for recognizing as equivalent the information required by the laws of a non-member state (Journal of Laws No. 33, item 259, as amended).

SIGNATURES OF PERSONS REPRESENTING THE COMPANY:
Management Board President, General Director Marek Mazurek 2011-05-11
Management Board Vice President, Commercial Director Jacek Podwiński 2011-05-11

INFORMATION ON THE ENTITY:
Full name of the issuer: IZOSTAL SPÓŁKA AKCYJNA
Abbreviated name of the issuer:  IZOSTAL S.A
Sector based on the classification of Warsaw Stock Exchange:  Other industry
Address: 47-120 Zawadzkie Polna 3
Telephone: (77) 405 65 00
Fax: (77) 405 65 01
e-mail:info@izostal.com.pl
www.izostal.com.pl
VAT No. [NIP]:756-00-10-641
Statistical No. [REGON]: 530884678