Agreement between PKN ORLEN S.A. and the State Treasury regarding the planned takeover of capital control by PKN ORLEN S.A. over ENERGA S.A.

The Agreement sets forth the Company’s declarations of intent not constituting a contractual obligation of the Company regarding: (i) realization of the energy policy of Poland by the Company, (ii) continuation of ENERGA’s strategic investments, and (iii) maintaining of employment policy in ENERGA’s capital group assuring proper and safe operating of the companies of this group in all their business areas.

The declaration on the implementation by the Company of the energy policy of Poland, whose primary objective is to ensure the long-term energy security of Poland, will be implemented to the extent permitted by generally applicable laws and provisions of the Company’s Articles of Association, especially through the capital control over ENERGA.

The parties of the Agreement declared that after the takeover of ENERGA by the Company the strategic investments of ENERGA will be continued. The Company declared that immediately after the control over ENERGA is taken, it will verify the conditions for continuation of these investments, in particular with regard to building Ostrołęka C Power and Heat Plant.

Moreover, in addition to the declarations set out above, after taking control over ENERGA and subject to the exceptions described in the Agreement, the Company undertook to assure that obligations of ENERGA capital group existing on the day of signing of the Agreement as well as future obligations will be executed, which include among others: (i) maintaining total installed capacity from so-called renewable energy sources (RES); (ii) providing production services and assuring the continuity of heat deliveries with the use of production units that operate within ENERGA capital group; and (iii) proper operating and reliability of the distribution network of ENERGA capital group according to the development plans accepted by the President of Energy Regulatory Office.

The Agreement is not legally binding except for selected provisions regulating, among others, the above mentioned Company’s obligations, as well as the rules of the Company’s liability for breach of these obligations.

In case of culpable non-performance or improper performance of legally binding obligations by the Company and ineffective expiry of the deadlines provided by the parties to the Agreement for amicable settlement of the dispute arising from the performance of these obligations, the Company will be obliged to pay contractual penalties to the State Treasury, which are described in the Agreement. The Company’s liability for culpable non-performance or improper performance of its legally binding obligations expires 10 years after the date of entry into force of the Agreement.

Subject to the exceptions set out in the Agreement, it will remain in force for a period of 10 years from the date of its entry into force and will be automatically extended for an indefinite period thereafter. The Agreement will enter into force in principle on the date of transfer of ENERGA shares owned by the State Treasury to the Company in response to the tender offer to subscribe for the sale of shares of ENERGA announced by the Company.

See also regulatory announcements: no 19/2020 as of 18 April 2020, no 18/2020 as of 15 April 2020, no 16/2020 as of 31 March 2020, no 15/2020 as of 26 March 2020, no 44/2019 as of 5 December 2019 and no 43/2019 as of 5 December 2019.