EMPLOYEE STOCK PURCHASE PLANS

EMPLOYEE STOCK PURCHASE PLANS: EMPLOYMENT

Labor Concerns

Polish labor law should not affect purchase plans. However, as a precaution, employees should acknowledge in writing that the offer to purchase rights does not create a right or entitlement to further grants. Deductions from an employee's remuneration are only allowed upon the employee's written consent. All employees, whether in full or part-time employment, are entitled to equal remuneration for equal work. The above rule also applies in respect of the purchase plan. The Plan documentation should expressly indicate the discretionary nature of benefits provided under the Plan and any consequences for the benefit in case of termination of employment.

Communications

Translation of Plan documents for employees is recommended but is not required. Government filings must be made in Polish.

EMPLOYEE STOCK PURCHASE PLANS: REGULATORY

Securities Compliance

It is possible that a prospectus will be required for participation in the Plan to be offered to employees in Poland and other Member States. However, certain exemptions, exclusions and interpretations may be applicable and, in practice, a prospectus is rarely required. For example, offers made to no more than 150 persons in any one Member State are exempt and certain listed companies are required to publish an information memorandum only, which includes summary information about the Plan and the Stock, instead of a prospectus. Where a prospectus is required, the Issuer may be able to take advantage of a short form regime under which certain requirements for the prospectus' contents are waived. Any prospectus must be approved by the relevant regulatory authority in the Issuer's Home Member State and filed under the passporting system with the relevant regulatory authority of each Member State in which participation in the Plan is being offered.

Foreign Exchange

Employees may be subject to certain reporting requirements.

Data Protection

In order to comply with existing data privacy requirements, it is recommended that employee consent for the processing and transfer of personal data is obtained.. If data is transferred outside of the EEA to a country which does not ensure at least the same level of data protection as Poland, the employee's written consent will be required unless:

(i) the transfer: (a) is necessary for the performance of a contract between the employee and the employer or takes place in response to the employee's request; (b) is necessary for the performance of a contract concluded in the interests of the employee between the employer and third party; (c) is necessary or required by reasons of public interest or for the establishment of legal claims; (d) is necessary in order to protect the vital interests of the employee; or (e) relates to data which is publicly available; or

(ii) the consent for the transfer is issued by the local data protection authority; or

(iii) the employer ensures adequate safeguards with respect to the protection of privacy, rights and freedoms of the employee through: (i) standard contractual clauses regarding personal data protection approved by the European Commission in accordance with the EU Data Protection Directive 95/46/EC or (ii) in the case of the transfer of personal data within a group of companies, legally binding regulations or policies regarding personal data protection approved by the local data protection authority.

Moreover, the employer must enter into a written agreement with third party data processors.

EMPLOYEE STOCK PURCHASE PLANS: TAX

Employee Tax Treatment

Employees are taxed on the spread on the exercise of the purchase right. Tax is also charged on any gain upon the subsequent sale of the underlying Stock. Careful tax planning may defer taxation until final realization of capital gain (binding tax ruling from the Polish Ministry of Finance is necessary).

Social Insurance Contributions

Social insurance contributions do not arise if the Subsidiary is not involved in the offer of purchase rights and purchase rights cannot be qualified as income from employment under respective tax regulations. Accordingly, for social insurance contributions not to apply, Plan benefits should not be included in employment agreements and the Issuer should not be reimbursed for the cost of the Plan benefits.

Tax Favored Program

None.

Withholding and Reporting

If the Subsidiary reimburses the Issuer for the costs of the plan benefits, withholding and reporting may be required.

Employer Tax Treatment

A tax deduction should be available to the Subsidiary if (i) the cost of Plan benefits is reimbursed by the Subsidiary to the Issuer; (ii) the Subsidiary treats the spread as part of employee remuneration; and (iii) these costs relate to the taxable income of the Subsidiary, but in such circumstances, social insurance contributions, withholding and reporting may be required.

Tax Rates

Income tax on the spread on the exercise of the purchase right is charged at rates of up to 32%. Income on the sale of Stock is charged at a rate of 19%.

Social taxes may be levied on the employee at a rate of 13.71% in total (retirement security at a rate of 9.76%; disability pension security at a rate of 1.5%; and social security in the case of illness at a rate of 2.45%) on the amount recognized as income from the employment relationship under the Plan. The employees will also have to pay a contribution for health security at a rate of 9% on the amount recognized as income from the employment relationship under the Plan, decreased by the social taxes described in the previous sentence.

Where social taxes arise for the employer, these are levied at the following rates: i) retirement security at a rate of 9.76%; ii) disability pension security at a rate of 6.5%; iii) social security in case of an accident at a rate of between 0.40% and 3.60%, depending on the safety of the employer's activity; iv) the Employment Fund at a rate of 2.45%, and v) the Fund of Guaranteed Employee Benefits at a rate of 0.10%.

RESTRICTED STOCK and RSUs

RESTRICTED STOCK and RSUs: EMPLOYMENT

Labor Concerns

Polish labor law issues are unlikely to apply to restricted stock and RSU plans. As a precaution, however, employees should acknowledge in writing that an award of restricted stock or RSUs does not create a right or entitlement to further grants.

Communications

Translation of Plan documents for employees is recommended, but not required. Government filings must be made in Polish.

RESTRICTED STOCK and RSUs: REGULATORY

Securities Compliance

Neither the award nor the vesting of restricted stock or RSUs is likely to trigger any prospectus requirement, provided that the restricted stock or RSUs are awarded and vest free of charge.

Foreign Exchange

Employees may be subject to certain reporting requirements.

Data Protection

In order to comply with existing data privacy requirements, it is recommended that employee consent for the processing and transfer of personal data is obtained. If data is transferred outside of the EEA to a country which does not ensure at least the same level of data protection as Poland, the employee's written consent will be required unless:

(i) the transfer: (a) is necessary for the performance of a contract between the employee and the employer or takes place in response to the employee's request; (b) is necessary for the performance of a contract concluded in the interests of the employee between the employer and third party; (c) is necessary or required by reasons of public interest or for the establishment of legal claims; (d) is necessary in order to protect the vital interests of the employee; or (e) relates to data which is publicly available; or

(ii) the consent for the transfer is issued by local data protection authority; or

(iii) the employer ensures adequate safeguards with respect to the protection of privacy, rights and freedoms of the employee through: (i) standard contractual clauses regarding personal data protection approved by the European Commission in accordance with the EU Data Protection Directive 95/46/EC or (ii) in the case of the transfer of personal data within a group of companies, legally binding regulations or policies regarding personal data protection approved by the local data protection authority.

Moreover, the employer must enter into a written agreement with third party data processors.

RESTRICTED STOCK and RSUs: TAX

Employee Tax Treatment

The employee is taxed at vesting on the fair market value upon vesting of the restricted stock or RSUs. Tax is also imposed on the gain from the subsequent sale of the Stock.

Social Insurance Contributions

No unified social tax (including pension insurance contributions) or mandatory accident insurance contributions are likely to be due on the fair market value so long as participation in the Plan is not considered to be a benefit provided by the employer (being either a Polish company or a branch of a foreign company) pursuant to an employment relationship.

Tax Favored Program

None.

Withholding and Reporting

Under a broad interpretation of Polish tax legislation, any legal entity (Polish or foreign) paying income to Polish taxpayers is subject to a reporting and withholding obligation. In practice, the Polish tax authorities tend not to apply this provision to foreign entities providing benefits to Polish taxpayers so long as such entities are deemed not to have any presence in Poland. The Subsidiary, however, may be deemed as being obliged to withhold tax and social taxes if the participation in the Plan is considered to be a benefit provided to the employees pursuant to an employment relationship.

If no withholding was made, the employees are required to report income in their tax returns and to pay tax themselves.

Employer Tax Treatment

It is unlikely that a local tax deduction would be permitted, even if the Subsidiary reimburses the Issuer for the cost of Plan benefits. However, a tax deduction should be available to the Subsidiary if the cost of restricted stock and RSU benefits is reimbursed and the Subsidiary treats the spread as part of employee remuneration and the costs relate to taxable income of the Subsidiary.

Tax Rates

Income tax is charged at rates of up to 32%. If the rights obtained are disposable, income on sale could trigger tax at a rate of 19%.

Social taxes may be levied on the employee (but not on sale of rights) at a rate of 13.71% in total (retirement security at a rate of 9.76%; disability pension security at a rate of 1.5%; and social security in the case of illness at a rate of 2.45%) on the amount recognized as income from the employment relationship under the Plan. The employees will also have to pay a contribution for health security at a rate of 9% on the amount recognized as income from the employment relationship under the Plan, decreased by the social taxes described in the previous sentence.

Where social taxes arise for the employer, these are levied at the following rates: i) retirement security at a rate of 9.76%; ii) disability pension security at a rate of 6.5%; iii) social security in case of an accident at a rate of between 0.40% and 3.60%, depending on the safety of the employer's activity; iv) the Employment Fund at a rate of 2.45%, and v) the Fund of Guaranteed Employee Benefits at a rate of 0.10%.

STOCK OPTIONS PLANS

STOCK OPTIONS PLANS: EMPLOYMENT

Labor Concerns

Polish labor law issues are unlikely to apply to option plans. As a precaution, however, employees should acknowledge in writing that the grant of options does not create a right or entitlement to further grants.

Communications

Translation of plan documents for employees is recommended but not required. Government filings must be made in Polish.

STOCK OPTIONS PLANS: REGULATORY

Securities Compliance

Neither the grant nor the exercise of employee options in Poland is likely to trigger any requirement for securities filings, provided the options are non-transferable. However, as there is some uncertainty in Poland regarding the prospectus requirement, it is advisable to consult Polish lawyers in any individual case.

Foreign Exchange

Employees may be subject to certain reporting requirements.

Data Protection

In order to comply with existing data privacy requirements, it is recommended that employee consent for the processing and transfer of personal data is obtained. If data is transferred outside of the EEA to a country which does not ensure at least the same level of data protection as Poland, the employee's written consent will be required unless:

(i) the transfer: (a) is necessary for the performance of a contract between the employee and the employer or takes place in response to the employee's request; (b) is necessary for the performance of a contract concluded in the interests of the employee between the employer and third party; (c) is necessary or required by reasons of public interest or for the establishment of legal claims; (d) is necessary in order to protect the vital interests of the employee; or (e) relates to data which is publicly available; or

(ii) the consent for the transfer is issued by the local data protection authority; or

(iii) the employer ensures adequate safeguards with respect to the protection of privacy, rights and freedoms of the employee through: (i) standard contractual clauses regarding personal data protection approved by the European Commission in accordance with the EU Data Protection Directive 95/46/EC or (ii) in the case of the transfer of personal data within a group of companies, legally binding regulations or policies regarding personal data protection approved by the local data protection authority.

Moreover, the employer must enter into a written agreement with third party data processors.

STOCK OPTIONS PLANS: TAX

Employee Tax Treatment

Employees are taxed on the spread upon the exercise of the option. Tax is also imposed on any gain upon the subsequent sale of the underlying Stock.

Social Insurance Contributions

Social insurance contributions do not arise if the Subsidiary is not involved in the offer of options and the options cannot be qualified as income from employment under respective tax regulations. Accordingly, Plan benefits should not be included in employment agreements and the Issuer should not be reimbursed for the spread.

Tax Favored Program

None.

Withholding and Reporting

If the Subsidiary reimburses the Issuer for the costs of option plan benefits, withholding and reporting are required.

Employer Tax Treatment

A tax deduction should be available to the Subsidiary if the cost of Plan benefits is reimbursed and the Subsidiary treats the spread as part of employee remuneration and the costs relate to taxable income of the Subsidiary.

Tax Rates

The income resulting from the employee's remuneration is taxed at a rate up to 32% Social taxes may be levied on the employee at a rate of 13.71% in total (retirement security at a rate of 9.76%; disability pension security at a rate of 1.5%; and social security in the case of illness at a rate of 2.45%) on the amount recognized as income from the employment relationship under the Plan. The employees will also have to pay a contribution for health security at a rate of 9% on the amount recognized as income from the employment relationship under the Plan, decreased by the social taxes described in the previous sentence.

Where social taxes arise for the employer, these are levied at the following rates: i) retirement security at a rate of 9.76%; ii) disability pension security at a rate of 6.5%; iii) social security in case of an accident at a rate of between 0.40% and 3.60%, depending on the safety of the employer's activity; iv) the Employment Fund at a rate of 2.45%, and v) the Fund of Guaranteed Employee Benefits at a rate of 0.10%.

Any gain made on the sale of shares is taxed at a rate of 19%.