1. execution of a share purchase agreement relating to shares in Eco Energy 2010 Spółka z ograniczoną odpowiedzialnością Spółka komandytowo-akcyjna (a limited joint-stock partnership) (“Eco SKA”);
2. execution of a share purchase agreement relating to shares in Eco Energy 2010 Spółka z ograniczoną odpowiedzialnością (a limited liability company);
3. execution of an investment agreement under which Masashi Holdings Limited will provide financing to Petrolinvest or to Eco Energy 2010 Spółka z ograniczoną odpowiedzialnością Spółka komandytowo-akcyjna up to an aggregate amount of PLN 60,000,000;
4. offering and subscribing for series C subscription warrants entitling to subscribe for series D shares in the conditionally increased share capital, and subscribing for series D shares; execution of a set-off agreement with Masashi Holdings Limited;
5. execution of an investment agreement under which Tabacchi Enterprises Limited will provide financing to Petrolinvest or Silurian Sp. z o.o. up to an aggregate amount of PLN 80,000,000;
6. execution of an annex to the share purchase agreement relating to shares in Silurian Sp. z o.o.;
7. execution of an annex to the share purchase agreement relating to shares in Silurian Hallwood Plc.; and
8. execution of an investment agreement by Tabacchi Enterprises Limited for an aggregate amount of up to PLN 80,000,000.
The execution by the Company of the share purchase agreement relating to Eco SKA significantly increases the geological potential of the Company in terms of the exploration and development of shale gas in Poland. As a result of the execution of the agreement, Petrolinvest will hold a total of 13 oil and natural gas exploration licences in Poland ensuring an appropriate geographical and exploration risk diversification, thereby increasing the possibility for the Company to secure business partners to manage the licences. The licences held by Eco SKA acquired under the share purchase agreement cover an area of 3,222 km2:
* “Grudziądz” licence No. 34/2011/p (part of licence block No. 130) – with an area of 699 km2
* “Częstochowa“ licence No. 44/2011/p (part of licence blocks No. 330, No. 331, No. 350 and No. 351) with an area of 749 km2
* “Repki” licence No. 51/2011/p (part of licence blocks No. 196, No. 197, No. 217 and No. 218) with an area of 882 km2 
* “Siemiatycze” licence No. 55/2011/p (part of licence blocks No. 197, No. 198 and No. 218) with an area of 892 km2.
In addition, the agreements executed today provide the Company with access to financing in the total amount of PLN 140 million, which will be made available within 12 months. The Company may use the financing it has raised for the purpose of developing the licences in Poland, as well as for making further progress in developing the hydrocarbon fields in Kazakhstan under the OTG licence, specifically for the purpose of testing the Shyrak structure and proceeding to drilling the Koblandy structure under the agreement executed with Total.       
Re 1. Execution of the share purchase agreement relating to shares in Eco Energy 2010 Spółka z ograniczoną odpowiedzialnością Spółka komandytowo-akcyjna
Execution of the share purchase agreement
The Management Board of the Company announces that on 8 December 2011 the Company executed a share purchase agreement relating to shares in Eco Energy 2010 Spółka z ograniczoną odpowiedzialnością Spółka komandytowo-akcyjna (the “Eco Share Purchase Agreement”) with Masashi Holdings Limited (“Masashi”).
Under the Eco Share Purchase Agreement, Petrolinvest acquired 4,400 shares, constituting in aggregate 40% of the shares in Eco SKA, representing in aggregate 40% of the share capital of Eco SKA (the “Eco Shares”). As a result of the execution of the Eco Share Purchase Agreement, the ownership structure of Eco SKA will be as follows: (i) Masashi – 60% of the shares; and (ii) Petrolinvest – 40% of the shares. The sole general partner of Eco SKA is Eco Energy 2010 Spółka z ograniczoną odpowiedzialnością.
The intention of Eco SKA is to take action with a view to completing one or more private placements and admitting the shares in this partnership to trading on a stock exchange under an IPO.
The sale price of the Eco Shares was PLN 106,592,000 (i.e. USD 32,000,000). In addition, the Company is required to make the following payments to Masashi for the Eco Shares, i.e.:
1) three bonus payments:
(a) Bonus 1 will accrue to Masashi in the case of each of the private placements of Eco SKA and will constitute:
(i) if Bonus 1 is the first Eco Bonus Payment (as defined below), Bonus 1 shall constitute X% of the difference (indicated below) between the value of the Eco Shares, taking into consideration the valuation of Eco SKA immediately after the given private placement based on the offer price paid by the investors in such private placement, and the value of the Eco Shares, taking into consideration the valuation of Eco SKA on the date of the Eco Share Purchase Agreement (i.e. PLN 266,480,000, which is an equivalent of USD 80,000,000), or
(ii) if Bonus 1 is the subsequent Eco Bonus Payment (as defined below), Bonus 1 shall constitute X% of the difference (indicated below) between the value of the Eco Shares, taking into consideration the valuation of Eco SKA immediately after the given private placement based on the offer price paid by the investors in such private placement, and the value of the Eco Shares, taking into consideration the valuation of Eco SKA immediately after the preceding bonus payment which has been paid to Masashi,
(“Bonus 1”);
(b) Bonus 2 will accrue to Masashi in the case of the IPO of Eco SKA and will constitute:
 (i) if Bonus 2 is the first Eco Bonus Payment (as defined below), Bonus 2 shall constitute X% of the difference (indicated below) between the value of the Eco Shares, taking into consideration the valuation of Eco SKA immediately after the IPO based on the offer price paid by the investors in such IPO, and the value of the Eco Shares, taking into consideration the valuation of Eco SKA on the date of the Eco Share Purchase Agreement (i.e. PLN 266,480,000, which is an equivalent of USD 80,000,000), or
 (ii)  if Bonus 2 is the subsequent Eco Bonus Payment (as defined below), Bonus 2 shall constitute X% of the difference (indicated below) between the value of the Eco Shares, taking into consideration the valuation of Eco SKA immediately after the IPO based on the offer price paid by the investors in such IPO, and the value of the Eco Shares, taking into consideration the valuation of Eco SKA immediately after the preceding bonus payment which has been paid to Masashi,
(“Bonus 2”); and
(c) Bonus 3 will accrue to Masashi in each case of an increase in the value of Eco SKA (to be determined by the Company and Masashi by way of a joint understanding on the basis of market criteria or, if the parties fail to reach an agreement, will be calculated as an average of two valuations performed by experts being leading international investment banks), in particular as a result of each of the following material events: 1) the re-evaluation of Eco SKA’s resources under its licenses, 2) confirmation of Eco SKA’s resources under its licenses, 3) the obtaining of new licences by Eco SKA, or 4) Eco SKA procuring a new strategic investor and/or partner (financial or business), (the “Material Events”, and each individually “Material Event 1”).
In each case when Material Event 1 occurs, it will constitute:
 (i) if Bonus 3 is the first Eco Bonus Payment (as defined below), Bonus 3 shall constitute X% of the difference (indicated below) between the value of the Eco Shares, taking into consideration the valuation of Eco SKA immediately after Material Event 1, and the value of the Eco Shares, taking into consideration the valuation of Eco SKA on the date of the Eco Share Purchase Agreement (i.e. PLN 266,480,000, which is an equivalent of USD 80,000,000), or
 (ii) if Bonus 3 is the subsequent Eco Bonus Payment (as defined below), Bonus 3 shall constitute X% of the difference (indicated below) between the value of the Eco Shares, taking into consideration the valuation of Eco SKA immediately after Material Event 1, and the value of the Eco Shares, taking into consideration the valuation of Eco SKA immediately after the preceding bonus payment which has been paid to Masashi,
(“Bonus 3”).
The above-mentioned bonus payments will constitute “X% of the difference” in such manner that the first bonus payment to be paid under the Eco Share Purchase Agreement will constitute 80% of the difference, and each of the subsequent bonus payments will be lower by 5% when compared to the previous bonus payment which has been paid to Masashi (however, in any case not lower than 60% of the difference).
2) four adjustment payments in amounts calculated in accordance with formulas included in the Eco Share Purchase Agreement:
(a) being the adjustment for the difference between the nominal value of the Petrolinvest shares that were issued to Masashi as at the date of the Eco Share Purchase Agreement and the average closing price of the Petrolinvest Shares on the Warsaw Stock Exchange during ten trading days before the date of the Eco Share Purchase Agreement,
(b) being the adjustment for the difference between the nominal value of the Petrolinvest shares that are to be issued to Masashi in exchange for Bonus 1 and the average closing price of the Petrolinvest Shares on the Warsaw Stock Exchange during ten trading days before the date of the given private placement of Eco SKA, and
(c) being the adjustment for the difference between the nominal value of the Petrolinvest shares that are to be issued to Masashi in exchange for Bonus 2 and the average closing price of the Petrolinvest Shares on the Warsaw Stock Exchange during ten trading days before the date of the initial public offering of Eco SKA,
(d) being the adjustment for the difference between the nominal value of the Petrolinvest shares that are to be issued to Masashi in exchange for Bonus 3 and the average closing price of the Petrolinvest Shares on the Warsaw Stock Exchange during ten trading days directly before the day on which the Petrolinvest Shares are issued to Masashi in exchange for Bonus 3.
The above-mentioned bonus payments and adjustment payments are jointly referred to as the “Additional Eco Payments”.
In the event that Eco SKA merges with another entity, the Additional Eco Payments will remain due and payable to Masashi, and the relevant calculation formulas will be modified accordingly. Masashi will be entitled to receive the Additional Eco Payments for the period of three years from the date of the Eco Share Purchase Agreement, however, not longer than within one month from the IPO date.
The sale price for the Eco Shares and the Additional Eco Payment will be contractually set-off between the parties to the Agreement against the price for the shares in the Company, which will be issued to Masashi, as a holder of subscription warrants of the Company. For this purpose, Petrolinvest will issue to Masashi, on a free-of-charge basis, subscription warrants in an amount entitling it to subscribe for such a number of shares in the Company whose nominal value will correspond to the sale price for the Eco Shares and the Additional Eco Payments. The Petrolinvest shares to be issued to Masashi will be issued in the conditionally increased share capital of the Company. The Company has agreed to procure that the shares are admitted to listing on the Warsaw Stock Exchange.
The parties to the Eco Share Purchase Agreement agreed that in the event that Petrolinvest fails to comply with its obligation to issue subscription warrants to Masashi, Masashi will be entitled to repurchase a corresponding proportional number of the Eco Shares at their nominal value as at the date of the Eco Share Purchase Agreement.

Under the Eco Share Purchase Agreement, the Company may pay the price for the shares in Eco SKA and make the bonus payments also by way of cash payments (at the discretion of the Company) or through the transfer of shares in another company or companies owned by Petrolinvest. In such case, Masashi will not be entitled to the adjustment payments and Petrolinvest will not be required to issue to Masashi subscription warrants entitling it to subscribe for shares in the Company.
In addition, the Company was granted a call option for up to 1,210 addition shares in Eco SKA (the “Eco SKA Option”), based on which the Company will own, along with the acquired Eco Shares, not less than 51% of the shares in the share capital of Eco SKA. The Eco SKA Option may be exercised by Petrolinvest within one year from the date of the Eco Share Purchase Agreement at the price per share calculated by dividing the value of Eco SKA directly before the date of exercising the Eco SKA Option and the number of all the shares in Eco SKA directly before the date of exercising such Eco SKA Option. In addition, the Company is required to pay to Masashi the Option Adjustment Payment being the adjustment for the difference between the nominal value of the Petrolinvest shares to be issued to and subscribed for by Masashi under the above-mentioned Eco SKA Option and average closing price of the Petrolinvest shares on the Warsaw Stock Exchange during the ten trading days directly before the date of exercise of the above-mentioned Eco SKA Option, however, in any case not higher than the average closing price of the Petrolinvest shares on the Warsaw Stock Exchange during the ten trading days directly before the date of the Eco Share Purchase Agreement.
The Eco SKA Option Price and the Option Adjustment Payment will be contractually set-off between the parties to the Agreement against the price for the shares in the Company, which will be issued to Masashi, as the holder of subscription warrants of the Company. For this purpose, Petrolinvest will issue to Masashi, on a free-of-charge basis, subscription warrants in an amount entitling it to subscribe for such a number of shares in the Company whose nominal value will correspond to the Eco SKA Option Price and the Option Adjustment Price. The Petrolinvest shares to be issued to Masashi will be issued in the conditionally increased share capital of the Company. The Company has agreed to procure that the shares are admitted to listing on the Warsaw Stock Exchange. Under the Eco Share Purchase Agreement, the Company may make the payment of the Eco SKA Option Price also in cash (at the discretion of the Company) or in the form of shares in another company owned by Petrolinvest. If the payment is made in such manner, Masashi will not be entitled to any appropriate adjustment payments and Petrolinvest will not be required to issue to Masashi subscription warrants entitling it to subscribe for the shares in the Company. The Eco SKA Option may be exercised only along with Option Eco Sp. z o.o.
The parties to the Agreement agreed that as from the date of the acquisition of the shares in Eco SKA by Petrolinvest in the exercise of the Eco SKA Option, the bonus payments and adjustment payments due to Masashi will also apply accordingly to such shares covered by the Eco SKA Option.
The Eco Share Purchase Agreement satisfies the criteria of a material agreement due to the fact that its value exceeds 10% of the equity of Petrolinvest.
Re 2. Execution of the share purchase agreement relating to shares in Eco Energy 2010 Spółka z ograniczoną odpowiedzialnością
The Management Board of the Company announces that also on 8 December 2011 the Company executed a share purchase agreement relating to shares in Eco Energy 2010 Sp. z o.o. (“Eco Sp. z o.o.”) (the “Eco Share Purchase Agreement”) with Masashi.
Under the Eco Share Purchase Agreement, Petrolinvest acquired 40 shares, constituting in aggregate 40% of the shares in Eco Sp. z o.o., representing in aggregate 40% of the share capital of Eco Sp. z o.o. (the “Eco Shares”). As a result of the execution of the Eco Share Purchase Agreement, the ownership structure of Eco Sp. z o.o. will be as follows: (i) Petrolinvest – 40% of the shares; (ii) Masashi – 60% of the shares. The total price of the Eco Shares was PLN 2,000.
Under the Eco Share Purchase Agreement, Masashi granted the Company a call option for such a number of shares in Eco Sp. z o.o. that, along with the Shares in Eco Sp. z o.o., will constitute 51% of the share capital of Eco Sp. z o.o. (as at the date of the Eco Share Purchase Agreement) (the “Eco Option”). The Eco Option can be exercised by Petrolinvest within one year from the execution of the Eco Share Purchase Agreement at the nominal price for the shares in Eco Sp. z o.o. as at the date of the exercise of this option. The Eco Option can be exercised only along with the Eco SKA Option.
Re 3. Execution of an investment agreement between Petrolinvest and Masashi Holdings Limited
The Management Board of the Company also announces that on 8 December 2011 the Company executed with Masashi Holdings Limited (“Masashi”) an investment agreement (the “Investment Agreement 1”), under which Masashi agreed that within 12 months from the date of the Investment Agreement 1 Masashi (or another entity indicated by Masashi) would provide additional financing to Eco SKA or to the Company (at the discretion of Masashi) in an aggregate amount of up to PLN 60,000,000, whereby the amount of PLN 35,000,000 would be provided within the first six months (the “First Financing 1”) and the remaining amount of PLN 25,000,000 would be provided within the following six months (the “Second Financing 1”) (together the “Additional Financing 1”).
In the case where Masashi agrees to provide the Additional Financing 1 (or any portion thereof) to Eco SKA, it will be provided under one or more loan agreements to be executed between Masashi and Eco SKA on arm’s-length terms (the “Eco Loans”). In the case where Masashi agrees to provide any portion of the Additional Financing 1 to Petrolinvest, it will be provided under loans on arm’s-length terms or by making a direct investment in the share capital of Petrolinvest and subscribing for shares in the share capital of the Company, increased specifically for this purpose, at the nominal value thereof, i.e. PLN 10 per share and in the number corresponding to the amount of the Additional Financing 1.
Each demand for the payment of the Additional Financing 1 submitted by Petrolinvest to Masashi may not exceed: (i) PLN 12,000,000 within every two months – with respect to the First Financing 1, and (ii) PLN 10,000,000 within every two months– with respect to the Second Financing 1, unless Masashi consents in writing to terms other than those specified above. The Additional Financing 1 will be provided within two months from the date on which Petrolinvest submits such demand.
If the Additional Financing 1 is provided by way of the Eco Loans, Masashi and the Company are required to procure that the financing made available to Eco SKA is subsequently provided to the Company by way of one or more loans on arm’s-length terms. Petrolinvest will be required to repay such loans in cash.
If the Additional Financing 1 is provided by way of the Eco Loans, Masashi will have the right to demand the repayment thereof: (i) in cash; or (ii) by way of the conversion of a given Eco Loan into the share capital of Eco SKA and subscribing for the shares in the share capital of Eco SKA, increased specifically for this purpose (the “Share Capital Increases 1”). In the case where the Share Capital Increases 1 are effected, the shares in Eco SKA will be subscribed for by Masashi above their nominal value. The issue price of one share will be calculated by dividing: (i) the value of Eco SKA immediately before a given Share Capital Increase 1, and (ii) the number of all the shares in Eco SKA immediately before a given Share Capital Increase 1 (the “Issue Price 1”). The share premium will be transferred to the supplementary capital of Eco SKA.
In each case where the share capital is increased under the Share Capital Increase 1, within three years from the date of the Investment Agreement 1, Petrolinvest will be granted an option to purchase (the “Call Option 1”), and Masashi will be granted an option to sell (the “Put Option 1”) the shares in Eco SKA issued within each share capital increase under the Share Capital Increases 1. The aforementioned options may be exercised by the respective parties at a price calculated based on the Issue Price 1 per share and corresponding to a given number of shares in Eco SKA (the “Base Issue Price 1”). Masashi shall be entitled to an option adjustment payment to adjust the nominal value of the shares in Petrolinvest issued to be subscribed for by Masashi under the Base Issue Price 1 and the average closing price of the shares in Petrolinvest on the Warsaw Stock Exchange during the ten trading days directly before the day on which the Call Option 1 or the Put Option 1 is exercised, however, in any case not higher than the average closing price of the shares in Petrolinvest on the Warsaw Stock Exchange during the ten trading days directly before the date of the Eco Share Purchase Agreement (the “Option Adjustment Payment 1”).
The Base Issue Price 1 and the Option Adjustment Payment 1 will be contractually set-off between the parties to the Investment Agreement 1 against the price for the shares in the Company to be issued to Masashi, as a holder of subscription warrants of the Company. For this purpose, Petrolinvest will issue to Masashi, on a free-of-charge basis, subscription warrants entitling Masashi to subscribe for such number of shares in the Company whose aggregate nominal value corresponds to the Base Issue Price 1 and the Option Adjustment Payment 1. The shares in Petrolinvest to be issued to Masashi will be issued within the scope of the conditionally increased share capital of the Company. The Company has agreed to procure that the shares are admitted to listing on the Warsaw Stock Exchange.
The Investment Agreement 1 stipulates that the Company may pay the Base Issue Price 1 also by way of cash payments (at the discretion of the Company) or through the transfer of shares in another company or companies owned by Petrolinvest. In the case of payment in such manner, Masashi will not be entitled to the Option Adjustment Payment 1 and Petrolinvest will not be required to issue to Masashi subscription warrants entitling it to subscribe for shares in the Company.
Re 4. Offering of and subscription for series C subscription warrants entitling their holders to subscribe for series D shares within the scope of the conditionally increased share capital, and subscription of series D shares; execution of a set-off agreement with Masashi
Additionally, the Management Board of the Company announces that on 8 December 2011 pursuant to the Eco Share Purchase Agreement, the Company received from Masashi a notice in which Masashi demands that Petrolinvest issues to Masashi on a free-of-charge basis 36,629,553 subscription warrants entitling to subscribe for shares in the conditionally increased share capital of Petrolinvest.
In view of the aforementioned demand and in connection with the resolution of the extraordinary general meeting dated 27 September 2011 regarding the issuance of subscription warrants, a conditional increase in the share capital of the Company, the exclusion of the pre-emptive rights of the existing shareholders of the Company and amendments to the Company’s articles of association (the “Issue Resolution”) disclosed in current report number 101/2011, on 8 December 2011 the Management Board of the Company adopted a resolution on defining the detailed terms and conditions of the issue of series C subscription warrants (the “Series C Subscription Warrants”), the offering of Series C Subscription Warrants, defining the specific wording of a collective certificate for the Series C Subscription Warrants and determining the issue price for the series D shares to be issued to the holders of the Series C Subscription Warrants. The Management Board of the Company agreed to issue 36,629,553 registered Series C Subscription Warrants and offer them by way of a private placement to Masashi. The Series C Subscription Warrants have been subscribed for by Masashi. Subsequently, Masashi exercised its rights under the Series C Subscription Warrants to subscribe for 36,629,553 ordinary series D bearer shares in the Company.
Masashi has paid for 36,629,553 series D shares by way of setting off the amounts due from the Company against the amounts due from Masashi. On 8 December 2011 the Company executed with Masashi a set-off agreement, under which the Company and Masashi set off the amount due to the Company from Masashi for subscribing for series D shares of PLN 366,295,530, against the amount due to Masashi from Petrolinvest of PLN 366,295,530 under the Eco Share Purchase Agreement. As a result of the set-off, the entire cash contribution due to the Company from Masashi for 36,629,553 series D shares in the Company subscribed for by Masashi has been made. The aforementioned set-off agreement satisfies the criteria of a material agreement due to the fact that the value thereof exceeds 10% of the equity of Petrolinvest.
The issue price of the ordinary series D bearer shares, issued to holders of the Series C Subscription Warrants pursuant to the Issue Resolution within the conditional increase in the share capital of the Company, was determined by the Management Board at PLN 10 per share, allowing for statutory restrictions on minimum share issue prices. The issue price was approved by the Supervisory Board on 8 December 2011.
The set-off agreement satisfies the criteria of a material agreement due to the fact that the value thereof exceeds 10% of the equity of Petrolinvest.
The aggregate value of the agreements executed with Masashi exceeds 10% of the equity of Petrolinvest and satisfies the criteria of material agreements, whereby the agreements of the highest value are the Eco Share Purchase Agreement and the set-off agreement dated 8 December 2011, as described above.
Re 5. Execution of an investment agreement between Petrolinvest and Tabacchi Enterprises Limited
Additionally, the Management Board of the Company announces that on 8 December 2011 the Company executed with Tabacchi Enterprises Ltd. (“Tabacchi”) an investment agreement (the “Investment Agreement 2”), under which Tabacchi agreed that within 12 months from the date of the Investment Agreement 2 Tabacchi (or another entity indicated by Tabacchi) would provide additional financing to Silurian or the Company (at the discretion of Tabacchi) in an aggregate amount of up to PLN 80,000,000, whereby the amount of PLN 50,000,000 would be provided during the first six months (the “First Financing 2”), and the remaining amount of PLN 30,000,000 would be provided within the following six months (the “Second Financing 2”) (together the “Additional Financing 2”).
In the case where Tabacchi agrees to provide the Additional Financing 2 (or any portion thereof) to Silurian, it will be provided under one or more loan agreements to be executed between Tabacchi and Silurian on arm’s-length terms (the “Silurian Loans”). In the case where Tabacchi agrees to provide any portion of the Additional Financing 2 to Petrolinvest, it will be under loans on arm’s-length terms or by making a direct investment in the share capital of Petrolinvest and subscribing for shares in the share capital of the Company, increased specifically for this purpose, at the nominal value thereof, i.e. PLN 10 per share and in the number corresponding to the amount of the Additional Financing 2.
Each demand for the payment of the Additional Financing 2 submitted by Petrolinvest to Tabacchi may not exceed: (i) PLN 10,000,000 within one month– with respect to the First Financing 2, and (ii) PLN 5,000,000 within one month – with respect to the Second Financing 2, unless Tabacchi consents in writing to terms other than those specified above. The Additional Financing 2 will be provided within one month from the date on which Petrolinvest submits such demand.
If the Additional Financing 2 is provided by way of the Silurian Loans, Tabacchi and the Company are required to procure that the financing made available to Silurian is subsequently provided to the Company by way of one or more loans on arm’s-length terms. Petrolinvest will be required to repay such loans in cash.
If the Additional Financing 2 is provided by way of the Silurian Loans, Tabacchi will have the right to demand the repayment thereof: (i) in cash; or (ii) by way of the conversion of a given Silurian Loan into the share capital of Silurian and subscribing for the shares in the share capital of Silurian, increased specifically for this purpose (the “Share Capital Increases 2”). In the case where the Share Capital Increases 2 are effected, shares in Silurian will be subscribed for by Tabacchi above their nominal value. The issue price of one share will be calculated by dividing: (i) the value of Silurian immediately before a given Share Capital Increase 2, and (ii) the number of all the shares in Silurian immediately before a given Share Capital Increase 2 (the “Issue Price 2”). The share premium will be transferred to the supplementary capital of Silurian.
In each case where the share capital is increased under the Share Capital Increase 2, within three years from the date of the Investment Agreement 2 Petrolinvest will be granted an option to purchase (the “Call Option 2”), and Tabacchi will be granted an option to sell (the “Put Option 2”) shares in Silurian issued within each share capital increase under the Share Capital Increases 2. The aforementioned options may be exercised by the respective parties at a price calculated based on the Issue Price 2 per share and corresponding to a given number of shares in Silurian (the “Base Issue Price 2”). Tabacchi shall be entitled to an option adjustment payment to adjust the nominal value of the shares in Petrolinvest issued to be subscribed for by Tabacchi under the Base Issue Price 2 and the average closing price of the shares in Petrolinvest on the Warsaw Stock Exchange during the ten trading days directly before the day on which the Call Option 2 or the Put Option 2 is exercised, however, in any case not higher than the average closing price of the shares in Petrolinvest on the Warsaw Stock Exchange during the ten trading days directly before the date of the Investment Agreement 2 (the “Option Adjustment Payment 2”).
The Base Issue Price 2 and the Option Adjustment Payment 2 will be contractually set-off between the parties to the Investment Agreement 2 against the price for the shares in the Company to be issued to Tabacchi, as a holder of subscription warrants of the Company. For this purpose, Petrolinvest will issue to Tabacchi on a free-of-charge basis subscription warrants entitling Tabacchi to subscribe for such number of shares in the Company whose aggregate nominal value corresponds to the Base Issue Price 2 and the Option Adjustment Payment 2. The shares in Petrolinvest to be issued to Tabacchi will be issued within the scope of the conditionally increased share capital of the Company. The Company has agreed to procure that the shares are admitted to listing on the Warsaw Stock Exchange.
The Investment Agreement 2 stipulates that the Company may pay the Base Issue Price 2 also by way of cash payments (at the discretion of the Company) or through the transfer of shares in another company or companies owned by Petrolinvest. In the case of payment in such manner, Tabacchi will not be entitled to the Option Adjustment Payment 2 and Petrolinvest will not be required to issue to Tabacchi subscription warrants entitling it to subscribe for shares in the Company.
At the same time, the Company announces that Tabacchi has already provided financing under the Investment Agreement 2 to Silurian in the amount of PLN 15,000,000.
The above agreement satisfies the criteria of a material agreement since it is one of the agreements executed between Petrolinvest and Tabacchi within a period not longer than 12 months, and the aggregate value of the aforementioned agreements exceeds 10% of the equity of Petrolinvest. The agreement of the highest value was an agreement for the sale of shares in Silurian Sp. z o.o., disclosed in current report number 83/2011.
Re 6. Execution of an annex to the agreement for the sale of shares in Silurian Sp. z o.o.
The Management Board of the Company also announces that on 8 December 2011 the Company executed with Tabacchi an annex to the agreement for the sale of shares in Silurian Sp. z o.o (“Silurian”) (the “Silurian Shares”) dated 23 August 2011 (the “Silurian Share Purchase Agreement”), disclosed by the Company in current report number 83/2011 (the “Silurian Annex”).
The intention of the shareholders of Silurian is to transform Silurian into a joint stock company (spółka akcyjna) and to cooperate to proceed to one or more private placements of Silurian and to have the shares in Silurian admitted to trading on a stock exchange within the scope of an initial public offering.
The most important amendments introduced by the Silurian Annex include, specifically: amended rules for the calculation of the current bonus payments and the introduction of an additional bonus payment. Pursuant to the Silurian Share Purchase Agreement in its current wording, in addition to the obligation to pay the price, the Company is required to make bonus payments to Tabacchi for the shares in Silurian, i.e.:
(a) Bonus 1 will accrue to Tabacchi in the case of any private placements and will constitute:
(i) if Bonus 1 is the first Additional Silurian Payment (as defined below), Bonus 1 will constitute X% of the difference (described below) between the value of the Silurian Shares, taking into consideration the valuation of Silurian immediately after a given private placement based on the offer price paid by the investors in such private placement, and the value of the Silurian Shares, taking into consideration the valuation of Silurian on the date of the Silurian Share Purchase Agreement (i.e. PLN 203 million), or
(ii) if Bonus 1 is a subsequent Additional Silurian Payment (as defined below), Bonus 1 will constitute X% of the difference (described below) between the value of the Silurian Shares, taking into consideration the valuation of Silurian immediately after a given private placement based on the offer price paid by the investors in such private placement, and the value of the Silurian Shares, taking into consideration the valuation of Silurian immediately after the preceding bonus payment which has been paid to Tabacchi,
(“Bonus 1”);
(b) Bonus 2 will accrue to Tabacchi in the case of the IPO of Silurian and will constitute:
(i) if Bonus 2 is the first Additional Silurian Payment (as defined below), Bonus 2 will constitute X% of the difference (described below) between the value of the Silurian Shares, taking into consideration the valuation of Silurian immediately after the IPO based on the offer price paid by the investors in the IPO, and the value of the Silurian Shares, taking into consideration the valuation of Silurian on the date of the Silurian Share Purchase Agreement (i.e. PLN 203 million), or
(ii)  if Bonus 2 is a subsequent Additional Silurian Payment (as defined below), Bonus 2 will constitute X% of the difference (described below) between the value of the Silurian Shares, taking into consideration the valuation of Silurian immediately after the IPO based on the offer price paid by the investors in the IPO, and the value of the Silurian Shares, taking into consideration the valuation of Silurian immediately after the preceding bonus payment which has been paid to Tabacchi,
(“Bonus 2”); and
(c) Bonus 3 will accrue to Tabacchi in each case of an increase in the value of Silurian (to be determined by the Company and Tabacchi by way of a joint understanding on the basis of market criteria or, if the parties fail to reach an agreement, will be calculated as an average of two valuations performed by experts being leading international investment banks), in particular as a result of each of the following material events: (1) the re-evaluation of Silurian’s resources under its licenses, 2) the confirmation of Silurian’s resources under its licenses, 3) the obtaining of new licences by Silurian, or (4) Silurian procuring a new strategic investor and/or partner (financial or business) (the “Material Events 2”, and each individually, the “Material Event 2”). In each case when the Material Event 2 occurs, it will constitute:
(i) if Bonus 3 is the first Additional Silurian Payment (as defined below), Bonus 3 will constitute X% of the difference (described below) between the value of the Silurian Shares, taking into consideration the valuation of Silurian immediately after the Material Event 2, and the value of the Silurian Shares, taking into consideration the valuation of Silurian on the date of the Silurian Share Purchase Agreement (i.e. PLN 203 million), or
(ii) if Bonus 3 is a subsequent Additional Silurian Payment (as defined below), Bonus 3 will constitute X% of the difference (described below) between the value of the Silurian Shares, taking into consideration the valuation of Silurian immediately after the Material Event 2, and the value of the Silurian Shares, taking into consideration the valuation of Silurian immediately after the preceding bonus payment which has been paid to Tabacchi,
(“Bonus 3”).
The above-mentioned bonus payments will constitute “X% of the difference” in such manner that the first bonus payment to be paid under the Silurian Share Purchase Agreement will constitute 80% of the difference, and each of the subsequent bonus payments will be lower by 5% as compared to the previous bonus payment which has been paid to Tabacchi (however, in any case not lower than 60% of the difference).
Additionally, the Silurian Annex introduces an adjustment payment calculated in accordance with the formula included in the Silurian Share Purchase Agreement, being 100% of the difference between the nominal value of the newly issued shares in Petrolinvest to be subscribed for by Tabacchi in exchange for Bonus 3 and the average closing price of the shares in Petrolinvest during ten trading days directly before the day on which Petrolinvest issues the Petrolinvest Shares to Tabacchi in exchange for Bonus 3.
The above-mentioned bonus payments and adjustment payments are jointly referred to as the “Additional Silurian Payments”.
In the event that Silurian merges with another entity, the Additional Silurian Payments will remain due and payable to Tabacchi and the relevant calculation formulas will be modified accordingly.
The Silurian Annex introduces a deadline for making the Additional Silurian Payments, such that Tabacchi will be entitled to the Additional Silurian Payments for the period of three years from the date of the Silurian Annex, however, for no longer than for one month from the IPO date.
The parties to the agreement agreed that in the case where Petrolinvest fails to comply with its obligation to issue subscription warrants to Tabacchi, Tabacchi will be entitled to repurchase a corresponding proportional number of the Silurian Shares at their nominal value on the date of the Silurian Share Purchase Agreement.
In addition, under the Silurian Annex the Company may pay the price for the shares in Silurian and make bonus payments also by way of cash payments (at the discretion of the Company) or through the transfer of shares in another company or companies owned by Petrolinvest. In such case, Tabacchi will not be entitled to the adjustment payments and Petrolinvest will not be required to issue to Tabacchi subscription warrants entitling it to subscribe for shares in the Company.
Additionally, given the fact that the Company and Tabacchi executed the Investment Agreement 2 containing the obligation to provide financing up to PLN 80,000,000, the parties agreed to delete from the Silurian Share Purchase Agreement the provision regarding the obligation of Tabacchi to provide financing to the Company at its request in the form of cash payments to the share capital of the Company up to the amount to PLN 20,000,000, and agreed to regulate additional financing in the Investment Agreement 2.
Re 7. Execution of an annex to the agreement for the sale of shares in Silurian Shares Hallwood Plc.
The Management Board of the Company also announces that on 8 December 2011 the Company executed with Tabacchi an annex to the agreement for the sale of shares in Silurian Hallwood Plc. (the “JVC”) (the “JVC Shares”) dated 23 August 2011 (the “JVC Share Purchase Agreement”), disclosed by the Company in current report number 83/2011 (the “JVC Annex”).
The most important amendments introduced by the JVC Annex include, specifically: the deletion of the provisions regarding Tabacchi’s obligation to provide financing to the Company at its request in the form of cash payments to the share capital of the Company up to the amount to PLN 10,000,000. This amendment was introduced due to the execution between the Company and Tabacchi of the Investment Agreement 2 stipulating the obligation of Tabacchi to provide financing up to PLN 80,000,000. The parties decided to regulate the additional financing in the Investment Agreement 2.
The JVC Annex clarifies the rules of calculating bonus payments for the shares in the JVC, i.e. the parties agreed that: (i) Bonus 1 will constitute 80% of the difference between the value of the JVC Shares, taking into consideration the valuation of JVC immediately after a given private placement based on the offer price paid by the investors in such private placement, and the value of the JVC Shares, taking into consideration the valuation of the JVC on the date of the JVC Share Purchase Agreement (i.e. PLN 232 million), and (ii) Bonus 2 will constitute 80% of the difference between the value of the JVC Shares, taking into consideration the valuation of the JVC immediately after the IPO based on the offer price paid by the investors in the IPO, and the value of the JVC Shares, taking into consideration the valuation of the JVC immediately after a given private placement based on the offer price paid by the investors in such private placement.
The JVC Annex introduces a deadline for making additional payments such that Tabacchi will be entitled to the bonus payments and adjustment payments for the period of three years from the date of the JVC Annex, however, for no longer than for one month from the IPO date.
Additionally, under the JVC Annex the Company may pay the price for the JVC Shares and make bonus payments also by way of cash payments (at the discretion of the Company) or through the transfer of shares in another company or companies owned by Petrolinvest. In such case, Tabacchi will not be entitled to the adjustment payments and Petrolinvest will not be required to issue to Tabacchi subscription warrants entitling it to subscribe for shares in the Company.
The parties to the agreement agreed that in the event that Petrolinvest fails to comply with its obligation to issue subscription warrants to Tabacchi, Tabacchi will be entitled to repurchase a corresponding proportional number of the JVC Shares at their nominal value as at the date of the JVC Share Purchase Agreement.

Downlaod current report no. 115/2011