Execution of an agreement by a subsidiary

Działając Management Board of Magna Polonia Spółka Akcyjna (“Issuer”, “Company”), pursuant to Article 56(1)(1) of the Act on Public Offering, hereby informs that on February 12, 2016, Magna Polonia spółka z ograniczoną odpowiedzialnością with its registered office in Warsaw (“MP”, “Creditor”), the Comapny’s subsidiary, entered into a Restructuring Agreement with the company Imagis Spółka Akcyjna having its registered office in Warsaw (“Imagis”), the subject matter of which is to determine rules of repayment by Imagis of a financial debt resulting from bank receivables purchased by MP (“Receivables”), described in current report No. 15/2015 (“Restructuring Agreement”).

Pursuant to the provisions of the Restructuring Agreement:

1. The Management Board of Imagis shall convene an Extraordinary General Meeting in order to adopt a resolution on an increase in the share capital, observing preemptive rights, through an issue of shares of Series I with the issue price of PLN 0.10 (ten groszes) per share (after a prior reduction in the share capital of Imagis through a reduction in the nominal value of shares);

2. if the existing shareholders do not take up all shares issued under the increase in the share capital mentioned above, the Management Board of Imagis shall offer the Creditor, within 7 days from the date of expiry of the deadline for shareholders holding preemptive rights to subscribe for shares of Series I, to take up the shares in a quantity of not more than 22,340,568 (twenty two million three hundred forty thousand five hundred sixty-eight) at the price of PLN 0.10 (ten groszes) per share provided that the issue price is settled by contractual deduction of this price against the amount of the Receivables.

The conditions of MP’s commitment to accept the offer in question to acquire shares of Imagis, reserved in favour of MP, are as follows:

1. the Extraordinary General Meeting of Imagis shall adopt a resolution on approval granted by the General Meeting for the sale by Imagis of real property located in Cząstków Polski (“Property”), in whole or in part;

2. at least 30,004,311 shares of Series I in the increased share capital of Imagis shall be taken up by its shareholders (other than Magna Inwestycje spółka z ograniczoną odpowiedzialnością S.K.A. with its registered office in Warsaw) and shall be paid up with a monetary contribution, i.e. in cash; and

3. none of the shareholders of Imagis may object to the resolutions adopted by the Extraordinary General Meeting of Imagis convened in accordance with the Restructuring Agreement nor challenge any of the resolutions adopted by the Extraordinary General Meeting of Imagis convened in accordance with the Restructuring Agreement.

Under the terms of the Restructuring Agreement, in the case where, because of a number of shares taken up by the existing shareholders of Imagis exercising their preemptive rights, the above-mentioned offer to acquire shares of Imagis, addressed by Imagis to MP, covers a number of shares smaller than 22,340,568 (twenty two million three hundred forty thousand five hundred sixty-eight), Imagis – provided that MP accepts this offer – shall repay the Receivables within 14 days from the date of registration of the issue of shares of Series I in the Register of Entrepreneurs, in the amount equal to a product of the amount of PLN 0.10 (ten groszes) and a difference between the number 22,340,568 (twenty two million three hundred forty thousand five hundred sixty-eight) and the number of shares of Series I taken up by MP.

Under the terms of the Restructuring Agreement, if Imagis is not able to offer MP to take up shares of Series I due to the fact that all the shares have been taken up by the existing shareholders exercising their preemptive rights, Imagis shall repay the Receivables within 14 days from the date of registration of the issue of shares of Series I in the Register of Entrepreneurs, in the amount of PLN 2,234,056.80 (two million two hundred thirty-four thousand fifty-six zlotys and eighty groszes).

In accordance with the provisions of the Restructuring Agreement, if the above-mentioned conditions for acceptance of the offer to take up shares are fulfilled, and the shares of Series I in the increased share capital of Imagis are taken up by MP or in the case of absence of such an offer because all the shares of Series I have been taken up by the existing shareholders of Imagis exercising their preemptive rights, provided that the issue of shares of Series I is registered in the Register of Entrepreneurs and that the alternative settlements (described in the two preceding paragraphs) are made, MP will, within 14 days:

1. make a statement remitting part of the Receivables in the amount of PLN 1,464,189.63 (one million four hundred sixty-four thousand one hundred eighty-nine zlotys 63/100);

2. release Imagis from a guarantee granted by this company for receivables against GPS Konsorcjum spółka z ograniczoną odpowiedzialnością with its registered office in Warsaw under guarantee agreement No. 004/3842311WA122031200 of 26 February 2012;

3. enter into an agreement with Imagis as regards repayment of the remaining part of the Receivables.

The agreement referred to above will include the following conditions:

1. the outstanding amount of the Receivables (including interest, which shall be capitalized as of the date of the execution of the agreement) shall be spread out over five equal instalments, payable on an annual basis no later than on 30 June of each year (“Instalments”);

2. in the case where, before all the Instalments are paid, Imagis receives any funds on account of repayment of receivables held by Imagis, specified in the Restructuring Agreement, Imagis shall transfer these funds to MP on account of repayment of the Receivables (up to the amount of the outstanding Receivables) within 7 days after they have been received by Imagis.

3. in the case where, before all the Instalments are paid, Imagis sells all or part of the Property, Imagis shall transfer to MP an amount corresponding to the sale price of all or part of the Property respectively, specified in the contract of sale, on account of repayment of the Receivables (up to the amount of the outstanding Receivables), within 5 days from the date of execution of the contract of sale;

4. the amounts received by MP in accordance with points 2 and 3 above shall be recognized against the Instalments, starting with the final Instalment;

5. interest shall be charged on the outstanding amount of the Receivables, calculated at the following rate: WIBOR 1Y (as of the date of execution of the agreement, updated annually on the 1st of July) + 3%, where the interest shall be due and payable within the payment deadlines of the Instalments;

6. the existing collaterals for the Receivables shall remain in force, in particular, mortgages, a registered pledge on shares of Emapa SA and a blank promissory note.

In addition to other termination conditions specified in the Restructuring Agreement, MP is entitled to terminate the Restructuring Agreement with immediate effect if the funds from the issue of shares of Series I in the amount of PLN 2,500,000.00 (two million five hundred zlotys) are used by Imagis for purposes other than repayment of public-law obligations of Imagis, which may result, in particular, from a decision of the Head of the Fiscal Control Office of 3 November 2015.

At the same time, the Issuer informs about execution by the subsidiary Magna Polonia spółka z ograniczoną odpowiedzialnością with its registered office in Warsaw of an annex to the Debt Repayment Agreement concluded with Imagis on 9 December 2015 (the Issuer informed about execution of this agreement in current report No. 15/2015), in which Imagis agreed to transfer to MP, on account of repayment of the Receivables (up to the amount of the outstanding Receivables), all amounts received by Imagis on account of repayment of receivables held by Imagis, specified in the Restructuring Agreement, within 7 days after they have been received by Imagis.

Mirosław Janisiewicz – President of the Management Board

Tom Ruhan – Vice-President of the Management Board

15 February 2016