Execution of the material agreement

The Management Board of PGE Polska Grupa Energetyczna S.A. („PGE”) discloses that on July 10, 2014 PGE Górnictwo i Energetyka Konwencjonalna S.A. („PGE GiEK S.A.”), a subsidiary of PGE, concluded an agreement („Agreement”) with syndicate of companies: Mitsubishi Hitachi Power Systems Europe GmbH (leader), Budimex S.A. and Tecnicas Reunidas S.A. (later referred to as the „Contractor”).

Subject matter of the agreement is designing and turn-key construction of 450 MWe supercrititcal power unit with steam dust boiler in PGE GiEK S.A. Branch Elektrownia Turów. New unit will be CCS Ready.

The construction of the new unit will be finished within 56 months from the date of the Notice To Proceed (“NTP”) issued by PGE GiEK S.A. The net value of the Agreement amounts to PLN 3,250,000,000 PLN, while gross value of the Agreement as at the Agreement signing date amounts to PLN 3,997,500,000. Value of the Agreements meets the criteria of the material agreement since it exceeds value of 10% of the PGE’s equity.

The aggregate amount of the contractual penalties to be paid by the Contractor due to delay and due to breach of specific technical parameters amounts to 25% of the Agreement’s net value, wherein the maximum total amount of contractual penalties payable by the Contractor for the delay is 10% of the Agreement’s net value while the maximum total amount of contractual penalties payable by the Contractor for breach of specific technical parameters is 15% of the Agreement’s net value. PGE GiEK S.A. entitlement to receiving the contractual penalty from the Contractor, as a rule precludes PGE GiEK S.A. from seeking compensation exceeding maximum value of contractual penalty. However, the Agreement allows PGE GiEK S.A. to seek compensation claims on general basis, shall certain conditions stipulated in the Agreement be fulfilled.

After signing of the Agreement, parties amended the Agreement with Annex 1 providing for risks limitation for the parties (time for issue of NTP prolonged to December 31, 2014) connected with the potential complaint to the District Court by other bidders participating in the tender.

Legal ground: § 9 in connection with § 5 section 1 point 3 of the Regulation of the Minister of Finance dated February 19, 2009 on current and periodic information published by issuers of securities and on conditions under which such information may be recognized as being equivalent to information required by the regulations of law of a state which is not a member state. (Dziennik Ustaw of 2009, No. 33, item 259, as amended).