Signing a frame contract with GAZ-SYSTEM S.A. for the supply of steel pipes coated on the outside and painted inside.

Date of issue: 2011-01-26

Legal basis: Art. 56 clause 1 item 2 of the public offering act – current and periodic information

SUBJECT:
Signing a frame contract with GAZ-SYSTEM S.A. for the supply of steel pipes coated on the outside and painted inside.

CONTENT OF THE REPORT:
The Management Board of Izostal S.A. (Company) informs that on January 26, 2011 Izostal S.A. being the leader of a consortium, signed a frame contract with Operator Gazociągów Przesyłowych GAZ-SYSTEM S.A. seated in Warszawa (Orderer),  for the supply of steel transmission pipes DN 700 with external and internal coating intended for flammable utilities.

The  contract stipulates that the Orderer will place partial orders for the supply of brand-new steel transmission pipes for flammable utilities class B based on standard PN-EN10208-2:2009 coated on the outside and painted inside, intended for use under working pressure of up to  8.4MPa. Partial contracts will be concluded separately for each offer.

 Total amount for the performance of partial contracts will not be lower than PLN 787.041.512 net.

Frame contract was concluded for the period of 24 months from the day on which it was concluded.

The contract contains the following provisions concerning possible contractual penalties:

• for a delay by the Contractor to provide "Guidelines for the Loading, Transport, Unloading and Storing of Pipes" within 14 days from the day on which the Parties signed the Frame Contract at the latest, and "Guidelines for the Removal of Defects, in the amount of PLN 1000 net for each day of delay,
• for a delay in the delivery of a given batch of a product being the object of the contract - 0.1% of the remuneration specified in the partial contract  for each day of delay,
• for a delay in the delivery of the object of the contract subject to repair – in case of defects discovered upon the collection of the object of delivery in the period of guarantee or warranty for defects - 0.5% of the net remuneration specified in the partial contract for each day of delay. 
• for withdrawal from the contract by the Orderer for reasons on the part of the Company, in the amount of 20% of net remuneration specified in the partial contract.

Performance bond constitutes 10% of the total net remuneration specified in the partial contract.

Other conditions of the contract are no different from standard conditions applied for this type of contracts.
Contract value exceeds 10% of the Issuer's equity.

Legal basis: § 5 clause 1 item 3 of the Regulation of the Minister of Finance of February 19, 2009 on current and periodic information submitted by issuers of securities and conditions  of recognizing information required by law of a non-EU state as equivalent (Journal of Laws no. 33 item 259, with further amendments);.

SIGNATURES OF PERSONS REPRESENTING THE COMPANY:
Management Board President, General Director, Władysław Mrzygłód  2011-01-26
Management Board Vice President, Financial Director Marek Mazurek 2011-01-26

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