Offering Memorandum Not for general circulation in the United States Strictly Confidential

NEW WORLD RESOURCES N.V.

EUR 275,000,000 7.875% Senior Notes due 2021

New World Resources N.V., a public limited liability company (naamloze vennootschap) incorporated under the laws of the Netherlands (the “Issuer”) is offering (the “Offering”) EUR 275,000,000 in aggregate principal amount of its 7.875 per cent senior notes due 2021 (the “Notes”). The Issuer intends to use substantially all of the net proceeds of the Offering to fund the redemption of the Issuer’s 7.375 per cent senior notes due 2015 (the “2015 Notes”). The net proceeds of the Offering will be used to redeem the 2015 Notes at a price equal to 101.844 per cent of the principal amount of the 2015 Notes, plus accrued interest through (but excluding) the date of the redemption. Interest on the Notes will be payable semi-annually in arrears on each 15 January and 15 July commencing on 15 July 2013. The Notes will mature on 15 January 2021. The Notes will be senior, unsecured obligations of the Issuer. The Notes will rank equally in right of payment to all existing and any future senior indebtedness of the Issuer. The Notes will rank senior in right of payment to all existing and any future subordinated indebtedness of the Issuer. The Notes will not be secured and will not be guaranteed by any of the Issuer’s subsidiaries and, as a result, will be subordinated to all existing and any future secured indebtedness of the Issuer, to the extent of the assets securing such indebtedness, and will be structurally subordinated to all existing and any future indebtedness of the Issuer’s subsidiaries, including guarantees issued by the Issuer’s subsidiaries in respect of other indebtedness of the Issuer. Prior to 15 January 2017, the Issuer may redeem the Notes in whole or in part by paying a “make-whole” premium as described in this offering memorandum (the “Offering Memorandum”). At any time on or after 15 January 2017, the Issuer may redeem the Notes in whole or in part at the redemption prices set forth in this Offering Memorandum. In addition, at any time and from time to time prior to 15 January 2016, the Issuer may redeem up to 35 per cent of the original principal amount of the Notes from the proceeds of one or more equity offerings. If the Issuer undergoes a change of control, sells certain of its assets or takes certain other actions, it may be required to offer to purchase the Notes from you. For a more detailed description of the Notes, see “Description of the Notes” beginning on page 158. This Offering Memorandum, constitutes the listing particulars (the “Listing Particulars”) in respect of the admission of EUR 275,000,000 7.875% Senior Notes due 2021 (the “Notes”) to the Official List and to trading on the Global Exchange Market of the Irish Stock Exchange. Application has been made to the Irish Stock Exchange for the approval of this Offering Memorandum as Listing Particulars. Application has been made to the Irish Stock Exchange for the EUR 275,000,000 7.875% Senior Notes due 2021 to be admitted to the Official List and trading on the Global Exchange Market which is the exchange regulated market of the Irish Stock Exchange. The Global Exchange Market is not a regulated market for the purposes of Directive 2004/39/EC. An investment in the Notes involves risks. See “Risk Factors” beginning on page 14 for a discussion of certain risks that you should consider in connection with an investment in the Notes. The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) or the securities laws of any other jurisdiction. The Notes may only be offered in transactions that are exempt from or not subject to registration under the U.S. Securities Act or the securities laws of any other jurisdiction. Accordingly, the Issuer is offering the Notes in the United States only to qualified institutional buyers in accordance with Rule 144A of the U.S. Securities Act, and to persons outside the United States in accordance with Regulation S of the U.S. Securities Act. For further details about eligible offerees and resale restrictions, see “Plan of Distribution” and “Transfer Restrictions”. The Issuer expects that the Notes will be made ready for delivery in book-entry form through Euroclear Bank SA/NV (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream”) on or about 23 January 2013.

Offering Price: 100 Per Cent The offering price set forth above does not include accrued interest, if any. Interest on the Notes will accrue from 23 January 2013. If the Notes are delivered after 23 January 2013, accrued interest must be paid by the purchaser until the time of delivery.

Joint Physical Bookrunners Citigroup Morgan Stanley Bookrunners Goldman Sachs International Erste Group

22 January 2013 In making your investment decision, you should rely only on the information contained in this Offering Memorandum. Neither the Issuer nor Citigroup Global Markets Limited, Morgan Stanley & Co. International plc, Goldman Sachs International and Erste Group Bank AG referred to as the ‘Initial Purchasers’, have authorised anyone to provide you with different information. If you receive any other information, you should not rely on it. The Issuer has not, and the Initial Purchasers are not, making an offer of these securities in any jurisdiction where the offer is not permitted. You should not assume that the information contained in this Offering Memorandum is accurate as of any date other than the date on the front of this Offering Memorandum. The definitions set out in this Offering Memorandum are repeated or set out in ‘‘Definitions.’’

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS ...... iv SUMMARY ...... 1 RISK FACTORS ...... 14 USE OF PROCEEDS ...... 38 CAPITALISATION ...... 39 SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA ...... 40 OPERATING AND FINANCIAL REVIEW AND PROSPECTS ...... 42 INDUSTRY OVERVIEW ...... 77 DESCRIPTION OF THE BUSINESS ...... 85 REGULATORY MATTERS ...... 117 MANAGEMENT AND DIVISIONS ...... 135 PRINCIPAL SHAREHOLDERS ...... 144 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS ...... 145 DESCRIPTION OF CERTAIN OTHER INDEBTEDNESS ...... 152 DESCRIPTION OF THE NOTES ...... 158 BOOK-ENTRY, SETTLEMENT AND CLEARANCE ...... 210 TAX CONSEQUENCES ...... 214 PLAN OF DISTRIBUTION ...... 220 WHERE YOU CAN FIND MORE INFORMATION ...... 222 LISTING AND GENERAL INFORMATION ...... 223 TRANSFER RESTRICTIONS ...... 224 LEGAL MATTERS ...... 226 INDEPENDENT AUDITORS ...... 226 DEFINITIONS ...... 227 GLOSSARY OF TECHNICAL TERMS ...... 238

i In connection with this Offering, Citigroup Global Markets Limited and Morgan Stanley & Co. International Plc. (the ‘Stabilising Managers’) or any person acting for them, may (but will be under no obligation to), to the extent permitted by applicable law, over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail in the open market. However, there is no assurance that the Stabilising Managers (or any other person acting for them) will undertake stabilising action. Any stabilising action, if commenced, may be discontinued at any time, and may only be undertaken during the period beginning on the date on which adequate public disclosure of the final terms of the offer of the Notes is made and ending no later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of the allotment of the Notes. Save as required by law, the Stabilising Managers do not intend to disclose the extent of any over-allotments and/or stabilisation transactions under the Offering. Any stabilisation action will be undertaken in accordance with applicable laws and regulations. This Offering Memorandum is a confidential document that the Issuer is providing only to prospective purchasers of the Notes. This Offering Memorandum is personal to each offeree and does not constitute an offer to any other person or to the public generally to subscribe for or otherwise acquire securities. You should read this Offering Memorandum before making a decision whether to purchase any Notes. You must not: • use this Offering Memorandum for any other purpose; • make copies of any part of this Offering Memorandum or any documents referred to in this Offering Memorandum, or give a copy of it or any documents referred to in this Offering Memorandum to any other person; or • disclose any information in this Offering Memorandum to any other person. This Offering Memorandum has been prepared by the Issuer, and it is responsible for its contents. The Issuer has taken all reasonable care to ensure that the information contained in the Offering Memorandum is, to the best of the Issuer’s knowledge, in accordance with the facts and contains no omission likely to affect its import. You are responsible for making your own examination of the Issuer and its subsidiaries (the ‘Company’) and your own assessment of the merits and risks of investing in the Notes. By purchasing the Notes, you acknowledge that: • you have reviewed this Offering Memorandum; • you have not relied on the Initial Purchasers or on any person affiliated with the Initial Purchasers in connection with your investigation of the accuracy of such information or your investment decision; • no person has been authorised to give any information or to make any representation concerning the Issuer or its direct parent, New World Resources Plc (‘NWR Plc’) and all of its subsidiaries (the ‘Group’) or the Notes other than as contained in this Offering Memorandum. If given or made, any such information or representation should not be relied upon as being authorised by the Company or the Initial Purchasers; and • the Initial Purchasers are not responsible for, and are not making any representation to you concerning, the Company’s future performance or the accuracy or completeness of this Offering Memorandum. The Issuer is not providing you with any legal, business, tax or other advice in this Offering Memorandum. You should consult with your own advisors as needed to assist you in making your investment decision and to advise you whether you are legally permitted to purchase the Notes. This Offering Memorandum does not constitute an offer to sell or an invitation to subscribe for or purchase any of the Notes in any jurisdiction in which such offer or invitation is not authorised or to any person to whom it is unlawful to make such an offer or invitation. You must comply with all laws that apply to you in any place in which you buy, offer or sell any Notes or possess this Offering Memorandum. You must also obtain any consents or approvals that you need in order to purchase any Notes. The Issuer and the Initial Purchasers are not responsible for your compliance with these legal requirements. The Issuer is offering the Notes in the United States in reliance on exemptions from the registration requirements of the U.S. Securities Act. These exemptions apply to offers and sales of

ii securities that do not involve a public offering. The Notes have not been approved by any U.S. federal, state or certain non-U.S. securities authorities, nor have any such authorities determined that this Offering Memorandum is accurate or complete. Any representation to the contrary is a criminal offense in the United States. The Notes are subject to restrictions on resale and transfer as described under ‘‘Transfer Restrictions’’ and ‘‘Plan of Distribution’’. By purchasing any Notes, you will be deemed to have made certain acknowledgments, representations and agreements as described in those sections of this Offering Memorandum. You may be required to bear the financial risks of investing in the Notes for an indefinite period of time. The Issuer reserves the right to withdraw the offering of Notes at any time. The Issuer and the Initial Purchasers also reserve the right to reject any offer to purchase the Notes in whole or in part for any reason or no reason and to allot to any prospective purchaser less than the full amount of Notes sought by it. The Issuer has prepared this Offering Memorandum solely for use in connection with the Offering to qualified institutional buyers under Rule 144A under the U.S. Securities Act and outside the United States to non-U.S. persons under Regulation S under the U.S. Securities Act. The Notes will be available in book-entry form only. We expect that the Notes will be issued in the form of two or more global notes. The global notes sold in reliance on Regulation S will be represented by one or more global notes in registered form (the ‘‘Regulation S Global Notes’’). The Regulation S Global Notes will be deposited with, or on behalf of, a common depositary for the accounts of Euroclear and Clearstream and registered in the name of the nominee of the common depositary. The global notes sold in reliance on Rule 144A will be represented by one or more global notes in registered form without interest coupons attached (the ‘‘Rule 144A Global Notes’’ and, together with the Regulation S Global Notes, the ‘‘Global Notes’’). The Rule 144A Global Notes will be deposited, with, or on behalf of, a common depositary for the accounts of Euroclear and Clearstream and registered in the name of the nominee of the common depositary. Ownership of interests in the Rule 144A Global Notes (the ‘‘Rule 144A Book-Entry Interests’’) and ownership of interests in the Regulation S Global Notes (the ‘‘Regulation S Book-Entry Interests’’, and, together with the Rule 144A Book-Entry Interests, the ‘‘Book-Entry Interests’’) will be shown on, and transfers of Book-Entry Interests will be effected only through, records maintained by Euroclear and Clearstream and their direct and indirect participants. After the initial issue of the Global Notes, Notes in certificated form will be issued in exchange for the Global Notes only as set out in the indenture governing the Notes (the ‘‘Indenture’’). See ‘‘Book-Entry, Delivery and Form’’. The information set out in the sections of this Offering Memorandum describing clearing and settlement arrangements is subject to any change or reinterpretation of the rules, regulations and procedures of Euroclear and Clearstream as currently in effect. The information in such sections concerning these clearing and settlement arrangements has been obtained from sources that the Issuer believes to be reliable. This information has been accurately reproduced and as far as the Issuer is aware, and is able to ascertain from published information, no facts have been omitted which would render the reproduced information inaccurate or misleading. The Issuer accepts responsibility only for the correct extraction and reproduction of such information, but not for the accuracy of such information. If you wish to use the facilities of any clearing system you should confirm the applicability of the rules, regulations and procedures of the relevant clearing system. The Issuer will not be responsible or liable for any aspect of the records relating to, or payments made on account of, Book-Entry Interests held through the facilities of any clearing system or for maintaining, supervising or reviewing any records, relating to such Book-Entry Interests. Investing in the Notes involves risks. See ‘‘Risk Factors’’ beginning on page 14.

iii CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements in this Offering Memorandum are not historical facts and are ‘‘forward- looking.’’ Forward-looking statements appear in various locations including, without limitation, under the headings ‘‘Summary,’’ ‘‘Risk Factors,’’ ‘‘Operating and Financial Review and Prospects’’ and ‘‘Description of the Business’’ and statements located elsewhere in this Offering Memorandum regarding the prospects of the Issuer’s industry and the Issuer’s prospects, plans, financial position and business strategy may constitute forward-looking statements. Forward-looking statements are not historical facts and can often be identified by the use of terms such as ‘‘estimates,’’ ‘‘projects,’’ ‘‘anticipates,’’ ‘‘expects,’’ ‘‘intends,’’ ‘‘believes,’’ ‘‘will,’’ ‘‘may,’’ ‘‘should’’ or the negative of these terms. All forward-looking statements, including discussions of strategy, plans, objectives, goals and future events or performance, involve risks and uncertainties. While these statements are based on sources believed to be reliable and on the current knowledge and best belief of the Issuer’s management, they are merely estimates or predictions and cannot be relied upon. The Issuer cannot assure you that future results will be achieved. Factors, risks and uncertainties that may cause actual outcomes and results to be materially different from those indicated, expressed, projected or implied in the forward-looking statements used in this Offering Memorandum include, among others, those relating to: • changes in political, economic and social conditions in the countries in which the Company or the its customers operate, including the Czech Republic and Poland; • future prices and demand for the Company’s products and demand for the Company’s customers’ products; • coal mine reserves; • remaining life of the Company’s mines; • coal and coke production; • trends in the coal industry and domestic and international coal market conditions; • risks in coal mining operations; • coke operations; • future expansion plans and capital expenditures, including statements about future capital expenditures in connection with the Debiensko mine development project; • the Company’s relationship with, and conditions affecting, the Company’s customers; • competition; • railroad and other transportation performance and costs; • labour relations and work stoppages; • availability of specialist and qualified workers; • weather conditions or catastrophic damage; • currency fluctuations; • changes in business strategy or development plans; • adverse regulatory, environmental, legislative, health and safety, tax or other judicial developments, including any failure to renew the Company’s licenses or any material changes to the Company’s licenses; and • other risks and uncertainties described in this Offering Memorandum, in particular those described in ‘‘Risk Factors’’. This list of important factors is not exhaustive. When relying on forward-looking statements, you should carefully consider the foregoing factors and other uncertainties and events, especially in light of the political, economic, social and legal environment in which the Issuer operates. Such forward-looking statements speak only as of the date on which they are made. Accordingly, the Issuer does not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. The Issuer does not make any representation, warranty

iv or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely scenario. These cautionary statements qualify all forward- looking statements attributable to the Issuer or persons acting on the Issuer’s behalf.

NOTICE TO U.S. INVESTORS This Offering is being made in the United States in reliance upon an exemption from registration under the U.S. Securities Act for an offer and sale of the Notes which does not involve a public offering. In making your purchase, you will be deemed to have made certain acknowledgments, representations and agreements. See ‘‘Transfer Restrictions’’. This Offering Memorandum is being provided (1) to a limited number of United States investors that the Issuer reasonably believes to be ‘‘qualified institutional buyers’’ under Rule 144A for informational use solely in connection with their consideration of the purchase of the Notes and (2) to investors outside the United States who are not ‘‘U.S. persons’’ in connection with offshore transactions complying with Rule 903 or Rule 904 of Regulation S under the U.S. Securities Act (‘‘Regulation S’’). The Notes have not been registered with, recommended by or approved by the SEC, any state securities commission in the United States or any other securities commission or regulatory authority in the United States, nor has the SEC or any such securities commission or regulatory authority received or passed upon the accuracy or adequacy of this Offering Memorandum. Any representation to the contrary is a criminal offense in the United States. Prospective purchasers are hereby notified that the seller of any Note may be relying on the exemption from the provisions of Section 5 of the U.S. Securities Act provided by Rule 144A. For a description of certain further restrictions on resale or transfer of the Notes, see ‘‘Transfer Restrictions’’.

NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES ANNOTATED, 1955, AS AMENDED (‘‘RSA 421-B’’), WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

NOTICE TO IRISH INVESTORS No Notes may be offered to the public in Ireland: (a) otherwise than in conformity with the provisions of the European Communities (Markets in Financial Instruments) Regulations 2007 (Nos. 1 to 3) (as amended), including, without limitation, Regulations 7 and 152 thereof or any codes of conduct used in connection therewith and the provisions of the Investor Compensation Act 1998; (b) otherwise than in conformity with the provisions of the Companies Acts 1963 to 2012 (as amended), the Central Bank Acts 1942 to 2011 (as amended) and any codes of conduct rules made under Section 117(1) of the Central Bank Act 1989; and (c) otherwise than in conformity with the provisions of the Market Abuse (Directive 2003/6/EC) Regulations 2005 (as amended) and any rules issued under Section 34 of the Investment Funds, Companies and Miscellaneous Provisions Act 2005 by the Central Bank of Ireland

v NOTICE TO UNITED KINGDOM INVESTORS This Offering Memorandum is for distribution only to, and is directed solely at, (i) persons who are outside the United Kingdom, (ii) investment professionals, as such term is defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the ‘Financial Promotion Order’), (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Financial Promotion Order, or (iv) persons to whom an invitation or inducement to engage in investment banking activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the ‘FSMA’) in connection with the issue or sale of any Notes may otherwise be lawfully communicated or caused to be communicated (all such persons together being referred to as ‘Relevant Persons’). This Offering Memorandum must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this Offering Memorandum relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. Any person who is not a Relevant Person should not act or rely on this Offering Memorandum or any of its contents.

NOTICE TO CZECH INVESTORS The Notes may not be offered, sold or distributed in the Czech Republic by way of public offering (veˇrejna´ nab´ıdka) within the meaning of Section 34 of the Act No. 256/2004 Sb., on the Undertakings on the Capital Markets (‘CMU Act’), as amended, nor can distribution in the Czech Republic of this Offering Memorandum or any other document relating to the Notes constitute a public offering (veˇrejna´ nab´ıdka) within the meaning of Section 34 of the CMU Act, unless an exemption applies. Accordingly, the Notes in the Czech Republic may only be offered or sold to professional investors (kvalifikovan´ı investoˇri), as defined in Section 34(2)(d) of the CMU Act, or in other circumstances which are exempted from the rules on public offerings pursuant to Section 35 Subsections 2 and 3 of the CMU Act.

NOTICE TO POLISH INVESTORS The Notes may not be offered, sold or distributed in the Republic of Poland through a public offering (oferta publiczna) within the meaning of Art. 3 of the Polish Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organised Trading and Public Companies dated 29 July 2005 as amended (the ‘‘Act on Public Offering’’) nor can distribution in the Republic of Poland of this Offering Memorandum or any other documents relating to the Notes or any other document relating to the Notes constitute a public offering (oferta publiczna) within the meaning of Art. 3 of the Act on Public Offering, unless an exemption applies. Accordingly, the Notes in the Republic of Poland may only be offered or sold to qualified investors (inwestorzy kwalifikowani), as defined in Art. 8 of the Act on Public Offering, or in other circumstances which are exempted from the rules on public offering pursuant to Art. 7 of the Act on Public Offering.

NOTICE TO LUXEMBOURG INVESTORS None of the Notes, this Offering Memorandum or any other material relating to the Notes will be offered, sold, distributed or otherwise made available in the Grand Duchy of Luxembourg other than in compliance with the relevant provisions of the Luxembourg law of 10 July 2005 on prospectuses for securities, as may be amended from time to time.

NOTICE TO ITALIAN INVESTORS The offering of the Notes has not been registered with the Commissione Nazionale per la Societa e la Borsa (‘CONSOB’) (the Italian securities and exchange commission) pursuant to Italian securities legislation and, accordingly, the Notes cannot be offered, sold or distributed nor can any copies of this Offering Memorandum or any other document relating to the Notes be distributed in Italy in a public solicitation (sollecitazione alFinvestimento) within the meaning of Article I, paragraph 1, letter (t) of Legislative Decree no. 58 of 24 February 1998, unless an exemption applies. Accordingly, the Notes in Italy may only be offered or sold to professional investors (operatori qualificati), as defined in Article 31, paragraph 2 of CONSOB Regulation No 11522 of 1 July 1998, as amended, or in other circumstances which are exempted from the rules on public solicitations pursuant to Article 100 of Legislative Decree No 58 of 24 February 1998 (the ‘Financial

vi Services Act’) and Article 33, paragraph 1, of CONSOB Regulation No 11971 of 14 May 1999 but, in any case, may not be offered, sold and/or delivered, either in the primary or in the secondary market, to individuals in Italy. The Notes may not be offered, sold or delivered and neither this Offering Memorandum nor any other material relating to the Notes may be distributed or made available in Italy unless such offer, sale or delivery of Notes or distribution or availability of copies of this Offering Memorandum or any other material relating to the Notes in Italy is made in one of the following ways: • by investment firms, banks or financial intermediaries permitted to conduct such activities in Italy in accordance with the Financial Services Act, Legislative Decree No 385 of 1 September 1993, Regulation No 11522 and any other applicable laws/regulations; • in compliance with Italian legislation and the implementing instructions of the Bank of Italy, pursuant to which the issue, trading or placement of securities in Italy is subject to prior/and subsequent notification to the Bank of Italy, unless an exemption, depending, among other things, on the amount of the issue and the characteristics of the securities, applies; and • in compliance with all relevant Italian securities, tax and exchange control and other applicable laws and regulations and any other applicable requirement or limitation which may be imposed from time to time by CONSOB or the Bank of Italy.

NOTICE TO BELGIAN INVESTORS The Offering is not being made, directly or indirectly, to the public in Belgium and does therefore not constitute a public offer pursuant to Article 6 of the Law of 1 April 2007 on public acquisition offers. This Offering Memorandum has not been and will not be notified to nor approved by the Belgian Banking, Finance and Insurance Commission (Commission Bancaire, Financiere` et des Assurances/Commissie voor het Bank, Financie en Assurantiewezen) and neither this Offering Memorandum nor any other documents or materials relating to the offering have been, or will be, approved by the Belgian Banking, Finance and Insurance Commission. Accordingly, the Offering may not be advertised or made (either directly or indirectly) and neither this Offering Memorandum nor any such documents or materials may be distributed or made available in Belgium other than to qualified investors, as referred to in Article 6 of the Law of 1 April 2007 on public acquisition offers, acting for their own account, as defined by Article 10, § 1, of the Law of 16 June 2006 on public offers of investment instruments and admission of investment instruments for trading on regulated markets and extended by the Royal Decree of 26 September 2006 extending the concepts of qualified investor and of institutional or professional investor.

NOTICE TO AUSTRIAN INVESTORS No public offer within the meaning of the Austrian Capital Market Act (Kapitalmarktgesetz) of the Notes is made in Austria and nothing shall be construed to constitute such a public offer of the Notes. This Offering Memorandum has not been and will not be approved and/or published pursuant to the Austrian Capital Markets Act as amended and neither this Offering Memorandum nor any other document connected therewith constitutes a prospectus according to the Austrian Capital Markets Act. The Notes may be offered and sold in Austria only in accordance with the provisions of the Austrian Capital Markets Act, the Austrian Banking Act (Bankwesengesetz), the Austrian Securities Supervision Act (Wertpapieraufsichtsgesetz) and any other applicable Austrian law. The Notes have not been admitted to public offer in Austria under the provisions of the Austrian Capital Markets Act or the Austrian Investment Fund Act (Investmentfondsgesetz) or the Austrian Stock Exchange Act (Borsegesetz¨ ). Consequently, in Austria, the Notes may not be offered or sold directly or indirectly by way of a public offering in Austria and the offering of the Notes may not be publicly advertised in Austria. The Notes will only be available to a limited group of persons within the scope of their professional activities and in accordance with the applicable Austrian laws. Neither this Offering Memorandum nor any other document connected therewith, may be distributed, passed on or disclosed to any other person in Austria.

vii ENFORCEABILITY OF CIVIL LIABILITIES The Issuer is a public limited liability company (naamloze vennootschap) incorporated under the laws of the Netherlands. All or substantially all of the Issuer’s directors and officers and certain other persons named in this Offering Memorandum reside outside the United States, and all or a significant portion of the assets of the directors and officers and such other persons, and substantially all of the Issuer’s and the Company’s assets, are located outside the United States. As a result, it may not be possible for you to effect service of process within the United States upon the Issuer, the Company or any of the aforesaid persons with respect to matters arising under the U.S. federal securities laws or to enforce against the Issuer, the Company or any such persons judgments obtained in U.S. courts, including judgments predicated upon civil liability under U.S. federal securities laws. Certain of the agreements entered into with respect to the issue of the Notes are governed by the laws of the State of New York. The United States and the Netherlands currently do not have a treaty providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. Consequently, a final and conclusive judgment for the payment of money rendered by any federal or state court in the United States that is enforceable in the United States, whether or not predicated solely upon U.S. federal securities laws, would not automatically be recognised or enforceable in the Netherlands. In order to obtain a judgment that is enforceable in the Netherlands, the party in whose favour a final and conclusive judgment of a U.S. court has been rendered will be required to file its claim with a court of competent jurisdiction in the Netherlands. Such party may submit the final judgment rendered by the U.S. court to the Dutch court. If and to the extent that such Dutch court finds that the jurisdiction of the U.S. court has been based on grounds that are internationally acceptable and that proper legal procedures have been observed, the court of the Netherlands will, in principle, give binding effect to the judgment of the U.S. court, unless such judgment contravenes principles of public policy of the Netherlands. The enforcement in a Dutch court of judgments rendered by a U.S. court is subject to Dutch rules of civil procedure. Subject to the foregoing and service of process in accordance with applicable treaties, investors may be able to enforce in the Netherlands judgments in civil and commercial matters obtained from U.S. federal or state courts. However, no assurance can be given that those judgments will be enforceable. In addition, it is doubtful whether a Dutch court would accept jurisdiction and impose civil liability in an original action commenced in the Netherlands and predicated solely upon U.S. federal securities law.

INDUSTRY AND MARKET DATA Certain information relating to market share, ranking and other industry data contained in this Offering Memorandum is based on independent industry publications, reports by market research firms, publicly available information or other published independent sources. The Company does not have access to the underlying facts and assumptions of numerical and market data and other information contained in publicly available sources and has not independently verified market share, ranking or other industry data from such third party sources. Industry publications generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed and that the calculations contained therein are based on a series of assumptions. While the Company believes this information is reliable and market definitions are appropriate; it accepts responsibility for the correct reproduction of this information and ascertains that, to the best of the Company’s knowledge, no facts have been omitted which would render such information inaccurate or misleading; this information has not been verified by independent sources. Accordingly, the Company cannot assure you that such market share, ranking and other industry data are accurate or complete in all material respects. In addition, in certain cases the Company has made statements in this Offering Memorandum regarding the Company’s industry and its position in the industry based on the Company’s experience and the Company’s own investigation of market conditions. The Company cannot assure you that any of these assumptions are accurate or correctly reflect the Company’s position in the industry, and none of the Company’s internal surveys or information has been verified by independent sources.

viii The various geographic regions and categories to which the Company’s business is divided for the purposes of calculating market shares and assessing its competitive position are determined by management and may vary from those geographic regions and categories defined by other companies in the Company’s industry. As a result, the market share data presented for the Company’s geographic regions and categories may not be comparable to the market share data relating to other companies, including the Company’s competitors that might define their segments and categories differently, or to future data collected by independent sources. While the Company is not aware of any misstatements regarding the industry data presented herein, its estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading ‘‘Risk Factors’’ in this Offering Memorandum.

COAL RESERVE INFORMATION Coal reserves are broadly defined as coal that can be economically mined using current technology and are further classified as proved or probable according to the degree of confidence of existence. The Company reviews and updates its estimates on a yearly basis to reflect reserve depletion by coal production, new data received and changes in other assumptions and parameters. Accordingly, reserve estimates will change from year to year to reflect mining activities, changes in both mining and coal processing technology, changes of mine plans, changes of economical parameters like prices or production costs and other factors. The information appearing in this Offering Memorandum concerning estimates of the Company’s proved and probable coal reserves was prepared by the Company.

PRESENTATION OF FINANCIAL INFORMATION The Issuer is wholly owned by NWR Plc. NWR Plc and its subsidiaries are referred to herein as the Group. The Issuer and all of its subsidiaries are referred to herein as the Company. The following historical financial information is incorporated by reference in this Offering Memorandum: • the Issuer’s unaudited condensed consolidated interim financial statements as of and for the nine months period ended 30 September 2012 (the ‘9M 2012 Interim Consolidated Financials’); • the Issuer’s audited consolidated financial statements as of and for the year ended 31 December 2011 (the ‘2011 Consolidated Financials’); • the Issuer’s audited consolidated financial statements as of and for the year ended 31 December 2010 (the ‘2010 Consolidated Financials’); • the Issuer’s audited consolidated financial statements as of and for the year ended 31 December 2009 (the ‘2009 Consolidated Financials’); and • for comparative purposes, financial information of the Issuer’s unaudited condensed consolidated interim financial statements for the nine months period ended 30 September 2011 (the ‘9M 2011 Interim Consolidated Financials’). The audited and unaudited financial statements of the Issuer are prepared on the basis of a financial period ending on 31 December of each year, and are presented in euro. The audited consolidated financial statements of the Issuer have been prepared in accordance with International Financial Reporting Standards (‘IFRS’) as adopted by the European Union. Certain financial information included in this Offering Memorandum, including information incorporated by reference, has been rounded for ease of presentation. As a result, in certain cases, the sum of the numbers in a column in a table may not conform to the total figure given for that column. Percentage figures included in this Offering Memorandum have not been calculated on the basis of rounded figures but have rather been calculated on the basis of such amounts prior to rounding. The information incorporated by reference is available on the Group’s website and can be printed from www.newworldresources.eu or is available on the website of the Irish Stock Exchange (www.ise.ie).

ix NON-IFRS MEASURES This Offering Memorandum contains references to certain non-IFRS measures, including EBITDA, Net Debt and Total EBITDA. The Group defines EBITDA as net profit after tax from continuing operations before non-controlling interest, income tax, net financial costs, depreciation and amortisation, impairment of property, plant and equipment (‘PPE’) and gains/losses from sale of PPE, in each case, relating to continuing operations. While the amounts included in EBITDA are derived from the Company’s consolidated financial statements, it is not a financial measure determined in accordance with IFRS and, accordingly, should not be considered as an alternative to net income or operating income as an indication of the Company’s performance or as an alternative to cash flows as a measure of the Company’s liquidity. The Company currently uses EBITDA in its business operations to, among other things, evaluate the performance of its operations, develop budgets, and measure its performance against those budgets. The Company finds it a useful tool to assist in evaluating performance because it excludes interest, taxes and other non-cash charges. EBITDA has limitations as an analytical tool, and investors should not consider them in isolation. Some of these limitations are: • it does not reflect the Company’s cash expenditures or future requirements for capital expenditures or contractual commitments; • it does not reflect changes in, or cash requirements for, the Company’s working capital needs; • it does not reflect the significant interest expense, or the cash requirements necessary, to service interest or principal payments on the Company’s debt; • although depreciation and amortisation are non-cash charges, the assets being depreciated and amortised will often need to be replaced in the future and EBITDA does not reflect any cash requirements that would be required for such replacements; • some of the exceptional items that the Company eliminates in calculating EBITDA reflect cash payments that were made, or will in the future be made; and • the fact that other companies in the Company’s industry may calculate EBITDA differently than the Company does, which limits their usefulness as comparative measures. The Company defines Net Debt as total debt less cash and cash equivalents. Total debt includes issued bonds, long-term interest bearing loans and borrowings, including current portion, plus short-term interest bearing loans and borrowings. Total debt is based on gross amount of debt less related expenses. Interest bearing loans, bond issues, and borrowings are measured at amortised cost. The Company defines Total EBITDA as the total of EBITDA from continuing operations and EBITDA from discontinued operations. The financial statements show the results from electricity trading as profit from discontinued operations. To present comparable figures with previously published financial information, the Company presents Total EBITDA. EBITDA, Net Debt and Total EBITDA are not measures determined based on IFRS and should not be construed as an alternative to any IFRS measure such as operating income, net income or cash flow from operations. EBITDA, Net Debt and Total EBITDA as presented in this Offering Memorandum may not be comparable to similarly titled measures reported by other companies due to differences in the way these measures are calculated. EBITDA measures used in this Offering Memorandum are each separately defined and are not the same as the definition of Adjusted EBITDA used in the 2015 Notes Indenture, the 2018 Notes Indenture or the Indenture governing the Notes. The financial information included in this Offering Memorandum is not intended to comply with reporting requirements of the U.S. Securities and Exchange Commission. Compliance with such requirements may require the modification or exclusion of certain financial measures.

x EXCHANGE RATE INFORMATION The Group and the Company prepare its consolidated financial statements in euro. In this Offering Memorandum, references to ‘‘U.S. dollars,’’ ‘‘USD’’ or ‘‘$’’ are to the lawful currency of the United States. References to ‘‘euro,’’ ‘‘EUR’’ or ‘‘e’’ are to the single currency adopted by participating member states of the European Union as their lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union. References to ‘‘Czech koruna’’ or ‘‘CZK’’ are to the lawful currency of the Czech Republic. The following table sets forth the high, low, period average and period end exchange rates of CZK for one euro in effect at the end of the period noted as reported by the European Central Bank. As at 10 January 2013, the exchange rate was CZK 25.6290 = EUR 1.00.

Period Period CZK High Low average(1) end (Per EUR) Year ended 31 December 2009 ...... 29.4900 25.0890 26.4349 26.4730 2010 ...... 26.3700 24.4080 25.2840 25.0610 2011 ...... 26.0310 24.0180 24.5898 25.7870 Month ended January 2012 ...... 25.9140 25.1560 February 2012 ...... 25.2680 24.8120 March 2012 ...... 24.8900 24.4640 April 2012 ...... 25.0430 24.5950 May 2012 ...... 25.6950 24.9050 June 2012 ...... 25.9630 25.3250 July 2012 ...... 25.7000 25.2550 August 2012 ...... 25.3580 24.7830 September 2012 ...... 25.1410 24.4330 October 2012 ...... 25.0800 24.7560 November 2012 ...... 25.5660 25.2260 December 2012 ...... 25.2900 25.1150

(1) Period average represents the average of the daily exchange rates during the relevant period. The following tables set forth the high, low, period average and period end exchange rates for one dollar in effect at the end of the periods noted. The Czech koruna exchange rates are based on the daily fixing rate as reported by the European Central Bank. The euro exchange rates are

xi based on the buying rate as reported by the European Central Bank. As at 10 January 2013 the exchange rates were EUR 0.7626 = USD 1.00 and CZK 19.5450 = USD 1.00.

Period EUR High Low average(1) Period end (Per USD) Year ended 31 December 2009 ...... 0.7965 0.6614 0.7190 0.6942 2010 ...... 0.8374 0.6867 0.7559 0.7484 2011 ...... 0.7759 0.6720 0.7192 0.7729 Month ended January 2012 ...... 0.7893 0.7590 February 2012 ...... 0.7703 0.7433 March 2012 ...... 0.7659 0.7487 April 2012 ...... 0.7678 0.7508 May 2012 ...... 0.8063 0.7616 June 2012 ...... 0.8116 0.7872 July 2012 ...... 0.8272 0.7941 August 2012 ...... 0.8167 0.7930 September 2012 ...... 0.7957 0.7637 October 2012 ...... 0.7766 0.7622 November 2012 ...... 0.7878 0.7696 December 2012 ...... 0.7749 0.7518

(1) Period average represents the average of the daily exchange rates during the relevant period.

Period CZK High Low average(1) Period end (Per USD) Year ended 31 December 2009 ...... 23.3418 16.8777 19.0345 18.3764 2010 ...... 21.7049 17.1356 19.1126 18.7554 2011 ...... 20.1024 16.2673 17.6925 19.9297 Month ended January 2012 ...... 20.3027 19.1166 February 2012 ...... 19.4639 18.4802 March 2012 ...... 18.957 18.448 April 2012 ...... 19.076 18.490 May 2012 ...... 20.717 18.959 June 2012 ...... 20.925 20.035 July 2012 ...... 21.133 20.272 August 2012 ...... 20.639 19.700 September 2012 ...... 19.805 18.659 October 2012 ...... 19.470 18.872 November 2012 ...... 20.053 19.413 December 2012 ...... 19.527 18.921

(1) Period average represents the average of the daily exchange rates during the relevant period.

xii SUMMARY This summary highlights certain information concerning the Company’s business and this Offering. It does not contain all of the information that may be important to you and your investment decision. The Issuer urges you to carefully read the entire Offering Memorandum, including the financial data and related notes and the matters set forth in ‘‘Risk Factors’’, ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’, ‘‘Industry Overview’’ and ‘‘Business’’ before deciding to invest in the Notes.

Overview The Company, through its subsidiary OKD, is the Czech Republic’s only hard coal mining company and is a leading producer of hard coal in Central Europe (in each case, on the basis of revenues and volume of coal produced) serving customers in the Czech Republic, Slovakia, Austria, Poland, Hungary and Germany. It is one of the largest industrial groups in the Czech Republic and the largest Czech natural resources company in terms of revenues and employees. For the nine months period ended 30 September 2012, the Company employed an average of 14,084 workers and utilised an average of 3,697 workers employed by contractors, making it one of the largest private employers in the country. The Company’s business is hard coal mining and coke production. Through its hard coal mining operations, the Company produces coking coal and thermal coal. Coking coal is used as a raw material in steel production, whereas thermal coal is sold to electric utilities, industrial users and other producers of electricity. Coking coal generally commands higher prices and generates higher revenues with higher margins for the Company than thermal coal. The Company has four operating mines and four coking batteries. As at 1 January 2012, the Company had approximately 385 million tonnes of proved and probable reserves (including approximately 190 million tonnes of probable reserves at D˛ebiensko).´ More than 80 per cent of the Company’s coal reserves consist of high quality coal (that is, coal having a high calorific value (high BTU/lb) and low sulphur content) that can be sold as coking coal. The Company’s mining and related businesses operate in the Northeastern region of the Czech Republic. The Company believes the landlocked position of its operations in the vicinity of the Company’s key customers and the high quality of its coal (in terms of calorific value as well as the percentage of coking coal in the coal mix) have enabled the Company to become a leading supplier of hard coal in Central Europe. For the year ended 31 December 2011, the Company sold approximately 10.6 million tonnes of coal of which approximately 4.8 million tonnes was coking coal and approximately 5.8 million tonnes was thermal coal. For the nine months period ended 30 September 2012, the Company sold approximately 7.2 million tonnes of coal, of which approximately 3.8 million tonnes was coking coal and approximately 3.4 million tonnes was thermal coal. For the year ended 31 December 2011, the Company also sold approximately 0.6 million tonnes of coke, converted from its own and purchased coking coal, which is used primarily as a raw material for steel, foundries and insulation material production. For the nine months period ended 30 September 2012, the Company also sold approximately 0.4 million tonnes of coke. For the year ended 31 December 2011, the Company had consolidated revenues from continuing operations of approximately EUR1,633 million, EBITDA from continuing operations of EUR 459 million and net income from continuing operations of EUR 135 million. During this period, the Company’s external coal and coke sales on an Ex Works basis accounted for EUR 1,440 million, which represented 88 per cent of consolidated revenues. For the nine months period ended 30 September 2012, the Company had consolidated revenues from continuing operations of approximately EUR 1,013 million, EBITDA from continuing operations of EUR 232 million and net income from continuing operations of EUR 53 million. During this period, the Company’s external coal and coke sales on an Ex Works basis accounted for EUR 879 million, which represented 87 per cent of consolidated revenues.

Redomiciliation On 30 March 2011, NWR Plc was incorporated, providing for the redomicile of the Company to the UK (the ‘‘Redomiciliation’’). The migration of the Company was effected through a

1 recommended share exchange offer, pursuant to which each holder of an A ordinary share in the capital of NWR NV (‘NWR NV A Shares’) received one A ordinary share in the capital of NWR Plc (‘NWR Plc A Shares’) in exchange for each NWR NV A Share. NWR Plc is now the holding company of the Company, holding 100 per cent of the NWR NV A Shares. As a result of the successful Redomiciliation, the Company became listed on the FTSE 250 and 350 on 20 June 2011.

Industry Overview Coal is one of the most abundant fossil fuels worldwide and a major contributor to global energy supply. It is a widely distributed natural resource that is mined commercially in approximately 50 countries and coal reserves are available in approximately 70 countries worldwide. At current production levels, proven coal reserves are estimated by the World Coal Association (‘WCA’) to last approximately 118 years. In contrast, proven oil and gas reserves are estimated to be equivalent to around 46 and 59 years at current production levels, respectively. Coal is used to fuel the generation of electric power and to produce coke for the steel making process. Coal also fuels and heats various industrial facilities including district heating systems, paper mills, chemical plants and other manufacturing and processing plants. According to WCA estimates, coal provides approximately 30 per cent of global primary energy needs and generates approximately 42 per cent of global electricity. In 2011, approximately 13 per cent (around 717 million tonnes) of total hard coal production was used by the steel industry. The majority of coal produced is consumed regionally due to high transportation costs relative to coal prices. According to the WCA, approximately 17 per cent of total global coal consumption is traded internationally. The two major markets for internationally traded coal are the Atlantic region and the Pacific region, and there can be significant pricing differences between the two due to the cost of ocean freight and other transportation related costs. Global markets are fragmented by geographical location, with coal prices varying significantly between regions. In regions where coal resources are scarce, coal-fired power plants and other coal users depend on the transport infrastructure to obtain coal supplies from other regions. Most Western European countries and several Asian countries (primarily Japan and South Korea) have a high demand for coal but have limited domestic coal resources, while other countries such as Australia, South Africa and Indonesia have abundant coal resources but relatively limited domestic demand. As a result of a number of factors, including economic growth in emerging markets, in recent years there has been higher global consumption of coal. The Czech Republic and certain other Central European countries represent largely localised markets for coal. The landlocked nature of such countries, infrastructure constraints and shipping costs preclude most global traded coal producers from reaching this market on a competitive basis.

Competitive Strengths The Company believes that its key strengths are: • Leading market position and scale in the Czech Republic and Central Europe in terms of revenue and amount of coal produced; • Diversified products, coal and integrated mining and coking operations leading to greater cost-efficiency; • Strong positioning to benefit from positive trends in steel production, electricity demand and industrial growth in Central Europe; • Long-standing relationships with customers and a stable customer base influenced by geographical positioning; • Significant regional growth potential given development projects; • Focused capital expenditure programs and operational efficiency; • Strong balance sheet; and • Strategic shareholder support through regional and industry expertise.

2 Strategic Objectives The Company seeks to maintain its leading market position in the Czech Republic and Central Europe by: • Increasing scale through organic growth of existing mines and development sites; • Pursuing attractive growth opportunities; and • Improving efficiency, profitability and safety of mining operations.

Corporate Structure The Issuer is a public limited liability company (naamloze vennootschap) incorporated in the Netherlands. The Issuer is a holding company and does not itself engage in any coal mining and/or coking operations. The following chart sets forth the Issuer’s current corporate structure and principal amounts of indebtedness as of the date hereof, after giving effect to the issuance of the Notes and the application of the net proceeds of the Offering, substantially all of which will be used to redeem the 2015 Notes in full.

BXR GROUP RPG Property Free Float B.V. BXR MINING B.V.

100% B shares 63.6% A shares 36.4% A shares

NWR PLC

Revolving 100% B shares 100% A shares* Credit Facility (2) Notes hereby offered (4) 2018 Notes €500 million NWR N.V. (the Issuer) (3) (1) 2015 Notes €258 million ECA Facility (5) €78 million (6)

NWR NWR OKK Koksovny Communications OKD a.s. KARBONIA a.s. s.r.o. S.A.

OKD HBZS a.s. 10JAN201322142328

(1) The 2018 Notes are guaranteed on a senior basis by OKK, Karbonia and OKD. The 2018 Notes are secured by a share pledge on all of the shares of OKK, Karbonia and OKD. For more, see ‘‘Description of Certain Other Indebtedness — 2018 Notes.’’ (2) In February 2011, the Issuer entered into a Revolving Credit Facility that allows for drawings of up to EUR 100 million at any one time. The Revolving Credit Facility is secured by share pledges over OKD, OKK and Karbonia, which pursuant to the terms of the Intercreditor Agreement and the share pledge, rank senior to the share pledges in respect of the 2018 Notes, and are guaranteed by OKD, OKK and Karbonia. (3) The Issuer re-incorporated in the United Kingdom pursuant to an exchange offer. The holders of NWR NV A Shares received one A share in NWR Plc, a newly formed holding company incorporated in England (NWR Plc A Shares) in exchange for each NWR NV A Share, as a result of which NWR Plc became the sole shareholder of the Issuer on 9 October 2012. (4) The Notes will be senior unsecured obligations of the Issuer and will rank equal in right of payment with all of the Issuer’s existing or future senior debt. The Notes will rank senior in right of payment to all existing and any future subordinated indebtedness of the Issuer. The net proceeds of the Offering will be used to redeem the 2015 Notes and for general corporate purposes. The Notes will be unsecured and will not be guaranteed by any of the Issuer’s subsidiaries and, as a result, will be subordinated to all existing and any future secured indebtedness of the Issuer, to the extent of the assets securing such indebtedness, and will be structurally subordinated to all existing and any

3 future indebtedness of the Issuer’s subsidiaries, including guarantees issued by the Issuer’s subsidiaries in respect of other indebtedness of the Issuer. (5) Substantially all of the net proceeds of the Offering will be used to finance the redemption of the EUR 257.6 million in aggregate outstanding principal amount of 2015 Notes. The 2015 Notes were issued on 18 May 2007 in an initial aggregate principal amount of EUR 300 million. On 30 September 2009, the Issuer accepted tenders for and purchased EUR 32.4 million in aggregate principal amount of 2015 Notes and retired such purchased debt. In October 2011 the Issuer purchased EUR 10 million in aggregate principal amount. As a result, the outstanding principal amount of 2015 Notes was reduced to EUR 257.6 million. (6) On 29 June 2009, the Issuer and OKD, as a co-obligor, entered into the Export Credit Agency Facility (‘ECA Facility’). The ECA Facility provides for a term loan of approximately EUR 141.5 million, which, following an amendment dated 21 June 2010, was available to be drawn until 30 November 2010 and which is repayable in seventeen semi-annual equal instalments. The ECA Facility is an unsecured obligation of the Issuer and OKD as a co-obligor and is not guaranteed by any of the Issuer’s subsidiaries. The ECA Facility is covered by a guarantee issued by the Federal Republic of Germany, represented by a consortium led by Euler Hermes Kreditversicherungs-AG, for which the Issuer has paid a premium.

Refinancing The Issuer is undertaking the Offering and the redemption in full of the 2015 Notes to extend its debt maturity profile and increase its liquidity and balance sheet flexibility. Substantially all of the proceeds of this Offering will be used to finance the redemption of the outstanding EUR 257,565,000 in aggregate principal amount of the 2015 Notes at a redemption price of 101.844 per cent plus accrued and unpaid interest through to (but excluding) the date of redemption. The 2015 Notes require a minimum of 30 days’ prior notice of redemption, which the Issuer intends to provide upon completion of the Offering. The foregoing transactions, together with the costs, administrative expenses, taxes, fees and other payments are hereinafter referred to as the ‘Refinancing’. For a more detailed description of use of proceeds and capitalisation, see ‘‘Use of Proceeds,’’ and ‘‘Capitalisation’’ elsewhere in this Offering Memorandum.

Principal Shareholders BXRG Limited indirectly owns 100 per cent of the shares of BXR Mining B.V. (‘BXR Mining’). BXR Mining holds approximately 63.6 per cent of the NWR Plc A Shares as at the date hereof. NWR Plc is a publicly listed company and approximately 36.4 per cent of NWR Plc A Shares is held by the public. NWR Plc holds 100 per cent of the NWR NV A shares.

BXRG Limited BXRG Limited is an international investment group focused on investments in Central Europe. It also has investments in Western Europe. BXRG Limited typically takes large or controlling stakes in investment companies and is active in the management of its investments. In addition to its investment in the Company, BXRG Limited currently has investments in real estate, logistics, green energy, financial services and other industries.

Recent Operating and Financial Performance Current trading and prospects The Company believes that it has benefited from its recent capital investments, evidenced by its improved production results since using the new equipment that was purchased in recent years. Whilst the broader European economic outlook remains uncertain, the Company expects demand for coking coal in the Central European region to remain robust, driven by continued strength in the automotive and construction sectors. The strength of Central Europe’s industrial sectors is also expected to underpin demand for thermal coal. The Company expects coking coal to remain a scarce global commodity going forward and expects this to continue to drive up international prices. The Company’s exposure to these price movements has increased as the Company moved its contracts from an annual pricing basis in accordance with the Japanese fiscal year towards a quarterly pricing basis in line with international trends. Since April 2011, all of the Company’s coking coal is priced on a quarterly basis. Furthermore, the Group expects to increase the proportion of coking coal in its external sales mix

4 above 50 per cent over the medium term (2-3 years). For the longer term, the additional production from D˛ebiensko´ is expected to further increase the proportion of coking coal in the overall coal mix. As a merchant supplier of coke, the Company is more susceptible to changes in demand as integrated steel suppliers will consolidate production in their own vertically integrated facilities when production is reduced. However, the Company’s consolidation of its coking plant and new coking battery gives the Company more flexibility to switch production between foundry and blast furnace coke, putting the Company in a stronger position to prosper throughout the economic cycle. Below is a brief overview of the Company’s key production and sales indicators for Q4 2012 as well as FY 2012. These figures are unaudited estimates available as of 14 January 2013 and subject to change. NWR will publish its results for the twelve-month period ended 31 December 2012 on Thursday 21 February 2013, when further information will be provided.

Q4 2012 production volume (kt) Q4 2012 sales volume (kt) Coking Coal 1,163 2,598 Thermal Coal 1,354 Coke 155 123

FY 2012 production volume (kt) FY 2012 sales volume (kt) Coking Coal 4,998 11,206 Thermal Coal 4,727 Coke 680 555

Current market outlook Thermal coal In the Central European thermal coal markets, due to recent declines in energy demand and broader market conditions, thermal coal inventories have been above the historical average levels. These conditions are likely to create pricing volatility and continued downwards pressure on thermal coal prices in the near term. NWR is currently in the process of negotiating the thermal coal pricing for the current period and expects to close the negotiations and announce the results of these negotiations in the coming weeks. NWR currently anticipates that in 2013 its average agreed thermal coal prices will decline.

Coking coal The Central European coking coal market continues to be impacted by soft demand that has been observed globally, and which is affecting international realised prices for coking coal. The global market dynamics are contributing to the uncertainty surrounding the pricing environment for 2013 for NWR’s coking coal and coke products. Thus, NWR expects pricing pressure in the coking coal market to continue in the near term, with improved international supply-demand balance driving a recovery in the medium to long term. NWR is currently in the process of negotiating the coking coal pricing for the current period and expects to close the negotiations and announce the results of these negotiations in the coming weeks.

Company’s 2013 outlook Given the fact that both thermal coal and coking coal markets remain under pressure due to broader market conditions, the Company will continue to focus on, among other things, management of capital and operating expenditures. Detailed plans and guidance for the current year shall be finalised and communicated to the market in February 2012 together with the announcement of the Company’s FY 2012 Financial results. Currently, the Company expects the following for 2013: • Coal production in the range of 10-11Mt • Coke production of approximately 800kt • Broadly flat mining unit costs year-on-year on a constant FX

5 • Significant reduction of total capex year-on-year on the order of 30-50% The above statements are forward-looking statements, and while they are based on sources believed to be reliable and on the current knowledge and best belief of the Company’s management, they are merely estimates or predictions and cannot be relied upon, and actual outcomes and results may be materially different. See ‘‘Cautionary Note Regarding Forward Looking Statements’’.

Update on 2012 Contracting On 15 October 2012, the Company announced that it reached agreements with its customers for coking coal and coke sales for the fourth calendar quarter of 2012. The average agreed price of coking coal, including PCI coking coal, for delivery was EUR 102 per tonne, a 20 per cent decrease compared to the third quarter of 2012 realised price. The average price agreed for coke sales during the fourth calendar quarter of 2012 decreased by 8 per cent to EUR 264 per tonne compared to the third quarter realised price. These prices are based on expected coking coal sales of approximately 47 per cent hard coking coal (mid-volatility), 45 per cent semi-soft coking coal and 8 per cent PCI coking coal, with expected coke sales consisting of approximately 73 per cent foundry coke, 9 per cent blast furnace coke, and 18 per cent other types. The average price agreed for thermal coal sales for the calendar year 2012 is EUR 74 per tonne, 11 per cent higher than the 2011 average realised price.

Key Performance Indicators The Company announced on 15 October 2012 its key performance indicators for the third calendar quarter of 2012. Coal production volume in the period was 2,829kt. Coking coal sales amounted to 1,164kt at an average realised price of EUR 126 per tonne. Thermal coal sales volume amounted to 1,221kt at an average realised price of EUR 73 per tonne. Coke production volume in the period was 176kt, with sales volume of 129kt and an average realised price of EUR 286 per tonne. On 15 October 2012 the Company also announced its key performance indicators for the nine months period ended 30 September 2012. Coal production volume in the period was 8,608kt. Coking coal sales amounted to 3,835kt at an average realised price of EUR 131 per tonne. Thermal coal sales volume amounted to 3,373kt at an average realised price of EUR 73 per tonne. Coke production volume in the period was 525kt, with sales volume of 432kt and an average realised price of EUR 299 per tonne. On 14 January 2013, the Company announced its key performance indicators for the full year 2012. Coal production volume in the period was 11,206kt compared to full year guidance between 11.0Mt and 11.1Mt. Coking coal sales volume amounted to 4,998kt (51 per cent of total coal sales volume). Thermal coal sales volume amounted to 4,727kt (49 per cent of total coal sales volume). The total coal sales volume amounted to 9,725kt compared to full year guidance between 10.2Mt and 10.3Mt. Coke production volume in the period was 680kt, with sales volume of 555kt compared to production volume guidance of 700kt and sales volume guidance of 600kt.

2012 Cost Guidance and Development Projects Containment of the Company’s mining unit costs remains a major focus as the Company mines deeper into more challenging environments. The Company also remains focused on driving further efficiency gains to partially counter the rising costs. Notwithstanding these pressures on the Company’s cost base, the Company’s close proximity to its customers continues to give the Company a cost advantage over its overseas competitors. The Company anticipates that capital investments in the short to medium term will decrease as a result of the current economic climate. In the medium term, the Company expects its current development projects to sustain its growth ambitions and the Company intends to continue to seek appropriate acquisition opportunities to further strengthen its competitive position. All of the prices and costs mentioned above are given in euro and are based on an exchange rate of 25.00 of CZK/EUR. See ‘‘Risk Factors — Risks Relating to Company’s Business and Industry — Contracted coal and coke price data and committed volume demand data included in this Offering Memorandum may differ materially from actual coal and coke prices and volumes realised’’.

6 THE OFFERING The summary below describes the principal terms of the Notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The section of this Offering Memorandum entitled ‘‘Description of the Notes’’ contains a more detailed description of the terms and conditions of the Notes.

Issuer ...... New World Resources N.V., a Dutch public company with limited liability. Notes Offered ...... EUR 275,000,000 aggregate principal amount of 7.875 per cent Senior Notes due 2021. Maturity Date ...... 15 January 2021. Interest Rate ...... 7.875 per cent per year on the principal amount of the Notes. Interest Payment Dates ...... Each 15 January and 15 July commencing on 15 July 2013. Ranking of the Notes ...... The Notes will be senior unsecured obligations of the Issuer and will: • rank equally in right of payment to all existing and any future senior indebtedness of the Issuer; • rank senior in right of payment to all existing and any future subordinated indebtedness of the Issuer; • be effectively subordinated to all existing and any future secured indebtedness of the Issuer, including the 2018 Notes, the 2015 Notes, hedging arrangements and the Revolving Credit Facility, to the extent of the assets securing such indebtedness; and • be structurally subordinated to all existing and any future indebtedness of the Issuer’s subsidiaries including guarantees of the Issuer’s subsidiaries in respect of the Issuer’s other indebtedness. The Notes will be structurally subordinated to guarantees issued by OKD, OKK and Karbonia in respect of the Issuer’s 2018 Notes. See ‘‘Description of the Notes — Ranking.’’ No Collateral ...... On the issue date, the Notes will not have the benefit of any collateral. No Guarantees ...... On the issue date, the Notes will not be guaranteed by any of the Issuer’s subsidiaries. Use of Proceeds ...... The Issuer intends to use substantially all of the net proceeds of the Offering to fund the redemption of the 2015 Notes, and to use any remaining net proceeds for general corporate purposes. See ‘‘Use of Proceeds’’. Optional Redemption ...... At any time on or after 15 January 2017, the Issuer may redeem some or all of the Notes at the redemption prices specified in this Offering Memorandum under the caption ‘‘Description of the Notes — Optional Redemption.’’ Prior to 15 January 2017, the Issuer may redeem some or all of the Notes by paying the make-whole premium specified in this Offering Memorandum under the caption ‘‘Description of the Notes — Optional Redemption.’’

7 In addition, at any time prior to 15 January 2016 the Issuer may redeem up to a maximum in aggregate of 35 per cent of the aggregate principal amount of the Notes issued at any time under the Indenture (including any additional Notes) with the proceeds of one or more Equity Offerings, at a redemption price equal to 107.875 per cent of the principal amount thereof, plus accrued and unpaid interest, if any, to but not including the applicable redemption date, so long as at least 65 per cent of the aggregate principal amount of the Notes (calculated giving effect to any issuance of additional Notes) remains outstanding after the redemption. Tax Redemption ...... The Issuer may redeem all of the Notes at a price equal to their principal amount plus accrued and unpaid interest, if any, to but not including the applicable redemption date, if the Issuer would become obligated to pay certain additional amounts as a result of certain changes in specified tax laws or certain other circumstances. See ‘‘Description of the Notes — Optional Tax Redemption.’’ Certain Covenants ...... The Issuer will issue the Notes under the Indenture to be entered into by and among, inter alios, the Issuer and Deutsche Trustee Company Limited, as Trustee. The Indenture will include certain covenants that, among other things, will limit the Issuer’s ability and each of the Issuer’s restricted subsidiaries’ ability to: • incur or guarantee additional debt; • pay dividends and make other restricted payments or investments; • create or permit certain liens; • issue or sell capital stock of restricted subsidiaries; • use the proceeds from sales or disposals of assets and capital stock of subsidiaries; • create or permit restrictions on the ability of restricted subsidiaries to pay dividends or make other distributions to the Issuer or its restricted subsidiaries; • enter into certain transactions with affiliates; • engage in certain business activities (including restricting the Issuer’s activities to generally acting as a holding company); and • consolidate, merge or sell all or substantially all of their assets. When the Notes are issued, all of the Issuer’s wholly-owned subsidiaries will be restricted subsidiaries. These covenants will be subject to a number of important exceptions, limitations and qualifications as described in ‘‘Description of the Notes — Certain Covenants.’’

8 Intercreditor Agreement ...... On the issue date, the Notes will be unsecured and will not be guaranteed by any of the Issuer’s subsidiaries, and the Trustee for the Notes will therefore not initially accede to the intercreditor agreement. In the event the Notes are granted security or guarantees pursuant to the terms of the Indenture, the Trustee will be obligated to accede to one or more intercreditor agreements providing for the relative ranking of the Notes to other debt of the Issuer and its subsidiaries with respect to security and guarantees and related provisions restricting enforcement action and payments in connection with defaults and insolvency proceedings. For more information, see ‘‘Description of the Notes — Intercreditor Agreements; Amendments to Intercreditor Agreements.’’ Additional Notes ...... The Indenture will permit the Issuer to issue additional Notes in compliance with the Indenture. Change of Control ...... Following a change of control, the Issuer will be required to offer to repurchase all of the Notes at a purchase price of 101 per cent of their outstanding principal amount, plus accrued and unpaid interest, if any, to the date of purchase. See ‘‘Description of the Notes — Change of Control’’ for further details. Denominations ...... The Notes will have a minimum denomination of EUR 100,000 and any integral multiple of EUR 1,000 in excess thereof. Transfer Restrictions ...... The Issuer has not registered the Notes under the U.S. Securities Act or any state or other securities laws, and the Notes may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act. Absence of Established Market for the Notes ...... The Notes are a new issue of securities, and currently there is no established market for them. The Initial Purchasers have advised the Issuer that they may make a market for the Notes, but they are not obligated to do so. The Initial Purchasers may discontinue any market making in the Notes at any time in their sole discretion and without notice. Accordingly, the Issuer cannot assure you that a liquid market will develop or will be maintained for the Notes. Listing and Trading ...... The Issuer has applied to list the Notes on the Official List of the Irish Stock Exchange and for trading on the Global Exchange Market of the Irish Stock Exchange. Governing Law of the Indenture and Notes ...... The Indenture and the Notes will be governed by, and construed in accordance with, the laws of the State of New York. Risk Factors ...... An investment in the Notes involves a high degree of risk. You should carefully consider the information set forth in the section entitled ‘‘Risk Factors’’ and the other information included in this Offering Memorandum before deciding whether to purchase the Notes. Trustee ...... Deutsche Trustee Company Limited. Transfer Agent and Paying Agent . Deutsche Bank AG, London Branch.

9 Registrar ...... Deutsche Bank Luxembourg S.A. Settlement Date ...... It is expected that delivery of the Notes will be made against payment therefore on or about 23 January 2013, which is five business days following the date of the pricing of the Notes (such settlement date being herein referred to as ‘‘T+5’’). Trades in the secondary market generally are required to settle in three business days unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade Notes on the date of pricing or the next three business days will be required by virtue of the fact that the Notes will initially settle in T+5 to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. For a description of certain risks that should be considered in connection with an investment in the Notes, see ‘‘Risk Factors.’’

10 SUMMARY FINANCIAL AND OTHER DATA The following table sets forth, for the periods indicated, the summary historical consolidated financial data presented in euro and additional data. The summary historical financial data in this summary have been extracted from the Issuer’s unaudited condensed consolidated interim financial statements for the nine months period ended on and as of 30 September 2012 and for the nine months period ended and as of 30 September 2011 and the Issuer’s audited consolidated financial statements for the years ended on and as of 31 December 2011, 2010 and 2009. Unless otherwise indicated, the summary historical financial data have been prepared in accordance with IFRS. The summary historical consolidated financial data should be read in conjunction with, and are qualified in their entirety by reference to ‘‘Operating and Financial Review and Prospects’’ and the Issuer’s financial statements and the related notes thereto incorporated by reference in this Offering Memorandum.

Nine months period ended 30 September Year ended 31 December (EUR million) 2012 2011 2011 2010(1) 2009(1) Income Statement Revenues ...... 1,013 1,241 1,633 1,590 1,117 Changes in inventories of finished goods and work in progress ...... 71 42 38 (35) 19 Consumption of material and energy ...... (284) (308) (413) (373) (292) Service expenses ...... (275) (290) (394) (342) (294) Personnel expenses(2) ...... (273) (289) (380) (361) (351) Depreciation and amortisation ...... (130) (132) (176) (170) (172) Net gain from material sold ...... 6 5 8 5 4 Gain/(loss) from sale of property, plant and equipment . — (1) (2) 1 4 Other operating income ...... 3 2 4 5 4 Other operating expenses ...... (30) (30) (36) (25) (28) Subtotal (operating income) ...... 102 239 282 295 10 Financial income ...... 33 17 32 36 49 Financial expenses ...... (63) (87) (121) (150) (117) Profit on disposal of energy business ...... — — — 72 — Profit/(loss) from continuing operations before tax . . . . 73 169 192 252 (58) Income tax expense ...... (20) (45) (57) (31) (6) Profit/(loss) after tax from continuing operations . . . . . 53 125 135 221 (64) Balance Sheet Data (at period end) Cash and cash equivalents(3) ...... 443 445 537 529 548 Total assets ...... 2,378 2,290 2,376 2,258 2,216 Total debt(4) ...... 924 846 928 850 1,034 Equity ...... 812 802 756 809 560 Other Financial Data EBITDA(5) ...... 232 373 459 464 179 Capital expenditure ...... 165 156 194 221 250 Ratios Total debt/EBITDA(4)(5)(12) ...... 2.90 1.58 2.02 1.83 5.78 Net debt/EBITDA(6)(5)(12) ...... 1.51 0.75 0.85 0.69 2.72 EBITDA/Net interest(5)(7)(12) ...... 5.52 9.11 8.44 7.72 3.65 Pro Forma Financial Data(8) Total debt (principal amount)(9) ...... 943 Pro forma total debt (principal amount)(9) ...... 960 Pro forma net debt (principal amount)(10) ...... 504 Pro forma net interest expense(11) ...... 61 Pro forma total debt (principal amount)/EBITDA(9)(5)(12) . 3.01 Pro forma net debt (principal amount)/EBITDA(10)(5)(12) . 1.58 EBITDA/Pro forma net interest expense(5)(11)(12) ...... 5.25

Notes: (1) Excludes results of operations from electricity trading business for 2010 and 2009, which are presented as discontinued operations in the 2010 Consolidated Financials and the 2009 Consolidated Financials.

11 (2) Personnel expenses including employee benefits and share-based payment expenses. (3) Cash and cash equivalents excludes restricted cash of EUR 17 million as at 30 September 2012 deposited to an escrow account in connection with the Group’s obligations under Czech law to maintain cash reserves for reclamation costs and potential liability for damages to properties owned by third parties. (4) Total debt includes bonds, long-term interest bearing loans and borrowings, including current portion, plus short-term interest bearing loans and borrowings. Total debt is based on gross amount of debt less related expenses. Interest bearing loans, bond issues and borrowings are measured at amortised cost. (5) EBITDA is defined as profit after tax from continuing operations adjusted for income tax, net financial expenses, depreciation and amortisation and gains/losses from sale of PPE. While the amounts included in EBITDA have been extracted from the historical financial statements, it is not a financial measure calculated in accordance with IFRS and, accordingly, should not be considered as an alternative to net income or operating income as an indicator of performance, or as an alternative to operating cash flows as a measure of the Group’s liquidity. The Group currently uses EBITDA in its business operations to, among other things, evaluate the performance of its operations, develop budgets and measure its performance against those budgets. The Group finds it a useful tool to assist in evaluating performance because it excludes interest, taxes and other principal non-cash charges. In addition, the Group believes that EBITDA is a measure commonly used by investors. EBITDA, as presented in this document, may not be comparable to similarly titled measures reported by other companies due to differences in the way these measures are calculated. EBITDA used in this document is not the same as the definition of Adjusted EBITDA used in the 2015 Notes Indenture, the 2018 Notes Indenture or the Indenture governing the Notes. Set forth below is a reconciliation of EBITDA to profit after tax from continuing operations. (6) Net debt represents total debt, as defined above, less cash and cash equivalents. It is not an IFRS measure. (7) Net interest expense means the aggregate amount of financial expense classified as interest expense under IFRS accrued for a period less any financial income classified as interest income under IFRS accrued in respect of that period including interest on any cash and cash equivalent investments for the period. (8) The ratios included in this table do not correspond to any of the financial covenants in the debt instruments of the Issuer or any of its subsidiaries including the Revolving Credit Facility, the ECA Facility, the 2015 Notes Indenture, the 2018 Notes Indenture or the Indenture governing the Notes per se. (9) Total debt (principal amount) reflects the aggregate principal value of debt outstanding. Pro forma total debt and pro forma net debt figures are based on total debt (principal amount) and reflect the redemption of EUR 258 million principal amount of 2015 Notes and the issuance of the Notes offered hereby. (10) Net debt (principal amount) represents total debt (principal amount), as defined above, less cash and cash equivalents. (11) Pro forma net interest expense represents net interest expense on total debt (principal amount) after giving pro forma effect to the issuance of the Notes and the redemption in full of the 2015 Notes. This does not reflect the amortisation of fees associated with the Notes. (12) The ratios are calculated on last twelve months basis.

12 The additional information in the following table headed ‘‘Additional data’’ is extracted from the Company’s financial and operating records, but the information is not determined in accordance with IFRS.

Additional data(1)

Nine months period ended 30 September Year ended 31 December 2012 2011 2011 2010 2009 External coal and coke operating data Sales volume (kt) Coking coal ...... 3,835 3,541 4,797 5,599 5,451 Thermal coal ...... 3,373 4,472 5,849 5,113 4,610 Coke ...... 432 430 555 1,100 705 Average sales prices per tonne (EUR) Coking coal ...... 131 181 177 138 86 Thermal coal ...... 73 66 67 60 72 Coke ...... 299 370 365 275 149

Calculation of EBITDA

Nine months period ended 30 September Year ended 31 December (EUR million) 2012 2011 2011 2010 2009 Profit/(loss) after tax from continuing operations ...... 53 125 135 221 (64) Income tax ...... 20 45 57 31 6 Net financial expense(1) ...... 29 70 89 42 68 Depreciation and amortisation ...... 130 132 176 170 173 (Gain)/loss from sale of PPE ...... — 1 2 — (4) EBITDA ...... 232 373 459 464 179

Note: (1) Net financial expense generally includes realised and unrealised foreign exchange gains and losses, interest income and interest expense, profit or loss on revaluation and realisation of derivative instruments, gain on disposal of investments in subsidiaries, bank fees and other minor items classified as financial income or expense.

(1) As of 1 January 2012, the Company began classifying PCI coking coal as coking coal in line with industry practice, while before 1 January 2012 PCI coking coal was treated as thermal coal. To provide comparable numbers, 2011, 2010 and 2009 periods were adjusted for the effect of this reclassification.

13 RISK FACTORS An investment in the Notes involves a significant degree of risk, including the risks described below. You should carefully consider the following risk factors and the other information in this Offering Memorandum before deciding to invest in the Notes. The risks described below are not the only ones facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems immaterial may also materially and adversely affect the Company’s business, financial condition, results of operations or liquidity. Any of the following risks could materially adversely affect the Company’s business, financial condition or results of operations. In such case, you may lose all or part of your original investment.

Risks Relating to the Company’s Business and the Industry The Company’s business, financial condition and results of operations may vary with fluctuations in the production costs and the prices for coal. The coal mining business is generally a high fixed-cost business. As the majority of the Company’s revenue is derived from sales of coal to external parties, the Company’s business, results of operations and margins are substantially dependent on the market prices and the production costs of coal. The domestic and international coal markets exhibit fluctuations in supply and demand and, consequently, prices vary from one period to another. Prices for coal tend to be cyclical, and over the last several years have been very volatile. These fluctuations in prices and production costs, which affect the Company’s results of operations and cash flows, are subject to numerous factors beyond the Company’s control, including but not limited to: • Central European and global economic trends and conditions; • the supply of and demand for coal in Central Europe; • the demand for electricity in Central Europe; • Central European demand for/and the price of steel and the continued financial viability of the Central European steel industry; • the price and availability of alternative fuels and nuclear energy, including the effects of technological developments and cost of transportation; • costs of raw materials, labour and services related to operations such as steel, rubber, petroleum products and electricity; • the proximity to, capacity of and cost of transportation facilities; • Central European and EU governmental regulations and taxes; • currency exchange rate fluctuations and rate of inflation; and • global or Central European political events and other market forces. Historically, the domestic and international markets for coal have at times experienced alternating periods of increased demand, causing insufficient production capacity and higher prices and margins, as well as periods of excess supply, resulting in excess production and lower prices and margins. Central European or international demand for coal may not grow and may decline, in which case the Central European or international coal markets would likely experience excess supply. A significant decline in demand for coal may have a material adverse effect on the Company’s business, financial condition and results of operations. Although the Company has historically sold most of its coal under long-term coal sales agreements, the prices in the spot market influence the price for forward sales agreements that the Company is entering into now and may enter into in the future, and the terms under which the Company contracts to sell its coal may not be as favourable to that of prevailing market conditions. A substantial amount of the Company’s coal revenue is derived from sales of coking coal. As the demand for coking coal is primarily affected by global demand for coal from the steel industry, the price the Company charges its coking coal customers is directly linked to the global market conditions of the steel industry. A drop in global steel prices may put downward pressure on the prices the Company can charge its coking coal customers. In addition, further consolidation in the

14 steel industry may lead to increased purchasing power for steel producers which could reduce the price paid for coking coal.

A majority of the Company’s revenues are derived from sales made in the Central European market and any significant downturn in the Central European economy or any decrease in the use of coal by the Company’s Central European customers could have a material adverse effect on the Company’s business, financial condition or results of operations. A majority of the Company’s coal sales are made in the Central European market. As a result of the land-locked nature of Central Europe and high transport costs to regions outside the Central European region, the Company has exposure which is concentrated in the Central European market. As such, the Company’s business, financial condition and results of operations are highly dependent on the Central European market. Any significant downturn in the Central European economy, and in particular, with respect to the Central European steel and coking industries, could have a material adverse effect on the Company’s business and results of operations. Furthermore, a significant decline in demand for coal or its excess supply by other coal producers may have a material adverse effect on the Company’s businesses, financial condition and results of operations.

Economic conditions globally and in Central Europe in the period following the global financial crisis may have an adverse effect on the Company’s business. The global economic downturn, coupled with the global financial and credit market disruptions, had an impact on the coal industry generally. Conditions have since improved but there is no certainty as to how sustained the recovery will be and the experience of the global financial crisis has demonstrated the vulnerability of the coal industry to significant changes in global economic conditions. A decline of the global and Central European economic conditions could result in a decrease in the use of coking coal by the Company’s Central European customers, specifically the Central European steel and coking industries, or result in decreased prices for coal and/or coke. Any actions the Company may take in response to these conditions may be insufficient. A protracted worsening of global economic conditions or disruption in the financial markets could have a material adverse effect on the Company’s business, financial condition and results of operations.

Development of shale gas deposits globally and in Central Europe may have an adverse effect on the Company’s thermal coal sales. Large-scale production of shale gas deposits over the past ten years in the United States has resulted in natural gas prices falling to historic lows in the U.S. market, making gas more competitive than coal for electricity generation. Although not on the same scale as the United States, shale gas deposits have recently been discovered in Europe, including several Central European countries in which some exploration currently is taking place. However, due to ongoing environmental concerns, many European countries have banned shale gas production outright whilst others are taking a wait and see approach. Even though commercial production in those countries in Europe that have allowed exploration to continue is seen to be at least eight to ten years away, any large increase in the domestic gas supply in the Company’s region could see gas becoming more price competitive with thermal coal for heat and electricity generation. A more competitive price environment for thermal coal in the Central European region could have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company operates in a competitive industry and the Company’s business and financial condition and results of operations will be adversely affected if the Company is not able to compete effectively, including with state-owned companies who may not be driven solely by profits. Competition in the coal industry is based on many factors, including price, production capacity, coal quality and characteristics, transportation capability, costs and brand name. The Company’s coal businesses compete principally in Central Europe with other Central European coal producers and face competition from third parties, including state-owned and formerly state-owned coal industries in Central Europe. The operations of state-owned coal companies may not be driven solely by profit and, as a result, may sell coal at lower prices than the Company. The Company may be unable to compete effectively due to the improvements in the quality of coal sold by the

15 Company’s competitors, a decrease in the quality of the Company’s coal, deterioration of coal reserve mining conditions or competitors, particularly government-owned competitors, selling coal at lower prices. Increased competition in the future, including from new competitors that may emerge, could have a material adverse effect on the Company’s business, financial condition and results of operations. While the Company believes it does not currently face significant competition from coal and coke suppliers located outside Central Europe, the Company may in the future face increased competition from coke and coal suppliers internationally, particularly in the event the cost of seaborne and overland transportation declines or if additional transportation infrastructure in Central Europe is built and causes a decrease in such competitors’ transportation costs, or in the event China eases its restrictions on the export of coke and coal. An increase in competition may have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company’s coal mining operations are subject to operating risks that could result in decreased coal production or product mix of coking coal, which could reduce the Company’s revenues. The level of the Company’s coal mining production is subject to operating conditions and events beyond its control that could disrupt operations and affect production at particular mines for varying lengths of time. These conditions and events include: • depletion of the Company’s reserves and resources; • the Company’s inability to acquire, maintain or renew necessary permits for mining or surface rights in a timely manner, or at all; • the unavailability of qualified mining labour in the Czech Republic or Poland, or other countries where the Company seeks employees and contractors; • changes in governmental regulation of the coal industry, including the imposition of additional taxes, fees or actions to suspend or revoke the Company’s permits or changes in the manner of enforcement of existing regulations; • adverse weather and natural disasters, such as heavy rains and flooding; • increased or unexpected reclamation costs; and • interruptions due to transportation delays. Furthermore, coal mining involves hazardous activities such as operating large pieces of rotating and other heavy equipment and delivering coal via large transportation systems. The Company’s underground mining operations and product mix may be affected by mining conditions such as: • unfavourable geologic conditions, such as the highly variable thickness of the coal deposits and the amount of rock embedded in or overlying the coal deposits, especially in the Ostrava region; • the highly variable tectonic character of the coal deposits in the Ostrava region; • mine safety accidents, including fires and explosions from methane or rock bursts, and mine closures resulting from such accidents; • mining and processing equipment failures and unexpected maintenance problems; • increased water entering mining areas and increased or accidental mine water discharges; and • other operational risks associated with industrial or engineering activity, such as risks relating to mechanical breakdowns and the use of explosive materials. In addition, although the Company has implemented a number of safety measures, the above risks may be exacerbated due to the depth of the Company’s mines (currently ranging from approximately 600 to 1,100 meters deep, and in the future may extend to 1,400 meters deep), which are among the deepest in Central Europe.

16 These conditions and events may increase the Company’s cost of mining and delay or halt production at particular mines, either permanently or for varying lengths of time. Furthermore, the realisation of some of these risks could result in damage to the Company’s coal deposits or coal production facilities or the transportation facilities it utilises, personal injury or death, environmental damage to the Company’s properties or the properties of others, or delays in mining out coal or in the transportation of coal, which could lead to monetary losses and potential legal liability.

Disruptions in transportation services or increases in the costs of transportation services could adversely impact the Company’s ability to deliver coal to its customers, which could cause a decline in the Company’s revenues and profitability. The cost and dependability of transportation are critical factors in the Company’s customers’ purchasing decisions. Increases in these transportation costs could make coal a less competitive source of energy or could make some of the Company’s operations less competitive than other coal producers. The Company depends primarily upon railroads to deliver coal to its customers. The Company has long-term contracts in place for the provision of railroad transportation services from Advanced World Transportation, a.s. (‘AWT’) and certain of its subsidiaries, namely an association of AWT Cechofracht a.s. (which operates the Czech part of the railway system for export deliveries and also provides transport services to Germany and France) and AWT.(which operates a regional railway system in the Czech Republic). In addition, the Company has transportation agreements with Metalimex, a.s. (‘Metalimex’) for the provision of rail transport services in Austria and other countries. The Company’s transportation providers may face difficulties in the future that may impair the Company’s ability to supply coal and coke to its customers. Alternatively, upon expiry or termination, supply agreements may not be able to be renegotiated at existing rates, which may lead to increased transportation costs. In addition, disruption of railroad services due to weather- related problems, mechanical difficulties, strikes, lockouts and other events could temporarily impair the Company’s ability to transport coal to its customers and may result in breaches of supply agreements with customers and consequently a loss of such customers or liability for contractual damages. If there are disruptions of the transportation services provided by the Company’s primary rail carriers that transport its produced coal and the Company is unable to find alternative transportation providers to ship its coal, its business could be adversely affected. Prolonged disruptions to the Company’s transportation services could result in delays to shipments to its customers or an inability to supply coal for its customers, which could result in customers using the Company’s competitors for their coal needs, adversely affecting the Company’s revenues and profitability.

Contracted coal and coke price data and committed volume demand data included in this Offering Memorandum may differ materially from actual coal and coke prices and volumes realised. The contracted coal and coke price and committed volume data included in this Offering Memorandum are based upon a number of assumptions and factors, including, among others, exchange rate fluctuations, timing and frequency of contract negotiations or renegotiations, shortened term of contracted prices, quality of mix of product required by customers, timing of deliveries, flexible provisions in individual contracts, cost of input materials, trends in the steel industry, and costs of other substitute products. In addition, unanticipated events and the slower than expected global economic revival may continue to adversely affect any of these assumptions or factors and consequently may adversely affect the price and demand data included in this Offering Memorandum. As a result, the actual realised prices and volumes sold for coal and/or coke may differ materially from contracted price and demand data included in this Offering Memorandum.

The Company’s framework agreements provide that prices are renegotiated periodically, which may lead to lower revenues when coal prices decline, and may result in economic penalties upon a failure to meet specifications. The Company historically contracts its coal and coke sales under long-term framework agreements. These framework agreements are typically periodic in nature and have been important

17 to the stability and profitability of the Company’s operations. The execution of a satisfactory coal supply agreement is frequently the basis on which the Company undertakes the development of coal reserves required to be supplied under the contract, but because framework agreements require the purchase price and quantity to be renegotiated at periodic intervals, these agreements generally do not commit the Company’s customers to purchase any quantity of coal at any price beyond the contracted periods. Any renegotiations would likely reflect prevailing market conditions at the time of the renegotiation and could result in a decreased price, volume or both. As a result, the Company’s framework agreements would provide only limited price protection if coal prices decline. When the Company’s current framework agreements expire, the Company’s customers may decide not to extend or enter into new framework agreements or may decide to purchase less coal than in the past or on different terms, including under different pricing terms. If one or more of the framework agreements with the Company’s major customers were renegotiated or terminated or if any of the Company’s major customers were to significantly reduce their purchases of coal from the Company, or the Company was unable to sell coal to them on terms as favourable to the Company as the terms under the Company’s current agreements, the Company’s revenues and operating profits could be materially adversely affected. The Company sometimes experiences a reduction in coal prices in new framework agreements that replace some of its expiring contracts. Some of the Company’s framework agreements contain force majeure provisions allowing temporary suspension of performance by the Company or the customer for the duration of specified events beyond the control of the affected party. The majority of coal sales are based on long-term framework agreements, which contain provisions requiring the Company to deliver coal meeting quality thresholds for certain characteristics such as BTU, sulphur content, ash content, hardness and ash fusion temperature. Failure to meet these specifications could result in economic penalties, including price adjustments, the rejection of deliveries or, in the extreme, rescission of individual orders, any of which may result in the Company not achieving the revenue or profit it expects to achieve from such framework agreements.

The volume and grade of the coal the Company recovers may be less than the estimates included in this Offering Memorandum. The Company’s coal reserves and resources data with respect to the Company’s mines and the D˛ebiensko´ project, on which the Company’s production and capital investment program is based, are estimates that were provided by the Company. The Company currently uses both the FSU System and the JORC system in parallel to report reserves and resources. The Company employs a certified geologist who is a member of the European Federation of Geologists and who prepares the reserve numbers in accordance with JORC methodology. However, he is not a JORC certified expert. In addition, the reserve and resources data reflected in this Offering Memorandum has not been subject to an independent external mining expert review. In addition, the Czech Ministry of Environment performs an annual review of the reserve number that OKD’s team of geologists have prepared in accordance with JORC methodology. For more information on the Company’s methodology on reporting reserves and resources, please see ‘‘Industry Overview’’. The coal reserve and mineral resource estimates inherently include a degree of uncertainty and depend to some extent on geological assumptions, coal prices, cost assumptions, and statistical inferences which may ultimately prove to have been unreliable. Consequently, coal reserve and mineral resource estimates are often regularly revised based on actual production experience or new information and could therefore be expected to change. Furthermore, should the Company encounter mineralisation or formations different from those predicted by past drilling, sampling and similar examinations, coal reserve and mineral resource estimates may have to be adjusted and mining plans may have to be altered in a way that might adversely affect the Company’s operations. Moreover, a decline in the price of coal, stabilisation at a price lower than recent levels, increases in production costs, decreases in recovery rates or changes in applicable laws and regulations, including environment, permitting, title or tax regulations that are adverse to the Company, may result in the volumes of coal that the Company can feasibly extract being significantly lower than the reserve and resource estimates indicated in this Offering Memorandum.

18 If it is determined that mining of certain of the Company’s coal reserves has become uneconomic, this may ultimately lead to a reduction in the Company’s aggregate reserves. Additionally, a significant proportion of the Company’s reserve estimates include reserves of the D˛ebiensko´ mine, which is a long-term development project rather than an existing operating mine. If the Company’s actual mineral reserves and resources are less than current estimates, the Company’s prospects, value, business, financial condition and results of operations may be adversely affected. In addition, the Company’s mining plan provides for the extraction and marketing of different grades of coal in the future from existing mining operations, which will require the certification of new coal grades for use by customers. The inability of such coal to meet quality specifications and certification requirements will cause the Company to sell such coal at lesser quality coal grades and may have a negative effect on the realised price for the coal product and on the product mix of coking and thermal coal. As such, the Company’s actual reserve and resource figures could significantly differ from those included in this Offering Memorandum.

The Company’s reserves and resources are disclosed on a different basis than those disclosed in filings with the U.S. Securities and Exchange Commission in accordance with SEC Industry Guide 7. The Company’s reserve and resources estimates are disclosed on a different basis than those disclosed in registration statements and other documents filed with the U.S. Securities Exchange Commission (the ‘SEC’). The disclosure rules and practices associated with JORC differ in several significant respects from the SEC Industry Guide 7 (‘Guide 7’), which governs disclosures of mineral reserves in registration statements and reports filed with the SEC. In particular, Guide 7 does not recognise classifications other than proved and probable reserves, and the SEC does not permit mining companies to disclose mineral resources in SEC filings. The reserve and resources estimates included in this document include measured, indicated and inferred resources, which are generally not permitted in disclosures filed with the SEC. Under SEC Guide 7, minerals may not be classified as a reserve unless the determination has been made that the minerals could be economically and legally produced or extracted at the time the reserve determination is made. All or any part of measured or indicated resources may never be classified as reserves. Further, there is a great amount of uncertainty as to the existence of inferred resources and as to whether they can be mined legally or economically. Accordingly, it should not be assumed that all or any part of an inferred resource will be upgraded to a higher category.

The profitability of the Company depends upon its ability to successfully exploit existing reserves and acquire and develop economically attractive coal reserves at competitive costs. The profitability of the Company depends substantially on its ability to mine coal reserves that can be mined at competitive costs and to meet the quality needed by its customers. Reserves may not be available when required or, if available, may not be capable of being mined at costs comparable to the Company’s current costs. Because the Company’s coal reserves deplete as they produce coal, the Company’s ability to sustain or increase its current level of production in the long-term will depend, in part, upon its ability to acquire and develop additional coal reserves that are economically recoverable and to develop new and expand existing mining operations. The average reserve life of the Company’s mines in the Czech Republic is estimated to be approximately 20 years based on the Company’s current production plans. Additionally, the Company may not be able to accurately assess the geological characteristics of any reserves that it acquires, which may adversely affect the Company’s profitability and financial condition if the Company’s assessment proves incorrect. Furthermore, the Company’s planned development, acquisition and exploration projects and acquisition activities may not result in significant additional reserves and such reserves may not be profitable. The Company’s ability to acquire new reserves could also be limited by factors beyond its control, including competition from other coal companies for suitable reserves, the lack of suitable acquisition candidates and the inability to acquire reserves on commercially reasonable terms.

19 The Company’s ability to exploit its resources which are not yet proved reserves and implement its development projects could be limited by many factors beyond its control, including, but not limited to, the Company’s ability to obtain the necessary licenses and execution and operational risks. The Company’s ability to commercially exploit resources which are not yet proved reserves has even greater risk attached to it than the exploitation of proved reserves. Additional factors affecting the ability of the Company to successfully transform its development projects into profitable mining operations include the gathering of geological data, the obtaining of reserve assessments by external engineers, the granting of consents and permits from the relevant government departments, working with environmental groups, working with unions, the availability, terms, conditions and timing of acceptable arrangements for mining, transportation and construction and the performance of engineering and construction contractors, mining contractors, suppliers and consultants. A delay in gathering information necessary for an application for, or the denial of, a license or governmental approval may adversely affect the Company’s business, financial condition and results of operations. There can be no guarantee as to when the Company’s development projects will receive the appropriate government approval, if at all, and whether the necessary project infrastructure will be completed, whether the resulting operations will achieve the anticipated production volumes or whether the costs in developing these projects will be in line with those anticipated. Furthermore, a significant portion of the Company’s current estimated coal resources are located in excess of 1,400 meters below ground, which would render such resources difficult to mine. The Company is seeking to develop and mine the D˛ebiensko´ and Morcinek coalfields, each of which requires various approvals and licenses by Polish government ministries and local municipalities. Certain permits necessary for new mining opportunities are obtained upon the approval of various governmental agencies and the absence of a long-term relationship with Polish regulatory authorities such as those that other Polish mining companies may have make it more difficult for the Company to obtain such necessary permits for new mining opportunities in Poland. Delay or failure in securing the relevant governmental approvals or permits as well as any adverse change in government policies may delay or impede the Company’s development and acquisition plans. Even if relevant governmental licenses and permits are obtained, if the Company is unable to complete its development projects within the time frame allowed by the licenses and permits, it may lose its licenses to mine some of the mining areas designated to the Company. To be able to commence mining under the D˛ebiensko´ license, the Company must acquire additional property. Even though negotiations have progressed between the Company and the current owners of the properties, there is no assurance that the negotiations will result in the required purchases, or that the Company will be able to purchase these properties on commercially reasonable terms. Furthermore, the Company has applied for an amendment to its current D˛ebiensko´ license to mine at shallower levels. The application has been suspended at the request of the Company and may be relaunched in the future. This license would increase the probable reserves at D˛ebiensko´ and would involve a smaller initial investment but there is no assurance that the license will be granted. For more information please see ‘‘Regulatory Matters’’ and ‘‘Description of the Business’’. In addition, the Company may be unable to economically mine the resources present at the Frenstˇ at´ mine in the near future or at all, due to opposition from environmental organisations and local municipalities. While the new mining equipment associated with POP 2010, the Company’s capital investment program, has had the effect of allowing the Company to mine more efficiently and in deeper coal seams, the Company’s reserve base associated with its four Czech mines is not expected to increase significantly. Consequently, absent the increase in reserves attributable to either the Company’s Polish projects or the Frenstˇ at´ region, the Company’s reserve base will generally diminish each year by the annual amount of production. The Company’s inability to complete its development projects as planned may have a material adverse effect on the growth prospects of the Company or the results of the operations or financial condition of the Company. For more information, please see ‘‘Description of the Business’’.

20 The Company must make significant capital expenditures in order to increase its production levels and improve overall efficiency. The inability to finance these and other expenditures in the longer term could have a material adverse effect on the Company’s business, financial condition or results of operations. The Company’s business and development of any new reserves requires significant capital expenditures with respect to development, maintenance, production, transport, exploration and coal preparation. The Company’s business plan requires substantial capital expenditures for the foreseeable future for the purposes of, among other things, the acquisition of machinery and equipment, expanding certain of the Company’s producing companies and increasing production efficiency. The Company also has a number of development projects and prospects, as well as plans for its existing operations, which involve significant capital expenditure. Some of the Company’s development projects and prospects may require greater investment than currently planned. The Company’s business and mining plans for Frenstˇ at,´ D˛ebiensko´ and Morcinek will also entail significant capital expenditures if, and when, mining operations begin there. However the Company anticipates that capital investments in the short to medium term will be decreased as a result of the current economic climate. The Company expects to be able to meet its current capital expenditures from its operating cash flows and the proceeds from the incurrence of debt. In the longer term, when the Company’s financing arrangements mature, the Company’s ability to secure future debt or equity financing in amounts sufficient to meet its financial needs could be adversely affected by many factors beyond its control, including but not limited to economic conditions in Central Europe and the health of the Central European banking sector and/or capital markets. If the Company is unable to raise the necessary financing in the longer term, it will have to revise capital expenditures planned for after that date. Such possible reduction could adversely affect the Company’s ability to expand its business and meet its production targets and, if the reductions are severe enough, they could adversely affect the Company’s ability to maintain its production at current levels. The Company’s approach to development of the D˛ebiensko´ mine is subject to the decision of the Polish Mining Authorities and the Company’s actual capital expenditures on the D˛ebiensko´ project may ultimately be different from those the Company currently anticipate. The Company’s capital expenditures plans constitute forward-looking statements and are subject to uncertainties. See ‘‘Risk Factors — Risks Relating to Government Regulation’’.

Failure by the Company to implement further profit improvement initiatives could have a material adverse effect on its business, results of operations or financial position. An increase in the Company’s production costs could have a material adverse effect on its profitability. The Company’s profit improvement initiatives depend on realising cost savings, efficiencies and synergies from the introduction of new technologies and operating processes, as well as reductions in the size of the Company’s workforce. An increase in the Company’s production costs could have a major impact on its profitability. The Company’s main production expenses are personnel costs, service costs and materials and energy costs. Changes in the costs of the Company’s mining and processing operations could occur as a result of unforeseen events, including international and local economic and political events, and could result in changes in profitability or reserve estimates. Many of these factors may be beyond the Company’s control. Wage levels of the Company also face potential upward pressure as a result of the strong position of trade unions in its workforce. In addition, other input costs in the Company may arise as a result of the continued integration of the Czech Republic and Poland into the EEA or other factors. The Company may be unable to implement one or more of its profit improvement initiatives successfully or it may experience unexpected cost increases that offset savings that it may achieve, which could have a material adverse effect on its business, financial position or results of operations. The Company relies on third-party suppliers for a number of its raw materials, including electricity, steel and parts used in the construction and continuing development of its mines and the processing of ore. In particular, the cost of electricity in the Czech Republic has increased significantly in the past few years and, while the Company has experienced recent reductions in such cost, the Company expects that increases in the future are likely. Moreover, the Company

21 employs highly specialised machinery, equipment and services, and a future scarcity of suppliers could lead to significant price increases. Any material increase in the cost of raw materials or specialist inputs, or the inability by the Company to source third-party suppliers for the supply of its raw materials or specialist inputs, could have a material adverse effect on the Company’s financial condition or results of operations.

A shortage of skilled labour in the mining industry could result in the Company having insufficient employees to operate its business, which could adversely affect the Company’s business, financial condition and results of operations. Efficient coal mining using modern techniques and equipment requires skilled labourers, preferably with at least one year of experience and proficiency in multiple mining tasks. Under Polish mining law, certain employees are required to hold qualifications deriving from, inter alia, their amount of experience, which further narrows the available labour pool. There is currently a shortage of qualified skilled labour in the Czech mining industry, and the Company has been steadily dependent upon its contractors to provide skilled labourers to offset such shortage. The Company and its contractors may also face the prospect of increased competition for Polish trained workers, as a result of the recent and future privatisation of Polish competitors creating alternative job prospects. In addition, the average age of the Company’s mine workers is about 42 years of age, which is relatively old for the mining industry. In the event that the current shortage of skilled labour continues or worsens or the Company is unable to retain the necessary number of skilled labourers, there could be an adverse impact on the Company’s labour productivity and costs and its ability to maintain or expand production, which could have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company could be adversely affected if it fails to maintain satisfactory labour relations. For the nine months period ended 30 September 2012, the Company employed an average total of 14,084 employees and 3,697 contracted workers. At 30 September 2012, the Company estimates that more than half of its employees are members of trade unions. Maintaining satisfactory labour relations with the Company’s employees and organised labour are important to its success. Although the Company has historically enjoyed a positive and productive working relationship with the trade unions under the collective bargaining and wages agreements, no assurance can be made that these relationships will remain positive and productive, particularly in light of possible changes to Company policy and procedure that may result from the implementation of the Company’s profit improvement plan. In 2010, OKD concluded negotiations with the trade unions and signed a collective bargaining agreement effective as of 1 February 2010 and which expired on 31 December 2012. The wages are renegotiated on an annual basis. On 5 April 2012, OKD agreed to a 3 per cent increase in wages effective from 1 April 2012 and to a 0.4% increase in tariff wages effective from 1 November 2012. The increase in tariff wages was based on the inflation rate announced by the Czech Statistic Authority in October 2012 and deducted by 3 per cent. Separate amendments to the collective bargaining agreement applicable to the individual organisational units (mines) are regularly negotiated with the local trade unions established at the individual units (mines). In addition, a higher-level (sector) collective bargaining agreement applies to OKD. The most recent agreement was concluded on 6 December 2012 for the period 1 January 2013 to 31 December 2017. OKD is bound by the higher-level collective bargaining agreement, and as a result the employees will not be provided with less favourable employment conditions than those outlined in the higher-level collective bargaining agreement. With respect to OKK, a collective bargaining agreement for 2012 was agreed on 12 April 2012, the conditions of which provided for a 3 per cent increase in basic wages in 2012 compared with 2011 on a Czech koruna basis. In addition, this collective bargaining agreement guarantees an increase in average wages corresponding at least to the annual average inflation rate in 2012 and until it expires. For both OKK and OKD, the collective bargaining for 2013 is still in progress. If new collective bargaining agreements are not agreed, the current collective bargaining agreements will remain in force until 31 December 2013. If future negotiations result in changes in compensation structure or any other

22 changes in Company policy or procedure, there may be a negative impact on the Company’s relationship with the trade unions and the Company’s employees, which could negatively affect the Company’s business, financial condition and results of operations.

The Company’s ability to operate effectively could be impaired if the Company fails to attract and retain key managers. The Company’s senior executives together have an average of approximately 20 years of experience in the mining industry, with specific experience in, among other things, maintaining strong customer relations and making strategic and opportunistic acquisitions. The ability to maintain the Company’s competitive positions and to implement the Company’s business strategy is dependent on the Company’s senior management and the ability to attract and retain experienced and qualified members of management. In particular, the contributions of the Executive Directors are critical to the management of the Company. If the Company is not able to continue to retain such key personnel, it may be unable to manage its growth or otherwise compete effectively in the Central European coal industry, which could adversely affect its business.

The Company depends on a small number of major customers, the loss of any of which, or the Company’s inability to collect payment from any of which, could adversely affect the Company’s financial condition and results of operations. For the year ended 31 December 2011, the Company derived approximately 86 per cent of its third-party thermal coal revenues from sales to its six largest thermal coal customers and 98 per cent of its coking coal revenues from sales to its six largest coking coal customers. In addition, the Company derived approximately 58 per cent of its third-party coke revenue from sales to its six largest third-party coke customers during this period. At 31 December 2011, the Company had material supply agreements with these customers that expire at various times between 2012 and 2016. Failure to review such agreements or the closure of any of its customers could force the Company to reduce productions or rely on customers located further afield, resulting in lower relative prices for its products. Furthermore, the Company’s ability to receive payment for coal sold and delivered depends on the continued creditworthiness of its customers. If the Company is unable to collect payments from a number of these customers, the Company’s financial condition and results of operations could be materially adversely affected.

The Company’s exposure to several tax jurisdictions may have an adverse effect on the Company. The Company is subject to the tax laws of several jurisdictions, including the United Kingdom, the Netherlands, Poland, and the Czech Republic. The Issuer and/or any member of the Company may be treated as being resident for tax purposes and/or otherwise subject to tax in jurisdictions other than their places of incorporation. The combined effect of the application to the Company of the tax laws, including the application or disapplication of tax treaties concluded by the relevant countries, of more than one of these jurisdictions and/or their interpretation by the relevant tax authorities could, under certain circumstances, produce contradictory results and related tax liabilities for the Company or if one or more of those customers materially reduces their volume of purchased coal or does not renew their supply agreements, and may materially and adversely affect the Company’s business, financial condition and operating results.

The Company is subject to risks in connection with the tax positions taken in the course of its business. The Company takes tax positions in the course of its business with respect to various tax matters, including, but not limited to, the taxation of foreign exchange results, compliance with arm’s-length principles in respect of transactions with related parties, the tax deductibility of interest and other costs and the amount of depreciation or write-down on the assets that it recognises for tax purposes. There is no assurance that the tax authorities in the United Kingdom, the Netherlands, the Czech Republic, Poland or any other jurisdiction will agree with the positions taken by the Company.

23 In the event that the tax authorities disagree with the Company on any of the positions taken, the Company may be subject to an unexpected tax liability that may have an adverse effect on the financial condition of the Company.

The Company’s insurance coverage with respect to its operations may be inadequate and the occurrence of a significant event could adversely affect the Company’s business, financial condition and results of operations. The Company maintains an amount of insurance protection that it considers adequate in the ordinary course of operations, but it cannot provide any assurance that its insurance will be sufficient or provide effective coverage under all circumstances and against all hazards or liabilities to which it may be subject. Specifically, the Company does not maintain insurance in respect of its underground operations or for all of the Company’s mining equipment. As a result, the Company’s insurance may not be sufficient to replace facilities or equipment that are damaged in part or in full. Damages or third-party claims for which the Company is not fully insured could hurt the Company’s financial results and materially harm its financial condition. Further, due to rising insurance costs and changes in the insurance markets, insurance coverage may not continue to be available at all or at rates or on terms similar to those presently available. Any losses not covered by insurance could have a material adverse effect on the results of the Company. From time to time, the Company may be subject to subrogation claims by insurance providers and, if such subrogation claims are not covered by other insurance policies, this could have a material adverse effect on the Company. The Company typically purchases business interruption insurance for its facilities. However, if the Company has a stoppage of operations, its insurance policies may not cover every contingency and may not be sufficient to cover all of the Company’s lost revenues. In the future, the Company may be unable to purchase sufficient business interruption insurance at desirable costs.

The Issuer is majority owned indirectly by BXRG Limited, and BXRG Limited’s interests may conflict with the interests of the Noteholders and/or with the Company. BXRG Limited indirectly owns a majority of the NWR Plc A Shares, and so effectively controls the Issuer. The Issuer generally has the power to elect all of the members of the Issuer’s board of directors and appoint new management. The Issuer’s board of directors has the ability to control decisions affecting the Company’s capital structure, including the issuance of additional share capital, the implementation of share repurchase programs and the declaration of dividends. Further, BXRG Limited has the power to approve any action requiring the approval of a simple majority of the NWR Plc A Shares (including changes to the Issuer’s capital structure, and approving acquisitions or sales of all or substantially all of the Issuer’s assets). The interests of BXRG Limited may not, in all cases, be aligned with the interests of the other shareholders, or the holders of the Notes or any other holder of the Issuer’s debt. If the Issuer encounters financial difficulties, or is unable to pay its debts as they mature, the interests of BXRG Limited may conflict with those of the other shareholders of NWR Plc A Shares, or the holders of the Notes or any other holder of the Issuer’s debt. There can be no assurance that the resolution of any matter that may involve the interests of BXRG Limited will be resolved in a manner which other shareholders of NWR Plc A Shares would consider to be their interests or the best interests of either NWR or the Company. BXRG Limited may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in BXRG Limited’s judgment, could enhance its equity investment, even though such transactions may involve risks to the Issuer’s shareholders or holders of the Notes or any other holder of the Issuer’s debt.

Fluctuations of the Czech koruna and Polish zloty against other currencies could affect the Company’s business, financial condition and results of operations. The Company’s coal products are typically priced in Czech korunas and euro, and the Company’s direct costs, including raw materials, labour and/or transportation costs, are largely incurred in Czech korunas, while other costs, such as interest expense, are incurred in Czech korunas and euro. The mix of the Company’s revenues and costs is such that appreciation of the Czech koruna against the euro tends to result in a decrease in the Company’s revenues relative to its costs and a decline in its results of operations. In addition, if the Czech koruna depreciates

24 significantly against the euro, the Company could have difficulty repaying or refinancing its foreign currency denominated indebtedness. A number of factors affect the price at which the Company sells coal, including, among other things, the global benchmark prices and the spot price of coal, which are denominated in U.S. dollars, as well as local pricing conditions in Central Europe. To the extent that the price of the Company’s coal is affected by global benchmark coal prices, a long-term depreciation of the U.S. dollar against the Czech koruna and/or the euro could adversely affect the Company’s price of coal and consequently, its revenue. The Company is also exposed to translation risk, which arises due to the conversion of balance sheet and income statement items denominated in foreign currencies to euro for the preparation of its consolidated financial statements. The Czech koruna depreciated against the euro by approximately 3.2 per cent and depreciated against the U.S. dollar by approximately 13.3 per cent, respectively, in the nine months period ended 30 September 2012 year-on-year (based on the average foreign exchange rate for the nine months period ended 30 September 2012). Accordingly, fluctuations of the Czech koruna against the euro and/or the U.S. dollar could affect the Company’s business, financial condition and results of operations and further appreciation of the Czech koruna against the euro and/or the U.S. dollar could adversely affect the Company’s results. In addition, the Company’s development projects in Poland will be subject to fluctuations of the Polish zloty against the euro and Czech koruna. However, since the projects are not yet in operation but at the initial development phase, the potential adverse impact of such fluctuations on the Company’s results of operations is difficult to estimate.

To hedge against foreign exchange rate and interest rate fluctuations, the Company uses derivative financial instruments. Using derivative financial instruments may be costly and ineffective. The Company has entered into various hedging transactions to help manage the risk of changes in interest rates or currency fluctuations with respect to borrowings made or to be made, or other obligations incurred or to be incurred, by the Company. The Company may use derivative financial instruments for this purpose, which may include interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements. The Company’s actual hedging decisions will be determined in light of the facts and circumstances existing at the time of the hedge and may differ from time to time. In some cases, the Company may not elect or have the ability to implement such hedges or, if the Company does implement them, they may not achieve the desired effect. They may also expose the Company to the risk that its counterparties to hedging contracts will default on their obligations. Furthermore, although hedging transactions may limit to some degree the Company’s risk from fluctuations in currency exchange and interest rates, the Company potentially forgoes benefits that might result from such fluctuations. At the date of this Offering Memorandum, the Company is hedged in line with its current policy to hedge 70 per cent of its forecasted net currency exposure. The Company is fully hedged against interest rate risk. However, there can be no assurance that the Company will be hedged as intended against currency and interest rate fluctuations in 2012, or that it will be able to hedge against the risk of interest rate or currency fluctuations in the future.

The Company is required under the laws of various jurisdictions to create and maintain cash reserves for reclamation costs and potential liability for damage to properties owned by third parties, and such reserves may be insufficient to cover the actual costs of reclamation and liabilities. Under Czech law, the Company is required to provide, as one of the requirements for obtaining a permit for mining each new part of the designated mining area, a reclamation plan, which obligates the Company to restore the mining site in accordance with specific standards. The Company is further required to create and maintain a cash reserve to cover the costs of implementing such reclamation plan. In addition, the Company is also required under Czech law to create and maintain cash reserves to cover potential liabilities arising from damages associated with the Company’s mining

25 activities made to properties owned by third parties. At 30 September 2012 approximately two-thirds of the land within the Company’s active mining area was owned by the Czech government or other third parties. The Company may therefore be liable for damages caused by its activities on such properties owned by third parties. If, as contemplated, the Company transfers any real estate assets to the holders of the NWR Plc B Shares or some other third party, it will be liable for any loss the transferee may incur on the real estate as a result of the Company’s mining activities. Thus, as the potential liability increases, the Company may be required to create higher cash reserves. These cash reserves may not be sufficient to cover the actual costs of reclamation or compensation paid to a third party for property damage, either of which could require the Company to make significant payments in the future, adversely impacting the Company’s business, financial condition and results of operations.

The privatisation of the Former OKD Company and government sales could be challenged and could result in the Company’s ownership of its business being deemed invalid or could result in additional liability being attributed to the Company, which could materially affect the Company’s business, financial condition and results of operations. The Company’s business was privatised by the Czech government in a series of transactions throughout 1992 and 2004. These transactions involved privatisation through a voucher program and sales of shares to Karbon Invest a.s. by the National Property Fund of the Czech Republic. In addition, between 2002 and 2004, the Former OKD group transferred mines that had become inactive (together with certain liabilities) to Czech State public enterprises. Such transactions are generally complex and may have been implemented by the government in a way that is open to criticism and, if such transactions were successfully challenged before the Czech government, Czech courts, arbitration tribunals or European institutions, could result in attempts to unwind or otherwise invalidate such transactions and adverse publicity. In the event of a successful challenge, the Company risks losing or altering its ownership of such companies or assets, which could materially adversely affect its business, financial condition and results of operations.

Joint venture arrangements may not be successful. The Company may enter into joint venture arrangements and minority investments for new mining projects and acquisitions. The successful operation of any joint ventures and minority investments entered into by the Company will be dependent on maintaining good relationships with the Company’s joint venture partners and minority investors, who may have interests different to the Company’s interests. If the Company is unable to maintain good relationships or resolve conflicts with the other joint venture parties and minority investors, the Company’s results of operations may be harmed. Any current or future acquisitions, joint ventures and/or minority investments may involve the Company making significant cash investments, issuing shares or incurring substantial debt. In addition, such acquisitions, joint ventures and/or minority investments may require significant managerial attention, which may be diverted from the Company’s other operations and could entail a number of additional risks, including problems with effective integration of operations, increased operating costs, exposure to unanticipated liabilities, and difficulties in realising projected efficiencies, synergies and cost savings.

Risks Relating to Government Regulation Extensive government regulations impose significant costs on the Company’s mining operations, and future regulations could increase those costs or limit the Company’s ability to produce and sell coal. The coal mining industry is subject to increasingly strict government regulation with respect to matters such as: • limitations on land use; • employee health and safety; • mandated benefits for retired coal miners; • mine permitting and licensing requirements; • reclamation and restoration of mining properties;

26 • air quality standards; • water pollution; • protection of human health, plant life and wildlife; • the discharge of materials into the environment; • surface subsidence from underground mining; and • the effects of mining on groundwater quality and availability. In addition, Czech regulations impose strict standards for particulate matter emissions, which may restrict the Company’s ability to develop new mines or could require the Company to modify its existing operations and increase its costs of doing business. Czech safety and health regulation in the coal mining industry is a comprehensive and pervasive system designed for the protection of employee safety and health. The costs, liabilities and requirements associated with these and other regulations may be costly and time-consuming and may delay commencement or continuation of exploration or production operations. Failure to comply with these regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of clean-up and site restoration costs and liens, the issuance of injunctions to limit or cease operations, the suspension or revocation of permits and other enforcement measures that could have the effect of limiting production from the Company’s operations. The Company may also incur costs and liabilities resulting from claims for damages to property or injury to persons arising from the Company’s operations. The Company must compensate employees for work-related injuries. If the Company does not make adequate provisions for its workers’ compensation liabilities and is pursued for such sanctions, costs and liabilities, the Company’s business, financial condition and results of operations could be adversely affected. The possibility exists that new legislation and/or regulations and orders may be adopted that may materially adversely affect the Company’s mining operations, the Company’s cost structure and/or the ability of the Company’s customers to use coal. New legislation or administrative regulations (or new judicial interpretations or administrative enforcement of existing laws and regulations), including proposals related to the protection of the environment that would further regulate and tax the coal industry, may also require the Company or its customers to change operations significantly or incur increased costs. These regulations, if enacted in the future, could have a material adverse effect on the Company’s financial condition and results of operations. As a result of the Company’s strategy to develop its Polish projects, a significant part of the Company’s assets and operations are now expected to be in Poland. Changes and developments in economic, tax, regulatory, administrative or other policies in Poland, could significantly and adversely affect the Company’s business, prospects, financial condition and results of operations.

The passage of environmental regulations to reduce carbon dioxide emissions could result in restrictions on coal use and reduce the demand for coal. The European Union, the Czech Republic and the Republic of Poland have entered into international agreements that require them to mitigate greenhouse gas emissions. In order to discharge these obligations, the European Union and Member States have sought to regulate emissions of greenhouse gas through a broad spectrum of measures including direct regulation, taxation, trading schemes and incentives for non-fossil fuel power generation. These efforts to control greenhouse gas emissions and to incentivise alternative sources of power generation could result in reduced demand for coal or could adversely affect the business of the Company’s customers and, in turn, have a material adverse effect on the Company’s business, prospects and results of operations. In addition, some of the Company’s carbon dioxide emitting operations may be required to acquire carbon dioxide emission rights from January 2013 onwards, in respect of some of the Company’s emissions which may increase the Company’s operating costs. Stricter environmental regulation of emissions from coal-fired electricity generating plants, including emissions of sulphur dioxide, particulates and nitrous oxides have been recently legislated by the European Union and will come into effect from 2016 onwards. These measures could increase the costs of using coal, thereby reducing demand for coal as a fuel source, and the

27 volume and price of the Company’s coal sales. Further restrictions and tightening of regulations could make coal a less attractive fuel alternative in the planning and building of utility power plants in the future. Regulation of carbon dioxide emissions may continue to tighten within the European Union such that the continued use of coal for power generation may only be possible through the implementation of new technologies, such as carbon capture and storage to mitigate carbon dioxide emissions. These technologies are untested on a commercial scale and there can be no guarantee that they will ever become commercially available. In addition, their implementation may increase operational costs for power generators, which may adversely impact demand for coal and coke.

The Company may be unable to obtain and renew permits and licenses necessary for its operation or mining of specific coal deposits, which would reduce its production and adversely impact the Company’s business, financial condition and results of operations. Mining companies must obtain numerous permits issued by various governmental agencies and regulatory bodies in a number of jurisdictions that impose strict regulations on various environmental and safety matters in connection with coal mining. The permitting rules are complex and may change over time, making the Company’s ability to comply with the applicable requirements more difficult or even impossible, thereby precluding continuing or future mining operations. Private individuals and the public have certain rights to comment upon and otherwise engage in the permitting process, including through court intervention. Accordingly, the permits the Company needs may not be issued, maintained or renewed, or may not be issued or renewed in a timely fashion, or may involve requirements that restrict the Company’s ability to conduct its mining operations. An inability to conduct the Company’s mining operations pursuant to applicable permits would reduce the Company’s production, cash flow and profitability. Furthermore, the Company is required to obtain licenses for mining of specific coal deposits including the Company’s Polish projects at D˛ebiensko´ and Morcinek. While the Company holds a license for mining activities and concessions to mining areas covering all coal deposits, which it lists as reserves and resources, it needs to obtain a specific permit each time it wishes to commence the exploitation of any specific deposit. Despite the Company having a good historic record of obtaining such specific permits in the Czech Republic, the Company may not be able to obtain such specific permits in the future. In particular, one of the conditions for obtaining each such specific permit in the Czech Republic is an agreement on handling of conflicts of interest with the owner or owners of properties affected by the proposed mining of the specific coal deposit. Accordingly, the failure to reach an agreement as to the remedy of mining damage with any owner of properties affected by the proposed mining of specific coal deposits may result in the Company being unable to mine such deposits. The failure to obtain a permit to commence mining any of the specific coal deposits, which comprise the Company’s reserves or resources, could have a material adverse effect on the Company’s business, financial condition and results of operations. The Company is required to obtain permits on an ongoing basis for its existing mining operations. In addition, the Company requires permits and licenses with respect to any new mining project at all phases of project development. The failure, or delay, in obtaining the necessary permits and licenses to develop mining projects into commercial operations may adversely affect the Company’s business, financial condition and prospects.

The Company is required to make mining concession fee payments to the Czech and Polish governments, and significant increases in such fees in the future could adversely affect the Company’s business, financial condition and results of operations. Pursuant to the Mining Act, holders of mining licenses are required to pay concession fees to the Czech government. The concession fees comprise fees calculated based on (i) mined area and (ii) mined coal fee, the levels of which are set by regulations of the Czech government and the Czech Ministry of Industry and Trade, respectively, up to a limit of (i) CZK 100 p.a. per hectare of the mined area in the case of the mined area fee and (ii) 10 per cent of the average price of the unprocessed coal in the case of the mined coal fee. Currently, the level of concession fees that the Company is required to pay for coal are (i) the mined coal fee of 0.5 per cent times the EXW (which refers to Ex Works Incoterm, when the seller

28 fulfils its obligation to deliver to the buyer upon having the goods available at the seller’s premises) revenues for unprocessed coal and (ii) the mined area fee of CZK 100 per annum per hectare of the mined area. For the year ended 31 December 2011, the Company’s total payment of mined coal fees was approximately CZK 147 million and mined area fees was approximately CZK 2 million. Such concession fees may be increased significantly by the Czech and/or Polish government in the future, which would lead to an increase in the Company’s mining costs, adversely affecting the Company’s business, financial condition and results of operations.

The Company’s operations may substantially impact the environment or cause exposure to hazardous materials, and the Company’s properties may have significant environmental contamination, any of which could result in material liabilities to the Company. The Company uses, and in the past has used, hazardous materials and generates, and in the past has generated, hazardous waste. In addition, many of the locations that the Company owns or operates were used for coal mining and/or involved hazardous material usage before and after the Company was involved with those locations. The Company may be subject to claims for toxic torts, natural resource damage, water pollution, property damage, personal injury and other damage to the environment as well as for the investigation of and demands for the clean up of soil, surface water, groundwater, and other media. Such claims may arise, for example, out of current or former activities at sites that the Company owns or operates currently, as well as at sites that the Company or predecessor entities owned or operated in the past, and at contaminated sites that have always been owned or operated by third parties. The Company’s liability for such claims may be joint and several, so that it may be held responsible for more than its share of the remediation costs or other damages, based on its contribution to the damage caused. The Company has from time to time been subject to claims arising out of contamination at its own and other facilities and may incur such liabilities in the future. Such liabilities include those deriving from environmental damage caused by the Company to Assets of the Real Estate Division, and the Company will continue to be subject to these liabilities even after the relevant Assets of the Real Estate Division are transferred by the Real Estate Division to a third party. Whilst as a matter of law the Company as a whole will be responsible for the reclamation of such damaged land and the related costs, such responsibility and costs have been allocated under the Articles of Association of the Issuer and the Divisional Policy Statements to the Mining Division and the holders of the A Shares of the Issuer. Mining operations can also impact flows and water quality in surface water bodies and remedial measures such as lining of streambeds may be required to prevent or minimise such impacts. The Company is studying, or addressing, those impacts and it has not finally resolved those matters. The costs of the Company’s efforts at the streams it is currently addressing, and at any other streams that may be identified in the future, could be significant. These and other impacts that the Company’s operations may have on the environment, as well as exposures to hazardous substances or wastes associated with the Company’s operations and environmental conditions at the Company’s properties, could result in costs and liabilities that would materially and adversely affect the Company. Currently, the Company’s liability arising from the contamination of land caused in the pre-privatisation era may be covered by a state indemnity existing under the agreement (‘Ecological Agreement’) entered into in 1996 by the Former OKD Company and the Czech National Property Fund. The Former OKD Company was the original party to the Ecological Agreement. Upon the de-merger of the Former OKD Company into OKD, by operation of law and in accordance with the applicable government order, the rights and obligations of the Former OKD Company under the Ecological Agreement were assigned to OKD and subsequently to OKK.

Risks Relating to the Company’s Indebtedness The Company has substantial indebtedness and its indebtedness levels may increase. The Company has a substantial amount of long-term indebtedness. As at 30 September 2012, the Company’s total consolidated indebtedness was approximately EUR 924 million. After taking into account the net proceeds received from this Offering and the application thereof, the Company’s total consolidated indebtedness is expected to be approximately EUR 940 million.

29 The level of the Company’s indebtedness could have important consequences, including: • increasing the Company’s vulnerability to, and reducing its flexibility to respond to, general adverse economic and industry conditions; • limiting the Company’s flexibility in planning for, or reacting to, changes in its business, the competitive environment and the industry in which it operates; • placing the Company at a competitive disadvantage as compared to its competitors that are not leveraged to the same degree; and • requiring the Company to dedicate substantially all or a significant portion of its cash flow to service its debt. The Company’s ability to pay principal and interest on or to refinance its outstanding indebtedness and raise additional debt depends upon the Company’s operating performance, which will be affected by, among other things, general economic, financial, competitive, regulatory and other factors, some of which are beyond the Company’s control. In particular, economic conditions could cause the price of coal to decline, which would lead to a diminishment of the Company’s revenue. If the Company’s revenue from operating activities is insufficient to service its debt, the Company may need to elect not to take advantage of development opportunities that, while not currently planned, would otherwise have been available to it. Moreover, in the longer term, the Company may not be able to refinance its current indebtedness on commercially reasonable terms, on terms acceptable to the Company or at all. A failure to refinance such outstanding indebtedness could result in the Company being obligated to make principal and interest payments under such indebtedness that may be higher than payments that the Company would otherwise be obliged to make. Any of these consequences or events could have a material adverse effect on the Company’s business, financial condition and results of operations.

The Issuer may not have enough cash available to service its debt. The Issuer’s ability to make scheduled payments on the Notes and its other indebtedness, or to refinance its debt, depends on the Company’s future operating and financial performance, which will be affected by its ability to implement successfully its business strategy as well as general economic, financial, competitive, regulatory, technical and other factors beyond its control. If, in the future, the Company cannot generate sufficient cash to meet its debt service requirements, the Company may, among other things, need to refinance all or a portion of its debt, including the 2018 Notes, the Revolving Credit Facility and the ECA Facility, obtain additional financing, delay planned capital expenditures or sell material assets. If the Company is not able to refinance its debt as necessary, obtain additional financing or sell assets on commercially reasonable terms or at all, the Issuer may not be able to satisfy its obligations with respect to its debt, including the Notes. In that event, borrowings under other debt agreements or instruments that contain cross default or cross acceleration provisions may become payable on demand, and the Issuer may not have sufficient funds to repay all of the its debts, including the Notes. Although the Company currently has significant cash and cash equivalents, the Issuer may distribute a significant amount of this cash and cash equivalents to its shareholders, use the cash to make acquisitions or enter into transactions that may be adverse to interests of holders of Notes or otherwise decrease the amount of cash on its balance sheet, which would adversely affect the ability of the Issuer to repay the interest or principal of the Notes offered hereby.

Despite the Company’s current significant leverage, the Company may be able to incur more debt in the future, which could further exacerbate the risks of its leverage. This additional debt may be structurally senior to the Notes and may benefit from security or guarantees that are not provided with respect to the Notes. The Company may need to incur additional debt in the future to complete acquisitions or capital projects or for working capital or other general corporate purposes. Although the 2018 Notes Indenture, the Indenture governing the Notes and the Company’s other indebtedness may impose some limits on the Company’s ability to incur debt, these agreements permit the incurrence of significant additional debt if the Company satisfies certain conditions. In certain circumstances, the Company may incur substantial additional debt that could mature prior to the Notes or that may be secured by liens on its assets. The incremental debt, which the Company may be able to incur

30 under the Notes may rank pari passu to the Notes and may be effectively senior to the Notes. In addition the Company will be permitted to incur debt under a Revolving Credit Facility and enter into certain hedging arrangements related to the Revolving Credit Facility, the 2018 Notes or the Notes that will rank senior to the Notes. If the Company incurs new debt, the risks related to being in a highly leveraged Company that the Company now faces, as described elsewhere in these ‘‘Risk Factors,’’ could increase.

The Company is subject to restrictive debt covenants that may limit its ability to finance its future operations and capital needs and to pursue business opportunities and activities. The Indenture governing the Notes, the 2018 Notes Indenture and the Company’s other financing agreements contain covenants that limit the ability of the Company and its subsidiaries to take certain actions. These restrictions may limit the Company’s ability to operate its businesses and may prohibit or limit its activity to enhance its operations or take advantage of potential business opportunities as they arise. The Indenture governing the Notes will, and the 2018 Notes Indenture, among other things, restrict the Company’s ability to: • incur or guarantee additional indebtedness and issue certain preferred stock; • create or incur certain liens; • make certain payments, including dividends or other distributions; • make investments; • prepay, repurchase or redeem subordinated debt or equity; • create encumbrances or restrictions on the payment of dividends or other distributions, loans or advances to and on the transfer of assets to the Company or any of its restricted subsidiaries; • sell, lease or transfer certain assets, including stock of restricted subsidiaries; • engage in certain transactions with affiliates; • consolidate or merge with other entities; and • materially change the nature of the Company’s business, enter into unrelated businesses or engage in prohibited activities. All of these limitations are subject to significant exceptions and qualifications. See ‘‘Description of the Notes — Certain Covenants.’’ These covenants could limit the Company’s ability to finance its future operations and capital needs and its ability to pursue business opportunities and activities that may be in the Company’s interest. If the Company breaches any of these covenants it may be in default under the Notes or other indebtedness. A significant portion or all of the Company’s indebtedness may then become immediately due and payable. In particular, the Company expects limited headroom for certain covenants under the ECA Facility at the end of 2013. If an event of default under the ECA Facility were to occur, subject to applicable cure periods and other limitations on acceleration or enforcement, as described under ‘‘Description of Certain Other Indebtedness’’ below, the relevant creditors could cancel the availability of the ECA Facility and elect to declare all amounts outstanding under the ECA Facility, together with accrued interest, immediately due and payable. The Company may not have, or be able to obtain, sufficient funds to make these accelerated payments. In addition, any default under the Notes could lead to an acceleration of debt under other debt instruments that contain cross acceleration or cross default provisions. If the debt under the Notes or other debt instruments is accelerated, the Issuer may not have sufficient assets to repay amounts due thereunder. The Company’s ability to comply with these provisions of the Indenture and other agreements governing the Company’s other debt may be affected by changes in economic or business conditions or other events beyond its control.

31 Any claims you may bring will be structurally subordinated to claims of creditors of all subsidiaries of the Issuer and, as a result, in the event of the dissolution of the Issuer or a similar event, the Issuer may not be able to satisfy your claims after satisfying the claims of subsidiaries of the Issuer. On the issue date, the Notes will not be guaranteed by any subsidiaries of the Issuer. Accordingly, claims of holders of the Notes are structurally subordinated to the claims of creditors of subsidiaries of the Issuer, including trade creditors. As of 30 September 2012 subsidiaries of the Issuer had approximately EUR 924 million of third-party indebtedness. In addition, the Issuer’s material subsidiaries are guarantors in respect of the 2018 Notes, the Revolving Credit Facility and related hedging arrangements and OKD is a co-obligor in respect of the ECA Facility. All obligations of subsidiaries of the Issuer, including the guarantees of the 2018 Notes, will have to be satisfied before any of the assets of such subsidiaries would be available for distribution, upon a liquidation or otherwise, to the Issuer. Accordingly, in the event that any of the subsidiaries become insolvent, liquidates or otherwise reorganises: • the creditors of the Issuer (including the holders of the Notes) will have no right to proceed against such subsidiary’s assets; and • creditors of such subsidiary, including trade creditors, will generally be entitled to payment in full from the sale or other disposal of the assets of such subsidiary before the Issuer, as direct or indirect shareholder or its creditors, will be entitled to receive any distributions from such subsidiary.

Your right to receive payments on the Notes is effectively junior to those lenders which have a security interest in the assets of the Issuer and, as a result, in the event of a foreclosure on those assets, the Issuer may not be able to satisfy your claims after satisfying the claims of secured lenders. The Issuer’s obligations under the Notes are unsecured but the Issuer’s obligations under the 2018 Notes are secured by a pledge of the shares of the Issuer’s material subsidiaries. These shares constitute substantially all of the assets of the Issuer. If the Issuer is declared bankrupt or insolvent, or if the Issuer defaults under its 2018 Notes, the secured lenders of the Issuer could declare all of the funds borrowed thereunder, together with accrued interest and any other ancillary amounts, immediately due and payable. If the Issuer is unable to repay such indebtedness, the secured lenders of the Issuer could foreclose on the pledged and assigned assets to the exclusion of holders of the Notes, even if an event of default exists under the Indenture governing the Notes. In any such event, because the Notes will not be secured by any assets of the Issuer, it is possible that there would be no assets remaining from which your claims could be satisfied or, if any assets remained, they might be insufficient to satisfy your claims fully. Additionally, after any such foreclosure, it is likely that the Issuer would not continue operating its business, in which case the Issuer could not generate any additional funds to satisfy your claims.

The Issuer’s ability to meet its obligations under the Notes is dependent upon payments from its subsidiaries, which are not obligated to make, and may be restricted from making, funds available to the Issuer. The Issuer is a holding company and conducts substantially all of its operations through its subsidiaries. The Issuer’s subsidiaries, none of which are guarantors of the Notes on the issue date conduct substantially all of the Issuer’s consolidated operations and own substantially all of the Issuer’s consolidated assets. Consequently, the Issuer’s ability to meet its debt service obligations, including as to the Notes, generally is dependent on the receipt of funds from the subsidiaries of the Issuer. The Issuer’s subsidiaries are not obligated to make, and may be restricted from making, funds available to the Issuer for payment on debt or otherwise. The ability of the Issuer’s subsidiaries to make any payments will depend on their earnings, the terms of their indebtedness, business and tax considerations and legal restrictions. Provisions of applicable law, such as those requiring dividends be paid only from distributable reserves, could limit the amounts the subsidiaries of the Issuer are permitted to pay as dividends on their capital stock. If the Issuer’s subsidiaries do not make payments to the Issuer, the Issuer may not be able to service its obligations, including its obligations as to the Notes.

32 The Notes will mature after a substantial portion of the Company’s other indebtedness, including its 2018 Notes. The Notes will mature in 2021. The 2018 Notes will mature in 2018. In addition, the indebtedness under the ECA Facility (currently approximately EUR 78 million in principal value outstanding), will mature in instalments prior to the maturity of the Notes. The Revolving Credit Facility will mature prior to the Notes in 2014. Accordingly, the Issuer will be required to repay a substantial portion of its other creditors before it is required to repay a portion of the interest due on, and the principal of, the Notes. As a result, the Issuer may not have sufficient cash to repay all amounts owing on the Notes at maturity. There can be no assurance that the Issuer will have the ability to borrow or otherwise raise the amounts necessary to repay such amounts.

The Issuer’s subsidiaries are subject to statutory cross guarantees, which could be called upon at any time and monies thereunder may become immediately due and payable. Pursuant to Czech law, OKD is subject to a statutory cross guarantee. The statutory cross guarantee was given by each successor entity in relation to the liabilities of the demerged entity (Former OKD) existing at the time of the demerger that were assumed by each successor entity on the date of the demerger. The cross guarantee of each successor entity is limited to the value of the net assets of the guarantor as at the effective date of the demerger. These statutory cross guarantees could be called upon at any time and monies thereunder may become immediately due and payable. OKD may not have sufficient assets to pay amounts due under these cross guarantees and to the extent the guarantor’s assets are insufficient, the Company may need to incur a substantial amount of indebtedness. If the Company incurs new debt in addition to its current debt level, the risks relating to it being a highly leveraged Company, as described elsewhere in these ‘‘Risk Factors’’ could increase.

The Company’s Real Estate Assets are not subject to the asset sale and restricted payment covenants in the Indenture, and as a result, the Company may distribute real estate and the proceeds from real estate sales effectively without restriction under the Indenture. The assets of the Company’s Real Estate Division are not subject to the asset sale and restricted payment covenants in the Indenture, although distributions of Real Estate Assets and proceeds from sales of Real Estate Assets would count against future restricted payment capacity.

Dutch insolvency laws may not be as favourable to holders of the Notes as those of another jurisdiction with which you may be familiar. Pursuant to Council Regulation (EC) no. 1346/2000 on insolvency proceedings (the ‘EU Insolvency Regulation’), the court that shall have jurisdiction to open insolvency proceedings in relation to a company will be the court of the EU Member State (other than Denmark) where the company concerned has its ‘‘centre of main interest’’ (as that term is used in Article 3(1) of the EU Insolvency Regulation). The determination of where any such company has its ‘‘centre of main interest’’ is a question of fact on which the courts of the different EU Member States may have differing and even conflicting views. Furthermore, the term ‘‘centre of main interest’’ is not a static concept and may change from time to time. Although there is a rebuttable presumption under Article 3(1) of the EU Insolvency Regulation that any such company has its ‘‘centre of main interests’’ in the Member State in which it has its registered office, Preamble 13 of the EU Insolvency Regulation states that the ‘‘centre of main interest’’ of a debtor should correspond to the place where the debtor conducts the administration of its interests on a regular basis and is therefore ascertainable by third parties. In that respect, factors such as where board meetings are held and the perception of the company’s creditors as regards the centre of the company’s business operations may all be relevant in the determination of the place where the company has its ‘‘centre of main interest’’. If the centre of main interest of a company is and will remain located in the state in which it has its registered office, the main insolvency proceedings with respect to the company under the EU Insolvency Regulation would be commenced in such jurisdiction and accordingly a court in such jurisdiction would be entitled to commence the types of insolvency proceedings referred to in Annex A to the EU Insolvency Regulation. Insolvency proceedings opened in one EU Member State

33 under the EU Insolvency Regulation are to be recognised in the other EU Member States (other than Denmark), although secondary proceedings may be opened in another EU Member State. If the ‘‘centre of main interest’’ of a debtor is in one EU Member State (other than Denmark), under Article 3(2) of the EU Insolvency Regulation, the courts of another EU Member State (other than Denmark) have jurisdiction to open ‘‘territorial proceedings’’ only in the event that such debtor has an ‘‘establishment’’ in the territory of such other EU Member State. The effects of those territorial proceedings are restricted to the assets of the debtor situated in the territory of such other EU Member State. If the company does not have an establishment in any other EU Member State, no court of any other EU Member State has jurisdiction to open territorial proceedings with respect to such company under the EU Insolvency Regulation. In the event that the Issuer or any of its subsidiaries experience financial difficulty, it is not possible to predict with certainty in which jurisdiction or jurisdictions insolvency or similar proceedings would be commenced or the outcome of such proceedings. Applicable insolvency laws may affect the enforceability of the obligations of the Issuer. Where a company (incorporated in the Netherlands or elsewhere) has its ‘‘centre of main interests’’ or an ‘‘establishment’’ in the Netherlands, it may be subjected to insolvency proceedings in this jurisdiction. This is particularly relevant for the Issuer, which has its corporate seat (statutaire zetel) in Amsterdam, the Netherlands, and is therefore presumed (subject to proof to the contrary) to have its ‘‘centre of main interests’’ in the Netherlands. Dutch insolvency law differs significantly from insolvency proceedings in the United States and other jurisdiction, and may make it more difficult for holders of Notes to recover the amount they would normally expect to recover in a liquidation or bankruptcy proceeding in the United States or another jurisdiction. There are two primary insolvency regimes under Dutch law. The first, moratorium of payments (surseance van betaling), is intended to facilitate the reorganisation of a debtor’s indebtedness and enable the debtor to continue as a going concern. The second, bankruptcy (faillissement), is primarily designed to liquidate and distribute the proceeds of the assets of a debtor to its creditors. Both insolvency regimes are set forth in the Dutch Bankruptcy Act. The consequences of both proceedings are roughly equal from the perspective of a creditor, with creditors being treated on a pari passu basis subject to exceptions. A general description of the principles of both insolvency regimes is set forth below. Unlike Chapter 11 proceedings under U.S. bankruptcy law, in which both secured and unsecured creditors are generally barred from seeking to exercise remedies against the debtor without court approval, in suspension of payments and bankruptcy proceedings under Dutch law secured creditors (and in case of suspension of payment also preferential creditors (including tax and social security authorities)) may enforce their rights against assets of the company to satisfy their claims as if there were insolvency proceedings. A recovery under Dutch law could, therefore, involve a sale of assets that does not reflect the going concern value of the debtor. Consequently, your potential recovery could be reduced in Dutch insolvency proceedings. Any pending executions of judgments against the debtor will be suspended by operation of law when suspension of payments is granted and terminate by operation of law when bankruptcy is declared. In addition, all attachments on the debtor’s assets will cease to have effect upon the suspension of payments having become definitive, a composition having been ratified by the court or the declaration of bankruptcy (as the case may be) subject to the ability of the court to set an earlier date for such termination. In a suspension of payments and bankruptcy, a composition (akkoord) may be offered to creditors. A composition will be binding on all unsecured and non-preferential creditors if it is (i) approved by a simple majority of the creditors being present or represented at the creditors’ meeting, representing at least 50 per cent of the amount of the claims that are admitted for voting purposes, and (ii) subsequently ratified (gehomologeerd) by the Dutch courts. Consequently, Dutch insolvency laws could preclude or inhibit the ability of the holders of the Notes to effect a restructuring and could reduce the recovery of a holder of Notes. Claims against a company subject to Dutch insolvency proceedings will have to be verified in the insolvency proceedings in order to be entitled to vote and, in a bankruptcy liquidation, to be entitled to distributions. ‘‘Verification’’ under Dutch law means, in the case of suspension of

34 payments, that the treatment of a disputed claim for voting purposes is determined and, in the case of a bankruptcy, that the value of the claim is determined and whether and to what extent it will be admitted in the insolvency proceedings. The valuation of claims that would not otherwise have been payable at the time of the proceedings may be based on a net present value analysis. Unless secured by a pledge or a mortgage, interest accruing after the date on which insolvency proceedings are opened cannot be verified. Where interest accrues after the date of opening of the proceedings, it can be admitted pro memoria. The existence, value and ranking of any claims submitted by the holders of the Notes may be challenged in the Dutch insolvency proceedings. Generally, in a creditors’ meeting (verificatievergadering), the receiver in bankruptcy, the administrator in suspension of payments proceedings, the insolvent debtor and all verified creditors may dispute the verification of claims of other creditors. Creditors whose claims or value thereof are disputed in the creditors’ meeting may be referred to separate court proceedings (renvooiprocedure) in bankruptcy, while in suspension of payments the court will decide how a disputed claim will be treated for voting purposes. These situations could cause holders of Notes to recover less than the principal amount of their Notes. Renvooi procedures could also cause payments to the holders of Notes to be delayed compared to holders of undisputed claims. The Dutch Bankruptcy Act does not in itself recognise the concept of classes of creditors. Remaining amounts, if any, after satisfaction of the secured and the preferential creditors are distributed among the unsecured non-preferential creditors, who will be satisfied on a pro rata basis. Contractual subordination may to a certain extent be given effect in Dutch insolvency proceedings, with the actual effect largely depending on the way such subordination is construed. Secured creditors may enforce their rights against assets of the debtor to satisfy their claims under a Dutch bankruptcy as if there is no bankruptcy. As in moratorium of payments proceedings, the court may order a ‘‘cooling down period’’ for a maximum of four months during which enforcement actions by secured creditors are barred unless such creditors have obtained leave for enforcement from the supervisory judge. Further, a receiver in bankruptcy can force a secured creditor to enforce its security interest within a reasonable period of time, failing which the receiver will be entitled to sell the secured assets, if any, and the secured creditor will have to share in the bankruptcy costs. Excess proceeds of enforcement must be returned to the bankrupt estate; they may not be set-off against an unsecured claim of the secured creditor in the bankruptcy. Such set-off is allowed prior to the bankruptcy, although a set-off prior to bankruptcy may be subject to clawback in the case of fraudulent conveyance or bad faith in obtaining the claim used for set-off. Under Dutch law, a legal act performed by a person (including, without limitation, an agreement pursuant to which it guarantees the performance of the obligations of a third party or agrees to provide or provides security for any of its or a third party’s obligations, enters into additional agreements benefiting from existing security and any other legal act having a similar effect) can be challenged in an insolvency proceeding or otherwise and may be nullified by any of its creditors or its receiver in bankruptcy, if (a) it performed such act without an obligation to do so (onverplicht), (b) the creditor concerned or, in the case of its bankruptcy, any creditor was prejudiced as a consequence of the act, and (c) at the time the act was performed both it and (unless the act was for no consideration (om niet)) the party with or towards which it acted, knew or should have known that one or more of its creditors (existing or future) would be prejudiced. In addition, in the case of a person’s bankruptcy, the receiver in bankruptcy may nullify its performance of any due and payable obligation (including (without limitation) an obligation under a guarantee or to provide security for any of its or a third party’s obligations) if (i) the recipient of the payment or performance knew, at the time of the payment or performance, that a request for bankruptcy had been filed, or (ii) the performance of the obligation was the result of a consultation between the debtor and the payee with a view to give preference to the latter over the debtor’s other creditors.

Transfers of the Notes are restricted, which may adversely affect the value of the Notes. The Notes have not been and will not be registered under the U.S. Securities Act, any U.S. state securities laws or under any other country’s securities laws. You may not offer the Notes in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws, or pursuant

35 to an effective registration statement. The Notes and the Indenture contain provisions that restrict the Notes from being offered, sold or otherwise transferred except pursuant to the exemptions available pursuant to Rule 144A and Regulation S, or other exemptions, under the U.S. Securities Act. You may transfer or resell the Notes in the United States only in a transaction registered under or exempt from the registration requirements of U.S. and applicable state securities laws. Therefore, you may be required to bear the risk of your investment for an indefinite period of time. It is your obligation to ensure that your offers and sales of the Notes within the United States and other countries comply with applicable securities laws. See ‘‘Transfer Restrictions.’’

You may be unable to sell your Notes if a trading market for the Notes does not develop. The Issuer cannot assure you as to the development or liquidity of any market for the Notes, your ability to sell your notes, or the prices at which you would be able to sell your Notes. The Initial Purchasers have advised the Company that they may make a market in the Notes. However, they are not obligated to do so and may discontinue any market making at any time at their sole discretion and without notice. In addition, the liquidity of the trading market in the Notes, and the market price quoted for the Notes, may be adversely affected by changes in the overall market for similar yield securities, interest rates and the Company’s financial condition, performance or prospects or in the prospects for companies in the Company’s industry generally as well as recommendations of securities analysts. The liquidity of, and trading market for, the Notes may also be hurt by general declines in the market for similar securities. Such a decline may adversely affect any liquidity and trading of the Notes independent of the Company’s financial performance and prospects. As a result, an active trading market for the Notes may not develop or be maintained. Although an application has been made to list the Notes on the Official List of the Irish Stock Exchange and to admit the Notes for trading on the Global Exchange Market of the Irish Stock Exchange, the Issuer cannot provide an assurance that the Notes will become or remain listed. Although no assurance is made as to the liquidity of the Notes as a result of listing on the Irish Stock Exchange, failure to gain approval for the for listing of the Notes or the delisting of the Notes from the Irish Stock Exchange may have a material effect on a holder’s ability to resell Notes in the secondary markets.

You may have difficulty enforcing your rights against the Issuer and its directors and executive officers. The Issuer is a public limited liability company (naamloze vennootschap) incorporated under the laws of the Netherlands. All or substantially all of the Issuer’s directors and officers and certain other persons named in this Offering Memorandum reside outside the United States, and all or a significant portion of the assets of the directors and officers and such other persons, and substantially all of the Issuer’s and the Company’s assets, are located outside the United States. As a result, it may not be possible for you to effect service of process within the United States upon the Issuer, the Company or any of the aforesaid persons with respect to matters arising under the U.S. federal securities laws or to enforce against the Issuer, the Company or any such persons judgments obtained in U.S. courts, including judgments predicated upon civil liability under U.S. federal securities laws. In addition, it is doubtful whether a Dutch court would accept jurisdiction and impose civil liability in an original action commenced in the Netherlands and predicated solely upon U.S. federal securities laws. No assurance can be given that judgments obtained in a U.S. court, whether or not predicated solely upon U.S. federal securities laws, will be enforceable in the Netherlands or elsewhere. See also ‘‘Enforceability of Civil Liabilities.’’ A shareholder of a company incorporated under the laws of the Netherlands cannot sue individual members of the board of such company derivatively; that is, in the name of and for the benefit of the relevant company. Moreover, under Dutch law, the duties owed by members of a company’s board are owed primarily to the relevant company, not to the shareholders. This may limit the rights of the shareholders of a Dutch company to sue members of such company’s board. Dutch law does not specifically provide for class action suits, such as a suit by one shareholder for his benefit and the benefit of others similarly situated against a company or the members of the board of such company.

36 The Issuer may not be able to repurchase the Notes upon a change of control. Upon the occurrence of a change of control, the Issuer will be required to offer to repurchase all of the Notes in cash in an amount equal to 101 per cent of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase. See ‘‘Description of the Notes — Repurchase at the Option of Holders Upon a Change of Control.’’ The Company may not have sufficient funds at the time of any such event to make the required repurchases. The source of funds for any repurchase required as a result of any such event will be available cash or cash generated from operating activities or other sources, including borrowings, sales of assets, sales of equity or funds provided by subsidiaries. Sufficient funds may not be available at the time of any such events to make any required repurchases of the Notes tendered.

The Notes will initially be held in book-entry form, and therefore you must rely on the procedures of the relevant clearing systems to exercise any rights and remedies. The Notes will initially only be issued in global certificated form and held through Euroclear and Clearstream. Interests in the Global Notes will trade in book-entry form only, and Notes in definitive registered form, or definitive registered Notes, will be issued in exchange for book-entry interests only in very limited circumstances. Owners of book-entry interests will not be considered owners or holders of Notes. The common depositary, or its nominee, for Euroclear and Clearstream will be the sole registered holder of the Global Notes representing the Notes. Payments of principal, interest and other amounts owing on or in respect of the Global Notes representing the Notes will be made to Deutsche Bank AG, London Branch as Paying Agent, which will make payments to Euroclear and Clearstream. Thereafter, these payments will be credited to participants’ accounts that hold book-entry interests in the Global Notes representing the Notes and credited by such participants to indirect participants. After payment to the common depositary for Euroclear and Clearstream, the Company will have no responsibility or liability for the payment of interest, principal or other amounts to the owners of book-entry interests. Accordingly, if you own a book-entry interest, you must rely on the procedures of Euroclear and Clearstream, and if you are not a participant in Euroclear and Clearstream, on the procedures of the participant through which you own your interest, to exercise any rights and obligations of a holder of the Notes under the Indenture. Unlike the holders of the Notes themselves, owners of book-entry interests will not have the direct right to act upon the Company’s solicitations for consents, requests for waivers or other actions from holders of the Notes. Instead, if you own a book-entry interest, you will be permitted to act only to the extent you have received appropriate proxies to do so from Euroclear and Clearstream. The procedures implemented for the granting of such proxies may not be sufficient to enable you to vote on a timely basis. Similarly, upon the occurrence of an event of default under the Indenture, unless and until definitive registered Notes are issued in respect of all book-entry interests, if you own a book-entry interest, you will be restricted to acting through Euroclear and Clearstream. The procedures to be implemented through Euroclear and Clearstream may not be adequate to ensure the timely exercise of rights under the Notes. See ‘‘Book-Entry Settlement and Clearance.’’

The Company does not present separate financial statements for each of its subsidiaries. The Company has not presented in this Offering Memorandum separate financial statements for each subsidiary, and is not required to do so in the future under the Indenture.

37 USE OF PROCEEDS The gross proceeds of the sale of the Notes will be EUR 275 million, assuming that the Notes are issued at a price equal to 100% of the principal amount thereof. The Issuer intends to use the net proceeds of the Offering to fund the redemption of all of the Issuer’s 2015 Notes, the redemption premium and accrued and unpaid interest to (but not including) the date of redemption, and to use any remaining net proceeds for general corporate purposes. The expected estimated sources and uses of the funds with respect to the Refinancing, including the Notes offered hereby, are shown in the table below. Actual amounts will vary from estimated amounts depending on several factors, including differences from our estimates of fees and expenses and the actual issue date.

(EUR millions) Sources of Funds Notes offered hereby(1) ...... 275 Total sources ...... 275 Uses of Funds Redemption of the 2015 Notes(2) ...... 258 General corporate purposes ...... 12.5 Fees and expenses(3) ...... 4.5 Total uses ...... 275

(1) Consists of the aggregate principal amount of the gross proceeds of the Notes offered hereby. (2) The Issuer issued EUR 300 million principal amount of 7.375 per cent Senior Notes due 2015 on 18 May 2007. On 30 September 2009, the Issuer accepted tenders for and purchased EUR 32.4 million in aggregate principal amount of 2015 Notes and retired such purchased debt. In October 2011, the Issuer purchased EUR 10 million in aggregate principal amount. As a result, the outstanding principal amount of 2015 Notes was reduced to EUR 257.6 million. The 2015 Notes require a minimum of 30 days’ prior notice of redemption. The Issuer intends to provide such notice on the closing date of the Offering. The redemption of 2015 Notes will be effected at a redemption price of 101.844 per cent of par, plus accrued and unpaid interest through to (but not including) the date of redemption. (3) Represents estimated fees and expenses associated with the Refinancing, including underwriting and professional fees, transaction costs, redemption premium and accrued and unpaid interest with respect to the 2015 Notes through to (but not including the date of redemption). See footnote 2 for a description of the redemption price.

38 CAPITALISATION The following table sets out the cash, cash equivalents and capitalisation of the Company on a consolidated basis as of 30 September 2012, and on an as adjusted basis to give effect to the Refinancing, including the redemption in full of the approximately EUR 258 million outstanding principal amount of the 2015 Notes, as if these events had occurred on 30 September 2012. The information provided on an actual basis was extracted from the Issuer’s unaudited condensed consolidated interim financial statements for the nine months period ended as of 30 September 2012. This table should be read in conjunction with the ‘‘Use of Proceeds,’’ ‘‘Operating and Financial Review and Prospects,’’ ‘‘Description of Certain Other Indebtedness’’ and ‘‘Description of the Notes’’ sections included elsewhere in the Offering Memorandum.

As of 30 September 2012 Actual Adjusted for the (EUR millions) Consolidated(1) Refinancing(1)(2) Cash and cash equivalents(3) ...... 443 456 2018 Notes ...... 500 500 Notes offered hereby(4) ...... 0 275 2015 Notes(5) ...... 258 0 2018 Notes ...... 500 500 ECA Facility ...... 85 85 Other debt(6) ...... 100 100 Total debt ...... 943 960 Total shareholders’ equity ...... 812 812 Total capitalisation ...... 1,755 1,772

(1) Debt amounts are stated in nominal values. (2) Assumes: (i) issuance of EUR 275 million in aggregate principal amount of the Notes, (ii) payment of the redemption price for the 2015 Notes including redemption premium and accrued interest, and (iii) payment of fees and expenses in connection with the Refinancing, estimated to be EUR 4.5 million. See footnote (5) for a description of the redemption price. (3) Cash and cash equivalents excludes restricted deposits of EUR 17 million as at 30 September 2012 in connection with the Group’s obligations under Czech law to maintain cash reserves for reclamation costs and potential liability for damages to properties owned by third parties. (4) The Notes have been reflected in the table at their aggregate principal amount. (5) The outstanding principal amount of 7.375 per cent 2015 Notes is EUR 257.6 million. The redemption of the 2015 Notes will be effected at a redemption price of 101.844 per cent of par, plus accrued and unpaid interest through to (but excluding) the date of redemption, which amount is expected to be approximately EUR 268 million. (6) Other debt refers to the Revolving Credit Facility. Since 30 September 2012, there has been no material change to the Company capitalisation, cash and cash equivalents, except for the repayment of all amounts outstanding under the Revolving Credit Facility in the amount of EUR100 million on 15 November 2012.

39 SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA The selected historical financial data for the Issuer set forth below as of and for the years ended 31 December, 2009, 2010 and 2011 were derived from the audited consolidated financial statements and the notes thereto of the Issuer, prepared in accordance with IFRS as adopted by the E.U. and incorporated by reference in this Offering Memorandum.. The consolidated financial statements including the notes thereto of the Issuer have been audited by KPMG as indicated in their independent auditors’ report incorporated by reference in this Offering Memorandum for and as of the years ended 31 December, 2009, 2010 and 2011. The selected historical financial data for the Issuer set forth below as of and for the nine months period ended 30 September, 2011 and 2012 were derived from the unaudited condensed consolidated interim financial statements. The selected historical consolidated financial data should be read in conjunction with the section ‘‘Operating and Financial Review and Prospects’’ and with the Issuer’s financial statements and the related notes thereto incorporated by reference in this Offering Memorandum.

Nine months period ended 30 September Year ended 31 December (EUR million) 2012 2011 2011 2010(1) 2009(1) Income Statement Revenues ...... 1,013 1,241 1,633 1,590 1,117 Changes in inventories of finished goods and work in progress ...... 71 42 38 (35) 19 Consumption of material and energy ...... (284) (308) (413) (373) (292) Service expenses ...... (275) (290) (394) (342) (294) Personnel expenses(2) ...... (273) (289) (380) (361) (351) Depreciation and amortisation ...... (130) (132) (176) (170) (172) Net gain from material sold ...... 6 5 8 5 4 Gain/(loss) from sale of property, plant and equipment ...... — (1) (2) 1 4 Other operating income ...... 3 2 4 5 4 Other operating expenses ...... (30) (30) (36) (25) (28) Subtotal (operating income) ...... 102 239 282 295 10 Financial income ...... 33 17 32 36 49 Financial expenses ...... (63) (87) (121) (150) (117) Profit on disposal of energy business ...... — — — 72 — Profit/(loss) from continuing operations before tax ...... 73 169 192 252 (58) Income tax expense ...... (20) (45) (57) (31) (6) Profit/(loss) after tax from continuing operations ...... 53 125 135 221 (64) Balance Sheet Data (at period end) Cash and cash equivalents(3) ...... 443 445 537 529 548 Total assets ...... 2,378 2,290 2,376 2,258 2,216 Total debt(4) ...... 924 846 928 850 1,034 Equity ...... 812 802 756 809 560 Other Financial Data EBITDA(5) ...... 232 373 459 464 179 Capital expenditure ...... 165 156 194 221 250 Ratios Total debt/EBITDA(4)(5) ...... 3.98 2.27 2.02 1.83 5.78 Net debt/EBITDA(6)(5) ...... 2.07 1.07 0.85 0.69 2.72 EBITDA/Net interest(5)(7) ...... 5.17 8.96 8.44 7.72 3.65

Notes: (1) Excludes results of operations from electricity trading business for 2010 and 2009, which are presented as discontinued operations in the 2010 Consolidated Financials and the 2009 Consolidated Financials. (2) Personnel expenses including employee benefits and share-based payment expenses. (3) Cash and cash equivalents excludes restricted cash of EUR 17 million as at 30 September 2012 deposited in an escrow account in connection with the Group’s obligations under Czech law to maintain cash reserves for reclamation costs and potential liability for damages to properties owned by third parties. (4) Total debt includes bonds, long-term interest bearing loans and borrowings, including current portion, plus short-term interest bearing loans and borrowings. Total debt is based on gross amount of debt less related expenses. Interest bearing loans, bond issues and borrowings are measured at amortised cost.

40 (5) EBITDA is defined as profit after tax from continuing operations adjusted for income tax, net financial expenses, depreciation and amortisation and gains/losses from sale of PPE. While the amounts included in EBITDA have been extracted from the historical financial statements, it is not a financial measure calculated in accordance with IFRS and, accordingly, should not be considered as an alternative to net income or operating income as an indicator of performance, or as an alternative to operating cash flows as a measure of the Group’s liquidity. The Group currently uses EBITDA in its business operations to, among other things, evaluate the performance of its operations, develop budgets and measure its performance against those budgets. The Group finds it a useful tool to assist in evaluating performance because it excludes interest, taxes and other principal non-cash charges. In addition, the Group believes that EBITDA is a measure commonly used by investors. EBITDA, as presented in this document, may not be comparable to similarly titled measures reported by other companies due to differences in the way these measures are calculated. EBITDA used in this document is not the same as the definition of Adjusted EBITDA used in the 2015 Notes Indenture, the 2018 Notes Indenture or the Indenture governing the Notes. Set forth below is a reconciliation of EBITDA to profit after tax from continuing operations. (6) Net debt represents total debt, as defined above, less cash and cash equivalents. It is not an IFRS measure. (7) Net interest expense means the aggregate amount of financial expense classified as interest expense under IFRS accrued for a period less any financial income classified as interest income under IFRS accrued in respect of that period including interest on any cash and cash equivalent investments for the period. The additional information in the following table headed ‘‘Additional data’’ is extracted from the Company’s financial and operating records, but the information is not determined in accordance with IFRS.

Additional data(2)

Nine months period ended Year ended 30 September 31 December 2012 2011 2011 2010 2009 External coal and coke operating data Sales volume (kt) Coking coal ...... 3,835 3,541 4,797 5,599 5,451 Thermal coal ...... 3,373 4,472 5,849 5,113 4,610 Coke ...... 432 430 555 1,100 705 Average sales prices per tonne (EUR) Coking coal ...... 131 181 177 138 86 Thermal coal ...... 73 66 67 60 72 Coke ...... 299 370 365 275 149

Calculation of EBITDA

Nine months period ended Year ended 30 September 31 December (EUR million) 2012 2011 2011 2010 2009 Profit/(loss) after tax from continuing operations ...... 53 125 135 221 (64) Income tax ...... 20 45 57 31 6 Net financial expense(1) ...... 29 70 89 42 68 Depreciation and amortisation ...... 130 132 176 170 173 (Gain)/loss from sale of PPE ...... — 1 2 — (4) EBITDA ...... 232 373 459 464 179

Note: (1) Net financial expense generally includes realised and unrealised foreign exchange gains and losses, interest income and interest expense, profit or loss on revaluation of derivative instruments, gain on disposal of investments in subsidiaries, bank fees and other minor items classified as financial income or expense.

(2) As of 1 January 2012, the Company began classifying PCI coking coal as coking coal in line with industry practice, while before 1 January 2012 PCI coking coal was treated as thermal coal. To provide comparable numbers, 2011, 2010 and 2009 periods were adjusted for the effect of this reclassification.

41 OPERATING AND FINANCIAL REVIEW AND PROSPECTS The following is a discussion and analysis of the Company’s results of operations and financial condition based on the Issuer’s audited consolidated financial statements as of and for the years ended 31 December 2009, 2010, and 2011, in each case prepared in accordance with IFRS, and the unaudited condensed consolidated interim financial statements as of and for the nine months period ended 30 September 2011 and 2012. You should read this section together with the Issuer’s audited consolidated financial statements as of and for the years ended 31 December, 2009, 2010 and 2011 and the unaudited condensed consolidated interim financial statements as of and for the nine months period ended 30 September 2011 and 2012, including the notes thereto, as well as the other financial information incorporated by reference in this Offering Memorandum. See ‘‘Presentation of financial information’’ for an explanation of the financial information included in this ‘‘Operating and Financial Review and Prospects.’’ A summary of the critical accounting policies that have been applied to these financial statements is set out below under the caption ‘‘— Critical accounting policies.’’ Some of the information contained in this discussion, including information with respect to the Company’s plans and strategies for its business, contain forward-looking statements that involve risks and uncertainties. You should read ‘‘Cautionary Note Regarding Forward-Looking Statements’’ for a discussion of the risks related to those statements. You should also read ‘‘Risk Factors’’ for a discussion of certain factors that may affect the Company’s business, financial condition and results of its operations. There has been no material adverse change in the prospects of the Issuer since the date of its last published audited consolidated financial statements (for the year ended 31 December 2011).

General Overview The Issuer, through its subsidiary OKD, is the Czech Republic’s only hard coal mining company and is a leading producer of hard coal in Central Europe (in each case, on the basis of revenues and volume of coal produced), serving customers in the Czech Republic, Slovakia, Austria, Poland, Hungary and Germany, among others. It is one of the largest industrial groups in the Czech Republic and the largest Czech natural resources company in terms of revenue and employees. For the nine months period ended 30 September 2012, the Company employed an average of 14,084 workers and utilised an average of 3,697 workers employed by contractors, making it one of the largest private employers in the country. The Company’s revenue from continuing operations for the year ended 31 December 2011 was EUR 1,633 million. For the nine months period ended 30 September 2012, the Company generated revenues of EUR 1,013 million. The Company operates four mines and four coking batteries in the Czech Republic and serves several large Central European steel and energy producers. Its key customers are ArcelorMittal Steel, U.S. Steel, Dalkia, Moravia Steel, voestalpine Stahl and CEZ.ˇ The vast majority of coal sales are based on long-term framework agreements, which are typically re-priced on a quarterly or annual basis. The Company’s hard coal mining business is conducted through OKD, a wholly-owned subsidiary of the Issuer. OKD produces coking coal, which is used in steel production, and thermal coal, which is used in power generation. For the year ended 31 December 2011, coking coal accounted for 45 per cent of the tonnage of coal sold to third parties by OKD and thermal coal accounted for the remaining 55 per cent. For the nine months period ended 30 September 2012, coking coal accounted for 53 per cent of the tonnage of coal sold to third parties and thermal coal accounted for the remaining 47 per cent. The Company’s largest business in terms of revenue is the production of coking coal, which generated EUR 848 million of revenues in the year ended 31 December 2011. External thermal coal revenues were EUR 389 million and external coke revenues were EUR 202 million in the year ended 31 December 2011. For the nine months period ended 30 September 2012, external coking coal revenues were EUR 504 million, external thermal coal revenues were EUR 245 million and external coke revenues were EUR 129 million. The Company also generates revenue from the sale of coke by-products and the sale of coalbed methane to Green Gas DPB, a.s. (‘DPB’). Prior to the sale of the Company’s energy

42 business to Dalkia in June 2010, as described in ‘‘Disposition of Energy Business’’ below, the Company generated revenue from its electricity trading operations. The electricity trading operations are classified as discontinued operations in the 2010 Consolidated Financials and 2009 Consolidated Financials.

Effects of Acquisitions, Restructuring and Disposals Reincorporation On 30 March 2011, New World Resources Plc (‘NWR Plc’) was incorporated as part of a corporate reorganisation pursuant to which it became the new UK-incorporated holding company for the business previously held by NWR NV. NWR Plc became the new holding company of NWR NV on 6 May 2011. At that date NWR Plc held approximately 97.0% of the A shares of NWR NV and 100% of its B shares. Subsequent closings reduced the number of shares of NWR NV that were not held by the Company to approximately 0.2%, representing a non-controlling interest in NWR NV as at 30 September 2012. On 9 October 2012, NWR Plc completed the process of a compulsory squeeze-out and became the sole shareholder of NWR NV on 9 October 2012. Following completion, NWR NV shares were delisted from the Warsaw Stock Exchange on 19 October 2012, and are no longer listed on any stock exchange. The reincorporation did not lead to a change in control and did not result in any changes to the day-to-day operations of the Group.

Disposition of Energy Business On 21 June 2010, the Issuer completed the sale of the energy business of the Company to Dalkia. The energy business of the Company was represented by the entities NWR Energy, NWR Energetyka PL Sp. z o.o. (‘NWR Energetyka’) and CZECH-KARBON in the 2010 Consolidated Financials and the 2009 Consolidated Financials. The assets and liabilities of these entities are classified as held for sale in the 2009 Consolidated Financials. Part of the energy business that historically has been represented in the results of the electricity trading segment is presented as discontinued operations in the 2010 Consolidated Financials and the 2009 Consolidated Financials. The discontinued operations only include the results of the operations of CZECH-KARBON and the electricity trading operations of NWR Energetyka and do not include the operations of NWR Energy, since those operations were not part of the electricity trading segment in the period before the Board’s resolution on 24 June 2009 approving the sale of the energy business of the Company.

Currency Reporting The financial information in this discussion is presented in EUR, which is the presentation currency of the Company. The functional currency of the Issuer is EUR. The functional currency of Karbonia is the Polish zloty (PLN). The functional currency of the remaining consolidated companies is the Czech koruna (CZK). The following table presents the foreign exchange rates used for all presented periods:

Nine months period ended Year ended 30 September 31 December 2012 2011 2011 2010 2009 (CZK/EUR) Average exchange rate(1)(2) ...... 25.143 24.362 24.590 25.284 26.435 Balance sheet date exchange rate(1) ...... 25.141 24.754 25.787 25.061 26.473

Notes: (1) Rates published by the European Central Bank. (2) For the period up to the date of the financial report.

43 Throughout the discussion of the operating results, the financial results and performance compared to the prior period, both in absolute and percentage terms, are expressed in euro. The Company may also, where deemed relevant, present variances in terms of constant foreign exchange rates, marked ‘ex-FX’, which exclude the estimated effect of currency translation differences and are non-IFRS financial measures. The financial information could differ considerably if the financial information was presented in CZK.

Segments and Divisions The Group’s business is organised into three segments (the Coal, Coke and Real Estate Division (‘RED’) segments) for which financial and other performance measures are separately available and regularly evaluated by the chief operating decision maker (‘CODM’). The CODM is the Board of Directors. These operational segments were identified based on the nature, performance and financial effects of key business activities of the Group. The Group is furthermore organised into two divisions: the Mining Division (‘MD’) and the Real Estate Division. The Company had A Shares and B Shares outstanding for the presented periods. The A Shares and B Shares are tracking stocks, which are designed to reflect the financial performance and economic value of the MD and RED, respectively. Due to the public listing of the Company’s A shares, the Group provides divisional reporting showing separately the performance of the MD and RED. The main rights, obligations and relations between the RED and MD are covered by the Divisional Policy Statement (‘DPS’). The divisional reporting, as such, is essential for the evaluation of the equity attributable to the listed part of the Group. As the operating segments form part of the divisions and in order to provide understandable and useful information, the Company decided to combine the segment and divisional disclosure in one table, with the Coal and Coke segments within the Mining Division and the RED segment within Real Estate Division. Reporting with respect to the Company’s corporate function is reflected in the Other information under the Mining Division.

Real Estate Division and Mining Division Effective 31 December 2007, the Company was divided into the Mining Division and the Real Estate Division to provide better transparency to the mining and real estate assets. The two divisions were determined by differences in their assets and products and services produced and provided. The Mining Division engages in coal extraction, production of coke and related operations and businesses. The Real Estate Division provides inter-divisional services only by providing use of its real estate to the Mining Division. The Real Estate Division is comprised of the shares and corresponding investments in Rekultivace and Gara´ze,ˇ all of the assets and liabilities in IMGE, a former internal business unit of OKD, and all of the real estate assets owned by the Company at the time of the establishment of the divisions (the ‘Real Estate Assets’). IMGE was formerly an internal business unit of OKD specialising in land reclamation work, attributed with all real estate of OKD that was not being used for its mining and related operations. On 30 September 2008, the first distribution of assets of the Real Estate Division to RPGI, at that time the sole holder of the B Shares, was effected. The assets included the shares and corresponding investments in RPG Rekultivace, a.s. (‘RPG Rekultivace’) (the sole shareholder in Rekultivace), RPG Gara´ze,ˇ a.s. (‘RPG Gara´ze’)ˇ (the sole shareholder in Gara´ze),ˇ all of the assets and liabilities of IMGE (spun-off for the purpose of the distribution to special purpose entities named Dukla Industrial Zone, a.s. (‘Dukla Industrial Zone’) and RPG RE Property, a.s.) and certain promissory notes received for the sale of Real Estate Assets. To ensure fair treatment of all shareholders, the Issuer adopted the Divisional Policy Statements, approved by RPGI, which was, at the time, its controlling shareholder. The fundamental and overriding principles are that the Mining Division has the right to maintain: • the undisturbed continuation of its mining, coking and related operations that are currently, or which are expected by the Board to be in the future, conducted using certain of the Real Estate Assets; and • unrestricted access to the Real Estate Assets in connection with such mining, coking and related operations.

44 Based on these principles the Mining Division is provided with unrestricted access to all Real Estate Assets necessary for its mining, coking and related operations until these operations cease to exist. The Real Estate Assets include two groups of assets — buildings, constructions and similar real estate assets (the ‘Buildings’) and land.

Disclosure on Buildings The Real Estate Division provides the Buildings to the Mining Division based on the fundamental principles provided by the Divisional Policy Statements. Management considers such access to the Buildings to be a leasing arrangement between the Real Estate Division and the Mining Division because it has the following characteristics: • the lease term is for the major part of the economic life of the asset; and • the leased assets are of such a specialised nature that only the lessee can use them without major modifications. The Buildings are recorded at the carrying amount in the balance sheet of the Mining Division. Commencing 1 January 2008, the Mining Division depreciates the Buildings. The deferred tax assets, liabilities and their impacts on the financial result of the Company related to the Real Estate Assets are divided between the divisions correspondingly to the allocation of the assets. The Company did not revalue the Real Estate Assets for the purpose of presentation in the segment reporting. The assets are presented in the segment reporting at book values. These values also represent the basis for depreciation. Under IFRS finance lease assets shall be valued at the present value of minimum lease payments, which would also be the basis for depreciation under standard finance lease conditions. The Real Estate Division does not charge lease payments to the Mining Division for the access to the Real Estate Assets. Therefore, the Company decided to apply the book values for the allocation of the Real Estate Assets value between the divisions. When the Mining Division no longer requires access to the Real Estate Assets, the overriding principles will no longer apply and the Real Estate Assets currently reflected on the balance sheet of the Mining Division will be reflected on the balance sheet of the Real Estate Division rather than the Mining Division. Since the respective Buildings meet the criteria mentioned above, they will generally be fully depreciated at the moment when mining, coking and related operations cease in the future. Therefore, the transfer should include only fully depreciated assets with a zero book value. IAS 16 assumes some residual value of assets, which should be equal to their estimated market value at the end of their useful life. However, the Company is unable to make a reliable estimate of such residual value due to the character of the assets. The Divisional Policy Statements determined in 2008 that the annual fee paid for Real Estate Assets used by the Mining Division would be EUR 3.6 million per year (the ‘Cap’). The annual fee paid by the Mining Division to the Real Estate Division represents the financing costs on the Buildings provided. The Cap is accounted for as financial expense in the Mining Division and as financial revenue in the Real Estate Division. The Cap for 2009 amounted to EUR 3.8 million after it was adjusted for the disposal of OKD, BASTRO, a.s. (‘OKD, Bastro’) in 2008 and for the inflation index of 2008 in accordance with the Divisional Policy Statements. The Cap for 2010 amounted to EUR 3.8 million after it was adjusted according to the Divisional Policy Statements. The Cap for 2011 amounted to EUR 3.6 million after it was adjusted according to the Divisional Policy Statements and to reflect the sale of the energy business, and the Cap for 2012 amounts to EUR 3.7 million. There is no consideration required from the Mining Division to repay the present value of the Buildings provided in compliance with the Divisional Policy Statements. Therefore, the respective amount, or the book value, of the Buildings provided to the Mining Division as at 31 December 2011 and 30 September 2012 is presented in the equity of the Mining Division.

Disclosures on Land Land is provided to the Mining Division without any consideration. Management has determined that the segment analysis should present this as a right to use land granted by the Real Estate Division to the Mining Division. The right is amortised over the expected lifetime of mining, coking and related businesses using a linear amortisation method. Management determined the

45 value of the right as being the book value of the land at 31 December 2007, the date when the divisions were established. Deferred revenue corresponding to the amount of the right to use land is presented in the balance sheet of the Real Estate Division. The deferred revenue will be released as revenue over the period corresponding to the amortisation of the right to use the land. The revenues and expenses of the Real Estate Division consisted, until 30 September 2008, mainly of the financial performance of the IMGE internal business unit of OKD and Rekultivace, which were allocated to the Real Estate Division on 30 September 2008. The financial income of the Real Estate Division also includes the fee that the Real Estate Division charges to the Mining Division for the use of the real estate provided according to the Divisional Policy Statements. The expenses include depreciation, income taxes, a part of the costs relating to the spin-off and distribution of the assets of the Real Estate Division and other expenses related to the assets allocated to the Real Estate Division. As at 30 September 2012, the Real Estate Division owned land with a book value of EUR 17 million, which was used by the Mining Division. The right to use this land was recorded as an asset by the Mining Division with a book value of EUR 13 million as at 30 September 2012. The book value of the Buildings used by the Mining Division at 30 September 2012 was EUR 215 million. The Real Estate Division also owned land and buildings not used for mining activities having a book value of EUR 2 million. The Real Estate Division recorded on its balance sheet total assets of EUR 28 million and total liabilities of EUR 14 million. The assets of the Real Estate Division held for the benefit of the holders of the NWR NV B Shares are operated separately from the assets of the Mining Division but remain part of and owned by the Company.

Electricity Trading In 2008, because the Company’s electricity trading activities saw robust growth in sales volume, the management of the Company decided to present and follow the financial performance of the electricity trading business separately. In June 2009, the Board approved the intention to dispose of the energy business. Therefore, the electricity trading segment is classified and presented as discontinued operations in the 2010 Consolidated Financials and the 2009 Consolidated Financials.

Description of Key Components of the Company’s Income Statement Revenue Sources The Company derives revenues from continuing operations primarily from the sale of coking coal, thermal coal and coke.

Principal Costs and Expenses The most significant expenses of the Company are the consumption of material and energy, service expenses (including contract workers) and personnel expenses.

Consumption of Material and Energy The consumption of material and energy is a significant cost, representing 30 per cent of total operating expenses for the year ended 31 December 2011 (29 per cent for the nine months period ended 30 September 2012). It consists of four main items: consumption of material for mining operations (e.g. steel and wood supports), consumption of spare parts for mining machines, consumption of external purchase coal for coking operations and consumption of energy.

Service Expenses Service expenses comprise the cost of contractors and of consulting, professional, transportation, maintenance and other services and represented 28 per cent of total operating expenses for the year ended 31 December 2011 (28 per cent for the nine months period ended 30 September 2012). Nearly 100 per cent of transportation service expenses are pass-through costs invoiced directly to the Company’s clients (and included in the Company’s revenue). Professional service expenses are those costs associated with the services of attorneys, consultants and other professionals.

46 Personnel Expenses Personnel expenses comprise wages and salaries, social insurance costs, social security and other payroll costs for the Company’s own employees and represented 27 per cent of total operating expenses for the year ended 31 December 2011 (28 per cent for the nine months period ended 30 September 2012). As discussed above, personnel expenses exclude the costs of workers employed by contractors, which are included in service expenses.

Employee Benefits The Company’s net obligation in respect of long-term service benefits is the amount of benefits that are payable more than 12 months after the balance sheet date and that employees have earned in return for their services in the current and prior periods. Employee benefits are presented as part of personnel expenses in the income statement of the Company. The Company’s employee benefit scheme covers the statutory requirements applicable to the mining industry and other benefits arranged with the labour union in the collective bargaining agreements. All benefits are unfunded. Most of them are paid annually and are calculated based on length of service, level of exposure to health hazards and disability. Others are payable upon severance. Post-employment and long-term benefits are adjusted annually according to (i) a discount rate derived from the linear approximation of the yield curve of Czech government bonds, (ii) the estimated wage increase per year, (iii) Czech official mortality models, and (iv) the applicable statutory retirement age.

Other Operating Expenses Other operating expenses principally include compensation for mining damages, property taxes and government fees and net loss on sale of receivables.

Operating Income The income statement of the Company contains a line item captioned Sub Total or Operating Income. The Company considers this line item in the financial statements to be the operating income of the Company. It includes all operating costs and revenues but does not reflect financial revenues or expenses or the effects of disposal of subsidiaries and taxes.

Non-IFRS Measures The Group defines EBITDA as net profit after tax from continuing operations before non-controlling interest, income tax, net financial costs, depreciation and amortisation, impairment of property, plant and equipment (‘PPE’) and gains/losses from sale of PPE, in each case, relating to continuing operations. While the amounts included in EBITDA are extracted from the Company’s 9M 2012 Interim Consolidated Financials, 2011 Consolidated Financials, 2010 Consolidated Financials and 2009 Consolidated Financials, it is not a financial measure determined in accordance with IFRS. Accordingly, EBITDA should not be considered as an alternative to net income or operating income as an indication of the Company’s performance or as an alternative to cash flows as a measure of the Company’s liquidity. The Company currently uses EBITDA in its business operations to, among other things, evaluate the performance of its operations, develop budgets and measure its performance against those budgets. The Company considers EBITDA a useful tool to assist in evaluating performance because it excludes interest, taxes and other non-cash charges. As such, the Group believes that EBITDA is a useful indicator of its ability to incur and service its indebtedness and can assist certain investors, security analysts and other interested parties in evaluating the Group. The 2010 Consolidated Financials and the 2009 Consolidated Financial Statements show the results from electricity trading as profit from discontinued operations. To present comparable figures with previously published financial information, the Company presents Total EBITDA, which is defined as the total of EBITDA from continuing operations and EBITDA from discontinued operations. The Company defines net debt as total debt less cash and cash equivalents. Total debt includes issued bonds, long-term interest bearing loans and borrowings, including current portion, plus short-term interest bearing loans and borrowings. Total debt is based on the gross amount of

47 debt less related expenses. Interest bearing loans, bond issues, and borrowings are measured at this amortised cost.

Certain Factors Affecting Results of Operations Certain factors relating to the Company’s business and industry, as well as the political, economic and legal environment in Central Europe, affect the Company’s results of operations. Such factors include, among others, the demand for coal, the price of coal, changes in coal and coke production capacity of competitors, the cost of labour and the level of production of the Company’s mines.

Coal Prices and the Demand for Coal The most significant factor affecting the results of operations of the Company is the price of coal and coke. Prices of coal and coke are the outcome of a primarily regional supply and demand balance, which is driven by the level of macroeconomic and industrial activity, most notably steel production. Coal and coke prices in the region are also influenced by international prices and quarterly international benchmark price agreements. Due to its landlocked nature, the Czech Republic and neighbouring Central European countries represent a largely localised market for coal. The only significant regional coal producers capable of shipping into the Czech market at competitive prices are mines in Poland, where there is significant domestic coal demand. As a result, historically there have been limited imports of coal into the Czech Republic, with the majority of imports from Poland. Driven by its low wages, skilled labour force, stabilising economic and political environment and proximity to established and other emerging markets, Central Europe has historically attracted significant private sector investment in industrial production and manufacturing capacity. The global economic recession which began in 2008 caused a decrease in demand for coking coal and coke as a result of a decrease in the consumption of steel and steel products in Central Europe, resulting in a decline in the prices of coking coal and coke. The improved economic environment in the Company’s markets during 2010 and 2011 led to higher coking coal and coke prices and sales volumes. Economic slowdown and market uncertainty influenced the Company’s business in the first nine months of 2012 by way of lower prices of coking coal and coke. Energy demand was less susceptible to the global recession, and thermal coal demand and prices were therefore relatively unaffected. Changes in thermal coal prices are due to, among other things, fluctuations in the supply of domestic and foreign coal, the demand for electricity, and the price and availability of alternative fuels for electricity generation. The Company’s increasing thermal coal sales volumes and the recovery of prices during 2011 and the first nine months of 2012 despite the challenging macro environment reflect the stability of this particular market. The table below summarises coal and coke external sales volumes and prices for the periods presented. For further information regarding recent trends in coal prices, see ‘‘Selected Historical Consolidated Financial Data’’.

Nine months period ended Year ended 30 September 31 December 2012 2011 2011 2010 2009 External coal and coke operating data Sales volume (kt) Coking coal ...... 3,835 3,541 4,797 5,599 5,451 Thermal coal ...... 3,373 4,472 5,849 5,113 4,610 Coke ...... 432 430 555 1,100 705 Average sales prices per tonne (EUR) Coking coal ...... 131 181 177 138 86 Thermal coal ...... 73 66 67 60 72 Coke ...... 299 370 365 275 149

48 Production Capacity Regional coal and coke production capacity is largely determined by Polish coal and coke capacity. If the regional coal mining industry were to expand significantly, it would have an impact on the supply and demand balance, most likely putting downward pressure on coal and coke prices. At the moment there is a regional shortage of premium high quality coking coal, evidenced by the relatively expensive coal imports into the region. We do not expect this situation to change in the short term. Poland became a net importer of coal in 2008. This position remained unchanged in 2009, 2010 and 2011 and is unlikely to change in the short term. Coke capacity in the region is generally static. Due to the global recession, significant coke capacity in the region was permanently taken off line. Most of the coke produced in the region is produced using refurbished post-WWII coking batteries that are nearing the end of their productive lives. In light of the expectation that the steel industry will return to normal utilisation levels in the medium term, the coke market may tighten. The Company’s four existing coal mines are expected to produce a stable output for the foreseeable future. Future long-term capacity increases are expected to come from development projects such as D˛ebiensko´ and Morcinek, although these projects will not be operational in the short to medium term. The current market conditions are such that the Issuer does not expect them to be disrupted by the additional production that may come on-line from projects such as those mentioned above. In an effort to centralise its coking operations, the Company shutdown the Jan Svermaˇ coking plant. As a result, the Company’s coking capacity decreased from approximately 1.0Mt in 2010 to approximately 0.8Mt in 2011. This decrease in coke capacity did not have a major impact on the supply and demand for coke in the region. The coke capacity at Svoboda is more flexible in terms of switching between blast furnace coke and foundry coke and should therefore make it easier for the Company to sell its coke when market preferences change.

Product Mix The Company’s results of operations are affected by the mix of coking coal, thermal coal and coke it sells. In particular, coke attracts higher prices and generates a higher gross margin than coking coal, and coking coal attracts higher prices and generates a higher gross margin than thermal coal. The mix of the coal products that the Company sells in any given period is influenced by a number of factors, including geological conditions and operational factors.

Cost of Labour An increase in the Company’s production costs could have an adverse effect on its profitability. Although the Company has experienced recent reductions in its labour costs, the wage levels of the Company’s employees are likely to increase as a result of the continued integration of the Czech Republic and Poland into the EEA. The Company has maintained good relationships with its trade unions, evidenced by the recent successful negotiations with unions over wages. However, as the economy improves, the Company expects wages for employees and contractors to increase, though further improvement of the Company’s efficiency should further reduce labour costs even if wages increase.

Cost Trends The Company reacted rapidly to challenging market conditions by implementing numerous cost saving measures in order to mitigate the significant revenue decrease in the year ended 31 December 2009. These measures included a reduction in overall headcount by 11 per cent in 2009 as compared to 2008. This was accompanied by a reduction in average wages, leading to a 20 per cent reduction in personnel costs, excluding employee benefits. Additionally, a decrease in production and other cost cutting initiatives led to a 21 per cent decrease in consumption of materials and energy and a 16 per cent reduction in service expenses. All cost categories saw a reduction in 2009, except for the consumption of energy for coal mining, which increased by 16 per cent due to higher electricity prices. The significant reductions in costs in 2009 were partially offset by increases in costs in respect of the year ended 31 December 2010 as described below. The Company’s operating costs increased during the year ended 31 December 2010 compared to 2009, mainly due to higher production and input costs, especially for coke production,

49 as well as intensified underground works in the Company’s mining operations. Consumption of material and energy increased by 28 per cent mainly due to higher mining material consumption and higher prices and higher volumes of consumed Polish and U.S. coal used for coking operations. Service expenses increased by 16 per cent, driven by higher costs for contractors, and personnel costs increased by 3 per cent in the year ended 31 December 2010 compared to 2009. In the difficult macroeconomic environment of 2011, the Company delivered one of its strongest financial performances underpinned by a disciplined approach to cost control and continuing focus on the fundamentals of the business. The Company’s total revenues for 2011 increased by 3 per cent year on year to EUR 1,633 million, mainly as a result of increased revenues from both thermal and, to a lesser extent, coking coal. Due to the Company’s stringent cost control, unit costs of EUR 82 per tonne for the coal segment and EUR 60 per tonne for the coke segment were broadly on target, despite rising input cost inflation during the year. Consumption of material and energy increased by 11 per cent mainly due to higher mining material consumption and higher prices, and higher volumes of consumed Polish and U.S. coal used for coking operations. Service expenses increased by 15 per cent, driven by higher costs for contractors and maintenance costs, and personnel costs increased by 5 per cent in the year ended 31 December 2011 compared to 2010. Results for the nine months period ended 30 September 2012 have been influenced by strict cost control as a reaction to the challenging market environment and to lower sales volumes and prices. Mining unit costs and coke conversion costs are below budget and flat year-on-year, respectively. Consumption of material and energy decreased by 8 per cent mainly due to lower prices of externally purchased coking coals as well as lower consumed volumes. Service expenses decreased by 5 per cent, driven by lower advisory expenses, as well as by a decrease in maintenance and lower costs for contractors. Personnel expenses decreased by 6 per cent mainly as a result of headcount decreases and lower accrual for bonuses and other allowances.

Mining unit costs and coke conversion costs Mining unit costs and coke conversion costs are measures commonly used in the industry the Company operates in. These are not IFRS measures and as there is no uniform definition, the comparison with other companies in the industry may not result in relevant and reliable information. The Company defines mining unit costs as total operating costs incurred in mining both coking coal and thermal coal divided by total volume of coal produced. It includes consumption of material and energy, services, personnel and other operating expenses. It does not include depreciation and amortisation, and transportation costs re-invoiced to the customers. Production data and mining unit costs for the periods indicated is summarised in the table below:

Nine months period ended Year ended 30 September 31 December 2012 2011 2011 2010 2009 Mining unit costs (EUR per tonne) ...... 79 81 82 71 66 Coal production (kt) ...... 8,608 8,641 11,247 11,443 11,001 The Company defines coke conversion costs as total operating costs incurred in converting coking coal into coke divided by total volume of coke produced. It includes consumption of material and energy, services, personnel and other operating expenses. It does not include cost of coking coal charge, depreciation and amortisation, and transport costs re-invoiced to the customers. Production data and coke conversion costs for the periods indicated is summarised in the table below:

Nine months period ended Year ended 30 September 31 December 2012 2011 2011 2010 2009 Coke conversion costs (EUR per tonne) ...... 64 62 60 70 84 Coke production (kt) ...... 525 584 770 1,006 843

50 Results of Operations Nine months period ended 30 September 2012 versus nine months period ended 30 September 2011 Basis of Presentation The following discussion is based on and should be read together with the unaudited condensed consolidated interim financial statement as of and for the nine months period ended 30 September 2012 incorporated by reference in this Offering Memorandum. See also ‘‘Effects of Acquisitions, Restructuring and Disposals’’ for changes in the Company and their impact on comparability of financial information for different periods.

Revenues The table below sets forth revenues for the nine months period ended 30 September 2012 compared to the same period in 2011.

Nine month period ended 30 September Change per cent per cent (EUR thousand) 2012 of total 2011 of total y-y per cent ex-FX Revenues External coking coal sales (EXW) ...... 504,238 50 642,443 52 (138,205) (22) (20) External thermal coal sales (EXW) ...... 245,490 24 293,481 24 (47,991) (16) (15) External coke sales (EXW) . . . 128,900 13 159,001 13 (30,101) (19) (19) Coal and coke transport .... 97,146 9 98,771 8 (1,625) (2) — Sale of coal and coke by- products ...... 27,883 3 27,280 2 603 2 5 Other revenues ...... 9,337 1 19,918 1 (10,581) (53) (52) Total ...... 1,012,994 100 1,240,894 100 (227,900) (18) (17) Revenues of the Company for the nine months period ended period 30 September 2012 decreased by 18% to EUR 1,013 million from EUR 1,241 million for the same period in 2011. The decrease in total revenues mainly reflects lower revenues from sales of both coking and thermal coal as well as coke. The decrease in coking coal and coke revenues is attributable mainly to lower realised prices (see table below), in line with lower prices for steel-making materials globally, as well as in our region, partly offset by higher coking coal sales volumes. The decrease in thermal coal revenues is attributable to a decrease in sales volumes due to reduced demand, partly offset by higher realised prices. The decrease in other revenues is attributable to the negative impact of derivatives used to hedge the currency risk relating to sales denominated in currencies other than CZK.

Nine month period ended 30 September Change (EUR) 2012 2011 y-y per cent Average sales prices per tonne (EXW) Coking coal ...... 131 181 (50) (28) Thermal coal ...... 73 66 7 11 Coke ...... 299 370 (71) (19)

51 The following table reflects coal production and sales for the nine months period ended 30 September 2012 compared to the same period in 2011:

Nine months period ended 30 September Change (kt) 2012 2011 y-y per cent Coal performance indicators Coal production ...... 8,608 8,641 (33) — Sales to OKK ...... (395) (417) 22 (5) Internal consumption ...... — (15) 15 — Coal production available for sale ...... 8,213 8,209 4 — Sales from inventory/(Inventory build-up) ...... (1,005) (196) (809) — Total net sales ...... 7,208 8,013 (805) (10) Coking coal ...... 3,835 3,541 294 8 Thermal coal ...... 3,373 4,472 (1,099) (25) Total production of coal in the nine months period ended 30 September 2012 remained almost flat compared to production volume in the same period of 2011. Coal volumes sold to third parties were lower by 10 per cent as a result of lower thermal coal sales in the nine months period ended 30 September 2012, which were partly offset by higher coking coal sales. Consequently, coal inventories increased by 1,005kt in the nine months period ended 30 September 2012 compared to an increase of 196kt in the same period in 2011. The following table reflects coke production and sales for the nine months period ended 30 September 2012 compared to the same period in 2011:

Nine months period ended 30 September Change (kt) 2012 2011 y-y per cent Coke performance indicators Coke production ...... 525 584 (59) (10) Internal consumption ...... (62) (78) 16 (21) Sales from inventory/(Inventory build-up) ...... (31) (76) 45 — Coke sales ...... 432 430 2 — Coke production decreased by 10 per cent in the nine months period ended 30 September 2012 compared to the same period in 2011, with coke sales almost flat year-on-year. Coke inventories increased by 31kt in nine months period ended 30 September 2012 compared to an increase of 76kt in the same period in 2011. The table below sets forth revenue percentages by geographic area for thermal coal, coking coal and coke for the nine months period ended 30 September 2012 and 2011.

Nine months period ended 30 September Thermal Coking Coal Coal Coke 2012 2011 2012 2011 2012 2011 Per cent of revenues Czech Republic ...... 51 46 28 32 21 19 Austria ...... 29 20 19 17 4 9 Slovakia ...... — 1 29 29 3 3 Poland ...... 16 26 14 17 2 5 Germany ...... — 1 — — 51 51 Hungary ...... — 1 8 3 — — Other ...... 4 5 2 2 19 13 Total ...... 100 100 100 100 100 100

52 Operating Expenses Total operating expenses including depreciation and amortisation, net of other operating income and gain/loss from sale of material and property, plant and equipment, decreased from EUR 1,044 million to EUR 982 million, a decrease of EUR 62 million or 3 per cent ex-FX in the nine months period ended 30 September 2012 compared to the same period in 2011. The decrease was mainly attributable to a decrease in advisory costs and personnel and contractors’ costs.

Consumption of Material and Energy The following table reflects the consumption of material and energy for the nine months period ended 30 September 2012 compared to the same period in 2011

Nine months period ended 30 September Change per cent per cent (EUR thousand) 2012 of total 2011 of total y-y per cent ex-FX Consumption of material and energy Mining material ...... 106,391 37 110,151 36 (3,760) (3) (1) Spare parts ...... 38,808 14 43,684 14 (4,876) (11) (9) External coal consumption for coking ...... 39,879 14 56,292 18 (16,413) (29) (28) Energy for coal mining ...... 79,231 28 78,575 26 656 1 4 Energy for coking ...... 5,396 2 6,035 2 (639) (11) (8) Other consumption of material and energy ...... 14,525 5 13,239 4 1,286 10 13 Total ...... 284,230 100 307,976 100 (23,746) (8) (5) The costs associated with the consumption of externally purchased coal for the need of the coking operations decreased due to lower prices of coking coal and lower consumed volumes. Consumption of material and energy, excluding external coal consumption, remained flat on an ex-FX basis. The decrease in the consumption of mining material and spare parts is mainly due to decrease in development works, to some extent offset by higher costs per longwall due to more demanding geological conditions of mining at greater depth.

Service Expenses The following table reflects service expenses for the nine months period ended 30 September 2012 compared to the same period in 2011:

Nine months period ended 30 September Change per cent per cent (EUR thousand) 2012 of total 2011 of total y-y per cent ex-FX Service expenses Transport costs ...... 101,889 37 100,976 35 913 1 2 Contractors ...... 72,173 26 76,477 26 (4,304) (6) (3) Maintenance ...... 33,597 12 38,254 13 (4,657) (12) (10) Sidings and stock movements .... 23,164 9 22,469 8 695 3 6 Advisory expenses incl. audit .... 5,291 2 12,391 4 (7,100) (57) (56) Other service expenses ...... 38,465 14 39,908 14 (1,443) (4) (1) Total ...... 274,579 100 290,475 100 (15,896) (5) (3) The reduction in advisory expenses is attributable to one-off expenses incurred during the nine months period ended 30 September 2011 related to the reincorporation process. The decrease in maintenance costs is attributable to lower planned maintenance works year-on-year. The decrease in contractors’ costs is the result of a 4 per cent decrease in the number of shifts, partly offset by a 2 per cent increase in unit costs per shift ex-FX. Contractors headcount decreased by 2 per cent

53 from an average of 3,754 for the nine months period ended 30 September 2011 to 3,697 for the same period in 2012.

Personnel Expenses The following table reflects personnel expenses for the nine months period ended 30 September 2012 compared to the same period in 2011:

Nine months period ended 30 September Change (EUR thousand) 2012 2011 y-y per cent ex-FX Personnel expenses Personnel expenses ...... 268,774 284,001 (15,227) (5) (2) Share-based payments ...... 3,536 5,330 (1,794) (34) (32) Employee benefit provision ...... 382 (719) 1,101 — — Total ...... 272,692 288,612 (15,920) (6) (3) Total personnel expenses decreased by 3 per cent compared to nine months period ended 30 September 2011 ex-FX, mainly as a result of a 1 per cent headcount decrease, and lower accrual for bonuses and other allowances. The following table represents the average number of employees in the nine months period ended 30 September 2012 compared to the same period in 2011:

Nine months period ended 30 September Change 2012 2011 y-y per cent Employees headcount (average) ...... 14,084 14,276 (192) (1) — of which Coal segment ...... 13,330 13,514 (184) (1) — of which Coke segment ...... 732 740 (8) (1) Contractors headcount (average) ...... 3,697 3,754 (57) (2) Total headcount (average) ...... 17,781 18,030 (249) (1) In the nine months period ended 30 September 2012, the average number of employees including contractors decreased by 1 per cent compared to the same period in 2011.

Other Operating Income and Expenses

Nine months period ended 30 September Change (EUR thousand) 2012 2011 y-y per cent ex-FX Other operating income ...... (2,933) (1,679) (1,254) 75 80 Other operating expenses ...... 30,031 30,497 (466) (2) 1 Net other operating expense ...... 27,098 28,818 (1,720) (6) (3) Other operating income and expenses is composed of insurance costs, donations, various taxes and fees, provisions for mining damages and indemnity and their release and other expenses. Since the amounts within the other operating income are relatively low, they are sensitive to one-time effects and seasonal fluctuations.

Depreciation and amortisation

Nine months period ended 30 September Change (EUR thousand) 2012 2011 y-y per cent ex-FX Depreciation and amortisation ...... 129,972 132,273 (2,301) (2) 1

54 As the functional currency of the main operating subsidiaries OKD and OKK is CZK, most of the depreciation cost is recorded in this currency. Depreciation increased by 1 per cent ex-FX in the nine months period ended 30 September 2012 compared to the same period in 2011.

Financial Income and Expense The following table reflects financial revenue and expense for the nine months period ended 30 September 2012 compared to the same period in 2011:

Nine months period ended 30 September Change (EUR thousand) 2012 2011 y-y per cent Financial income ...... (33,450) (17,191) (16,259) 95 Financial expense ...... 62,781 86,976 (24,195) (28) Net financial expense ...... 29,331 69,785 (40,454) (58) The decrease in net financial expense of 58 per cent in the nine months period ended 30 September 2012 compared to the same period in 2011 is mainly attributable to a decrease in net foreign exchange loss of EUR 17.8 million, and to an increase of EUR 26.0 million in net profit on revaluation of derivatives for which hedge accounting is not applied.

Profit before Tax Profit before tax in the nine months period ended 30 September 2012 was EUR 72.8 million, a decrease of EUR 96.4 million compared to a profit of EUR 169.2 million for the same period in 2011. The factors affecting profit are discussed above.

Income Tax The Company recorded a net income tax expense of EUR 20.1 million in nine months period ended 30 September 2012, compared to a net income tax expense of EUR 44.6 million in the nine months period ended September 2011. The effective tax rate was 28 per cent in this period for 2012 compared to 26 per cent in the same period in 2011.

Profit for the Period Profit in the nine month period ended 30 September 2012 was EUR 52.7 million, which represents a decrease of EUR 72.0 million compared to the profit of EUR 124.7 million for the same period of 2011.

EBITDA The following table compares EBITDA for the nine months period ended 30 September 2012 compared to the same period in 2011:

Nine months period ended 30 September Change (EUR thousand) 2012 2011 y-y per cent ex-FX EBITDA ...... 232,078 372,631 (140,553) (38) (39) The Company’s EBITDA for the nine months period ended 30 September 2012 decreased by 38 per cent compared to the same period in 2011, mainly as a result of lower revenues from both coking and thermal coal as well as from coke.

55 As EBITDA is a non-IFRS measure, the following table provides a reconciliation of EBITDA to IFRS line items of the income statement.

Nine months period ended 30 September (EUR thousand) 2012 2011 Net profit after tax ...... 52,700 124,667 Income tax ...... 20,134 44,576 Net financial expenses ...... 29,331 69,785 Depreciation and amortisation ...... 129,972 132,273 (Gain)/loss from sale of PPE ...... (59) 1,330 EBITDA ...... 232,078 372,631

Year ended 31 December 2011 versus year ended 31 December 2010 Basis of Presentation The following discussion is based on and should be read together with the 2011 Consolidated Financials incorporated by reference in this Offering Memorandum. Results of operations for the electricity trading business are reported as discontinued operations for the comparative period. See also ‘‘Effects of Acquisitions, Restructuring and Disposals’’ for changes in the Company and their impact on comparability of financial information for different periods.

Revenues The table below sets forth revenues for the years ended 31 December 2011 and 2010.

Year ended 31 December per cent per cent Change (EUR thousand) 2011 of total 2010 of total y-y per cent ex-FX Revenues External coking coal sales (EXW) ...... 847,698 52 772,477 49 75,221 10 8 External thermal coal sales (EXW) ...... 389,490 24 309,229 19 80,261 26 25 External coke sales (EXW) ...... 202,419 12 302,689 19 (100,270) (33) (33) Coal and coke transport . 132,278 8 124,054 8 8,224 7 5 Sale of coal and coke by-products ...... 37,157 2 35,291 2 1,866 5 3 Other revenues ...... 23,688 2 46,250 3 (22,562) (49) (50) Total ...... 1,632,730 100 1,589,990 100 42,740 3 1 The Company increased its revenues by 3 per cent to EUR 1,633 million in the year ended 31 December 2011 compared to 2010. The increase in total revenues mainly reflected higher revenues from sales of both coking coal and thermal coal. The increase in coking coal revenues was attributable to higher realised prices, partly offset by lower sales volumes, while the increase in thermal coal revenues was attributable to both an increase in sales volumes as well as higher realised prices. The decrease in coke revenues reflected a decrease in coke sales volumes by 50 per cent due to weaker market conditions, which was only partly offset by higher prices. The decrease in other revenues was attributable to the EUR 19 million electricity distribution revenues in 2010. The energy business was sold on 21 June 2010 and, as a result, there were no corresponding electricity distribution revenues for the Issuer in 2011.

56 Year ended 31 December Change (EUR) 2011 2010 y-y per cent Average sales prices per tonne (EXW) Coking coal ...... 177 138 39 28 Thermal coal ...... 67 60 7 12 Coke ...... 365 275 90 33 The following table reflects coal production and sales for the years ended 31 December 2011 and 2010.

Year ended 31 December Change (kt) 2011 2010 y-y per cent Coal performance indicators Coal production ...... 11,247 11,443 (196) (2) Sales to OKK ...... (550) (780) 230 (29) Sales to NWR Energy, a.s...... — (23) 23 — Internal consumption ...... (3) (8) 5 63 Coal production available for sale ...... 10,694 10,632 62 1 Sales from inventory/(Inventory build-up) ...... (48) 80 (128) — Total net sales ...... 10,646 10,712 (66) (1) Coking coal ...... 4,797 5,599 (802) (14) Thermal coal ...... 5,849 5,113 736 14 Total production of coal in the year ended 31 December 2011 decreased by 2 per cent compared to production volume in 2010. Volumes of coal sold to third parties decreased by 1 per cent resulting in an increase of inventories by 48kt in the year ended 31 December 2011 compared to a decrease of inventories by 80kt in 2010. The following table reflects coke production and sales for the years ended 31 December 2011 and 2010.

Year ended 31 December Change (kt) 2011 2010 y-y per cent Coke performance indicators Coke production ...... 770 1,006 (236) (23) Internal consumption ...... (103) (74) (29) 39 Sales from inventory/(Inventory build-up) ...... (112) 168 (280) — Coke sales ...... 555 1,100 (545) (50) Coke production decreased by 23 per cent in the year ended 31 December 2011 compared to the same period in 2010, principally caused by the centralisation of all coke production to the Svoboda coking plant. The closure of the Jan Svermaˇ coking plant led to an overall reduction in the Company’s annual coke production capacity, which is now approximately 800 kt. Coke inventories increased by 112 kt in the year ended 31 December 2011 due to deteriorating demand for coke in the second half of the year compared to a decrease of inventories by 168 kt in the same period of 2010.

57 The table below sets forth revenue percentages by geographic area for thermal coal, coking coal and coke for the years ended 31 December 2011 and 2010.

Year ended 31 December Thermal Coking Coal Coal Coke 2011 2010 2011 2010 2011 2010 Per cent of Revenues Czech Republic ...... 51 54 31 26 18 26 Slovakia ...... 1 1 28 30 3 6 Austria ...... 20 20 17 18 8 21 Poland ...... 21 20 17 18 5 9 Germany ...... 1 1 — — 52 33 Hungary ...... 1257—— Other ...... 5 2 2 1 14 5 Total ...... 100 100 100 100 100 100

Operating Expenses Total operating expenses increased from EUR 1,271 million to EUR 1,399 million or by 10 per cent for the year ended 31 December 2011 compared to the same period in 2010. This was attributable mainly to the increase in mine development and the planned maintenance of mining equipment, resulting in higher mining material, spare parts and maintenance costs, as well as increases in basic wages by 4 per cent (in CZK terms) as agreed with the trade unions resulting in higher personnel expenses. Additionally, contractors’ headcount and unit costs per shift increased, resulting in higher cost for contractors, as well as prices of externally purchased coal and electricity, resulting in higher cost of external coal used for the Company’s own coke production and higher energy costs for coal mining. Lastly, an increase in advisory expenses associated with the Redomiciliation and a tax provision relating to an on-going tax audit initiated by the tax authorities in 2011 influenced the Company’s operating expenses for the year ended 31 December 2011.

Consumption of Material and Energy The following table reflects the consumption of material and energy for the years ended 31 December 2011 and 2010:

Year ended 31 December per cent per cent Change (EUR thousand) 2011 of total 2010 of total y-y per cent ex-FX Consumption of material and energy Mining material ...... 148,018 36 129,823 35 18,195 14 11 Spare parts ...... 58,591 14 49,613 13 8,978 18 15 External coal consumption for coking ...... 74,160 18 64,275 17 9,885 15 14 Energy for coal mining ...... 104,918 25 94,824 25 10,094 11 8 Energy for coking ...... 8,012 2 13,587 4 (5,575) (41) (43) Other consumption of material and energy ...... 19,274 5 21,031 6 (1,757) (8) (11) Total ...... 412,973 100 373,153 100 39,820 11 8 The increase in the cost of mining material and spare parts results from higher input costs due to more demanding geological conditions which the Company faces as it Company mines at greater depths and uses higher grades of steel for reinforcement underground. The costs for consumption of externally purchased coal for coking operations increased due to higher prices of coal, partly offset by a decrease in consumed volumes. In the year ended 31 December 2011, the cost of energy consumption for coal mining increased by 11 per cent mainly due to an increase in the price of electricity and distribution in the

58 Czech Republic. The cost of energy for coking decreased by 41 per cent as a result of lower consumption of electricity and heat, following the closure of the Jan Svermaˇ coking plant and reduced production volumes of coke.

Service Expenses The following table reflects service expenses for the years ended 31 December 2011 and 2010:

Year ended 31 December per cent per cent Change (EUR thousand) 2011 of total 2010 of total y-y per cent ex-FX Service expenses Transport costs ...... 135,589 34 127,630 37 7,959 6 5 Contractors ...... 102,751 26 86,394 25 16,357 19 16 Maintenance ...... 50,119 13 39,860 12 10,259 26 23 Sidings and stock movements . 30,399 8 25,410 7 4,989 20 16 Advisory expenses incl. audit . . 20,866 5 9,393 3 11,473 122 119 Other service expenses ...... 53,851 14 53,156 16 695 1 (1) Total ...... 393,575 100 341,843 100 51,732 15 13 Service expenses increased by 15 per cent for the year ended 31 December 2011 compared to 2010, as set forth in the table below. The increase in contractors’ costs is the result of a 6 per cent increase in unit costs per shift, ex-FX, combined with a 9 per cent increase in the number of shifts worked and an 11 per cent increase in contractors’ headcount, from an average of 3,407 for the year ended 31 December 2010 to 3,778 for the year ended 31 December 2011. Advisory expenses include one-off costs and fees associated with the Redomiciliation in the amount of EUR 5.6 million and a EUR 4.6 million tax provision relating to an on-going tax audit initiated by the tax authorities in 2011. The increase in maintenance cost is mainly attributable to scheduled maintenance of roadways and mining equipment.

Personnel Expenses The following table reflects personnel expenses for the years ended 31 December 2011 and 2010:

Year ended 31 December Change (EUR thousand) 2011 2010 y-y per cent ex-FX Personnel expenses Personnel expenses ...... 378,797 354,715 24,082 7 4 Share-based payments ...... 6,746 12,486 (5,740) (46) (46) Employee benefit provision ...... (5,537) (6,084) 547 (9) (11) Total ...... 380,006 361,117 18,889 5 2 Total personnel expenses increased by 2 per cent compared to the year ended 31 December 2010 ex-FX, mainly as a result of a 4 per cent increase in basic wages per employee at OKD in CZK terms as agreed with the trade unions and higher accrual for bonuses and allowances when compared to the year ended 31 December 2010, partly offset by a headcount decrease of 6 per cent and decrease in cost for share-based payments. In addition, the 2011 as well the 2010 personnel expenses were positively affected by the change in the employee benefit provision.

59 The following table reflects the average number of employees for the years ended 31 December 2011 and 2010:

Year ended 31 December Change 2011 2010 y-y per cent Employees headcount (average) ...... 14,266 15,146 (880) (6) — of which Coal segment ...... 13,506 13,891 (385) (3) — of which Coke segment ...... 738 1,037 (299) (29) Contractors headcount (average) ...... 3,778 3,407 371 11 Total headcount (average) ...... 18,044 18,553 (509) (3) For the year ended 31 December 2011, the average number of employees decreased by 6 per cent compared to the average number of employees in the same period of 2010. This decrease, however, was partly offset by the increase in contractors’ headcount, which led to a decrease in the total headcount (including employees and contractors) of 3 per cent. The total number of workers decreased as a result of higher productivity at the mines, the closure of the Jan Svermaˇ coking plant at the end of 2010 as well as the energy business disposal in June 2010.

Other Operating Income and Expenses The following table reflects other operating income and expenses for the years ended 31 December 2011 and 2010:

Year ended 31 December Change (EUR thousand) 2011 2010 y-y per cent ex-FX Other operating income ...... (4,065) (5,062) 997 (20) (22) Other operating expenses ...... 36,090 24,985 11,105 44 41 Net other operating expense ...... 32,025 19,923 12,102 61 57 Other operating income and expenses is composed of insurance costs and payments, provisions for mining damages and indemnity and their release and other fees. Since the amounts within the other operating income are relatively low, they are sensitive to one-time effects and seasonal fluctuations. Other operating expenses increased in the year ended 31 December 2011 mainly due to a higher provision for mining damages, reflecting expected increases in mine development works and higher donation contributions compared to the same period in 2010.

Depreciation and amortisation The following table reflects depreciation and amortisation for the years ended 31 December 2011 and 2010.

Year ended 31 December Change (EUR thousand) 2011 2010 y-y per cent ex-FX Depreciation and amortisation ...... 176,389 170,348 6,041 4 1 As the functional currency of the main operating subsidiaries OKD and OKK is CZK, most of the depreciation cost is recorded in this currency. Excluding the impact of changes in the exchange rate, depreciation increased by 1 per cent in the year ended 31 December 2011 compared to 2010. The increase was mainly due to higher depreciation charges on new mining equipment, in particular the POP 2010 mining equipment, and higher depreciation charges at OKK due to the activation of the new coking battery No. 10.

60 Financial Income and Expense

Year ended 31 December Change (EUR thousand) 2011 2010 y-y per cent Financial income ...... 31,582 35,518 (3,936) (11) Financial expense ...... (120,677) (150,373) 29,696 (20) Net financial expense ...... (89,095) (114,855) 25,760 (22) The decrease in net financial expenses of 22 per cent for the year ended 31 December 2011 compared to 2010 is mainly attributable to a decrease in bank fees of EUR 12.7 million due to a one-off expense related to a bridge loan facility that was arranged in contemplation of the proposed acquisition of Bogdanka in 2010. The decrease in net financial expenses was also due to a decrease in other financial expenses of EUR 6.8 million mainly due to a one-off fee relating to the repayment of Senior Secured Facilities in the year ended 31 December 2010.

Profit from Continuing Operations before Tax Profit from continuing operations before tax for the year ended 31 December 2011 was EUR 192.4 million, a decrease of EUR 59.7 million compared to a profit of EUR 252.1 million in 2010. Apart from the factors discussed above, the decrease was due to a one-off profit from the disposal of the energy business (excluding electricity trading) of EUR 72.4 million in 2010.

Income Tax The Company recorded a net income tax expense of EUR 57.1 million in the year ended 31 December 2011, compared to a net income tax expense of EUR 30.8 million in 2010. The net expense in the previous period comprises an income tax expense of EUR 54.0 million offset by a one-off refund in the amount of EUR 23.2 million caused by the reversal of Czech tax authority’s position on certain interest expenses, which were previously deemed non tax-deductible. Higher income tax expense corresponds to the increase in profitability in OKD. The effective tax rate was 30 per cent for the year ended 31 December 2011 compared to 12 per cent in the same period in 2010. The 2010 rate benefited from both a tax refund mentioned above, and also the profit made on the disposal of the energy business being non-taxable.

Profit from Discontinued Operations Profit from discontinued operations, being the electricity trading business, was EUR 12.0 million for the period 1 January until 21 June 2010, when the energy business was sold and consists of electricity trading result of EUR 2.5 million and profit on energy business disposal of EUR 9.5 million.

Profit for the Period Profit for the year ended 31 December 2011 was EUR 135.3 million, which represents a decrease of EUR 98.0 million compared to the profit of EUR 233.3 million for the same period of 2010. Excluding the one-off profit on energy business disposal of EUR 82.0 million and the tax refund of EUR 23.2 million that influenced the profit in previous period, profit in 2011 would be EUR 7.2 million higher, representing an increase of 6 per cent.

EBITDA The following table compares EBITDA for the years ended 31 December 2011 and 2010.

Year ended 31 December Change (EUR thousand) 2011 2010 y-y per cent ex-FX EBITDA from continuing operations ...... 459,461 464,177 (4,716) (1) (0) EBITDA from discontinued operations ...... — 3,746 (3,746) — — Total EBITDA ...... 459,461 467,923 (8,462) (2) (1)

61 The Company’s EBITDA from continuing operations for the year ended 31 December 2011 was EUR 459.5 million, which was EUR 4.7 million lower than in the year ended 31 December 2010 and represented a decrease of 1 per cent between the years. As EBITDA is a non-IFRS measure, the following tables provide a reconciliation of EBITDA from continuing operations and EBITDA from discontinued operations to the nearest IFRS line item of the income statement.

Year ended 31 December (EUR thousand) 2011 2010 Net profit after tax from continuing operations ...... 135,294 221,269 Income tax ...... 57,147 30,811 Net financial expenses ...... 89,095 114,855 Depreciation and amortisation ...... 176,389 170,348 Profit on disposal of energy business ...... — (72,391) (Gain)/loss from sale of PPE ...... 1,536 (715) EBITDA from continuing operations ...... 459,461 464,177

Year ended 31 December (EUR thousand) 2011 2010(1) Net profit after tax from discontinuing operations ...... — 12,045 Income tax ...... — 473 Net financial expenses ...... — 810 Depreciation and amortisation ...... — — Profit on disposal of energy business — discontinued part ...... — (9,585) (Gain)/loss from sale of PPE ...... — 3 EBITDA from discontinued operations ...... — 3,746

Note: (1) Discontinued operations to 21 June 2010, the date on which the Company’s energy business was sold.

Year ended 31 December 2010 versus year ended 31 December 2009 Basis of Presentation The following discussion is based on and should be read together with the 2010 Consolidated Financials incorporated by reference in this Offering Memorandum. Results of operations for the electricity trading business are reported as discontinued operations for the relevant periods. See also ‘‘Effects of Acquisitions, Restructuring and Disposals’’ for changes in the Company and their impact on comparability of financial information for different periods.

62 Revenues The table below sets forth revenues for the year ended 31 December 2010 compared to 2009.

Year ended 31 December Change per cent per cent (EUR thousand) 2010 of total 2009 of total y-y per cent ex-FX Revenues External coking coal sales (EXW) ...... 772,477 49 469,753 42 302,724 64 60 External thermal coal sales (EXW) ...... 309,229 19 330,250 30 (21,021) (6) (8) External coke sales (EXW) . . . 302,689 19 105,092 9 197,597 188 185 Coal and coke transport ..... 124,054 8 114,413 10 9,641 8 6 Sale of coal and coke by- products ...... 35,291 2 37,349 4 (2,058) (6) (9) Other revenues ...... 46,250 3 59,981 5 (13,731) (23) (26) Total ...... 1,589,990 100 1,116,838 100 473,152 42 39 The Company increased its revenues by 42 per cent to EUR 1,590 million in the year ended 31 December 2010 compared to 2009. The increase mainly reflected an increase in revenues from coking coal and coke sales, which was attributable to an increase in volumes and prices of coking coal and coke sold to third parties. The increase was partly offset by a decrease in revenues from thermal coal attributable to a decrease in thermal coal prices due to the price in 2009 being positively affected by growing customer concerns about the ability of local supply to meet market demand. The increase in the Company’s revenues in 2010 was adversely impacted by changes in product mix, which included a lower proportion of coking coal mined and sold in the fourth quarter of 2010 due to certain factors, including delays in coal mining largely due to adverse geological conditions in some of the Company’s mines which in turn required the Company to increase purchases of coking coal from third parties to satisfy its coke production. As the energy business was sold on 21 June 2010, Other revenues for the year ended 31 December 2010 contained electricity distribution revenues up to the date of sale only, while Other revenues for 2009 contained electricity distribution revenues for the full year, resulting in a negative impact on revenues of EUR 12 million in 2010. The following table reflects the average sales price per tonne for the years ended 31 December 2011 and 2010.

Year ended 31 December Change (EUR) 2010 2009 y-y per cent Average sales prices per tonne (EXW) Coking coal ...... 138 86 52 60 Thermal coal ...... 60 72 (12) (17) Coke ...... 275 149 126 85

63 The following table reflects coal production and sales for the years ended 31 December 2010 and 2009.

Year ended 31 December Change (kt) 2010 2009 y-y per cent Coal performance indicators Coal production ...... 11,443 11,001 442 4 Sales to OKK ...... (780) (829) 49 6 Sales to NWR Energy, a.s...... (23) (49) 26 53 Internal consumption ...... (8) (11) 3 29 Coal production available for sale ...... 10,632 10,112 520 5 Sales from inventory/(Inventory build-up) ...... 80 (51) 131 — Total net sales ...... 10,712 10,061 651 6 Coking coal ...... 5,599 5,451 148 3 Thermal coal ...... 5,113 4,610 503 11 Total production of coal in the year ended 31 December 2010 increased by 4 per cent compared to production volume in 2009. Volumes of coal sold to third parties increased by 6 per cent resulting in a decrease of inventories by 80kt in the year ended 31 December 2010 compared to a build-up of 51kt in 2009. The following table reflects coke production and sales for the years ended 31 December 2010 and 2009.

Year ended 31 December Change (kt) 2010 2009 y-y per cent Coke performance indicators Coke production ...... 1,006 843 163 19 Internal consumption ...... (74) (53) (21) 39 Sales from inventory/(Inventory build-up) ...... 168 (85) 253 — Coke sales ...... 1,100 705 395 56 Coke production increased by 19 per cent in the year ended 31 December 2010, when compared to 2009, while coke sales increased by 56 per cent. Significant improvement in demand for coke in 2010 allowed for higher sales volumes and production resulting in a 169kt decrease in coke inventories, compared to a 85kt build-up of inventory in 2009. The table below sets forth revenue percentages by geographic area for thermal coal, coking coal and coke for the years ended 31 December 2010 and 2009.

Year ended 31 December Thermal Coking Coal Coal Coke 2010 2009 2010 2009 2010 2009 Per cent of Revenues Czech Republic ...... 54 51 26 24 26 27 Slovakia ...... 1 3 30 31 6 5 Poland ...... 20 6 18 15 9 3 Austria ...... 20 31 18 20 21 20 Germany ...... 1 8 — — 33 34 Hungary ...... 2176—1 Other ...... 2 — 1 4 5 10 Total ...... 100 100 100 100 100 100

Operating Expenses Total operating expenses increased from EUR 1,137 million to EUR 1,271 million or by 12 per cent for the year ended 31 December 2010 compared to the same period in 2009. This increase was attributable to increased coke production, leading to a EUR 46 million increase in consumption of externally purchased Polish and U.S. coal used in coking operations, and increased coal

64 production and development in OKD, resulting in a EUR 32 million increase in mining material consumption, a EUR 24 million increase in personnel expenses and a EUR 20 million increase in contractor cost.

Consumption of Material and Energy The following table sets out the Company’s costs for the consumption of material and energy for the years ended 31 December 2010 and 2009.

Year ended 31 December Change per cent per cent (EUR thousand) 2010 of total 2009 of total y-y per cent ex-FX Consumption of material and energy Mining material ...... 129,823 35 97,371 33 32,452 33 28 Spare parts ...... 49,613 13 38,967 13 10,646 27 23 External coal consumption for coking ...... 64,275 17 18,503 6 45,772 247 244 Energy for coal mining ...... 94,824 25 110,867 38 (16,043) (14) (18) Energy for coking ...... 13,587 4 14,291 5 (704) (5) (9) Other consumption of material and energy ...... 21,031 6 12,314 5 8,717 71 76 Total ...... 373,153 100 292,313 100 80,840 28 24 The Company relies on significant amounts of externally purchased Polish and U.S. coal for coking operations. Polish and U.S. coal consumption increased due to increased prices of coal in combination with higher consumed volumes of externally purchased Polish and U.S. coal needed to support increased coke production. The increase in Mining material expenses and Spare parts expenses resulted from an increase in the number of new longwalls to be equipped combined with higher costs per equipped longwall. These higher costs were mainly due to more demanding geological conditions and an increase in drivage (preparation activities for new longwall faces) of 1.3 per cent in meter terms over the year ended 31 December 2010. In the year ended 31 December 2010 the cost of energy consumption for coal mining decreased by 14 per cent mainly due to a decrease in price of electricity and distribution in the Czech Republic of 22 per cent in euro terms, which was partly offset by an increase in electricity consumption volumes by 4 per cent. In addition, the costs of compressed air decreased by 20 per cent in the year ended 31 December 2010 due to lower prices and lower consumption. The cost of energy for coking decreased by 5 per cent, mainly due to decreased electricity prices, which were partially offset by increased heating costs as a result of increased consumption of heat at the Company’s coking facilities (which represented 54 per cent of the Company’s energy costs for coking) in the year ended 31 December 2010.

Service Expenses Service expenses increased by 16 per cent for the year ended 31 December 2010 compared to 2009, as set forth in the table below.

Year ended 31 December Change per cent per cent (EUR thousand) 2010 of total 2009 of total y-y per cent ex-FX Service expenses Transport costs ...... 127,630 37 116,583 40 11,047 9 7 Contractors ...... 86,394 25 66,403 23 19,991 30 24 Maintenance ...... 39,860 12 30,897 10 8,963 29 24 Sidings and stock movements .... 25,410 7 24,387 8 1,023 4 0 Advisory expenses incl. audit ..... 9,393 3 8,546 3 847 10 8 Other service expenses ...... 53,156 16 46,755 16 6,401 14 9 Total ...... 341,843 100 293,571 100 48,272 16 13

65 The increase in Service expenses was mainly attributable to an increase in transport costs, which was a direct result of higher sales volumes. However, nearly 100 per cent of transportation costs were incurred in relation to the deliveries of coal and coke to customers and were then directly invoiced to these customers and included in revenue. As a result transportation costs were mostly a pass-through item and did not have a material impact on the Company’s earnings. The increase in maintenance costs was due to an increase in repairs in both the coal mining and coking operations. The increase in coal mining operations was partly due to a number of repairs of longwall equipment scheduled to take place during the year ended 31 December 2009 being postponed and instead being carried out in 2010. The increase in Contractors costs at OKD was the result of an 8 per cent increase of unit costs per shift ex-FX, combined with a 20 per cent increase in number of shifts worked. The increased number of shifts resulted in a 17 per cent increase the contractor headcount from an average of 2,906 for the year ended 31 December 2009 to 3,407 for the same period in 2010.

Year ended 31 December Change 2010 2009 y-y per cent Contractors headcount (average) ...... 3,407 2,906 501 17

Personnel Expenses The following table reflects personnel expenses, excluding employee benefits, for the years ended 31 December 2010 and 2009.

Year ended 31 December Change (EUR thousand) 2010 2009 y-y per cent ex-FX Personnel expenses Personnel expenses ...... 354,715 330,754 23,961 7 3 Share-based payments ...... 12,486 12,441 45 — — Employee benefit provision ...... (6,084) 7,877 (13,961) — — Total ...... 361,117 351,072 10,045 3 2 Personnel expenses excluding employee benefits increased by 7 per cent. The increase was due to a 12 per cent increase in average payroll expenses per employee at OKD in CZK, primarily resulting from higher holiday allowances and bonus payments in 2010, partly offset by a headcount decrease of 5 per cent. Personnel expenses also include the costs for share based payments to directors and employees in the amount of EUR 12.5 million and EUR 12.4 million for the year ended 31 December 2010 and 2009, respectively. The following table reflects the average number of employees for the years ended 31 December 2010 and 2009:

Year ended 31 December Change 2010 2009 y-y per cent Employees headcount (average) ...... 15,146 16,008 (862) (5) — of which Coal segment ...... 13,891 14,552 (385) (3) — of which Coke segment ...... 1,037 1,099 (299) (29) Contractors headcount (average) ...... 3,407 2,906 501 17 Total headcount (average) ...... 18,553 18,914 (361) (2) For the year ended 31 December 2010, the average number of employees decreased by 5 per cent compared to the average number of employees in 2009. The decrease in own employees headcount is partly offset by the increase in contractors headcount. The total number of workers decreased mainly due to higher productivity at mines and due to the shut-down of two coking batteries during 2010.

66 Other Operating Income and Expenses The following table reflects other operating income and expenses for the years ended 31 December 2010 and 2009.

Year ended 31 December Change (EUR thousand) 2010 2009 y-y per cent ex-FX Other operating income ...... (5,062) (3,514) (1,548) 44 38 Other operating expenses ...... 24,985 28,812 (3,827) (13) (16) Net other operating expense ...... 19,923 25,298 (5,375) (21) (24) Other operating income and expenses reflect insurance costs and payments, mining damage and indemnity, related provisions and their release and other fees. Since the amounts are relatively low, they are sensitive to one-time effects and seasonal fluctuations. Other operating income for the year ended 31 December 2010 also included a one-off EUR 2.3 million write-off of liabilities related to dividend and share price claims of former minority shareholders of OKD. Other operating expenses were lower in the year ended 31 December 2010 mainly due to lower charitable donations decreasing by EUR 4.3 million when compared to the same period in 2009.

Depreciation and amortisation The following table reflects depreciation and amortisation for the years ended 31 December 2010 and 2009.

Year ended 31 December Change (EUR thousand) 2010 2009 y-y per cent ex-FX Depreciation and amortisation ...... 170,348 172,849 (2,501) (1) (6) The majority of property, plant and equipment of the Company is located in the Czech Republic. Therefore most of the depreciation is recorded in CZK. Excluding the impact of changes in the exchange rate, depreciation decreased by 6 per cent. This decrease was a result of higher depreciation charges on new mining equipment, in particular the POP 2010 mining equipment, which was more than offset by a decrease of depreciation in coking operations due to the accelerated depreciation of two coking batteries during the year 2009.

Financial Income and Expense Net financial loss increased by 69 per cent for the year ended 31 December 2010 compared to 2009, as set forth in the table below.

Year ended 31 December Change (EUR thousand) 2010 2009 y-y per cent Financial income ...... 35,518 48,931 (13,413) (27) Financial expense ...... (150,373) (116,804) (33,569) 29 Net financial expense ...... (114,855) (67,873) (46,982) 69 Financial income decreased by 27 per cent to EUR 35.5 million for the year ended 31 December 2010. This decrease was mainly due to a decrease in realised and unrealised foreign exchange gains by EUR 13.4 million, which was partly offset by a decrease in realised and unrealised foreign exchange losses by EUR 4 million. Net loss on derivative instruments, which did not qualify for hedge accounting, increased by EUR 8.2 million. The increase in financial expenses was due to a one-off amortisation of expenses relating to the Senior Secured Facilities in the amount of EUR 5.7 million, due to interest expense on the 2018 Notes and due to one-off expenses related to an unrealised bridge loan facility in the amount of EUR 14.1 million relating to the attempted acquisition of Bogdanka.

67 Profit/(Loss) from Continuing Operations before Tax Profit from continuing operations before tax for the year ended 31 December 2010 was EUR 252 million, an increase of EUR 310 million compared to a loss of EUR 58 million in 2009. Apart from the factors discussed above, the increase was due to a one-off profit from the disposal of the energy business (excluding electricity trading) of EUR 72.4 million.

Income Tax The Company recorded a net income tax expense of EUR 31 million for the year ended 31 December 2010, compared to a net income tax expense in the amount of EUR 6 million in 2009. The net tax expense in the current period comprises an income tax expense of EUR 54 million offset by a one off tax reclaim in the amount of EUR 23.2 million caused by the reversal of the Czech tax authority’s position on certain interest expense which was previously deemed non tax-deductible.

Profit/(Loss) from Discontinued Operations Profit from discontinued operations, reflecting the results of the electricity trading business, increased from EUR 2 million in the year ended 31 December 2009 to EUR 12 million in the year ended 31 December 2010, largely as a result of a profit on the sale of the energy business relating to electricity trading in the amount of EUR 9.5 million.

Profit/(Loss) for the Period Profit for the year ended 31 December 2010 was EUR 233 million, which represented an increase of EUR 295 million compared to the loss of EUR 62 million in 2009.

EBITDA The following table compares EBITDA for the years ended 31 December 2010 and 2009.

Year ended 31 December Change (EUR thousand) 2010 2009 y-y per cent ex-FX EBITDA from continuing operations ...... 464,177 178,685 285,492 160 157 EBITDA from discontinued operations ...... 3,746 6,995 (3,249) (46) (49) Total EBITDA ...... 467,923 185,680 282,243 152 150 The Company’s EBITDA from continuing operations for the year ended 31 December 2010 was EUR 464.2 million, which was EUR 285.5 million higher than in the year ended 31 December 2009 and represented a 160 per cent increase. As EBITDA is a non-IFRS measure, the following tables provide a reconciliation of EBITDA from continuing operations and EBITDA from discontinued operations to the nearest IFRS line item of the income statement.

Year ended 31 December (EUR thousand) 2010 2009 Profit/(Loss) from continuing operations after tax ...... 221,269 (63,731) Income tax ...... 30,811 5,811 Net financial expense ...... 114,855 67,873 Depreciation and amortisation ...... 170,348 172,849 Profit on Sale of Energy Business ...... (72,391) — Gains from sale of PPE ...... (715) (4,117) EBITDA from continuing operations ...... 464,177 178,685

68 Year ended 31 December (EUR thousand) 2010(1) 2009 Profit/(Loss) from discontinued operations after tax ...... 12,045 2,135 Income tax ...... 473 1,555 Net financial expense ...... 810 3,300 Depreciation and amortisation ...... — 5 Profit on Sale of Energy Business — Discontinued Part ...... (9,585) — Gains from sale of PPE ...... 3 — EBITDA from discontinued operations ...... 3,746 6,995

Note: (1) Discontinued operations to 21 June 2010, the date on which the Company’s energy business was sold.

Liquidity and Capital Resources Liquidity The liquidity requirements of the Company arise primarily from working capital requirements, the need to fund capital expenditures and, on a selective basis, possible future acquisitions. The principal uses of cash are anticipated to fund planned operating expenditures, capital expenditures, which will include acquisitions of new mining equipment, interest payments on debt, including in connection with the 2018 Notes and the redemption of the 2015 Notes, and any other mandatory or discretionary principal payments of debt. The Company believes these requirements will be covered by cash flow from business operations of the Issuer’s subsidiaries or by borrowings under the Company’s debt. The Company’s debt obligations consist of mandatory interest and principal payments. As at 30 September 2012, the Company had cash and cash equivalents of EUR 443 million. The Company’s stated dividend policy is to pay dividends to A Shareholders, as applicable, amounting to 50 per cent of net income over the fiscal year. Cash and cash equivalents available to be distributed under the restricted payment build-up capacity in respect of the 2015 Notes Indenture and the 2018 Notes Indenture amounted to EUR 110 million as at 30 September 2012. Subject to certain conditions, the restricted payment build-up capacity in respect of the 2015 Notes and the 2018 Notes is increased or decreased each quarter by 50 per cent of the consolidated net income of the Issuer for such quarter, subject to certain adjustments. Dividends paid to shareholders and share repurchases reduce restricted payment build up capacity. The Notes also contain and future debt instruments are also expected to contain similar restrictions. The Company’s target net debt to EBITDA ratio is 2.0 to 1.0 over the fiscal year. Although we believe that our expected cash flows from operations, together with available borrowings and cash on hand, will be adequate to meet our anticipated liquidity and debt service needs, we cannot assure you that our business will generate sufficient cash flows from operations or that future debt and equity financing will be available to us in an amount sufficient to enable us to pay our debts when due, including the Notes, or to fund our other liquidity needs. See ‘‘Risk Factors — Risks relating to the Company’s Indebtedness — The Issuer may not have enough cash available to service its debt.’’

69 Nine months period ended 30 September 2012 versus nine months period ended 30 September 2011 The table below sets forth, certain information about the Company’s cash flows.

Nine months period ended 30 September (EUR thousand) 2012 2011 Profit before tax ...... 72,834 169,243 Adjustments for non-cash income items ...... 153,606 181,642 Working capital changes ...... (46,652) (58,404) Interest paid ...... (32,120) (36,287) Corporate income tax paid ...... (41,560) (45,868) Net cash flows from operating activities ...... 106,108 210,326 Net cash flows from investing activities ...... (161,871) (146,024) Proceeds from/(Repayments of) borrowings ...... (7,177) (7,123) Dividends paid ...... (34,411) (140,586) Net cash flows from financing activities ...... (41,588) (147,709)

Cash Flow from Operating Activities The Company’s primary source of cash is its operating activities. Cash generated from operating activities before interest and tax payments in the nine months period ended 30 September 2012 was EUR 179.8 million, which was EUR 112.7 million lower than in the same period in 2011, and is in line with the Company’s lower EBITDA during the period.

Cash Flow from Investing Activities Capital expenditures amounted to EUR 165.4 million in the nine months period ended 30 September 2012, an increase of EUR 9.7 million or 6.3 per cent when compared to the same period of 2011. The capital expenditures consist mainly of spending in the Coal segment, including the development of new mining areas.

Cash Flow from Financing Activities Cash flow from financing activities consisted of the repayment of the ECA Facility of EUR 7.1 million (the same amount which was repaid in the comparative period of 2011) and the dividend payment of EUR 34.4 million to A shareholders (dividend payments of EUR 100.6 million to A shareholders and EUR 40.0 million to B shareholders were made in comparative period of 2011).

Year ended 31 December 2011 versus year ended 31 December 2010 The table below sets forth, for the periods indicated, certain information about the Company’s cash flows.

Year ended 31 December (EUR thousand) 2011 2010 Profit before tax ...... 192,441 264,598 Adjustments for non-cash income items ...... 244,395 149,598 Working capital changes ...... (54,384) (51,247) Interest paid ...... (69,111) (56,811) Corporate income tax paid ...... (55,732) 9,029 Net cash flows from operating activities ...... 257,609 315,167 Net cash flows from investing activities ...... (181,703) (88,787) Proceeds from/(Repayments of) borrowings ...... 76,605 (199,630) Dividends paid ...... (140,586) (55,531) Net cash flows from financing activities ...... (63,981) (255,161)

70 Cash Flow from Operating Activities Cash generated from operating activities, before interest and tax payments, for the year ended 31 December 2011 was EUR 19.5 million higher, despite lower EBITDA, than in 2010, which was influenced by payment of one-off expenses related to the EUR 12.5 million bridge loan facility arranged in connection with the proposed acquisition of Bogdanka. This increase was offset by an increase in interest expense payments of EUR 12.3 million and a higher income tax payment of EUR 64.8 million (related to higher advance payments) when compared to 2010. This increase also reflects a one-off corporate income tax refund of EUR 23.2 million received in the second quarter of 2010.

Cash Flow from Investing Activities Capital expenditure amounted to EUR 194.3 million for the year ended 31 December 2011, a decrease of EUR 26.6 million or 12 per cent when compared to the same period of 2010. This decrease, due to the Company’s decision to spend less on capital expenditure, was offset by a cash inflow from the sale of the energy business in an amount of EUR 124.6 million.

Cash Flow from Financing Activities Cash flow from financing activities in 2011 was influenced mainly by dividend payments made A shareholders of EUR 100.6 million and to B shareholders of EUR 40.0 million. In addition, the Company repaid EUR 14.2 million of the ECA Facility made in 2011 and redeemed EUR 10.0 million of its 2015 Notes for EUR 8.8 million. The Company drew down EUR 99.7 million on its Revolving Credit Facility at the end of 2011, thus offsetting these cash outflows from financing activities. The Company repaid the outstanding nominal amount of EUR 678.3 million under the Senior Secured Facilities in 2010, using proceeds from the issuance of its 2018 Notes and cash on hand. The Company made EUR 55.5 million of dividend payments in 2010.

Year ended 31 December 2010 versus year ended 31 December 2009 The table below sets forth, for the periods indicated, certain information about the Company’s cash flows.

Year ended 31 December (EUR thousand) 2010 2009 Profit before tax ...... 264,598 (54,230) Adjustments for non-cash income items ...... 149,598 249,180 Working capital changes ...... (51,247) 52,491 Interest paid ...... (56,811) (52,852) Corporate income tax paid ...... 9,029 (18,364) Net cash flows from operating activities ...... 315,167 176,225 Net cash flows from investing activities ...... (88,787) (239,411) Proceeds from/(Repayments of) borrowings ...... (199,630) (11,034) Dividends paid ...... (55,531) (47,484) Net cash flows from financing activities ...... (255,161) (58,518)

Cash Flow from Operating Activities Net cash flows from operating activities for the year ended 31 December 2010 amounted to EUR 315.2 million, an increase of EUR 138.9 million from 2009. This increase in the net operating cash flow was attributable to higher EBITDA, driven mainly by increased sales of coking coal and coke, and a positive corporate income tax return received in cash in the amount of EUR 23.2 million in the second quarter of 2010.

Cash Flow from Investing Activities Capital expenditure decreased by EUR 29.3 million from EUR 250.2 million for the year ended 31 December 2009 to EUR 220.9 million for the year ended 31 December 2010. This was mainly

71 attributable to the Company’s sale of its energy business in June 2010 with a positive effect on cash flow from investing activities of EUR 124.6 million.

Cash Flow from Financing Activities In April and May 2010, the Company issued 7.875 per cent Senior Secured Notes due 2018 in an aggregate principal amount of EUR 500.0 million. The related transaction costs amounted to EUR 16.8 million. The Company used the net proceeds of the offering and existing cash to repay the outstanding amounts under the Senior Secured Facilities, including accrued interest and fees. The total principal amount repaid under the Senior Secured Facilities was EUR 678.3 million. The Company repaid an overdraft facility in January 2010 in the amount of EUR 18.9 million. The Company also drew down an additional part of the ECA Facility in the amount of EUR 27.9 million and repaid EUR 13.6 million during the year ended 31 December 2010. The Company paid an interim dividend of EUR 55.5 million in October 2010, EUR 8.0 million more than total dividends paid in the year ended 31 December 2009.

Capital Resources The Company’s principal source of liquidity has historically been the Company’s operating cash flows and proceeds from the incurrence of debt. The Company expects to be able to meet its current capital expenditures from these sources. In the longer term, working capital and capital expenditures may be funded by funds raised through other means of financing. See ‘‘Risk Factors — Risks relating to the Company’s Business and Industry — The Company must make significant capital expenditures in order to increase its production levels and improve overall efficiency. The inability to finance these and other expenditures in the longer term could have a material adverse effect on the Company’s business, financial condition or results of operations.’’ As at 30 September 2012, the Company had approximately EUR 924 million of outstanding total indebtedness. As at 30 September 2012, the Issuer had EUR 258 million in principal amount of its 2015 Notes outstanding and EUR 500 million in principal amount of its 2018 Notes outstanding. On 7 February 2011, the Issuer entered into a Revolving Credit Facility which provides for availability of up to EUR 100 million. As at 31 December 2011, the Issuer fully drew down the available amount of EUR 100 million. On 15 November 2012, the Issuer repaid the Revolving Credit Facility in full. The facility remains available up to February 2014. On 29 June 2009, the Issuer and OKD entered into an unsecured ECA Facility which provides for a term loan of approximately EUR 141 million. As at 30 September 2012, the outstanding balance under the ECA Facility amounted to EUR 85 million. Since 2007, the Company has invested significantly in capital investment programs such as POP 2010, which was initiated to upgrade longwall and development equipment at the Company’s existing mines, COP 2010, which was initiated to centralise coking operations and continuous investment in safety improvements. Historically, capital expenditures to develop and expand the Company’s operations were not material due to the fact that its mining sites had been fully developed for a significant period of time. However, the Company anticipates that capital investments in the short to medium term will be decreased as a result of the current economic climate. The Company may, from time to time, seek to refinance existing indebtedness or raise additional debt or equity capital. In light of the maturity of the Company’s existing debt, the Company may consider transactions involving extending its debt maturity profile, increase its liquidity position and enhancing balance sheet flexibility. The Company’s ability to refinance existing indebtedness, its ability to incur new debt or raise equity capital and the applicable cost of capital associated with such financings is dependent upon a range of factors, including general economic conditions, prevailing market conditions for debt and equity securities, the Company’s financial performance, and the terms of the Company’s existing debt instruments, including the terms of the 2015 Notes (prior to their redemption in connection with this Offering), the 2018 Notes, the Notes issued under this Offering, the Revolving Credit Facility and the ECA Facility.

72 The Issuer expects that the net proceeds of the Offering will be approximately EUR 271 million. The Issuer intends to use substantially all of the net proceeds of the Offering to fund the redemption of all of the Issuer’s 2015 Notes, including the redemption premium and accrued and unpaid interest to (but not including) the date of redemption, and to use any remaining net proceeds for general corporate purposes.

Off-Balance Sheet Arrangements In the ordinary course of business, the Company is a party to certain off balance sheet arrangements. These arrangements include assets related to the construction and related geological survey work at Frenstˇ at.´ These assets are maintained by OKD but are not reflected in the Consolidated Financial Statements. The assets were booked as costs and have not been utilised. The original cost of these assets, spent in the years 1980 to 1989, was CZK 921 million (EUR 37 million as at 30 September 2012), of which CZK 815 million (EUR 33 million) was the value of assets located underground and CZK 106 million (EUR 4 million) was the value of assets located on the surface, each as at 30 September 2012. Liabilities related to these arrangements are not reflected in the Company’s balance sheet and management does not expect that these off balance sheet arrangements will have material adverse effects on the Company’s financial condition, results of operations or cash flows.

Contractual obligations The Company is subject to commitments resulting from its indebtedness. These result mainly from the 2015 Notes (prior to their redemption in connection with this Offering), the 2018 Notes and the Notes issued under this Offering. The following table includes contractual obligations resulting from the 2015 Notes, the 2018 Notes, the RCF Facility, the ECA Facility and purchase obligations as at 30 September 2012, and pro forma data reflecting the Notes that are to be issued in this Offering, after taking into account receipt of net proceeds of this Offering and the redemption of the 2015 Notes.

(EUR thousand) < 1 year 1 to 3 years > 3 years Actual contractual obligations 2015 Notes ...... 0 257,565 0 2018 Notes ...... 0 0 500,000 ECA Facility ...... 14,246 28,493 42,739 RCF Facility ...... 100,000 0 0 Purchase obligations ...... 75,000 37,000 0 Total ...... 189,246 323,058 542,739

(EUR thousand) < 1 year 1 to 3 years > 3 years Pro Forma obligations Notes ...... 0 0 275,000 2015 Notes(1) ...... 0 0 0 2018 Notes ...... 0 0 500,000 ECA Facility ...... 28,493 28,493 21,370 Other loans(2) ...... 0 0 0 Purchase obligations(3) ...... 0 0 0 Total ...... 28,493 28,493 821,370

Note: (1) Assumes the redemption in full of all of the Issuer’s 2015 Notes. (2) This does not reflect the Revolving Credit Facility entered into in February 2011 which provides for availability of up to EUR 100 million. As at 14 January 2013 no amounts were outstanding under the Revolving Credit Facility. (3) The Company had contractual obligations to acquire property, plant and equipment in the amount of EUR 83 million, of which EUR 50 million resulted from the 2015 Perspective Program. See — ‘‘Description of the Business — Operational Excellence — Improving Efficiency, Profitability and Safety of Mining Operations’’ The Company is also subject to contractual obligations under lease contracts in the total amount of EUR 11.0 million, of which EUR 2.0 million are short-term obligations.

73 Pensions Under the pension and retirement system of the Czech Republic, pension plans and retirement benefits are fully funded by the state budget.

Contingent liabilities Contingent liabilities include clean-up liabilities related to a decommissioned coking plant owned by OKK, and the Company’s involvement in several litigation proceedings. As inherent in such proceedings, outcomes cannot be predicted with certainty and there is a risk of unfavourable outcomes for the Company. The Company disputes all pending and threatened litigation claims of which it is aware and which it considers unjustified. Company management believes that the litigation proceedings have no significant impact on the Company’s financial position as at 30 September 2012, and as such, no provisions have been made. A summary of the main litigation proceedings is included in the 2011 Annual Report and Accounts of the Company. There have been no significant developments in any of these matters. See also ‘‘Description of the Business — Litigation’’. The sale and purchase agreement between NWR NV and Dalkia Ceska´ Republika, a.s. provides for put and call options, as well as a pre-emption right of NWR NV in respect of the energy assets and businesses transferred to Dalkia or replacing such energy assets or businesses upon the occurrence of certain events. In connection with the sale of NWR Energy, the Company will continue to purchase utilities from Dalkia Industry CZ and Dalkia Commodities CZ under a long-term agreement, which expires in 2029. In 2009, Karbonia received a claim for damages from Vattenfall Sales Poland Sp. z o.o. (‘VSP’) for the amount of PLN 12 million. Karbonia disputed the claim. VSP took this claim to the Regional Court in Bielsko-Biala seeking only PLN 1 million in damages. In December 2010, the Regional Court in Bielsko-Biala dismissed VSP’s claim in its entirety, however VSP won an appeal reversing the Regional Court in Bielsko-Biala’s decision. In December 2011 VSP was acquired by TAURON Sprzedaz GZE Sp. z o.o. (‘Tauron’). On 23 July 2012, the Regional Court in Katowice ruled and ordered Karbonia to pay PLN 9,213,000 (approx. euro 2,195,000) including trial costs plus interest to Tauron. Karbonia opposes the ruling and appealed against the verdict. Management is of the opinion that it is more likely than not that the case will not result in charges for the company and that as such no provision has been included as at 30 September 2012. For more detail please see ‘‘Description of the Business — Litigation’’

Quantitative and Qualitative Disclosure about Market Risk Commodity Price Risk Market risks related to the Company’s operations result primarily from demand for coking coal and fluctuations in coal prices, currency fluctuation and interest rates. The Company does not hedge against, and is therefore exposed to, any declines in coal prices. Because the Company’s levels of coal production historically have been relatively stable, the price of coal is the most significant factor affecting the Company’s results of operations. A change in coal prices would significantly influence the financial performance of the Company. The coal mining business generally is a high fixed cost business. Consequently, a significant decline in the price of coal would have a material adverse effect on the Company’s results of operations. See ‘‘Risk Factors — Risks Relating to Company’s Business and Industry — financial condition and results of operations may vary with fluctuations in the production costs and the prices for coal’’.

Foreign Currency Risk A significant amount of the Company’s expenses are denominated in CZK. The functional currency of the Issuer is the euro. Approximately 85 per cent of the Company’s operating expenses, excluding depreciation and amortisation, and approximately 50 per cent of the Company’s revenues in the nine months period ended 30 September 2012 were denominated in CZK. A substantial portion of the Company’s long-term debt is in euro and the Company’s working capital facilities, which are currently un-drawn, are denominated in euro. The Company’s net profit calculated in

74 euro is positively affected by appreciation of the euro against the CZK, and negatively affected when the euro depreciates against the CZK. See ‘‘Risk Factors — Risks Relating to the Company’s Business and the Industry — Fluctuations of the Czech koruna and Polish zloty against other currencies could affect the Company’s business, financial condition and results of operations’’. The Company is exposed to foreign exchange risks arising from sales, purchases, receivables and loans that are denominated in currencies other than CZK. The Company mitigates foreign currency risks by entering into forward exchange rate contracts. In line with the Issuer’s policy to hedge its exposure to currency fluctuations, 100 per cent of the forecasted ordinary course of business currency exposure for Q4 2012 is covered by forward contracts, with an average forward exchange rate of approximately 24.65 CZK/EUR. The sensitivity of the Company’s financial performance on the change in the foreign exchange rate is presented in the following table (excluding the effect of any foreign currency hedges):

(EUR thousand) 30 September 2012 Appreciation of CZK against euro by 2 per cent Cash and bank balances ...... (305) Accounts receivables ...... (968) Accounts payables ...... 365 Loans ...... 6,552 Total effect on profit after tax ...... 5,645

Interest Rate Risk The Company has entered into forward interest rate swaps and collars to convert floating rate loans to fixed rate loans. Specific amounts that the Company hedges are determined based on the prevailing market conditions and the current shape of the yield curve. The specific terms and notional amounts of the swaps are determined based on management’s assessment of future interest rates, as well as other factors, including short-term strategic initiatives. As at 30 September 2012, the swaps and collars covered 100 per cent of the Company’s scheduled interest rate exposure pursuant to which the Company receives floating EURIBOR and PRIBOR in exchange for paying a fixed rate of interest.

Derivatives The Company uses certain derivatives to mitigate its foreign currency exposure and interest rate exposure. The Company does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments.

Critical Accounting Policies The preparation of financial statements in conformity with adopted IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Set out below is information about: • Critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements; and • Assumption and estimation uncertainties that have a significant risk of resulting in a material adjustment within next financial year.

Critical judgments, estimates and assumptions Coal reserves Economically recoverable coal reserves represent the estimated quantity of product in an area of interests that can be expected to be profitably extracted, processed and sold under current and foreseeable economic conditions. The entity determines and reports coal reserves in accordance with the JORC code. The determination of coal reserves includes estimates and assumptions about

75 a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, productions costs, transportation costs, commodity demand, commodity prices and exchange rates. Changes in coal reserves impact the assessment of recoverability of property, plant and equipment, the carrying amount of mining licences depreciated on unit of production basis and mine closure and restoration provision.

Restoration and mine closure provisions Determining the cost of restoration, rehabilitation, and mine closure during mining activities in accordance with the Company’s accounting policy, requires the use of significant estimates and assumptions, including: the appropriate discount rate, the timing of the cash flows, expected life of the relevant mine, the application of relevant environmental legislation, and the future expected costs of restoration, rehabilitation and mine closure. Changes in the estimates and assumptions used to determine the cost of restoration, rehabilitation and mine closure could have a material impact on the carrying value of the restoration and mine closure provision and relevant asset. The provision recognised for each mine is reviewed at each reporting date and updated based on the facts and circumstances available at that time.

Impairment of assets The recoverable amount of each non financial asset or cash-generating unit (‘CGU’) is determined as the higher of the value-in-use and fair value less costs to sell, in accordance with the Company’s accounting policy. Determination of the recoverable amount of an asset or CGU based on a discounted cash flow model requires the use of estimates and assumptions, including: the appropriate discount rate, the timing of the cash flow and expected life of the relevant area of interest, exchange rates, coal and coke prices, reserves, future capital requirements and future operating performance. Changes in these estimates and assumptions impact the recoverable amount of the asset or CGU, and accordingly could result in an adjustment to the carrying amount of that asset or CGU.

Employee benefits The Company’s accounting policy for employee benefits requires management to make estimates and assumptions about discount rate, future remuneration changes, changes in benefits, life expectancy, retirement age, number of employees and expected remaining periods of service of employees. Changes in these estimates and assumptions could have a material impact on the carrying value of the employee benefit provision.

76 INDUSTRY OVERVIEW General Coal is one of the most abundant fossil fuels worldwide and a major contributor to global energy supply. It is a widely distributed natural resource that is mined commercially in approximately 50 countries and coal reserves are available in approximately 70 countries worldwide. At current production levels, proven coal reserves are estimated by the World Coal Association (‘WCA’) to last around 130 years. In contrast, proven oil and gas reserves are estimated by the WCA to be equivalent to around 46 and 59 years at current production levels, respectively. According to WCA estimates, coal provides approximately 30 per cent of global primary energy needs and generates approximately 42 per cent of global electricity. In 2011, approximately 13 per cent (around 717 million tonnes) of total hard coal production was used by the steel industry. Coal is used to fuel the generation of electric power and to produce coke for the steel making process. Coal also fuels and heats various industrial facilities, including district heating systems, paper mills, chemical plants and other manufacturing and processing plants.

Global Coal Markets The global coal supply and demand balance is strongly influenced by interdependent global economic and industrial demand cycles, as well as supply chain related constraints such as shipping capacity, availability, terrestrial transportation congestion, and production disruptions. Global demand for thermal coal, which is used in the production of electricity, is influenced predominantly by economic growth prospects and region-specific coal generation profile trends. Desired regional coal generation profiles can be influenced by emissions related constraints, such as those imposed under the Kyoto Protocol, or fuel availability concerns. Global demand for coking coal, which is primarily used in steel production, is generally in line with demand for steel products. According to the World Steel Association, China is now producing roughly half of the world’s steel and its corresponding surge in demand for coking coal and coke has permanently changed the dynamics of the global sea-borne markets. According to the WCA, approximately 17 per cent of total global coal consumption is traded internationally. The two major markets for internationally traded coal are the Atlantic region and the Pacific region, and there can be significant pricing differences between the two due to the cost of ocean freight and other transportation-related costs. The majority of coal produced is consumed regionally due to high transportation costs relative to coal prices. In regions where coal resources are scarce, the technology to extract the coal does not exist and the need for specific types of coal results in coal-fired power plants and other coal users depending on the transport infrastructure to obtain coal supplies from other regions. Most countries have a congruent consumption and production pattern. Most Western European countries and several Asian countries (primarily Japan and South Korea) have a high demand for coal but have limited domestic coal resources, while other countries such as Australia, South Africa and Indonesia have abundant coal resources but relatively limited domestic demand. As a result of a number of factors, including economic growth in emerging markets, in recent years there has been higher global consumption of coal.

Central European, Czech and Polish Coal Markets The market for coal in the Czech Republic and Central European region is somewhat isolated from the global coal market. Due to its landlocked nature, the Czech Republic, and neighbouring Central European countries, represents a largely localised market for coal. Infrastructure constraints and shipping costs preclude most global traded coal producers (including Australia and others) from reaching this market on a competitive basis and prevent large volumes from being capable of being imported. Small amounts of imported coking coal are, however, important to the region, particularly during periods of high demand and to supplement the local quality mix. Newcomers to the market would find the high investment, logistical difficulty and lack of skilled workforce a significant barrier to entry. The only significant regional coal producer capable of transporting coal into the Czech market on a competitive basis is Poland, which also has significant domestic coal demand. As a result, historically there have been limited imports of coal into the Czech Republic,

77 with the majority of imports originating in Poland. In 2011, total hard coal production in Poland and the Czech Republic was approximately 75.4 million tonnes and 11.2 million tonnes, respectively. Poland is Europe’s largest coal producer and a significant producer in the global context as well. In 2011, Poland accounted for 39 per cent of Europe’s (excluding Russia) total production and, with approximately 1.1 per cent share in the global hard coal output, was the world’s ninth largest producer. Over 90 per cent of Poland’s electricity is generated using coal. Germany, Austria, Slovakia and the Czech Republic are the major importers of Polish coal. The Upper Silesian, Lower Silesian and Lublin basins have resources that add up to 44 billion tonnes of coal spread across around 128 deposits. The Upper Silesian basin represents the major portion of the Polish reserves, with about 79 per cent of the total in 110 deposits. Hard coal is extracted in two regions, which represent the majority of Polish deposits: Upper Silesia and in South-eastern Poland, near Lublin. The Polish hard coal industry is comprised of 32 active mines. Up until 2000, coal was also mined in the Lower Silesian coal basin in the south- western part of the country; however, due to geological hazards and high exploitations costs, the mines have been shut down. The industry consists of the following major Upper Silesia-based companies: • Kompania Weglowa — Poland’s largest coal mining group with a total of 15 mines, 60,000 employees and a production capacity of nearly 40 million tonnes of thermal coal per year in 2011. Fully owned by the Polish government; • Katowicka Grupa Kapitalowa — operating four mines within the Katowicki Holding Weglowy and the Kazimierz-Juliusz mine, a staff of approximately 19,200 and production a production capacity of approximately 12 million tonnes of thermal coal per year. Fully owned by the Polish government; • Jastrzebska Spolka Weglowa — the largest coking coal producer in the EU with a 2011 production of 12.6 million tonnes per year (of which 8.8 million tonnes was coking coal) from five mines and approximately 22,900 employees. Listed on the Warsaw stock exchange in 2011 with a free float of 33 per cent of the shares but still majority owned by the Polish government, Two other smaller mining companies account for the remaining annual production in Silesia. Poludniowy Koncern Weglowy with approximately 5.5 million tonnes of thermal coal production and KWK Siltech with approximately 200,000 tonnes of thermal coal production.

Coal Characteristics Coal is characterised by its use as either ‘thermal coal’ or ‘metallurgical coal’. Thermal coal, also referred to as ‘steaming coal’ or ‘steam coal’, is used by electricity generators and by industrial facilities to produce steam, electricity or both. Metallurgical coal (known as ‘coking coal’) is used to produce coke, which is used as a reducing agent in blast furnaces for the production of steel. There are four types of coal by geological composition: lignite, sub-bituminous, bituminous and anthracite. Each has characteristics that make it more or less suitable for different uses. Energy content and sulfur content are the most important coal characteristics and help to determine the best use of particular types of coal, as well as being used to determine the price of different qualities of coal. Calorific value and sulfur content are the most important variables in the profitable marketing and transportation of thermal coal, while ash, sulfur and various coking characteristics are important variables in the profitable marketing and transportation of coking coal. The calorific value of coal is commonly measured in kcal/kg or BTU/lb. A BTU is the amount of heat needed to raise the temperature of one pound of water by one degree Fahrenheit. Coal found in the Company’s mines tends to have a higher average heat value than coal found in other parts of the world. Coal with a higher heat content generally commands a higher price than coal with lower heat content. Coal with a higher sulfur content generally commands a lower price than coal with a low sulfur content. Low sulfur coal is coal that contains a sulfur concentration of 1 per cent or less. Coal with lower sulfur content is considered to be higher quality as electrical generators worldwide have increasingly become subject to regulations intended to reduce sulfur dioxide emissions. More than 80 per cent of the Company’s proved and probable reserves is high-quality coal, that is, coal having high

78 calorific value (high BTU/lb) and low sulfur content relative to industry standards, which can be sold as coking coal.

Coal Pricing Historically, the majority of coal worldwide had been sold under fixed price, long-term contracts (usually 12 month duration running from April to March, the Japanese fiscal year), with smaller amounts sold on the spot markets. Price negotiations would generally take their benchmark from initial deals agreed between the major Australian miners and their larger customers in Asia as this region represents the vast majority of internationally traded coal. The pricing dynamics of thermal and coking coal operate relatively independent of each other due to the differences in the end-user markets for both products. At the beginning of 2010, following the changes in iron ore pricing, a number of leading coal producers moved from annually negotiated fixed contract prices to a quarterly based pricing system, particularly for coking coal. This shorter term pricing is intended to better reflect market- clearing prices over time and quarterly agreements are now the standard for coking coal contracts. The price of coal is primarily influenced by prevailing supply/demand conditions and the market outlook. Ocean freight costs also influence coal demand and pricing, with coal suppliers closer to the end-user being preferred. The pricing of coal is complex since the price of a shipment of coal is based on the coal type (for instance, thermal, hard coking, semi-soft coking, PCI coal), net calorific value and the content level of impurities, such as sulfur and ash. Additionally, the cost of transportation comprises a significant proportion of the delivered price of coal. Up until 2009 the Company generally contracted coking coal and thermal coal prices with its customers on a calendar year basis. However, during 2010 and 2011 there was the international trend towards quarterly pricing. The Company followed this trend with all coking coal now contracted on a quarterly basis (with volume commitments continuing to provide for a yearly term). Quarterly contracting for coking coal means that the Company will align its coking coal prices with global price trends. The Company believes that this enables its coking coal contracts to more closely follow and benefit from the developments in the global coal benchmark prices. Thermal coal contracts tend to remain within the calendar year with prices fixed for the full year reflecting the more static nature of this market and the Company expects that it will continue to negotiate prices for the sale of thermal coal on this basis.

Coking Coal Coking coal grades are used primarily for the production of coke, but can also, albeit to a lesser extent, be used to produce electricity and heat. Coke is the substance formed when coking coal is heated in a coking oven to a very high temperature in the absence of air. Coke is a key raw ingredient in the production of steel, and most of the coke produced is used for steel production. With around 70 per cent of global steel production directly dependent on coal, demand for coking coal and coke is closely linked to demand for steel, which in turn tracks global economic growth.

Central European Coking Coal Market Production of coking coal by the two main suppliers to the Central European region, namely Poland and the Czech Republic, was 16.5 million tonnes in 2011. The Company is the only coking coal miner in the Czech Republic and produced approximately 5.1 million tonnes in 2011, which represents an estimated 25% of the total coking coal supply in Central Europe (excluding Germany). The health of the coking coal market is expected to remain aligned to that of the steel industry. The global economic downturn has affected global steel production and demand materially. The World Steel Association forecast that global apparent steel use will increase by 2.1 per cent in 2012 after world steel production increased by 4 per cent in 2011. In the Czech Republic, steel consumption is more heavily weighted towards automotive and machinery production than is the case in some other regional domestic markets. Although Europe’s steel industry was hit hard in 2009 due to the global financial crisis, recovery in the EU turned out stronger than expected during 2010 and 2011 as the region’s manufacturing exports, especially Germany’s, saw the benefit of the global recovery. The World Steel Association (‘WSA’) reported an increase in steel production in the EU of 2.8 per cent in 2011,

79 after growing by 24 per cent in 2010 on the back of inventory rebuilding and strength in the export sector. Moreover, 2012 is expected to see a decrease in steel demand in Europe, however, apparent steel use growth of 2.4 per cent is forecasted by the WSA for 2013, which could have a direct positive impact on the Company’s performance.

Thermal Coal Both thermal coal and lignite are consumed globally as a primary fuel for base load power generation because of its low cost, on a heat content comparable basis, relative to other fossil fuels such as oil and natural gas. Bituminous thermal coal usually has a lower moisture content than sub-bituminous coals and lignite, resulting in more efficient steam production and reduced emissions. As a result, hard thermal coal typically enjoys a premium in the marketplace compared to lignite. Thermal coal is primarily used to produce electricity and heat. Within the Company, thermal coal is produced by Czech coalmines operated by OKD.

Central European Thermal Coal Market The demand for thermal coal largely depends on the demand for electricity and the structure of electricity generation. According to the International Energy Agency, in 2011 in the Czech Republic, approximately 50 per cent of electricity was generated from coal, while Poland generated over 90 per cent of its electricity from coal. A well-established thermal power infrastructure in the Company’s region ensures a steady and reliable customer base for thermal coal. Furthermore, the future development of Carbon Capture Storage (‘CCS’) technology should secure the viability of coal-fired power stations.

Coke There are two principal types of coke products: blast furnace coke and foundry coke. Blast furnace coke is used in a blast furnace along with iron ore to produce pig iron. The blast furnace coke has four functions in this production process, namely as a heat source, a carbon source, a reducing agent and as a carrier and filling material. These four functions require specific characteristics from the coke, mainly low reactivity (ability to react with oxygen), high rigidity and optimal grain size (up to 90mm). Pig iron is consequently used as an alloy for steel production. Foundry coke is mainly used in a large cupola furnace to produce cast iron from iron, scrap and other metallic components (manganese, zinc etc.). The cupola furnace is a melting device used in a foundry, which is used to melt the metals. Foundry coke is also used in the production of basalt-based insulation materials. As opposed to blast furnace coke, foundry coke has only one function in the cupola furnace and that is as a heat source. This heating function requires different characteristics than blast furnace coke, mainly bigger grain size and high rigidity. These characteristics require a longer coking process, lower temperature carbonisation and additives. The sales of foundry coke make up an important part of the Company’s sales portfolio. The Company is a leading producer of foundry coke with an estimated 36 per cent share of the installed foundry coke capacity in Europe supplying foundries and stone (mineral) wool producers based in the Czech Republic and the surrounding region.

Central European Coke Market The coke supply/demand balance in the Central European (‘CE’) region is volatile since there are a number of producers operating relatively old coke batteries. Historically, there has been more coke production in Central Europe and the surrounding region by the integrated steel mills such as ArcelorMittal Steel compared with the commercial plants such as those operated by the Company. There is a further distinction in coke markets between foundry coke and blast furnace coke with the latter tending to command a higher price due to a more limited number of foundry coke suppliers in Europe. The economic slowdown in recent years has seen the decommissioning of a number of coking production facilities in Central Europe which could create tight supply conditions if demand returns to previous levels. However, the planned introduction of new technology at steel plants in the region to reduce coke consumption could impact on overall demand.

80 As a by-product of coking coal, coke demand is dependent on the performance of the steel industry. In the Central Europe region, the Company believes that the integrated steel mills have historically produced more coke than the commercial producers such as the Company, which will complement supply to the steel mills. Due to the substantial drop in demand caused by the global economic downturn, some of the coking facilities in the Central Europe market were permanently taken offline. With the World Steel Association forecasting that world steel demand and production will rebound in 2013, it can be expected that there will be a shortage of coke capacity, putting upward pressure on prices. Furthermore, in recent years and in contrast to previous economic downturns, Chinese exports of coke to international markets have significantly decreased due to the imposition of a 40 per cent export tax. This has added to the falling supply of internationally traded coke and has helped to maintain prices.

Mining Methods Coal is mined using either surface or underground methods. The most appropriate mining technique is determined by coal seam characteristics such as location and recoverable reserve base. All of the Company’s current operations are underground mines. In underground mining, access to the coal seam is achieved either through an inclined roadway when the coal seam is relatively shallow, or by a vertical shaft for deeper mines. The Company’s four mines have a total of 22 shafts extracting coal from depths ranging from 600 to 1,100 meters below the surface. All the mines extract coal from multiple seams using the longwall mining method with shearers or ploughs in connection with mechanised shields or single hydraulic props to cut coal and to secure the excavated area. The longwall method of mining involves the sequential and complete removal of rectangular shaped ‘panels’ of coal.

International Reserve Reporting Methodologies Several codes exist for reporting reserves in the international mining industry. The technical differences between these codes are minor, and results are generally comparable regardless of methodology employed in assessing a particular deposit. The principal reporting codes currently being utilized are: • Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Reserves; • Australasian Code for Reporting Mineral Resources and Ore Reserves (2004) published by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Minerals Council of Australia (the ‘JORC’ Code); • Institute of Materials, Minerals and Mining Reporting Code; • South African Institute of Mining and Metallurgy Reporting Code; and • Society of Mining, Metallurgy and Exploration Guidelines (USA). Each of the codes recognises the difference between mineral resources and reserves. Conversion from a mineral resource to a reserve requires the application of ‘modifying factors’. These modifying factors include mining, economic, marketing, legal, environment, social and governmental factors. A ‘resource’ is geologically defined and becomes a reserve when the modifying factors, especially technical and economic, are taken into account. Each of the codes includes strict guidelines for data quality and reporting for different mining conditions. In 1994, the Committee for Mineral Reserves International Reporting Standards was established to standardise the regional codes by issuing a standard template. There are also local systems used for reporting reserves and the system in the Czech Republic is the FSU System (described below).

Company’s reserve reporting methodology The Company currently uses both the FSU System and the JORC system in parallel to report reserves and resources. Reserve and resource numbers under both systems are maintained and periodically updated by a certified geologist employed by the Company. The JORC methodology was implemented by the Company in 2006, when the existing FSU reserve number was reclassified

81 to a JORC reserve number. Since then, the Company has maintained both an FSU System and a JORC system of calculating reserves and resources. The Company uses FSU reserve numbers for its mining plans and, in accordance with Czech mining regulations, reports those numbers to the Czech Ministry of Trade and Industry and Czech Ministry of Environment annually. The JORC reserve number is primarily used for external reporting (except for Czech regulatory purposes). The last time the Company’s reserve calculation was independently reviewed was in connection with the Issuer’s initial public offering in 2008. The JORC-compliant reserves were estimated, as of the time of the initial public offering to be 418.9 million tonnes as of 1 January 2008. For the years ended 31 December 2011, 31 December 2010 and 31 December 2009, the Company mined approximately 11.2, 11.4 million and 11.0 million tonnes of coal, respectively. The Company believes, as at 1 January 2012, it had approximately 385 million tonnes of JORC-standard reserves based on the Company’s internal estimates applying JORC standards. The Company’s reserves remain subject to external independent review and verification. The Company intends to report comparable JORC-compliant reserves (including for regulatory purposes) in the future if the JORC Code is implemented through legislation in the Czech Republic. Currently Czech regulation does not recognise JORC and provides for the FSU System.

JORC Code Under the JORC Code, coal resources are sub-divided, in order of decreasing geological confidence, into measured (highest level), indicated and inferred (lowest level) categories. A measured coal resource is that part of the total coal resource for which quantity and quality can be estimated with a high level of confidence, based upon information gathered from points of observation that may be supported by interpretative data. An indicated coal resource is that part of the total coal resource for which quantity and quality can be estimated with a reasonable level of confidence based upon information gathered from points of observation that may be supported by interpretative data. An inferred coal resource is that part of a total coal resource for which quantity and quality can only be estimated with a low level of confidence. The quantity and quality are inferred using points of observation that may be supported by interpretative data. Coal reserves are the economically mineable parts of a measured or indicated resource. Coal reserve estimates include estimates for diluting materials and are adjusted for losses that may occur when the coal is mined. Appropriate assessments, which may include feasibility studies, have been carried out on the deposit, and include proper consideration of all relevant modifying factors such as: mining methods and economic, marketing, legal, environmental, social and governmental factors. A proved coal reserve is the economically mineable part of a measured coal resource for which the modifying factors have been satisfied. A probable coal reserve is the economically mineable part of an indicated and, in some circumstances, a measured coal resource.

FSU System The Czech Republic uses a close variant of the FSU System developed in the former Soviet Union. Deposits under the FSU System are classified into one of four classes based on the complexity of their geological structure. This classification may take into account quantitative results measuring the inconsistencies in the basic features of mineralisation. The initial classification is intended to identify those resources warranting further study. Depending on the extent of further exploration, coal resources are subsequently divided into ‘explored’ and ‘evaluated’ deposits. Explored deposits have been sufficiently explored to proceed with a feasibility study relating to commercial development, and evaluated deposits have been explored to the extent necessary to determine whether continued exploration is warranted. Resources that do not meet the standards for explored or evaluated deposits are classified as prognosticated resources. The primary difference between the FSU System and international methodologies is that the FSU System relies on ‘geometrical’ methods to determine reserves, as compared with international methodologies, which utilise sampling and extrapolation techniques. While a direct comparison between international methodologies and the FSU System is difficult because each is founded on different principles, it is often the case that Category A and Category B FSU System reserves (as

82 set forth below) correlate to proved reserves and C1 FSU System reserves (as set forth below) partially relate to probable reserves. However, these relationships may vary among deposits and at different times for the same deposits.

Category A These resources include only explored deposits and must satisfy the following criteria: • the sizes, forms and bedding conditions of the mineral body have been determined; the nature and regularities in their morphology and internal fabric have been studied; the barren and off-grade segments within the mineral bodies have been detected and mapped; and the locations and fault amplitudes of dislocations with a break have been identified; • the natural varieties of the minerals within the body have been determined; its categories and grades have been identified and mapped; its compositions and properties have been verified; and the quality of all categories and grades of the identified minerals have been characterised in terms of all parameters stipulated by industrial regulations; • the distribution and forms of those valuable and noxious components found in the mineral body and products of its processing have been investigated; and • the mineral reserves have been mapped based upon test wells, workings and detailed trial runs.

Category B These reserves include only explored deposits. Category B reserves have been subject to a high level of investigation, though their boundaries have been determined with less accuracy than Category A reserves. Category B reserves meet the criteria established for Category A reserves, except that Category B reserves may contain a limited extrapolation zone that is substantiated on a basis of geological criteria and geophysical and geochemical research.

Category C1 These reserves are characterised by a lower level of accuracy than the determination of Category B reserves. Most explored deposits are Category C1 reserves. Category C1 reserves meet the criteria established for Category B, except that additional extrapolation is permitted in mapping the mineral deposit.

Category C2 These reserves consist of evaluated deposits. Category C2 reserves must meet the criteria established for Category C1, except that the sizes, forms, internal fabric and bedding conditions of the mineral body are confirmed by means of only a limited number of test wells and core samples; and the boundaries of the deposit are mapped based upon data gathered from only a limited number of test wells and a geologically substantiated extrapolation of deposit parameters is permitted. Resources that do not meet the standards for classification as A, B, C1 or C2 reserves may be classified as prognostic resources in categories P1, P2 or P3. Such deposits have undergone some exploration, but require further geological work to be upgraded to A, B, C1 or C2 reserves.

U.S. Industry Guide 7 Mining companies that file registration statements or periodic reports with the SEC are required to report their mineral reserves in accordance with Guide 7. Under Guide 7, a ‘‘reserve’’ is defined as ‘‘that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.’’ There are two principal differences between reporting under Industry Guide 7 and the JORC Code: (i) Guide 7 does not recognise the classification referred to as ‘‘resources’’ in the JORC Code. As a result, SEC registrants are permitted only to report proved and probable reserves; and (ii) Under Guide 7, reserves must be estimated on the basis of current economic and legal conditions, whereas the JORC Code permits the use of ‘‘realistic’’ assumptions, which may include forecast prices and reasonable expectations

83 that required permits will be granted in the future and contracts will be entered into for the sale of production. Accordingly, investors should be aware that if this document was prepared in accordance with Guide 7, the Company’s mineral resources, would not be permitted to be reported, and the amount of reserves that were estimated may be different. For further information on the terms used in this section, please see the ‘‘glossary of technical terms’’.

84 DESCRIPTION OF THE BUSINESS Overview The Issuer, through its subsidiary OKD, is the Czech Republic’s only hard coal mining company and is a leading producer of hard coal in Central Europe (in each case, on the basis of revenues and volume of coal produced) serving customers in the Czech Republic, Slovakia, Austria, Poland, Hungary and Germany. It is one of the largest industrial groups in the Czech Republic and the largest Czech natural resources company in terms of revenue and employees. For the nine months period ended 30 September 2012, the Company employed an average of 14,084 workers and utilised an average of 3,697 workers employed by contractors, making it one of the largest private employers in the country. The Company’s business is hard coal mining and coke production. Through its hard coal mining operations, the Company produces coking coal and thermal coal. Coking coal is used as a raw material in steel production, whereas thermal coal is sold to electric and heat producers, industrial users and other producers of electricity and heat. Coking coal generally commands higher prices and generates higher revenues with higher margins for the Company than thermal coal. The Company has four operating mines and four coking batteries. As at 1 January 2011, the Company had approximately 385 million tonnes of proved and probable reserves (including approximately 190 million tonnes of probable reserves at D˛ebiensko).´ More than 80 per cent of the Company’s coal reserves consist of high quality coal (that is, coal having a high calorific value (high BTU/lb) and low sulfur content) that can be sold as coking coal. The Company’s mining and related businesses operate in the Northeastern region of the Czech Republic. The Company believes the landlocked position of its operations in the vicinity of the Company’s key customers and the high quality of its coal (in terms of calorific value as well as the percentage of coking coal in the coal mix) have enabled the Company to become a leading supplier of hard coal in Central Europe. For the year ended 31 December 2011, the Company sold approximately 10.6 million tonnes of coal of which approximately 4.8 million tonnes was coking coal and approximately 5.8 million tonnes was thermal coal. For the year ended 31 December 2011, the Company also sold approximately 0.6 million tonnes of coke, converted from its own and purchased coking coal, which is used primarily as a raw material for steel, foundries and insulation material production. For the nine months period ended 30 September 2012, the Company sold approximately 7.2 million tonnes of coal of which approximately 3.8 million tonnes was coking coal and approximately 3.4 million tonnes was thermal coal. For the nine months period ended 30 September 2012, the Company also sold approximately 0.4 million tonnes of coke, converted from its own and purchased coking coal, which is used primarily as a raw material for steel, foundries and insulation material production. For the year ended 31 December 2011, the Company had consolidated revenues from continuing operations of approximately EUR 1,633 million, EBITDA from continuing operations of EUR 459 million and net income from continuing operations of EUR 135 million. During this period, the Company’s external coal and coke sales on an Ex-works basis accounted for EUR 1,440 million, which represented 88 per cent of consolidated revenues. For the nine months period ended 30 September 2012, the Company had consolidated revenues from continuing operations of approximately EUR 1,013 million, EBITDA from continuing operations of EUR 232 million and net income from continuing operations of EUR 53 million. During this period, the Company’s external coal and coke sales on an Ex-works basis accounted for EUR 879, which represented 87 per cent of consolidated revenues. Since 2007, the Company has been focused on making capital investments to improve the efficiency and productivity of its coal mining operations. POP 2010, which was initiated to upgrade longwall and development equipment at the Company’s existing mines was completed in 2009. In addition, COP 2010, which was initiated to centralise coking operations, and the SAFETY 2010 program, which was initiated to further improve work safety in the Company’s mines, were fully implemented in 2010. The Company’s capital investment programs have resulted in productivity gains, improved efficiency and raised the safety levels of the Company’s operations. In early 2010, the Company launched its 2015 Perspective Program, a set of cultural values intended, amongst other things, to build on the gains and efficiencies achieved by the POP 2010 investment by further

85 improving employee care and labour productivity and ensuring consistent exploitation of coal reserves, occupational safety and good customer relations. The Company is focused on its core business of coal mining and coke production. In line with this strategy, on 21 June 2010, the Issuer concluded the sale of its energy business to Dalkia, a leading energy group in the Czech Republic, for CZK 3.584 billion in cash. Dalkia is a leading energy group in the Czech Republic as a heat producer and distributor and is a member of the ‘Veolia Environment Group’. In connection with the sale of NWR Energy, the Issuer will continue to purchase utilities from Dalkia Industry CZ and Dalkia Commodities CZ under a long-term agreement, expiring in 2029.

Competitive Strengths The Company believes that its key strengths are:

A Leading Market Position and Scale in the Czech Republic and Central Europe in Terms of Revenue and Amount of Coal Produced. The Company is the only hard coal producer in the Czech Republic and a leading producer of hard coal in Central Europe in terms of revenues and volume of coal produced. It is also the leading supplier of foundry coke for foundries and stone (mineral) wool producers based in the Czech Republic in terms of tonnage sold. The Company has a large and diverse reserves base and is able to source and blend coal from multiple mines to meet the demands of customers who require specific blends of coal of varying specifications. As at 1 January 2012, the Company had approximately 385 million tonnes of proved and probable reserves (including approximately 190 million tonnes of probable reserves at D˛ebiensko).´

Diversified Products, Coal and Integrated Mining and Coking Operations leading to Greater Cost-Efficiency. The Company produces both coking coal for use in steel production and thermal coal for use in electricity and heat generation. Having diversified reserves allows the Company to be flexible when one type of coal is preferred over another type of coal or when coal blends of several types of coal are required. The Company’s mix of coal qualities also provides it with an opportunity to work with many different types of coal customers. More than 80 per cent of the Company’s proved and probable reserves is high-quality coal (that is, coal having high calorific value (high BTU/lb) and low sulfur content) which can be sold as coking coal. Coking coal generally commands higher prices and generates higher revenues for the Company with higher margins relative to thermal coal. Approximately 45 per cent of the volume of coal sold to third parties by the Company in the year ended 31 December 2011 consisted of coking coal and approximately 53 per cent of the volume of coal sold to third parties by the Company in the nine months period ended 30 September 2012 consisted of coking coal. The Company benefits from the integration of its coal mining and coke production operations. The Company sells coke to regional steel companies and foundries, who rely on the Company to provide specific qualities and blends of coke. In addition to allowing the Company to provide a broader range of services to its customers, the Company believes that integration allows it to capture higher margins attributable to the sale of coke than would otherwise be achieved through the sale of coking coal alone and also allows the Company to maintain strong customer relationships by providing coke capacity in addition to coking coal.

Strong Positioning to Benefit from Positive Trends in Steel Production, Electricity Demand and Industrial Growth in Central Europe. The Company believes it is well positioned to take advantage of any renewed industrial growth in Europe, leading to increased demand for steel, and in turn coking coal, following the effects of the financial crisis. The World Steel Association reported an increase in crude steel production in the EU of approximately 2.8 per cent in 2011, whilst steel production fell by approximately 4.5 per cent during the first ten months of 2012. Growth in the automobile, construction, manufacturing and machinery industries is a significant potential driver of demand for the Company’s products and the Company believes that the Central European region’s industrial base and lower cost work force will

86 give it a competitive advantage in benefiting from this trend compared to mining companies in Western Europe. Strengthening demand for electricity in Poland, where over 90 per cent of electricity generated is produced from coal, is also projected, with the Polish Ministry of Finance forecasting an increase in demand of electricity of more than 50 per cent by 2030. Such a trend may indirectly benefit the Company as increased demand and prices in Poland influence prices in the wider Central European region.

Long-Standing Relationships with Customers and a Stable Customer Base influenced by Geographical Positioning. The Company has long-standing relationships with its key customers, many of which have production facilities which the Company or its predecessors have served for over 50 years. The Company’s customers include large, established companies, including global steel producers, large regional steel producers, electric and heat utilities and other large industrial companies. The Company believes it has a reputation for reliability, superior product delivery, familiarity with its customers’ needs and customer service that has enabled it to maintain these customer relationships. For example, steel companies typically adapt their coking ovens for specific coal qualities to increase efficiency and organise their logistics for coal delivery with their coal supplier. Consequently, the Company believes that coal customers have substantial investments embedded in their relationships with a particular supplier, such as the Company, and that the Company’s long-term supply and logistics relationships with its customers, together with its ability to supply high quality coal blends, therefore provide it with a competitive advantage over other suppliers of coal. In addition, the Company benefits significantly from the landlocked location of the production facilities of its customers in the Czech Republic and Central Europe and the proximity of its reserves and its facilities to the facilities of its customers. The limited reach of navigable waterways near many industrialised areas of Central Europe provides a competitive cost advantage to coal producers, such as the Company, with its coal mines being located near the sites of steel mills and electricity generating facilities in the region, being able to efficiently deliver coal and coke to such customers by rail. The landlocked location of customers in Central Europe makes importing coal from overseas generally more expensive than using locally sourced coal. The Company believes that the higher transportation costs associated with such overseas coal provide the Company with a competitive cost advantage in servicing such regional customers as a result of the close proximity of the Company’s coal mines to its customers’ production facilities, and to a regional transportation system combined with long-term relationships with transportation providers which generally facilitates the Company’s delivery of coal to its customers, relative to overseas competitors, who generally rely on long distance sea freight, ports with limited capacity and longer overland distances from port to customer.

Significant Growth Potential in Poland In June 2011, the Company’s Board of Directors gave its approval for the D˛ebiensko´ coalmine development project in Poland, based on the outcome of a detailed feasibility study, an extensive internal review of the project and long-term market considerations. In the first quarter of 2012, construction works on the D˛ebiensko´ project progressed according to plan. However, the risk profile related to water management changed and long-term water treatment liabilities need to be reviewed. In addition, the Company sought competitive bids for certain parts of the project, which indicated that inflationary pressures for mining equipment and services in Poland would affect overall project cost. The Company, therefore, capped capex spend for 2012 at EUR 5 million, pending a review of the project’s parameters. The review will involve several months of engineering work with the results of the review expected during the first quarter of 2013. Capex spend on D˛ebiensko´ will again be limited during 2013 and less than the 2012 capex regardless of the outcome of this review. The Company holds a 50-year mining license, granted in 2008, to extract coal from D˛ebiensko´ and made an application for an amendment to this license to enable the Company to mine the additional shallower coal seams which is currently suspended on request of the Company. See ‘‘Risk Factors — Risks Relating to Government Regulation — The Company may be unable to obtain and renew permits and licenses necessary for its operation or mining of specific coal

87 deposits, which would reduce its production and adversely impact the Company’s business, financial condition and results of operations.’’ Total reserves in D˛ebiensko´ are estimated to be 190 million tonnes of coal, of which 7/8 are expected to be coking coal and 1/8 thermal coal. The quality mix of the coking coal is expected to be 2/3 hard coking coal and 1/3 semi-soft coking coal. It is expected that the average production will be approximately 2 million tonnes per annum. Mining unit costs at D˛ebiensko´ are estimated to be around 10-15 per cent lower compared to OKD’s existing mining operations. Once fully operational and subject to the successful conclusion of the review, the D˛ebiensko´ mine will offer the opportunity to significantly increase the Company’s coking coal production and enable organic growth in the regional coal market. The Company believes that the D˛ebiensko´ mine provides the Company with significant potential to increase reserves, production capacity and revenues.

Focused Capital Expenditure Programs and Operational Efficiency Since 2007, the Company has invested significantly in capital investment programs designed to improve the efficiency and profitability of its mining and coking operations. These include POP 2010, which was initiated to upgrade longwall and development equipment at the Company’s existing mines, COP 2010, which was initiated to centralise coking operations, and the SAFETY 2010 program, which was initiated to improve safety in the Company’s mines. These programs have resulted in productivity gains and improved efficiency by allowing the Company to mine at deeper levels using new mining equipment. As a result of the implementation of the POP 2010 equipment, the average longwall productivity (in tonnes produced per day per longwall set) for the year ended 31 December 2010 increased approximately 23 per cent compared to the year ended 31 December 2007, being the last year of production without any POP 2010 impact, with the new longwalls producing on average approximately 2,800 tonnes of coal per longwall per day, an improvement of 72 per cent compared to the old equipment. The new longwalls also reduced costs and raised the safety levels of the Company’s operations. In the nine months period ended 30 September 2012, mining LTIFR improved by 6 per cent compared to the nine months period ended 30 September 2011 to 7.48, and by 38 per cent since 2008. The Company believes that these capital investment programs have strengthened its competitive advantage, improved productivity and enhanced access to, and efficiency of, extracting reserves. The Company also believes that it has lower unit operating production costs and logistics costs compared to its competitors in countries such as Germany and Poland. These relatively low operating costs provide it with an advantage as compared to other regional mining companies, including state-owned mining companies.

Strong Balance Sheet The Issuer has a strong balance sheet and, as at 30 September 2012, had cash and cash equivalents of EUR 443 million. The significant cash position preserves liquidity and provides the Company with flexibility to manage volatility in its business. In addition, the strength of its balance sheet provides opportunities for organic growth investments and enables the Company to take advantage of strategic opportunities that may from time to time become available.

Strong Management Team The Company has a strong and established management team headed by experienced and knowledgeable industry practitioners. The Company’s senior executives together have an average of approximately 20 years of experience in the coal and mining industry, and bring to the Company regional experience, knowledge of coal marketing, cost cutting, managing coal production, financial structuring and business development.

Good Relations with Regulators and Trade Unions The Company believes that its long-standing relationships with Czech government agencies and its developing working relationship with Polish government agencies provide it with an advantage, enabling it to respond to changes in the regulatory environment. The coal industry in the Central European region is heavily regulated, with various regulatory agencies that oversee mining, environmental, health, safety and employment matters. The Company believes it benefits

88 from established and co-operative relationships with regulatory agencies in the Czech Republic, attributable to the Company’s predecessors having been Czech government controlled entities and the Company’s position as one of the largest employers in the Czech Republic. These relationships are further enhanced by the Company’s management and the BXR Group and its shareholders, who have experience in working with the agencies responsible for regulating the mining industry in the Czech Republic. In Poland, the Company has also developed good relationships with the Polish government and the relevant regional and municipal governmental authorities in connection with development projects in the country, which includes the potential reopening and development of D˛ebiensko.´ Further, the Company believes it has strong relationships with its employees and trade unions. The Company has not experienced any work stoppages due to industrial action or wage negotiations since 1990, despite occasional announcements of strikes and subsequent cancellations by the trade unions in the past. The most recent wage negotiations were successfully completed with the trade unions in April 2012 covering the wage level for 2012. For both OKK and OKD, the collective bargaining for 2013 is still in progress. In case new collective bargaining agreements are not agreed, the current collective bargaining agreements will remain in force until 31 December 2013.

Strong Health and Safety Record The Company believes that safeguarding the health and promoting the safety of its workers is a top priority and an integral part of its business. The number of reportable injuries decreased by 9 per cent for the year ended 31 December 2011 compared to the year ended 31 December 2010 and decreased by 6 per cent for the nine months period ended 30 September 2012 compared to the nine months period ended 30 September 2011. The Company has also sought to improve safety in its mines through the implementation of its capital investment programs, including the SAFETY 2010 program in which the Company invested approximately EUR 6 million in 2010. The Company believes that its emphasis on safety is one of the key drivers of its relationship with its employees. The Company’s ability to avoid lost-time injuries fosters good relationships with its employees, regulatory agencies and regional and municipal governmental authorities, which ultimately enhances the Company’s business.

Strategic Shareholder Support through Regional and Industry Expertise BXR Group is an experienced investor with significant expertise and background in the energy industry and significant expertise and in-depth knowledge of the Central European market generally. Zdenek Bakala, a Non-Executive Director and Chairman of the supervisory board of BXR Partners a.s., is an established figure in the Czech business community and has been involved in finance and business in Central Europe since the early 1990s and has made significant investments in, and has a track record for, growing companies in the region. Peter Kadas, a Non-Executive Director and senior employee of BXR Partners a.s., an affiliate of BXR Group Limited, has been involved in many investments in Central Europe. In 1990, Mr. Kadas established the Budapest office of Credit Suisse First Boston and, in 1995, he co-founded Renaissance Capital, the first private investment bank in Russia. From 1997 to 2000, Mr. Kadas was managing director of a joint venture between Croesus of New York and Central European Partners. As the Company represents the most significant holding of the BXR Group, it benefits from the in-depth regional knowledge of BXR Group and its shareholders, which advises the Company on financial and strategic matters and assists in the identification and execution of financing and acquisition opportunities. The Company seeks to leverage their expertise and regional and industry knowledge to maintain its relationships with leading coal consumers, to secure new mining sites and to implement operational improvements.

Strategic Objectives The Company seeks to distinguish itself from its competitors in terms of responsiveness to customer specifications, production of high quality coal products, timeliness of delivery and knowledge of market trends to maintain its leading market position in the Czech Republic and Central Europe. The Company intends to accomplish this by pursuing the following focused business strategy.

89 Pursuing Attractive Growth Opportunities The Company intends to continue to selectively expand its operations, reserve base and long-term production by pursuing attractive growth opportunities in Central Europe and other markets, which would complement the Company’s current operations. Privatisation candidates and recently privatised coal companies represent a significant area of opportunity for the Issuer. The Company’s proposed acquisition of the Polish thermal coal producer, Lubelski W˛egiel Bogdanka S.A. (‘Bogdanka’) in 2010, was an example of the Company identifying and pursuing growth opportunities on terms attractive to the Company and its shareholders. The Company’s offer was not accepted by the requisite number of Bogdanka’s shareholders and was therefore unsuccessful. The Company’s decision not to raise the offer price is indicative of its determination to pursue growth opportunities only on commercial terms that meet its return requirements. In addition, the Company may pursue, on a selective basis, acquisitions outside the Central European region, on its own or with a joint venture partner. The Company anticipates that its acquisition targets will typically be earnings accretive or will otherwise benefit the Company’s financial results.

Increasing Scale through Organic Growth of Existing Mines and Development Sites The Company intends to continue to grow its business organically, primarily by converting resources to reserves and by adding reserves through, among other things, developing the Company’s existing mines and development sites. The geological configuration of the Company’s mines involves significant investment in underground equipment, and the Company’s mining strategy and capital investment programs are designed to maximise the development of its reserve base. The new underground mining equipment acquired as part of POP 2010 has enabled the Company to safely extract a larger proportion of coal from the Company’s existing resources. This larger proportion of coal extraction is achieved through the scalable use of longwall equipment that allows for extraction from the full height of high coal seams, safe and more automated access to seams at low height, and extraction from deeper seams. The Company’s reserve strategy is in the near term aimed at enhancing productivity and cash flow and enhancement of the Company’s reserve base in the long term. The Company’s reserves strategy also involves assessing the extension of the working lives of the Company’s existing mines through continued underground exploration of the mining area, using improved equipment to mine deeper seams and considering new methods of mining, such as the room-and-pillar method, to open new coal beds. In addition, the Company is in the process of assessing its options for developing the D˛ebiensko´ coalfield in Poland. The similar geological conditions and mining techniques and the proximity of D˛ebiensko´ and the Company’s other Polish development project, Morcinek, to the Company’s existing mining operations, coupled with the Company’s existing use of Polish miners and knowledge of the Polish mining business environment through the operations of its wholly- owned subsidiary, Karbonia, provide a rational basis for integration with the Company’s existing mining operations. The Company considers these projects to be medium to long-term projects and they will not come online in the short term.

Improving Efficiency, Profitability and Safety of Mining Operations The Company plans to continue to build on the gains and efficiencies achieved by POP 2010, SAFETY 2010 program and COP 2010. In early 2010, the Company launched its 2015 Perspective Program, a set of cultural values intended, amongst other things, to further improve employee care and labour productivity and ensure consistent exploitation of coal reserves, occupational safety and good customer relations. The Company continues to focus on maintaining a safe work environment to minimise injuries to its workforce and maintain the efficiency of its operations. The Company believes that its emphasis on safety is one of the key drivers of its relationship with its employees. The Company’s ability to avoid lost-time injuries fosters good relationships with its employees, regulatory agencies and regional and municipal governmental authorities, which ultimately enhances the Company’s business. The equipment purchased as part of POP 2010 involves further automation of extraction and has enhanced the safety environment for the Company’s workforce.

90 The Company also has an environmental monitoring system in place, which consists of special monitoring of individual types of impacts on the environment. Monitoring of and adhering to high environmental standards is important to meet the Company’s corporate social responsibility targets as part of its wider strategic objectives. There are special monitoring systems in the following areas: 1) Reclamation (the so called Comprehensive Reclamation and Rehabilitation Plan for a 5-year period); 2) Emissions to air, whereby emissions from OKK operation are monitored on monthly, quarterly and yearly basis; the results are verified and reported to relevant institutions regularly; 3) Energy consumption is monitored internally on monthly basis with the aim to reduce it not only from the environmental perspective but also from the financial perspective; 4) Water withdrawal and discharge is monitored on yearly basis, verified and reported to relevant institutions; 5) Waste production and disposal is monitored on 6-month basis and reported to the relevant institutions yearly; and 6) Material consumption is monitored and reported internally on monthly basis.

Recent Developments Karvina´ project The Karvina´ mine, located in the Czech Republic, is the largest operating mine in the Company’s portfolio. In autumn 2011, the Company entered into negotiations with the City of Karvina´ regarding an extension to the mining activities in the area, which remain ongoing. The aim is to extract more than 30 million tonnes of coking coal from the area via the existing Karvina´ mine. Work is currently taking place on the expansion of the Karvina´ mine to access the adjacent coal reserves, a project that the Company aims to complete by 2016 - 2017. This venture will allow access to hard coking coal deposits through horizontal development of the Karvina´ mine, and consists of two principal projects: Project Karvina´ and Project Orlova-V´ yhoda.´ The extension of mining activities under the Karvina´ project may involve costs (including costs in connection with a possible relocation of an existing industrial zone), which the Company is currently evaluating. Accordingly, the Company may adjust the project to optimise its cost/benefit profile. Such an adjustment, if adopted, could result in the Company being able to extract a lesser amount of coal under this project then originally anticipated. A connecting gate road development was initiated between the Darkov mine and the Karvina´ mine during spring 2011. Completion of the project, including the installation of belt haulage systems to facilitate the transportation of coal and other materials underground is scheduled for the second half of 2013 and will lead to the optimisation of OKD’s preparation plant capability. Two shaft-deepening initiatives are also planned at Karvina´ with completion expected between 2017 - 2020.

D˛ebiensko´ project In June 2011, the Company announced that its Board of Directors had given its approval for the D˛ebiensko´ project, based on the outcome of the Detailed Feasibility Study, an extensive internal review of the project as well as long-term market considerations. The project officially started on 3 December 2011. In the first quarter of 2012, construction works on the D˛ebiensko´ project progressed according to plan. However, the risk profile related to water management has changed and long-term water treatment liabilities now need to be reviewed. In addition, recent competitive bids for certain parts of the project reflect inflationary pressures for mining equipment and services in Poland. The Company, therefore, capped capex spend for 2012 at EUR 5 million, pending a review of the project’s parameters. The review will involve several months of engineering work with the results of the review expected during the first quarter of 2013. Capex spend on D˛ebiensko´ will again be limited during 2013 and less than the 2012 capex regardless of the outcome of this review.

91 The Company has applied for an amendment to its current D˛ebiensko´ 1 license to mine at shallower levels. The application has been suspended at the request of the Company and may be relaunched in the near future. This alternative mining plan, if implemented, is expected to increase the probable reserves at D˛ebiensko´ as a result of the mining of shallower seams by developing parallel slopes (spiral openings). The alternative mining plan would involve a smaller initial investment and earlier start of operations, at lower production levels compared to the existing mining plan. It would also significantly extend the life of the mine, and would still allow for the subsequent mining of the deeper seams. The Company estimates that there are approximately 190 million tonnes of probable reserves in the D˛ebiensko´ mine, of which 7/8’s is coking coal and over 50 per cent of which is contained in thick seams (greater than 1.5 meters), offering potential for long longwall panels and thereby offering the possibility of mining coal at a lower cost. The Company expects this probable reserves figure would increase if the amendment to its current D˛ebiensko´ 1 mining license is finally granted. If the Company applies for an amendment to the D˛ebiensko´ 1 mining license and the amendment is granted, the Company would invest approximately EUR 400 million over a five-year period in order to ramp-up production at D˛ebiensko.´ If an amendment is not granted, the Company intends to develop the mine under the terms of the existing license, which may require a larger capital investment and take longer to ramp-up production. However, an investment to ramp-up production at D˛ebiensko´ is not expected to be made until 2014 at the earliest. See ‘‘Risk Factors — Risks Relating to Government Regulation — The Company may be unable to obtain and renew permits and licenses necessary for its operation or mining of specific coal deposits, which would reduce its production and adversely impact the Company’s business, financial condition and results of operations’’ and ‘‘— Projects and Prospects — Polish Development Projects — D˛ebiensko´ coal field, Poland’’ below for further details.

Sale of Energy Business In line with its strategy to focus on its core business of coal mining and coke production, on 21 June 2010, the Issuer concluded the sale of its energy business to Dalkia, a leading energy group in the Czech Republic, for CZK 3.584 billion in cash. In connection with the sale of NWR Energy, the Issuer will continue to purchase utilities from Dalkia Industry CZ and Dalkia Commodities CZ under a long-term agreement, expiring in 2029.

Capital Investment Programs Since 2007, the Company has undertaken a series of capital investment programs to improve the efficiency, profitability and safety of its mining operations. The Company’s POP 2010 program, the aim of which was to upgrade longwall and gate road equipment at the Company’s four existing mines, was completed in 2009. The new mining equipment has improved productivity by enabling the Company to mine in more geologically challenging seams which were previously unsafe to access. As a result of the implementation of the POP 2010 equipment, the average longwall productivity (in tonnes produced per day per longwall set) for the year ended 31 December 2010 increased by approximately 23 per cent compared to the year ended 31 December 2007, being the last year of production without any POP 2010 impact. The operation of the new longwall sets have also resulted in improved employee safety by, for example, allowing better control of the roof strata as a result of their higher load bearing capacity and improving microclimatic conditions through more efficient dust control. In addition, the implementation of the Company’s coking refurbishment program, COP 2010, to consolidate all coke production at a single, more efficient coking plant at Svoboda was completed in 2010 and the newly constructed coke battery No.10 is now running at full capacity. The new battery enabled the Company to increase its foundry coke share in its total coke production volume. In addition, it is expected to improve the efficiency and extend the life of the Company’s coking operations. With the construction of the No. 10 coking battery at the Svoboda plant, the No. 4 coking battery at the Svermaˇ plant was fully shut down by the end of 2010 and production at the Svermaˇ plant was ceased.

92 As a result of the implementation of the POP 2010 equipment and continuous investment in safety, the mining LTIFR improved by 50 per cent for the year ended 31 December 2011 compared to the year ended 31 December 2007. In 2010, the Company launched its 2015 Perspective Program, designed to further build on the gains and efficiencies achieved by the POP 2010 investment. This additional program provides a set of cultural values intended, amongst other things, to further improve employee care and labour productivity and help ensure consistent exploitation of coal reserves, occupational safety and good customer relations. The Company spent approximately EUR 194 million on its capital investment programs in the year ended 31 December 2011, consisting of EUR 100 million in maintenance and safety spending, EUR 90 million in the development of current reserves and operational improvements and EUR 5 million on the D˛ebiensko´ development project. In the nine months ended 30 September 2012, the Company spent approximately EUR 165 million on capital expenditure and expects to allocate EUR 210-220 million to capital expenditures for the full year 2012. However, given the current economic climate, the Company anticipates that capital expenditure will decrease to approximately EUR 100 million per annum in the short to medium term.

Corporate Structure The Issuer currently has four directly owned subsidiaries: (i) OKD, which along with its subsidiaries, operates the Company’s mining operations; (ii) OKK, which produces coke; (iii) Karbonia, whose main business activity will be the extraction of coal in Poland; and NWR Communications which is responsible for all the Company’s external communications. HBZS is responsible for emergency services and waste processing. On 5 October 2010, the Issuer announced its intention to re-incorporate in the United Kingdom, in order to allow FTSE Index Series eligibility. The re-incorporation was effected through an exchange offer pursuant to which each holder of ordinary shares ‘‘A’’ in the capital of the Issuer (‘NWR NV A Shares’) received one ‘‘A’’ ordinary share in the capital of New World Resources Plc (‘NWR Plc A Shares’), a newly incorporated English holding company, in exchange for each NWR NV A Share tendered (the ‘Exchange Offer’). As from 9 October 2012, NWR Plc owns 100 per cent of the NWR A Shares. The current group structure:

BXR GROUP

RPG Property BXR MINING B.V. Free Float B.V. 63.6% A shares

New World Resources Plc 100% B shares 36.4% A shares

100% B shares 100% A shares*

New World Resources N.V.

NWR NWR OKK Koksovny, Communications, OKD, a.s. KARBONIA a.s. s.r.o. S.A.

OKD HBZS, a.s. 10JAN201323552545

Please note that BXR Mining B.V. is owned indirectly by the BXR GROUP * Please note that NWR Plc holds 100 per cent of the NWR NV A Shares as from 9 October 2012.

93 Group History Regular mining activities in the northeast region of the Czech Republic commenced in 1782. Prior to 1946, the hard-coal mining business in the Ostrava Karvina´ region was under the control of several companies. One of the most famous owners was the family of Salomon Mayer Rothschild. With effect from 1 January 1946, the government of the then Czechoslovakia nationalised the hard coal mining industry. In the early 1990’s, state enterprises engaged in coal mining were converted into two joint stock companies (akciova´ spolecnostˇ ), Former OKD and CMDˇ a.s. (‘CMD’),ˇ to prepare them for privatisation. Former OKD comprised most of the mining industry located in the Ostrava Karvina´ region, while CMDˇ operated hard-coal mines in the Kladno region and Ostrava Karvina´ region (CSMˇ in Stonava). In 1994 and 1997, respectively, 40 per cent of Former OKD shares and 45 per cent of CMDˇ shares were privatised through a voucher privatisation program and purchased by individuals and investment funds. From 1998 through to 2004, Karbon Invest acquired controlling stakes in CMDˇ and Former OKD from minority shareholders. A majority stake in Metalimex, a commodities trader, was acquired by CMDˇ and K.O.P., a.s. (both subsidiaries of Former OKD). In 1998, Former OKD purchased all of the outstanding shares of K.O.P., a.s., a majority shareholder of Metalimex. In November 2004, Karbon Invest purchased 46 per cent of the shares of Former OKD. Shortly thereafter, Karbon Invest was acquired by what is now the BXR Group (RPGI and entities directly or indirectly controlled by RPGI). In the second half of 2005, the majority shareholders bought out shares held by the minority shareholders under the newly introduced Czech squeeze-out legislation, consolidating their shareholdings in Former OKD, CMDˇ and Metalimex. On 29 December 2005, New World Resources B.V. was incorporated as a Dutch private company with limited liability in connection with the Restructuring to serve as the holding company for the coal mining operations and the coking business of the Company and certain related businesses other than the Core Business. See ‘‘Operating and Financial Review and Prospects — The Restructuring’’. On 31 December 2007, the Mining Division and the Real Estate Division were created within the Company. New World Resources B.V. was converted into New World Resources N.V. prior to the Issuer’s initial public offering in April 2008. On 5 October 2010, the Company announced its intention to re-incorporate from the Netherlands to the United Kingdom. The Redomiciliation was undertaken to allow FTSE Index Series eligibility, to raise the profile of the Group with international investors and to demonstrate the Group’s commitment to the high governance and control standards according to which it operates its business. The redomiciliation to the United Kingdom was effected through the establishment of a new holding company, NWR Plc, which holds 100 per cent of the NWR A Shares. NWR Plc represents the most significant holding of the BXR Group.

Coal Mining Operations The Company’s hard coal mining business is conducted through OKD, a wholly-owned direct subsidiary of the Issuer. OKD produces coking coal for use in steel production and thermal coal for use in electricity and heat generation. The Company sells coking coal to steel production companies and foundries in either its raw form or as coke. Approximately 41 per cent of the Company’s external coal sales tonnage for the year ended 31 December 2011 was coking coal and approximately 53 per cent of the Company’s external coal sales tonnage for the nine months period ended 30 September 2012 was coking coal. Thermal coal, which accounted for the remainder of the Company’s coal sales, is used by utilities, heating plants and industrial companies to produce steam and electricity. Thermal coal prices have tended to increase to the extent energy demand increases and thermal coal supply diminishes. Thermal coal margins are generally lower than coking coal margins.

Coal Characteristics Coal found in the northeastern region of the Czech Republic tends to have a much higher heat value than coal found in other parts of the Czech Republic. The Company’s coal is generally bituminous with high BTU, low (i.e. less than 1 per cent) sulfur level and volatile matter ranging from 18 per cent to 31 per cent.

94 Bituminous coals are classified according to vitrinite reflectance, moisture content and volatile content and are graded according to calorific value, the amount and nature of ash yield and sulfur content. Generally, the highest value bituminous coals are those which have a specific grade of volatility and ash content, especially with low carbonate and sulfur content. Plasticity is essential for coking and steel making, where the coal must be able to mix with the iron oxides during smelting. This is measured by the swelling index test. The swelling index is used to select coals for coke blending. The swelling index of coal is a measurement of its increase in volume when heated under prescribed conditions. The test consists of heating several one gramme samples of pulverised coal in a silica crucible over a gas flame under prescribed conditions to form a coke button, the size and shape of which are then compared with a series of standard profiles numbered one to nine in increasing order of swelling. The higher the number, the better coking qualities. The heat content of sub-bituminous coal ranges from 20 to 28 MJ/kg (8,596 to 12,034 BTU/lb) on a moist, mineral matter-free basis. Sub-bituminous coal is used almost exclusively by electric utilities and some industrial customers.

Coal Characteristics

Volatile Sulfur Calorific Swelling matter content Value OKD’s Coal Quality Mine index % % (MJ/kg) Hard coking coal ...... Paskov 8.0 18.3 0.61 27.55 Hard coking coal ...... CSMˇ 7.0 25.9 0.50 27.40 Semi-hard coking coal ...... Darkov 6.5 27.0 0.43 26.10 Semi-soft coking coal ...... Karvina´ (CSA)ˇ 5.5 29.4 0.42 32.83 Thermal coal ...... Karvina´ (Lazy) 3.0 30.2 0.45 22.29

Source: Data relating to swelling index and volatile matter has been provided by an external mining consultant and data relating to sulfur content has been sourced from the Company as at 31 December 2011. The Company’s coking coal characteristics are: • Swelling index: 8 for the high quality coking coal from the Paskov mine and 5.5 to 7 for the standard quality coking coal. • Volatile matter: approximately 18 per cent for the high quality coking coal from the Paskov mine and 26 per cent to 29 per cent for the standard quality coking coal. • Sulfur: all coking coal produced from the company’s mines has a relatively low sulfur content (less than 1 per cent). More than half of the Company’s reserves are coking coal with the right characteristics for use in steel production. The Company’s thermal coal characteristics are: • Heat content 28 to 31 MJ/kg (12,034 BTU/lb to 13,323 BTU/lb) for the best quality thermal coal and 15 to 25 MJ/kg (6,447 BTU/lb to 10,745 BTU/lb) for the standard quality thermal coal. • Ash content for the high quality thermal coal is 5 to 10 per cent and for the standard quality thermal coal 20 to 45 per cent.

Coal Extraction and Production For the year ended 31 December 2011, the Company produced approximately 11.2 million tonnes of coal, substantially all of which was extracted from underground and the remainder of which was produced from surface coal waste deposits (often referred to as sludge ponds), which are attributable to sludge water created as a result of coal processing in prior years. The contribution of individual mines to the total coal production for the years ended 31 December 2011, 2010 and 2009 is set out in the following tables.

95 Mine Output

Year ended Year ended 31 December 2011 31 December 2010 Coking Thermal Coking Thermal coal coal Total coal coal Total (in thousand tonnes) Darkov ...... 1,650 1,450 3,100 2,278 1,336 3,614 Karvina´ (CSA/Lazy)ˇ (1) ...... 582 3,391 3,973 873 3,372 4,245 Paskov ...... 918 114 1,032 877 86 963 CSM...... ˇ 1,950 912 2,862 1,901 470 2,371 Total Mine Output ...... 5,100 5,867 10,967(2) 5,929 5,264 11,193(3)

Year ended 31 December 2009 Coking Thermal coal coal Total (in thousand tonnes) Darkov ...... 2,200 1,060 3,260 Karvina´ (CSA/Lazy)ˇ (1) ...... 1,018 3,155 4,173 Paskov ...... 682 61 743 CSMˇ ...... 1,891 554 2,445 Total Mine Output ...... 5,791 4,830 10,621(4)

Source: NWR Notes: (1) Includes the CSAˇ mine and the Lazy mine, which were merged into one organisational unit in 2008. (2) 10,967 thousand tonnes in the production of coking and thermal coal from the mines only. Sludge ponds produced another 69 thousand tonnes of coking coal and 211 thousand tonnes of thermal coal in 2011, making a total production of 11,247 thousand tonnes. (3) 11,193 thousand tonnes in the production of coking and thermal coal from the mines only. Sludge ponds produced another 250 thousand tonnes of thermal coal in 2010, making a total production of 11,443 thousand tonnes. (4) 10,621 thousand tonnes in the production of coking and thermal coal from the mines only. Sludge ponds produced another 380 thousand tonnes of thermal coal in 2009, making a total production of 11,001 thousand tonnes.

Coal Reserves OKD has a team of 15 geologists, led by a certified geologist who is a member of the European Federation of Geologists. The Company’s geology team is charged with gathering and maintaining reserve information for the Company. The reserve numbers are reported periodically to and independently verified by the Czech Mining Authority and are included in the Czech State database relating to national coal reserves. As at 1 January 2012, the Company had total proved and probable coal reserves of approximately 385 million tonnes (including approximately 190 million tonnes of probable reserves at D˛ebiensko).´ Of the approximately 195 million tonnes of proved and probable reserves (excluding the probable reserves at D˛ebiensko),´ approximately 92 million tonnes are proved reserves that the Company expects to be mined at current operations. The remaining amount, approximately 103 million tonnes, are probable reserves for future development and, in most instances, would require new mining equipment and development work before the Company could commence coal mining. The following table summarises the locations and coal reserves in millions of tonnes of the Company’s active mines as of 1 January 2012. The Company owns approximately one third of the land that the Company mines with the remaining land owned by the Czech government and third parties.

96 Reserves by Mine as of 1 January 2012

Total- Grand Category Karvina´ CSMˇ Darkov Paskov active D˛ebiensko´ Total (in thousand tonnes) Reserves Proved ...... 38,032 26,940 16,926 10,168 92,069 — 92,069 Probable ...... 50,761 17,912 20,496 13,891 103,060 189,858 292,918 Total ...... 88,793 44,852 37,425 24,059 195,129 189,858 384,987 By Coal Type Coking ...... 54,263 19,665 37,425 20,347 131,700 188,846 320,546 Thermal ...... 34,530 25,187 0 3,712 63,429 1,012 64,441 Total ...... 88,793 44,852 37,425 24,059 195,129 189,858 384,987 By Thickness Range (m) 0.75-0.99 ...... 3,321 718 654 6,898 11,591 4,623 16,214 1.00-1.49 ...... 9,811 2,511 3,777 15,554 31,653 77,912 109,565 1.50-2.49 ...... 20,554 10,855 11,002 1,607 44,018 69,303 113,321 +2.50 ...... 55,107 30,768 21,992 0 107,867 38,019 145,886 Total ...... 88,793 44,852 37,425 24,059 195,129 189,857 384,986

Source: NWR The Company’s reserves estimate is based on geological data assembled and analysed by its staff of geologists and engineers. Reserves estimates are periodically updated to reflect past coal production, new drilling information and other geological or mining data. Acquisitions or sales of coal properties will also change the reserve base. Changes in mining methods may increase or decrease the recovery basis for a coal seam as will plant processing efficiency tests. See ‘‘Risk Factors — Risks Relating to the Company’s Business and the Industry — The volume and grade of the coal the Company recovers may be less than the estimates included in this Offering Memorandum’’.

Coal Mines The Company’s hard coal reserves are situated in eight mining areas in the Karvina´ and Ostrava regions of the Upper Silesian basin. The coal deposits in the Karvina´ region, where all OKD mines except for Paskov are located, feature seam thickness ranging from 0.8 meters to 10 meters. The coal deposits in Ostrava region, where the Paskov mine is located, have usual seam thickness from 0.5 to 1.2 meters, while the coal found there shows the highest quality parameters. Until 31 March 2008 the Company had five mines: Darkov mine, CSMˇ mine, CSAˇ mine, Lazy mine and Paskov mine. On 1 April 2008, the Company consolidated the administration of Lazy mine and CSAˇ mine under the name Karvina´ mine. Certain of the operating and statistical data in this document show Lazy mine and CSAˇ mine as separate mines. The Company’s four mines have 22 shafts extracting coal from depths ranging from 600 to 1,100 meters below the surface. Darkov mine, CSMˇ mine and Karvina´ mine are connected through underground tunnels and railways on the surface.

97 Location of OKD Mines, development projects and OKK coking plants

10JAN201322142978

Source: NWR

Overview of Operating Mines The following provides a description of the operating characteristics of the principal mines and reserves of each of the Company’s mining operations as at 31 December 2011, unless otherwise stated.

Units Darkov Karvina´(1) Paskov CSMˇ Total Proved and probable reserves(2) as at 1 January 2012 ...... thousand tonnes 37,425 88,793 24,059 44,852 195,129 Washing plant capacity . . . tonnes/hour 1,800 1,940 750 1,300 5,790 Saleable mine production (for the year ended 31 December 2011) .... thousand tonnes 3,215 4,178 1,054 2,753 11,199 Number of shafts ...... 5 7 6 4 22 Number of sites ...... 2 2 1 2 7 Average number of longwalls ...... 4,5 4,4 4,4 4,9 18.2 Lifespan ...... Years 19 16 18 19 — Number of workers (OKD mining business units only) — Employees ...... 2,394 3,444 2,384 2,463 10,685 — Contractors(3) ...... 1,063 1,220 647 1,440 4,370 Total number of workers . 3,457 4,664 3,031 3,903 15,055

Source: NWR Notes: (1) The Karvina´ mine was established on 1 April 2008 by merging the CSAˇ and the Lazy mines into one organisational unit. (2) Prepared by a certified geologist employed by OKD. See ‘‘Risk Factors — Risks Relating to the Company’s Business and the Industry — The volume and grade of the coal the Company recovers may be less than the estimates included in this Offering Memorandum.’’ (3) Based on Company estimates.

98 Brief History of Mines Darkov Mine Mining in the area where the Darkov mine is located began in 1853 in the Gabriela mine. The Hohenegger and Austria mines began production in 1883 and 1907, respectively. These mines were merged in the 1950s. The Zavod´ 2 site began operations in 1982.

Paskov Mine Paskov, with its one active site in Star´ıc,ˇ is the only active mine in the Ostrava region. The original Paskov site was founded in 1960, began operations in 1966 and closed in 1999. The Star´ıcˇ site was founded in 1963 and began operations in 1970. In 1994, the Paskov and Star´ıcˇ sites were merged into Paskov.

CSMˇ Mine The construction works for CSMˇ mine located in Karvina´ began in 1958 and operations began in 1969. In 2005, CMD,ˇ which owned CSMˇ mine, merged with OKD.

Karvina´ Mine The Karvina´ mine was established on 1 April 2008 by merging the CSAˇ mine and the Lazy mine into one organisational unit. The Company consolidated the administration of Lazy mine and CSAˇ mine under the name Karvina´ mine. The construction works at the Lazy location began in 1890 under the name Neuschacht Lazy. Until 2006, Lazy also included the Dukla mine site, founded in 1907. In 2006, the Dukla site was transferred to Paskov and is currently being closed down. The CSAˇ mine originally consisted of two mines, Jindrich and Frantiska,ˇ which were founded in 1856. Other mines that belong to CSAˇ today were founded as follows: Karel in 1859, Jan in 1860 and Hlubina in 1870. In 1951, the mines were merged into one mine currently known as Jan-Karel. Shaft Versuch was drilled in 1822 and the Eleonora mine was founded in 1854. In 1883, the mines were merged into the Doubrava mine, which was merged with CSAˇ in 1995.

Mine Closures During the period from 1992 to 2003, the Company closed and liquidated eight mines, three ineffective sites and 62 shafts. In 2006, the Company commenced liquidation of the Dukla Mine and two shafts at Doubrava. All costs connected with liquidations of mines since 2004 are borne solely by the Company. In 2011, 2010 and 2009, the Company incurred costs connected with mine closures of approximately CZK 14.0 million (approximately EUR 0.6 million), CZK 30.2 million (approximately EUR 1.2 million) and CZK 7.0 million (approximately EUR 0.3 million), respectively. The process for closing and liquidating mines is regulated by Czech mining law. The District Mining Authority must approve all liquidation works in shafts and underground. See ‘‘Regulatory Matters’’ for further details. In general, mine liquidation includes sealing underground shafts, demolition of unusable surface buildings, providing social benefits for employees who were laid off, and landscape reclamation or remediation. For shaft liquidation (filling the shaft), the Company uses hardened (mixture of ash and cement) and non-hardened (waste rock) material. Hoist tower, compressors, mining fans and other buildings are demolished during mine liquidation.

Transfer of Certain Old Mines Until 2000, OKD had concentrated all discontinued mines into a division called Odra mine. The main purpose of this division was to supervise reclamation works at the closed mines and to administer claims and obligations towards current and former employees of the discontinued mining units. In 2000, OKD began the process of selling Odra mine to a state-owned company, DIAMO, s.p. The sale was completed in 2002.

99 In 2004, OKD sold its Barbora mine to DIAMO, s.p. At this time, DIAMO, s.p. also assumed all of OKD’s obligations vis-a-vis` all its former employees. Simultaneously, CMDˇ sold its closed mines in the Kladno area to state-owned Palivovy kombinat´ Ust´ ´ı, s.p. (‘PKU’) in a similar transaction. By operation of law, OKD is the statutory guarantor of the obligations assumed by DIAMO, s.p. and PKU existing at the time of the transfer.

Coal Mining Techniques There are two main coal-mining methods: underground mining and open-pit mining. There are two forms of underground mining procedures: longwall mining and room-and-pillar mining. Longwall mining is an established coal mining technique widely used in Europe, South Africa, the United States, and Australia, among other places, while room-and-pillar mining is used especially in the United States and Canada. The Company engages in underground mining and currently employs the longwall mining system to extract coal from each of its four mines, generally utilising equipment purchased from German, Polish, Austrian and Czech manufacturers. Development is by means of single entry gate-roads and access tunnels. All four mines are operated under a relatively deep cover, ranging from approximately 600 meters to 1,100 meters, and are accessed by vertical shaft openings. As at 31 December 2011, the Company operated 22 mining shafts. Coal seams range in thickness, from 0.8 meters to 10 meters. In longwall mining, large panels of coal are identified during the development stage of the mine and are then extracted in a single continuous operation. Longwall mining is a fully mechanised underground mining technique in which the mining face is supported by hydraulic props and/or mainly with shield supports, while the coal is excavated by a coal shearer and/or coal plough and then transported to the surface by electric conveyor belts. Road headers and/or drilling and loading machines are used to develop access to long rectangular blocks of coal which are then mined with longwall equipment, allowing controlled subsidence behind the advancing machinery. After the mining of a particular longwall panel has been completed, the longwall system is moved to a new mining area. The key characteristics of longwall mining, compared to room-and-pillar mining, include high productivity, comparatively high reserve recovery rates, safety and reliability. Longwall mining is most effective for large blocks of medium to thick coal seams. High capital costs associated with longwall mining demand a large, contiguous reserve base. Ultimate seam recovery of in-place reserves using longwall mining can reach more than 70 per cent. This is much higher than for the room-and-pillar mining method. Although the Company does not currently engage in the room-and-pillar method, the Company has probable reserves available within the current mining areas, including those areas that the Company is currently expanding into at its Karvina´ mines, which could be extracted using the room-and-pillar method, provided that there is no surface subsidence. The Company has developed conceptual mine plans to extract the coal from various seams in these areas using continuous mining and partial extraction using the room-and-pillar method.

100 Productive shafts at OKD mines as at 31 December 2011

Shaft entrance on Mine Plant Name of the shaft the surface Shaft bottom Total length (meters (meters below (meters) above sea sea level) level) Darkov ...... Plant 2 Output shaft M´ır 4 236.8 776.0 1,012.8 Input shaft M´ır 5 235.1 676.0 911.1 Input shaft Da 1 233.6 665.4 899.0 Plant 3 Input shaft 282.5 534.4 816.9 Sucha-Stonava´ I Output shaft 282.5 530.4 812.9 Sucha-Stonava´ III Karvina-´ CSAˇ . . Plant CSAˇ Input shaft 1 (Jan) 234.0 727.9 961.9 Input shaft 2 234.0 724.0 958.0 (CSAˇ 2) Output shaft CSAˇ 3 230.0 775.0 1,005.0 Output shaft Do III 281.5 895.0 1,176.5 Karvina-Lazy´ . . Plant Lazy Input shaft 2 261.2 589.4 850.6 Input shaft 5 261.7 585.4 847.1 Output shaft 6 261.7 643.4 905.1 Paskov ...... Plant Output shaft I/1 273.5 304.6 578.1 Input shaft I/2 273.4 633.0 906.4 Output shaft II/3 305.5 614.1 919.6 Input shaft II/4 305.5 850.0 1,155.5 Output shaft III/5 305.5 455.5 761.0 Input shaft III/6 305.5 642.8 948.3 CSMˇ ...... CSMˇ Sever Input shaft 272.6 831.8 1,104.4 Output shaft 272.6 732.0 1,004.6 CSMˇ Jih Input shaft 277.9 826.0 1,103.9 Output shaft 278.1 695.0 973.1

Source: NWR. All of the raw coal mined at the Company’s longwall mines is washed in preparation plants to remove ballast. The processing capacity of the washing/processing plants is designed to average the variations of the coal production volumes and coal quality within the seam(s) to get a homogenous product in terms of physical and chemical parameters. Generally, the Company uses three coal processing methods: • Rough selection: first level of sorting, where the major impurities (such as large stones, wood, debris and metal) are eliminated by a system of screens. • Washing: second level of sorting, where the larger grains (approximately 40 mm) are separated by washing and smaller grains (0.5-40 mm) are separated in washboxes and drewboys (at all mines except at Lazy) or heavy hydrocyclones and heavy sorting tanks (at Lazy only). • Flotation: third level or sorting, where the smallest particles (0-0.5 mm) are separated by flotation methods (at all mines except for Lazy). Each mine uses a coal-processing unit specifically designed for the quality of coal produced by mining and for the final products delivered to the customer.

101 Coal Production and Sales The following table represents the Company’s coking coal and thermal coal sales for the years ended 31 December 2011, 2010 and 2009.

Year ended 31 December 2011 2010 2009 Coking Thermal Coking Thermal Coking Thermal Units Coal Coal Coal Coal Coal Coal Production ...... Thousand tonnes 5,722 5,525 6,271 5,172 6,072 4,929 Sales (External) ...... Thousand tonnes 4,797 5,849 5,599 5,113 5,451 4,610 Revenues (on EXW basis) ...... EUR thousand 847,698 389,490 772,477 309,229 469,753 330,250 Price ...... EUR/tonne 177 67 138 60 86 72

Source: NWR The following table represents the Company’s coking coal and thermal coal sales for the nine months period ended 30 September 2012 and 2011.

Nine months period ended 30 September 2012 2011 Coking Thermal Coking Thermal Units Coal Coal Coal Coal Production ...... Thousand tonnes 4,057 4,551 4,390 4,251 Sales (External) ...... Thousand tonnes 3,835 3,373 3,541 4,472 Revenues (on EXW basis) ...... EUR thousand 504,238 245,490 642,443 293,481 Price ...... EUR/tonne 131 73 181 66

Projects and Prospects The Company is pursuing several projects and prospects in the Czech Republic and Poland. The projects are categorised as follows:

Polish Development Projects D˛ebiensko´ coalfield, Poland The D˛ebiensko´ mine is located in southern Poland, in the Northwestern part of the Upper Silesian basin, near the city of Rybnik, approximately 40 kilometres from the border of the Czech Republic. The D˛ebiensko´ mine was previously operated by various Polish companies until 2000 when Gliwicka Spo´łka W˛eglowa terminated mining due to a lack of financing that would enable further development of the mine to a depth in excess of 750 meters below surface. In early 2006, the Company started to develop this project, aimed at accessing and mining seams in the region between 750 meters and 1,400 meters below surface. On 31 August 2007, the Minister of Environment of Poland approved the Company’s proposal providing for 2.8 million tonnes of saleable coking coal per year and, in June 2008, a 50-year mining license for the D˛ebiensko´ 1 mine was granted. The Company has assessed logistics and infrastructure in the area and is in the process of acquiring key surface infrastructure, including land and selected buildings which could be utilised in the Company’s future mining operations. According to a report issued by JT Boyd, which was completed in the first half of 2009, it is estimated that there are approximately 190 million tonnes of probable reserves in the D˛ebiensko´ mine, of which substantially all is coking coal and over 50 per cent of which is contained in thick seams greater than 1.5 meters, offering potential for long longwall panels and thereby offering the possibility of mining coal at a lower cost. The JT Boyd report concluded that, while actual shaft construction could be completed within four years, the total construction process to ramp-up production under the D˛ebiensko´ 1 mining license would take approximately seven to eight years, taking into account time required for

102 underground development of the mine. They also estimated that the initial investment required for the D˛ebiensko´ project to reach full production would be approximately EUR 800 million. Such an estimate, however, was predicted on a mining plan involving drilling new mining shafts to pursue coal extraction at deeper levels. Later in 2009, the Company internally prepared an alternative mine development plan which provides for the Company’s use and exploitation of the shallower seams at D˛ebiensko,´ in addition to mining the reserves under the D˛ebiensko´ 1 license. The Company has applied for an amendment to its current D˛ebiensko´ 1 license to mine at these shallower levels, the application has been suspended at the request of the Company and may be relaunched in the near future. This alternative mining plan, if implemented, is expected to increase the probable reserves at D˛ebiensko´ as a result of the mining of shallower seams by developing parallel slopes (spiral openings). The alternative mining plan would involve a smaller initial investment and earlier start of operations, but at lower production levels compared to the existing mining plan. It would also significantly extend the life of the mine, and would still allow for the subsequent mining of the deeper seams. The Company has not commissioned an external feasibility study as regards the alternative mine development plan and the reserves associated with the alternative plan are not currently part of the Company’s mining reserves base. See ‘‘Risk Factors — Risks Relating to Government Regulation — The Company may be unable to obtain and renew permits and licenses necessary for its operation or mining of specific coal deposits, which would reduce its production and adversely impact the Company’s business, financial condition and results of operations.’’ Following the outcome of the initial feasibility study and the subsequent preparation of the Company’s alternative mining plan in 2009, the Company commenced a detailed feasibility study to map out the project scope, execution plan, budget and schedule, as well as a significant proportion of the engineering for the project, in September 2010. In June 2011, the Company announced that its Board of Directors had given its approval for the D˛ebiensko´ project, based on the outcome of the detailed feasibility study, an extensive internal review of the project as well as long-term market considerations. The project officially started on 3 December 2011. In the first quarter of 2012, construction works on the Debiensko project progressed according to plan. However, the risk profile related to water management has changed and long-term water treatment liabilities now need to be reviewed. In addition, recent competitive bids for certain parts of the project reflect inflationary pressures for mining equipment and services in Poland. The Company, therefore, capped capex spend for 2012 at EUR 5 million, pending a review of the project’s parameters. The review will involve several months of engineering work with the results of the review expected during the first quarter of 2013. Capex spend on Debiensko will again be limited during 2013 and less than the 2012 capex regardless of the outcome of this review.

Morcinek coalfield, Poland Morcinek is located in southern Poland, next to the border with the Czech Republic in the area of a former mining district Kaczyce. This mining district is situated in the southern part of the Upper Silesian coal basin. The Morcinek mine was opened by JSW in 1986 and in the following 12 years only 10 million tonnes of coal was extracted. Production at this mine was stopped in 1998 and the mine was abandoned at the end of 1999. On 16 October 2007, the Company signed a letter of intent with JSW, which outlines the intention of both parties to co-operate in developing the mine. The main phase of the project requires the Company to sink a new shaft within the Morcinek 1 area and open an access route to the central parts of the mining district. The Company remains in discussion with JSW to assess its options for the development of the Morcinek mine. The Company has not commissioned a geological study with respect to the Morcinek mine and it is not currently included in the Company’s mining reserves base. The Morcinek project was initiated by the Company in 2002 with the initial objective of accessing coal in the southern part of this mining district using mine and surface infrastructure of the CSMˇ mine after draining water from the abandoned mine workings of the Morcinek mine. The Company has since acquired the relevant documentation and exploration concession enabling it to prepare the conceptual study and also acquired a license to extract coalbed methane from the area.

103 These cross-border mining activities will be regulated by the Czech-Polish treaty that has been agreed by the intergovernmental committee and became effective on 26 October 2009. Neither D˛ebiensko´ nor Morcinek is an operational mine and the development of either mine into a fully operational mine would require mining and environmental permits, approvals from and agreements with municipal authorities and significant capital expenditure. The Company has developed good relationships with the Polish government and the relevant regional and municipal governmental authorities in connection with the development of the Polish projects, which includes the potential future reopening of the Polish mine.

Czech Development Projects Karvina´ project The Karvina´ mine, located in the Czech Republic, is the largest operating mine in the Company’s portfolio. In autumn 2011, the Company entered into negotiations with the City of Karvina´ regarding an extension to the mining activities in the area, which remain ongoing. The aim is to extract more than 30 million tonnes of coking coal from the area via the existing Karvina´ mine. The extension of the mining activities under the Karvina´ project may involve costs (including in connection with possible relocation of an existing industrial zone), which the company is currently evaluating. Accordingly, the Company may adjust the project to optimise the cost/benefit profile. Such adjustment, if adopted, could result in the Company being able to extract a lesser amount of coal under this project than originally anticipated. Work is currently taking place on the expansion of the Karvina´ mine to access the adjacent coal reserves, a project that the Company aims to complete by 2016 - 2017. This venture will allow access to hard coking coal deposits through horizontal development of the Karvina´ mine, and consists of two principal projects: Project Karvina´ and Project Orlova-V´ yhoda.´ A connecting gate road development was initiated between the Darkov mine and the Karvina´ mine during spring 2011. Completion of the project, including the installation of belt haulage systems to facilitate the transportation of coal and other materials underground is scheduled for the second half of 2013 and will lead to the optimisation of OKD’s preparation plant capability. Two shaft-deepening initiatives are also planned at Karvina´ with completion expected between 2017 - 2020.

Frenˇstat´ mining area The Company believes that the Frenstˇ at´ mining area, located 30 kilometres south of Ostrava, could potentially provide the Company with additional coal resources of approximately 1.6 billion tonnes and has engaged a third-party consultant to evaluate this opportunity. Frenstˇ at´ is not currently included in the Company’s mining reserves base. The resource was identified and preliminary drilling was performed in the 1980s; however, after the collapse of communism, further development was halted. Frenstˇ at´ is not an operational mine and the development of Frenstˇ at´ into an operational mine would require mining and environmental permits, approvals from and agreements with municipal authorities and significant capital expenditure. The Company has a right to develop this mine. In September 2011, the Company announced its intention to explore the deposit at Frenstˇ at.´ The exploration process is expected to take four years to complete, after which the Company will decide on the feasibility of developing the resource. The exploration process will include evaluating the economic feasibility of developing the resources, considering such factors as the quantity and quality of resources at Frenstˇ at,´ the length of time required to develop such resources, its ability to obtain any relevant mining or other governmental permits and to work with any relevant local and governmental authorities.

Coke Production The Company produces coke in four coking batteries located near its mining operations for a combined capacity of approximately 850 thousand tonnes per year. These coke production operations are conducted through OKK, a wholly-owned subsidiary of the Issuer. OKK is the largest producer of foundry coke in Europe.

104 Approximately 63 per cent of the coking coal used by OKK for the year ended 31 December 2011 was produced by OKD, with the remaining 37 per cent obtained from third parties. Coke is sold by OKD’s sales and marketing department, together with other coal products. In addition to coke, OKK produces by-products such as washed coke gas, tar, benzene, ammonium sulphate and fluid sulfur. To produce coke, coking coal is heated to high temperatures in specialised facilities called coking batteries. These batteries produce coke, which, along with iron ore, is a key input for steel production. OKK operates a coking plant at the Svoboda facility, which consists of a total of four coking batteries. For the year ended 31 December 2011, OKK produced 770 thousand tonnes of coke, of which approximately 61 per cent was foundry coke, 16 per cent was blast furnace coke and the remaining 23 per cent was heating coke and technological coke. The Svoboda facility uses the stamp charging process to produce foundry coke. The facility comprises four batteries, two with 50 ovens, one with 54 ovens, and one with 56 ovens. Typical capacity of the ovens is 20 tonnes of coal yielding 15.5 tonnes of coke per load on average, with coking time of approximately 32 to 36 hours. The Company previously operated another coking plant at Sverma,ˇ producing blast furnace coke via one conventional top charging coke battery with approximately 72 ovens. The implementation of the Company’s coking refurbishment program, COP 2010, to consolidate all coke production at a single, more efficient coking plant at Svoboda was completed in 2010 and resulted in the shut down of the Jan Svermaˇ facility. The newly constructed coke battery No.10 is now running at full capacity. The new battery at the Svoboda plant enabled the Company to increase its foundry coke share in its total coke production volume. In addition, it improved the efficiency and extend the life of the Company’s coking operations. With the construction of the No. 10 coking battery at the Svoboda plant, the No. 4 coking battery at the Svermaˇ plant was fully shut down by the end of 2010 and production at the Svermaˇ plant was ceased. OKK intends to continue to operate four coking batteries, with all of them situated at the Svoboda plant. Coke battery number 10, together with the renovated coke battery number 8, will enable the Company to increase its foundry coke share in its total coke production volume, improve efficiency and extend the life of the Company’s coking operations. See ‘‘Risk Factors — Risks Relating to the Company’s Business and the Industry — The Company depends on a small number of major customers, the loss of any of which, or the Company’s inability to collect payment from any of which, could adversely affect the Company’s financial condition and results of operations.’’

Coke Production and Sales The following table represents the Company’s coke sales for the years ended 31 December 2011, 2010 and 2009.

Year ended 31 December Units 2011 2010 2009 Production ...... Thousand tonnes 770 1,006 843 Sales (External) ...... Thousand tonnes 555 1,100 705 Revenues (on EXW basis) ...... EUR million 202 303 105 Price ...... EUR/tonne 365 275 149 The following table represents the Company’s coke sales for the nine months period ended 30 September 2012 and 2011.

Nine months period ended 30 September Units 2012 2011 Production ...... Thousand tonnes 525 584 Sales (External) ...... Thousand tonnes 432 430 Revenues (on EXW basis) ...... EUR million 129 159 Price ...... EUR/tonne 299 370

105 Customers Coal and coke products of the Company are sold via the Company’s centralised sales department within OKD. Deliveries to municipalities, small businesses and households are provided through the contracts with wholesalers. The Company applies an integrated approach to customer service, by providing end-to-end services to customers, including mining, processing, marketing, sale, transportation and coking of coal products. By providing services in an integrated manner, the Company enjoys improved efficiencies of scale (meaning it is able to deliver coal at a lower cost), enjoys a more comprehensive relationship with its customers and can better ensure the quality and consistency of products delivered to its customers. The Company’s top six customers across all products generated approximately 65 per cent of the Company’s third party revenues for the year ended 31 December 2011. See ‘‘Risk Factors — Risks Relating to the Company’s Business and the Industry — The Company depends on a small number of major customers, the loss of any of which, or the Company’s inability to collect payment from any of which, could adversely affect the Company’s financial condition and results of operations’’.

Coking Coal Customers For the year ended 31 December 2011 and the nine months ended 30 September 2012, the Company’s top six coking coal customers generated approximately 99 per cent of its third-party coking coal sales volumes. The Company’s six largest third-party coking coal customers in this period were ArcelorMittal, U.S. Steel, voestalpine Stahl, Novscom Enterprises, Moravia Steel and DBK. The customer base has not changed significantly over the past few years. Steel ovens are calibrated for a certain coal quality, and close proximity allows for reduced transport costs and more effective logistics planning. The primary facilities of two of the Company’s largest steel customers are located within several kilometres of the Company’s mines. In some cases, customers operate ovens that are constructed to burn the type of coal mined by the Company. A change in supplier could result in increased costs to those customers and disruption to their production systems because changing suppliers could require them to recalibrate their ovens, which would incur considerable cost, to use coal, which may have differing qualities. In addition, the logistics concerning the timing, transport and volume of deliveries could be more complex if the Company’s customers were to switch to a coal provider where mines were more distant. The Company believes that, as a result of the inconvenience and potential for uneven end-products resulting from the use of coal from a different source, the risk of substitution by the Company’s customers is low.

Third-Party Coking Coal Sales Volumes, including PCI sales (year ended 31 December 2011)

1% 4% 7% ArcelorMittal U. S. Steel Košice 8% 34% voestalpine Novscom 19% Moravia Steel DBK Other 27% 10JAN201322142712

Source: NWR

106 Third-Party Coking Coal Sales Volumes, including PCI sales (nine months period ended 30 September 2012)

1% 4% 7% ArcelorMittal 7% U.S. Steel Kosice 33% voestalpine DBK 20% Moravia Steel Novscom Other 28% 10JAN201323552685

Source: NWR

Thermal Coal Customers The portfolio of thermal coal customers is less concentrated than the portfolio of coking coal customers and the Company’s six largest thermal coal customers (Novscom, Dalkia, CEZ,ˇ Verbund, ArcelorMittal and Eurosource Trading) accounted for approximately 87 per cent of total third-party thermal coal sales volumes for the year ended 31 December 2011 and the nine months ended 30 September 2012.

Third-Party Thermal Coal Sales Volumes (year ended 31 December 2011)

13% Novscom 26% 6% Dalkia CEZˇ 7% Verbund ArcelorMittal

14% 19% Eurosource Trading Other 15% 10JAN201322143122

Source: NWR

Third-Party Thermal Coal Sales Volumes (nine months period ended 30 September 2012)

13% 22% Dalkia 5% Verbund Novscom 9% CEZ ArcelorMittal 21% 13% Eurosource Trading Other 16% 10JAN201322143248

Source: NWR

Coke Customers The Company’s coke sales are more diversified than its coal sales, and the Company’s six largest third-party coke customers (Moravia Steel, KSK Handels, ThyssenKrupp, voestalpine, Knauf Insulation and Fritz Winter Eisengiesserei) accounted for approximately 60 per cent of total coke sales volumes for the year ended 31 December 2011 and the nine months ended 30 September 2012. There are two main groups of coke customers: blast furnaces and foundries.

107 Third-Party Coke Sales Volumes (year ended 31 December 2011)

17% Moravia Steel KSK Handels

40% ThyssenKrupp 14% voestalpine Knauf Insulation Fritz Winter Eisengiesserei 11% Other 5% 5% 8% 10JAN201322142455

Source: NWR

Third-Party Coke Sales Volumes (nine months period ended 30 September 2012)

19% Moravia Steel KSK Handels

40% ThyssenKrupp LLC Rockwool 16% Georg Fischer Automobilguss Fritz Winter Eisengiesserei

10% Other 4% 5% 6% 10JAN201322142580

Source: NWR

Competition The Company competes with other coal producers on quality of coal, proximity, transport systems, level of integration of services offered and customer relationships. The Company faces competition from coal produced in Poland, Russia and Ukraine as coal supplies from these countries are proximate to Central European customers. The Company believes that coal sourced from international companies outside Central Europe, Ukraine and Russia is not currently a significant threat due to high transport costs. However, a certain amount of coking coal of higher quality and higher prices than the regional coal is imported into the region mainly from North America and Australia to ensure a sufficient blended mix is achieved. To take advantage of this relatively isolated market, the Company markets its coal predominantly to customers in Central Europe. These include regional and local companies as well as the local facilities of multinational corporations. Polish and, to a lesser extent, Ukrainian and Russian coal producers represent the most significant competitive threat for the Company’s market position in Central Europe. However, the Company is better positioned in countries to the south of the Czech Republic, where the Company faces less competition from Polish and Russian coal producers due to the greater distance between those countries and Poland and Russia. Demand for coal and the prices that the Company will be able to obtain for its coal are closely linked to coal consumption patterns of the regional steel, heat and power generation industries, which have accounted for the majority of regional coal consumption in recent years. These coal consumption patterns are influenced by factors beyond the Company’s control, including regional integrated steel demand, the demand for heat and electricity, which is affected by economic activity and summer and winter temperatures in Central Europe, government regulation, technological developments and the location, availability, quality and price of competing sources of coal, alternative fuels such as natural gas, oil and nuclear, and alternative/renewable energy sources such as hydroelectric power, wind power plants and biomass. Poland is an established supplier of thermal and coking coal in the region. Polish mining operations are broadly comparable with the Company’s mines in terms of overall geology and mining technology. Polish mining operations produced approximately 75.4 million tonnes of coal in 2011, of which approximately 1.7 million tonnes of coking coal and 5.1 million tonnes of thermal coal were exported. The majority of Polish coal is produced by government controlled companies and, based upon the limited public information available, the Company believes that the majority of

108 government controlled companies have overall lower productivity and higher production costs than the Company. Given Poland’s proximity to the Company’s customers and the quality of its coal, Polish producers remain the closest competitor to the Company. However, the Company believes that the closures of mines in the last few years by the Polish government have given the Company a competitive advantage in Central Europe, allowing the Company to capitalise on increased sales opportunities to continue to improve its market position within Central Europe generally and the Czech Republic in particular. While there are large reserves of coal in Russia, the Company believes that supplies of Russian coal to Central Europe are currently limited by infrastructure constraints, the lack of transport capacity and a reputation in the marketplace as being somewhat less reliable and of inconsistent quality. The Company does not view the Ukrainian coal industry as a significant threat. The Company believes that Ukrainian coal is generally of a poorer quality than that in the Czech Republic. In addition, exports of Ukrainian coal to Central European countries may be affected due to Ukraine’s inability to meet its own domestic demand for coal.

Long-Term Framework Agreements The Company and its coal customers generally enter into framework agreements that, in the Czech mining industry, are commonly referred to as long-term framework agreements. These agreements typically set forth quantities and prices; however, they generally do not commit the Company’s customers to purchasing any quantity of coal at any price beyond a one-year period. These long-term framework agreements are negotiated and entered into by OKD. The execution of a satisfactory coal supply agreement is frequently the basis on which the Company undertakes the development of coal reserves required to be supplied under the contract. A majority of the Company’s sales volume of coal is sold under long-term framework agreements. See ‘‘Risk Factors — Risks Relating to the Company and the Industry — The Company’s framework agreements provide that prices are renegotiated periodically, which may lead to lower revenues when coal prices decline, and may result in economic penalties upon a failure to meet specifications’’. For the year ended 31 December 2011, approximately 84 per cent of the Company’s coal sales volume was generated under long-term framework agreements. The Company’s primary customer base is in Central Europe and most of its coal is sold within a 500 kilometre radius. OKD’s framework agreements with most of its key customers (U.S. Steel, Voestalpine Stahl, Moravia Steel, Dalkia and CEZ)ˇ extend through periods ranging from 2012 to 2016. The terms of these contracts do not vary significantly by customer except for coal quality requirements, quantity parameters and permitted sources of supply. The nature of the Company’s framework agreements requires the parties to agree on a new price and quantity at specific times. Historically, the Company generally contracted coking coal and thermal coal prices with its customers on a calendar year basis. However, during the global economic downturn in 2009, a majority of the Company’s coking coal customers entered into contracts on a quarterly, rather than annual, pricing basis. In 2010, as markets improved, the Company made a strategic decision to contract with its coking coal customers on an annual basis in accordance with the Japanese fiscal year (which runs from April to March) and agreed to sell approximately 80 per cent of its coking coal volume on this basis. However, from 2010 onwards there was a shift towards quarterly pricing in the international market which the Company followed. The Company reached agreements with its customers for its coking coal contracts for 2012, and all of its contracted volumes are subject to quarterly price adjustments. The shift to quarterly pricing for coking coal has further aligned the Company’s coking coal prices with the international coal price trend. Thermal coal contracts tend to remain within the calendar year and with prices fixed for the full year, reflecting the more static nature of this market, and the Company will continue to negotiate prices for the sale of thermal coal on this basis. Qualities and volumes of the coal are stipulated in coal supply agreements, and in some instances buyers have the option to vary annual or quarterly volumes. Most of the Company’s coal supply agreements contain provisions requiring it to deliver coal within certain ranges of

109 characteristics such as calorific value, sulfur, ash, hardness and ash fusion temperature. Failure to meet these specifications can result in economic penalties, rejection of deliveries or, in extreme circumstances, the rescission of individual orders. The force majeure provisions generally contained in some of the coal supply agreements allow for the temporary suspension of performance by the Company or the customer during the duration of specified events beyond the control of the affected party, including events such as strikes, wars, natural disaster, adverse mining conditions, mine closures or serious transportation problems that affect the Company or unanticipated plant outages that may affect the buyer. The Company has not been subject to any material penalties for failure to provide coal in satisfaction of contract provisions in the recent past. The Company believes that the supply contracts that it enters into with customers contain provisions and are negotiated in such a way which is consistent with Central European coal industry standards. All payments by the Company’s domestic customers and U.S. Steel are in CZKs, while payments from its foreign customers are usually denominated in euro. The Company has not experienced in the recent past any significant problems in the timely payment by customers under its coal supply contracts. The price of both the Company’s domestic and export coal is determined primarily by market forces, which differ from market to market depending on the specific market environment and trends. Although market economics are a significant factor in the determination of the price the Company charges to its customers, the Company believes that it is able to effectively negotiate pricing terms given its position in the Czech hard coal mining market.

Suppliers In addition to capital expenditures, the Company procures goods and services in support of its business activities. Principal purchases include transport, material and spare parts, electricity, maintenance and repairs and other services (including, amongst others, IT and communications services, security, laundry, rescue teams and catering). The Company uses suppliers for a significant portion of its equipment rebuilds, works and services, and repairs both on- and off-site, as well as construction and reclamation activities. Furthermore, the Company’s labour force is partially comprised of contractors (approximately 21 per cent for the year ended 31 December 2011), most of whom come from Poland, Slovakia and Ukraine. The Company has a central procurement department under the authority of the chief procurement and IT office which is responsible for negotiating with suppliers and procuring mining equipment, spare parts, capital goods, contracted labour force, maintenance, repairs and other selected services for the Company. The Company continues to optimise its supplier’s portfolio with the aim of reducing purchase prices and administrative costs, and offering mines better purchasing services is an on-going process. While the Company’s supplier base has been relatively stable for a number of years, where appropriate or possible the Company seeks to engage alternative suppliers to encourage competition (both in terms of price and quality) and to eliminate the risk of dependence on a single supplier. The Company also seeks suppliers that identify and concentrate on implementing continuous improvement opportunities within their area of expertise. Historically, the Company has relied on mining equipment produced mainly by German and Polish manufacturers, which proved to best meet the Company’s needs because of the geological proximities of the Czech, German and Polish mining industries. When the Company procures capital goods, it focuses on assessing the need to purchase spare parts during and after the guarantee period. However, in certain instances, including the purchase of specialist equipment, the Company is exposed to situations in which the number of alternative suppliers is very limited, thus reducing the Company’s ability to encourage price competition. The Company purchases part of the coking coal it requires to produce its coke from other producers. This is because there are a number of grades of coke, which are determined by, among other things, the type of coking coal from which they are derived. The basic grades are (in order of value per tonne) foundry coke, blast furnace coke and heating coke, and these individual grades can be further divided according to their physical and chemical characteristics, such as grain size and reactivity. If coking coal with certain qualities is not produced by OKD mines, due to technological or geological reasons, coking coal with such qualities must be purchased from other

110 producers. The ratio of own/purchased coking coal for coke production may vary, depending on customers demand and availability of suitable OKD coal grades. For the year ended 31 December 2011, OKK used 872 thousand tonnes of coking coal for their coke production, out of which approximately 63 per cent was produced by OKD mines. In connection with the consummation of the sale of its energy business to Dalkia, the Company has contracted with Dalkia that Dalkia Industry CZ and Dalkia Commodities CZ will continue to supply energy and related services to the Company in the requested volumes (subject to technical minimum and maximum amounts) at agreed prices under a framework agreement which terminates on 31 December 2029, subject to an option in favour of OKD to extend the arrangement for a further five years. See ‘‘Certain Relationships and Related Party Transactions — Material Contracts — Sale of Energy Business’’ for further details. In addition, the Company is subject to the Czech Public Procurement Act (Act No. 137/2006 Sb.). This requires the Company, as a ‘‘sector contracting entity’’, to purchase supplies and services used for exploration and extraction of hard coal through a public procurement procedure in accordance with the Public Procurement Act. The major principles of the Public Procurement Act are based on EU law and include, in particular, principles of transparency, equal treatment, non-discrimination, mutual recognition and proportionality. The Company assesses the applicability of the public procurement rules on a project-by-project basis, and believes it is in compliance with the Public Procurement Act.

Master Agreements for Work related to Mining Operations OKD entered into four master agreements with various contractors on 23 November 2011 for work in relation to the mining operations in the mining area of OKD (the ‘Master Agreements for Work related to Mining Operations’). The expected price of the work is CZK 18.5 billion. The Master Agreements for Work related to Mining Operations will expire on 31 December 2014. The conclusion of individual agreements for work is contemplated by these master agreements. The Master Agreements for Work related to Mining Operations may be terminated without cause by either party upon three months prior written notice to the other party. In the event that OKD terminates the relevant master agreement with respect to one party, the termination is effective only with respect to such party. If the number of the contractors falls below three, the relevant master agreement expires. Either party can withdraw from the master agreement on the basis of a written withdrawal stating the cause for such withdrawal. In the event that OKD withdraws from the master agreement with respect to one party, the withdrawal is effective only with respect to such party. The Master Agreements for Work related to Mining Operations were concluded according to the results of the public tender pursuant to the Czech Public Procurement Act No. 137/2006 Sb.

Transportation Currently, nearly all of the coal products that the Company sells are transported by railway, with the primary rail carrier being AWT, the Issuer’s affiliate. Transportation costs are borne by the purchaser. In addition, the Company has transportation agreements with Metalimex for the provision of rail transport services in Austria and other countries, with AWT for the provision of rail transport services in the Czech Republic, and with AWT Cechofracht, a.s. and AWT for the provision of rail transport services in the Czech Republic and for export deliveries to Germany and France. Rail transport services are also provided by CDˇ Cargo, a.s. (‘CDˇ Cargo’). The Company’s coal transportation network, a spur line of approximately 350 kilometres in length running from its facilities to several railroad stations operated by Ceske´ drahy,´ is owned and operated by AWT. AWT is one of the largest railroad haulage contractors in the Czech Republic. AWT specialises in transport and logistics, providing rail and road transportation, handling and forwarding services for both the Company and third parties. AWT also provides transportation logistics services (such as forwarding, vehicle hire and maintenance), operates natural gas filling stations and maintains railways. See ‘‘Certain Relationships and Related Party Transactions’’ for further details. AWT utilises its own fleet of approximately 160 locomotives and approximately 3,000 railcars for transporting coal, coke and other bulk materials. Most of this fleet can be operated on Czech railroads as well as abroad. Maintenance and repairs are carried out at AWT’s own locomotive

111 depots and railcar service garages. AWT also operates its own 400 kilometre-long railway network in the Northeastern region of the Czech Republic. AWT was a former subsidiary of the Issuer before its transfer to RPGI, in June 2007. On 2 July 2007, the Company entered into a framework agreement with AWT for its transportation services in Poland and Belarus and on 13 March 2009 for its transportation service in Slovakia and Hungary. There is also an agreement for transportation service within the EU between OKD and AWT for an indefinite period of time with a notice termination period of one month. AWT also owns ‘‘last mile’’ rail tracks connecting the Company’s mines, and many of its significant customers to the railway network. The Company has the right to use these ‘‘last mile’’ tracks under agreements with AWT, which can be terminated on 18 months’ notice by either party. See ‘‘Risk Factors — Risks Relating to the Company’s Business and Industry — Disruptions in transportation services or increases in the costs of transportation services could adversely impact the Company’s ability to deliver coal to its customers, which could cause a decline in the Company’s revenues and profitability’’ for further details.

Gas Methane extracted from the Company’s mines during the exploration and production of coal is sold to DPB under a long-term framework agreement relating to each mine. The term of the original long-term framework agreement is scheduled to expire in 2028, unless mining activities of the Company terminate prior to such date. The Company also has an option to extend the term. DPB is also the Company’s supplier of nitrogen used in mines and certain specialised services related to safety at mines. See ‘‘Certain Relationships and Related Party Transactions’’ for further details.

Employees and Contractors For the year ended 31 December 2011 the Company employed an average of 14,268 employees and 3,778 workers employed by contractors. The Company’s mining engineers, at both a senior and operating level, have extensive industry experience and are considered to be among the most experienced mining engineers in the Czech Republic. The following is a summary of the Company’s average numbers of employees and contractors for the periods indicated:

Year ended % of % of % of 2011 total 2010 total 2009 total Own Employees ...... 14,266 79 15,146 82 16,008 85 Contractors ...... 3,778 21 3,407 18 2,906 15 Total ...... 18,044 100 18,553 100 18,914 100

Source: NWR

Nine months ended 30 September % of % of 2012 total 2011 total Own Employees ...... 14,084 79 14,276 79 Contractors ...... 3,697 21 3,754 21 Total ...... 17,781 100 18,030 100

To increase flexibility in production, to reduce administration costs and to cover the lack of qualified underground workforce, the Company outsources certain mining and preparatory works to contractors, which are specialised companies that provide mining services using their own employees (mostly from Poland, Slovakia and Ukraine). As at 31 December 2011, the vast majority of contracted workers hired by the Company were part of the underground mining workforce. The Company hires and pays these contractors through contracting agencies on a project-by-project

112 basis. The Company has relied on these contractors as a result of the decrease in its own employee base caused by the closure of many of the mining schools in the Czech Republic resulting from a decline in student enrolment. Czech citizens interested in underground work and who meet the health, age and certain education requirements are trained in a retraining scheme organised by the Company’s own training institutions, accompanied by further underground training organised by the mines and external training institutions. The relationship between the Company and its employees is governed by Czech law and collective bargaining agreements. In early 2010, OKD concluded negotiations with the trade unions and signed a new collective bargaining agreement effective as of 1 February 2010 and valid until 31 December 2012. The wages are renegotiated on an annual basis. On 5 April 2012, OKD agreed to a 3 per cent increase in wages effective from 1 April 2012 and to a 0.4% increase in tariff wages effective from 1 November 2012. The increase in tariff wages was based on the inflation rate announced by the Czech Statistic Authority in October 2012 and deducted by 3 per cent. Separate amendments to the collective bargaining agreement applicable to the individual organisational units (mines) are regularly negotiated with the local trade unions established at the individual units (mines). In addition, higher-level (sector) collective bargaining agreement applies to OKD. The most recent agreement was concluded on 6 December 2012 for the period 1 January 2013 to 31 December 2017. OKD is bound by the higher-level collective bargaining agreement, and, as a result, the employees will not be provided with less favourable employment conditions than those outlined in the higher-level collective bargaining agreement. In addition, in line with the agreement concluded in 2011, OKD employees will also receive the equivalent of 14 times the average daily wage as a summer holiday allowance and the equivalent of 16 times the average daily wage as a Christmas allowance. On the basis of the agreement, OKD’s total personnel expenses for 2012 are expected to remain broadly flat in CZK terms compared to the previous year. With respect to OKK, a collective bargaining agreement for 2012 was agreed on 12 April 2012, the conditions of which provided for a 3 per cent increase in basic wages in 2012 compared with 2011 on a Czech koruna basis. In addition, this collective bargaining agreement guarantees an increase in average wages corresponding at least to the annual average inflation rate after in 2012 and until it expires. For both OKK and OKD, the collective bargaining for 2013 is still in progress. If new collective bargaining agreements are not agreed, the current collective bargaining agreements will remain in force until 31 December 2013. The social and financial benefits include amongst others contribution to pension insurance, an extra week of holiday for all employees above the minimum required under the labour laws in the Czech Republic, rehabilitative courses for underground employees, alimentation contributions, extra bonuses for long-term employees and preventive medical checks. See ‘‘Risk Factors — Risks Relating to the Company’s Business and the Industry — The Company could be adversely affected if it fails to maintain satisfactory labour relations’’. The Company considers relations with its employees to be good and it has not experienced any work stoppages caused by labour unrest or negotiations since 1990. As at 31 December 2011, the Company estimated that more than half of its employees are members of trade unions. Relations with organised labour are important to the Company’s success.

Insurance The Company currently carries insurance against natural disasters, fire and consequent business interruption, theft and vandalism, credit risk, third-party liability insurance and miscellaneous insurance such as car insurance, or insurance of electrical devices. The business interruption insurance covers the full value of potential or realised revenue losses resulting from major damage to the Company’s property at an operational level. In addition, the Company carries directors and officers insurance which provides coverage to former, current or future directors or officers of the Company for damages suffered in their capacities as directors or officers of up to EUR 100 million for any one claim and in an annual aggregate. OKK maintains liability insurance to the extent required by Act No. 59/2006 Sb. on prevention of major accidents caused by dangerous chemicals, as amended.

113 Since January 2009, OKD has been insured against damage to its underground structures and certain of its machinery and equipment, including its POP 2010 equipment. The Company carries limited third-party liability insurance. See ‘‘Risk Factors — Risks Relating to Company’s Business and Industry — The Company’s insurance coverage with respect to its operations may be inadequate and the occurrence of a significant event could adversely affect the Company’s business, financial condition and results of operations’’ for further details.

Intellectual Property The Company has registered its trademark ‘‘NWR NEW WORLD RESOURCES’’ (its previous as well as its current logo) in the EU and with the International Register of Marks maintained by the International Bureau of the WIPO under the Madrid Agreement and Protocol. Its trademark has been registered also in the United States. OKD (and its subsidiaries) have registered several trademarks in Europe. Whilst the Company owns patents in some European countries, it is not dependent on any of these patents for the operations of its business.

Information Systems The Company uses the SAP R/3 information system for accounting purposes. The Company maintains reserve information in secure computerised databases, and selected information is filed in hard copy as well. The ability to update and/or modify the reserve base is restricted to a limited number of qualified individuals and the modifications are documented. In addition to the general support, the Company’s information systems and technology department develops customised information for accounting systems and customises SAP for the Company’s use, including: • SAP R/3: financial (finance accounting, controlling, treasury), logistics (purchasing, warehousing, sales and distribution, maintenance) and HR (personal administration and development) standard SAP modules with many business-specific enhancements and interfaces developed by an in-house SAP competence centre. SAP BIW (Business Information Warehouse) is used for financial results consolidation on the Company level; • MIS: internal management information system developed by the Company; • ASEPL employees records and registry including, among others, access control, tracking/ counting employees underground (according to legislation) and personal protective equipment registry; • Customised information systems for coal production business units including, among others, mining engineering (mining calculations, longwall records, etc.), operational control of mining (production monitoring, reserves monitoring, stoppages and breakdowns, etc.), quality and distribution management, business plan, statistics and security; • eTender: automatic tendering system for purchasing of material and spare parts; • GIS OKD: graphic information system developed for the Company, which contains, among others, land ownership registry (in connection with cadastral registry), media distribution networks and air photos; and • SEVS — Electricity trading system: supply diagrams, invoicing, SAP compatible.

Mining Division and Real Estate Division of the Company and Properties The Issuer has established two divisions: the Mining Division to manage its coal mining and coking business, and the Real Estate Division to manage its real estate assets. The Issuer has established two classes of shares to track these divisions, which are ‘‘tracking shares’’. The NWR NV A Shares track the performance and represent the economic value of the Mining Division. The NWR NV B Shares track the performance and represent the economic value of the Real Estate Division. Since the incorporation of NWR Plc, the NWR Plc A Shares also track and represent the Mining Division and the NWR Plc B Shares also track and represent the Real Estate Division. These two divisions are accounted for as separate segments in the Company’s consolidated IFRS financial statements.

114 The Company has historically managed a portfolio of Assets of the Real Estate Division located predominantly in the Northeastern region of the Czech Republic. As part of the Restructuring, a substantial portion of the real estate held by the Company’s predecessor was transferred to the BXR Company. The real estate transferred consisted primarily of commercial and residential buildings, but excluded land relating to mining activities and land above active and inactive mines. The Company’s production facilities are located in the Ostrava and Karvina´ area and the Paskov mine is located between Ostrava and Frydek-M´ıstek. The Company owns approximately 17.3 square kilometres of land that is part of the Real Estate Division. OKD has the option to purchase approximately 15 square kilometres of additional land from the Czech government at market price. If the option is exercised, such land shall be allocated to the Mining Division. Pursuant to the Divisional Policy Statements and the Articles of Association of the Issuer, the Mining Division is entitled to unrestricted access to, and use of, the Real Estate Division’s real estate on which the Mining Division’s mining, coking and related operations are currently, or expected by the Issuer’s Board to be, conducted. As consideration for this access and use, the Real Estate Division is entitled to an annual fee from the Mining Division of EUR 3.6 million per year (subject to inflation and other adjustments). The annual fee for 2011 was EUR 3.6 million. Under the Divisional Policy Statements, once mining, coking or related operations on Real Estate Division assets have permanently ceased with no proposed plan to recommence, such assets must be transferred or distributed to holders of the NWR Plc B Shares or at their direction. All of the Company’s real estate is currently held by the Real Estate Division, apart from five coal processing and washing plants and certain production assets which are owned by OKD and the Svermaˇ and Svoboda coking facilities (including the coking batteries), coke processing plants and chemical units and OKK’s administration building which are owned by OKK, all of which are held by the Mining Division. All real estate acquired by the Company after 31 December 2007 is to be paid for by, and be held by, the Mining Division rather than the Real Estate Division, with the exception of incidental or minor rights or real estate, where such acquisition shall be paid for by, and shall subsequently be held by, the Real Estate Division.

Litigation Save as set out below, there are no governmental, legal or arbitral proceedings, including any such proceedings which are pending or threatened, of which the Issuer is aware during the twelve months preceding the date of this Offering Memorandum, which may have or have had in the recent past, a significant effect on the financial position or profitability of the Issuer. Additionally, Group management believes that the litigation proceedings identified below have no significant impact on the Group’s financial position as at 30 September 2012, and as such, no provisions have been made. Karbonia and Dalkia Powerline Sp. z o.o. (former business name: NWR ENERGETYKA PL Sp. z o.o.) (‘Dalkia Powerline’), which was contributed to NWR Energy in 2009 as part of the consolidation of the Company’s energy assets, has been jointly and severally claimed against for damages by Vattenfall Sales Poland Sp. z o.o. (‘VSP’) in relation to negotiations held between Karbonia and VSP for the purchase of electricity in the 2009 calendar year. Due to the failure of VSP to satisfy one of the conditions of the agreement, namely, the provision of a guarantee, Karbonia refused to complete the final power purchase agreement. As a result, VSP subsequently claimed that it suffered damages and lost profit of an aggregate amount of approximately PLN 12 million (EUR 2,217,135.37). VSP is, however, only currently seeking damages against Karbonia and Dalkia Powerline in the amount of PLN 1 million (EUR 243,676.59). The management of Karbonia and Dalkia Powerline disagree with the claim and with the claimed amount and have taken appropriate legal actions to defend the claim. By law, Dalkia Powerline is jointly and severally liable together with Karbonia because it assumed energy assets which were spun-off from Karbonia on 1 April 2009. The Issuer believes that VSP’s claim is without merit. On 13 December 2010, the Regional Court in Bielsko-Biała dismissed VSP’s claim in its entirety. On 16 February 2011, VSP filed an appeal. On 31 May 2011, the Appellate Court in Katowice reversed the ruling and ordered reconsideration of the case by the Regional Court in Katowice. In December 2011, VSP was taken over by TAURON Sprzedaz˙ GZE Sp. z o.o. (‘Tauron’). On 23 July 2012, the Regional Court in Katowice ruled as follows: (i) it ordered Karbonia and Dalkia Powerline to pay jointly and severally

115 PLN 9,098,680.12 (EUR 2,217,135.37) plus interest to Tauron; (ii) dismissed Tauron’s remaining claims, and (iii) ordered Karbonia and Dalkia Powerline to pay to Tauron PLN 114,434 (EUR 27,862.71) in trial costs. It should be noted that Tauron requested the Court to order Karbonia and Dalkia Powerline to pay jointly and severally PLN 1,000,000 (EUR 243,676.59) as damages; hence, inter alia, the court ruled in excess of the plaintiff’s claim. Karbonia and Dalkia Powerline filed an appeal against this judgment on 14 September 2012. Tauron also filed an appeal on 4 September 2012 with respect to the dismissal of ‘‘the remaining claims’’, which it valued at approximately PLN 10,000 (EUR 2,436,76). Karbonia management believes the appellate proceedings may take about one year. The Court of Appeal may reverse the ruling and order reconsideration of the case by the Regional Court in Katowice. The Regional Court in Katowice may also conduct the hearing of evidence itself and may rule on the merits. OKD have been claimed against for unfounded enrichment by Mr. Otakar Cernˇ y´ in relation to Improvement proposal no. 31/5-15/95 in connection with the Company’s use of Mr. Cernˇ y’s´ design of equipment, valued by the claimant at CZK 1.087 billion. The first hearing was held on 18 January 2012, where the statement of claim was partially adjusted and the proceeding was suspended until a similar dispute led by the Regional Court in Ostrava is settled. OKD believes that the claim is unjustified and will be dismissed by the courts. Litigation is pending against OKD (as successor entity) regarding the review of the adequacy of the consideration for shares of CMDˇ a.s. paid out to minority shareholders (constituting at the time 5.915 per cent of the shareholders of the company) in a squeeze-out procedure relating to CMDˇ a.s. If the courts decided in the claimants’ favour, the judgment would benefit all minority shareholders subject to the squeeze-out procedure. The proceeding is still pending, and the potential impact of a decision in the claimants’ favour is impossible to assess given that the consideration is subject to review. OKD believes that the claim is unjustified and will be dismissed by the courts. The Company is involved in other less material litigation claims as arise in the ordinary course of its business. As inherent in such proceedings, outcomes cannot be predicted with certainty and there is a risk of unfavourable outcomes to the Company. The Company disputes all pending and threatened litigation claims of which it is aware and which it considers unjustified.

116 REGULATORY MATTERS The Czech Republic General The hard coal mining industry in the Czech Republic is principally regulated by the Czech Act No. 44/1988 Sb., on Preservation and Exploitation of Mineral Resources, as amended on 1 January 2013 (the ‘Mining Act’) and the Czech Act No. 61/1988 Sb., on Mining Activities, Explosives and State Mining Administration, as amended (the ‘Act on Mining Activities’). There are a number of implementing regulations issued under these two statutes. Besides regulations specific to the mining industry, the Company is subject to other relevant legislation, including the legislation governing environmental, health and safety and employment matters. The Mining Act determines which minerals are considered to be ‘‘exclusive minerals’’ (e.g. coal, flammable natural gas or crude oil) and therefore subject to a special regulatory regime. The Mining Act sets forth the legal framework for exploration, preservation and exploitation of exclusive minerals. The Mining Act and the regulations issued thereunder partially govern the industry licensing regime. Finally, the Mining Act also sets forth key obligations of persons licensed to exploit exclusive minerals. These obligations are aimed at economical exploitation of deposits of exclusive minerals, reclamation of land affected by mining, maintenance of health and safety and addressing relevant environmental concerns. One of the relevant obligations under the Mining Act is the duty to reclaim the land affected by the exploitation and to compensate any damage caused to third parties. To be able to cover future reclamation expenses and pay damages, the Company is required to make mandatory reserves. The Act on Mining Activities describes the necessary qualifications for any person that wishes to engage in mining activities or mining-like activities (e.g. deep drilling or other underground works). The Act on Mining Activities also sets out the structure and jurisdiction of mining regulatory bodies, i.e. the central Czech Mining Office and the district mining offices. In December 2012 an amendment to the Mining Act was adopted pursuant to which companies involved in mining operations are no longer entitled to acquire rights (ownership or third party rights) to the real estate affected by the mining activities in expropriation proceedings depriving the original owners and/or entitled persons of their titles and rights to the real estate for compensation. This expropriation process in favor of mining companies was conditional to public interest prevailing interests of the affected entitled individuals. The regulation of environmental matters is split into a number of Acts, each of them regulating a specific area of the environment, e.g. the Act on Air, the Emission Allowances Act, the Act on Renewable Resources, the Water Act, the Waste Act, the Environmental Impact Assessment Act, the IPPC Act or the general Environment Act, as defined below.

Mining Licenses Pursuant to the Mining Act, hard coal is considered to be an exclusive mineral. As such, a deposit of hard coal does not represent a part of the land on/under which it is located, but belongs to the state. Once the extent of a deposit is ascertained to a certain level, the right to mine the deposit can be awarded by the Czech Mining Office to a private entity. Such right, also known as a concession to a mining area (dobyvac´ı prostor), may be issued for a limited or unlimited period of

117 time. The Company holds unlimited concessions to exploit hard coal from 11 mining areas located in the north-eastern region of the Czech Republic.

Area Mining Area Mine (sq km) Date Granted Darkov ...... Darkov 5,08 11 March 1977 Doln´ı Sucha...... ´ Karvina´ 11,40 6 April 1961 Doubrava ...... Karvina´ 9,54 4 October 1961 Karvina-Doly´ I ...... Karvina´ 16,62 1 October 1979 Karvina´ Doly II ...... Darkov 9,35 25 September 1961 Lazy ...... Karvina´ 6,07 8 April 1961 Louky ...... CSMˇ 22,11 30 October 1984 Petrvald I ...... Karvina´ 1,62 20 December 2004 Star´ıc...... ˇ Paskov 40,36 18 December1962 Stonava I ...... Darkov 11,51 12 December 1960 Trojanovice ...... Frenstˇ at´ (1) 63,17 30 June 1989

Note: (1) The Company holds a license for the Frenstˇ at´ mining area but does not hold the specific ‘mining permit’ to mine the hard coal deposit in the Frenstˇ at´ area. The concession to a mining area is subject to an annual fee of CZK 100 per hectare. The state may, by a decree, increase such fee up to CZK 1,000 per hectare. As noted, performance of ‘mining’ or ‘mining-like’ activities (e.g. deep drilling or other underground works) requires a license under the Act on Mining Activities. Such license may be granted only if the applicant is proven to have qualified and experienced personnel and suitable equipment. The Company believes it holds all the necessary material licenses for mining and mining-like activities and that it is required to have for its operations. Exploitation of a specific hard coal deposit at a particular location requires obtaining a further ‘mining permit’ from the mining authorities. Such a permit is granted upon proving compliance with mining regulations. The application must include detailed documentation describing the geological situation, suggested exploitation method, reserves to be mined, underground infrastructure, health and safety measures, proposed reclamation works, estimated costs of reclamation, estimated third- party damages and proposed reserves to be created. Prior to granting the permit, the applicant must also prove that it has concluded an agreement on handling conflicts of interest with any persons that may be affected by mining on the specific location. Also, each municipality on whose territory the applicant wishes to commence mining has a right to comment on and object to the application. Although the relevant authorities have the power to waive the requirement of reaching consensus with all affected parties or even to expropriate the affected third-party property, they have been unwilling to exercise this power in the past. Moreover, expropriation is allowed only in the public interest. According to expropriation laws, exploitation of minerals by a private company is not likely to be considered sufficient in terms of public interest, even when an exclusive mineral is concerned and such exploitation indirectly benefits the public. Pursuant to a regulation issued under the Mining Act, exploitation of an exclusive mineral is subject to a fee. For hard coal, the amount of the fee is calculated by the following formula:

Fee = 0.5% ǂ R ǂ Nc/Nt where: R = revenues from the sale of coal, Nc = costs of mining, and Nt = total coal production cost

The Company has all requisite mining licenses to conduct its mining operations as described in this document. Although the Company holds a license to the Frenstˇ at´ mining area and was allowed to construct two shafts in the 1990s for exploring the coal deposits at Frenstˇ at,´ it is currently

118 evaluating the economic feasibility of developing its resources in the Frenstˇ at´ mining area, considering such factors as the quantity and quality of resources at that location, the length of time required to develop such resources, the need to obtain any relevant mining or other governmental permits and the ability to work with any relevant local and governmental authorities. Frenstˇ at´ is not an operational mine and the development of Frenstˇ at´ into an operational mine will require mining and environmental permits, approvals from and agreements with municipal authorities and significant capital expenditures.

Fossil Fuel Tax The Company is subject to a Czech tax on fossil fuels (including hard coal and coke) which became effective on 1 January 2008. The tax must be paid by producers or resellers of fossil fuels at the time of delivery to the end customer. Fossil fuels used for selected purposes including (i) production of electricity, (ii) coke production, (iii) use in metallurgy, and (iv) chemical processes in blast furnaces are exempt from the tax. The tax rate is CZK 8.5 per Giga Joule (‘GJ’) of the product of total heating value. Due to the fact that most of the Company’s customers use its coal for exempted purposes, the tax has not had, and the Company does not expect it to have, a material negative effect on its business or business of its customers.

Other Licenses, Approvals and Consents of State Authorities and Environmental Matters Besides the mining licenses described above, the Company is required to have a number of additional licenses or permits to carry out its business. The Company has all such required licenses, approvals, concessions and permits of state authorities related to (i) air pollution, (ii) water pollution, (iii) disposal of dangerous waste, (iv) environmental impact assessment, (v) integrated pollution prevention and control, (vi) reclamation of land damaged by mining activities and (vii) disposal of ionising radiation sources. The Company was granted an indemnity by the state for ecological damages caused prior to the privatisation of the Company in 1993. The indemnity was provided under a special agreement concluded between the Company and the NPF.

Act on Air 2012 The protection of air is governed mainly by Act No. 201/2012 Sb. (the ‘‘Act on Air’’) and numerous implementing regulations. A new Act on Air is effective from 1 September 2012. Operators of facilities which pollute the air must follow notification and information procedures established by the relevant authorities, and comply with applicable norms. Unlike the previous legislation the Act on Air comprises only the regulation aiming for the protection of the air. The protection of the earth’s climate as a result of the Kyoto Protocol to the Framework U.N. Convention on Climate Change is currently governed by Act No. 73/2012 Sb., on substances that deplete the ozone layer and on fluorinated greenhouse gases. The Act on Air is based on the ‘‘polluter pays’’ principle and implements the economic instrument of emission regulation, i.e. emissions charges. These emission allowances affect emissions of SO2, NOX, CO, solid pollutants (e.g. fly ash) and hydrocarbons. In 2011, the emission charges the Company had to pay amounted to CZK 167,000 for OKD and CZK 530,100 for OKK. The Act on Air further empowers the Czech Environmental Inspection Agency or other relevant authorities to order any pollution source violating its obligations arising from the Act on Air or from licence to be shut down. Some of the Company’s facilities are subject to the Act on Air regulation. These facilities include coking plants, incinerators, exhaust shafts and dumps. For the proper operation of these facilities, official permits are required. These permits are issued by the Czech Environmental Inspection Agency and specify the conditions according to which such facilities must be operated.

CO2 Emissions Reduction Directive 2003/87/EC (as amended) established a scheme for greenhouse gas emission allowance trading within the EU with respect to the industrial and power generation sectors. A new regulatory framework implementing this directive in the Czech Republic has been adopted pursuant to Act No. 695/2004 Sb., on conditions of greenhouse gas emission allowance trading, as amended. This legal regulation will be replaced by the Act No. 383/2012 Sb on greenhouse gas

119 emission allowance trading (the ‘Emission Allowances Act’), with effect from 1 January 2013. In accordance with these directives, an emission allowance trading scheme became operational within the EU from 1 January 2005. In accordance with the currently effective regulation, emission allowances are allocated pursuant to National Allocation Plans (adopted by the Czech government and subject to review by the European Commission) for each compliance period. For the current compliance period, which commenced on 1 January 2008 and terminates on 31 December 2012, the emission allowances are initially allocated for free in the Czech Republic. However, in the event that the emitter exceeds its free allocation it must purchase additional emissions allowances to cover the excess emissions. If the emitter fails to cover its emissions with sufficient emissions allowances, the penalties are the payment of EUR 100 per emission allowance not held and an obligation to surrender emission allowances equal to the shortfall in the subsequent allowance period. The Company is actively present in the trading of emission allowances in the European markets as a direct participant. The Emission Allowances Act was adopted to reflect the current EU legislation, especially in the field of climate protection, and provides for the conditions of greenhouse gas emission allowance trading within the EU, in particular, a gradual transition from the current free emission allowances allocation to the sale of allowances at auction.

Promotion of Electricity Produced from Renewables and Promotion of Co-generation Act No. 165/2012 Sb., on supported energy sources (the ‘Act on Renewable Resources’) repealing with effect from 1 January 2013 the Act No. 180/2005 Sb., on the promotion of production of electricity from renewable energy resources, as amended, was adopted to implement Directive No. 2009/28/ES of the European Parliament and of the Council of the 23 April 2009 and Directive No. 2004/8/ES of the European Parliament and of the Council of the 11 February 2004. The Act on Renewable Resources stipulates as one of its most important purposes promotion of the production of electricity, heat and bio methane from renewable energy sources aiming to achieve the national indicative target approved by the Czech government (the share of the renewable energy sources amounting to 14 per cent of gross domestic consumption and of gross domestic consumption in transport by 2020). Currently, the promotion of electricity produced from renewable sources of energy, is based on (i) priority access to the distribution grid, (ii) minimum purchase prices, and (iii) the ‘‘green bonuses’’ increasing the market price of the energy. The amounts mentioned under (ii) and (iii) above for such energy are set by the Energy Regulatory Office in advance for particular calendar years. When setting the minimum purchase prices and the amount of green bonuses, the Energy Regulatory Office has to differentiate between particular renewable energy sources used for production of electricity

Water Pollution The protection of water is governed mainly by the Act No. 254/2001 Sb., on water, as amended (the ‘Water Act’), together with numerous implementing regulations. This Water Act distinguishes the general disposal of surface water for personal use, which is free, from other disposals which are subject to a permit. The release of pollution into water is governed by principles including best available technology and correct agricultural practice. The Water Act is based on the ‘‘user pays’’ and ‘‘polluter pays’’ principles. The Water Act stipulates that official permission is necessary e.g. for surface water take-off and to release waste water into surface water or ground water. Permission is granted by a municipal or regional authority.

Disposal of Waste Disposal of waste is governed mainly by Act No. 185/2001 Sb., on waste, as amended (the ‘Waste Act’), together with numerous implementing regulations.

120 The Waste Act respects the notions and definitions of the waste related EU directives, but it is partly inspired by regulation of some individual member states such as Germany and Austria. The Waste Act regulates all aspects of waste generation, storage, transfer handling and disposal. Generally, the operation of the equipment for use, disposal, collection or sale of waste can be operated only with a permit. Also, an official permit must be obtained to dispose of dangerous waste which is waste satisfying certain qualified criteria e.g. toxicity, cancer or infection risks, evocation or explosiveness. Any person or entity dealing with more than 100 tonnes of the hazardous waste per year in the previous two years must nominate a waste manager who ensures proper waste disposal management. Certain types of waste and equipment are subject to a notification duty and a record must be kept. The Waste Act requires the planning of waste disposal at all levels. The provisions in the Waste Act relating to the import, export and shipment of waste are consistent with the EU regulations.

Environmental Impact Assessment The Environmental Impact Assessment Act (No. 100/2001 Sb., as amended) sets forth a duty to conduct in certain cases an environmental impact assessment (‘EIA’) prior to the approval of a new investment project by the relevant authorities. The public is allowed to participate actively in the intended investment project from when the investor applies for EIA analysis. The Environmental Impact Assessment Act distinguishes projects which always fall within the scope of the EIA, projects which are always excluded and projects in which the state authorities decide, on an ad hoc basis, whether an EIA is to be made or not. The total length of such an EIA procedure can exceed one year.

Integrated Pollution Prevention and Control Act No. 76/2002 Sb., on the integrated pollution prevention and control, as amended (the ‘IPPC Act’), fully implements the IPPC Directive 2008/1/EC into the Czech legal system. Under the IPPC Act, the users of certain installations (e.g. coking or heating plants) must obtain an integrated permit prior to the issuance of the building permit for construction of such plants and must have it for the launch of their operation. The main criterion for granting of the permit is compliance with the best available technology. In addition, the users of installations registered under the Act No. 25/2008 Sb., on the integrated pollution register and on integrated system performance reporting requirements for environmental purposes, as amended, have to notify the respective administrative authority of the emissions of such installations, if such emissions exceed set limits, which are then registered in the publicly accessible integrated pollutant register. The IPPC Act has been effective since 1 January 2003. The Company has acquired IPPC status for the coking plants Jan Svermaˇ and Svoboda.

Chemical Substances The treatment of chemical substances is governed mainly by Act No. 350/2011 Sb., chemical Act (the ‘Chemical Act’), with numerous implementing regulations. The Chemical Act stipulates that certain chemical substances shall be classified concerning their hazardousness for health and environment and registered before entering the EU market. Treatment of other chemical substances shall be notified to the relevant authority. Therefore, the Company may be from time to time obliged to classify and register, or notify to the relevant state authority, the treatment of certain chemical substances as stipulated by the Chemical Act. OKD monitors and applies the current legislation. Further obligations concerning chemical substances are amongst others set out in Regulation (EC) No. 1907/2006 of the European Parliament and of the Council of 18 December 2006 concerning REACH, establishing a European Chemicals Agency, amending Directive 1999/45/EC and repealing Council Regulation (EEC) No 793/93 and Commission Regulation (EC) No. 1488/94 as well as Council Directive 76/769/EEC and Commission Directives 91/155/EEC, 93/67/EEC, 93/105/EC and 2000/21/EC. These EC Directives are largely either implemented in the Chemical Act, or the Czech Chemical Act follows these directly applicable EC regulations.

121 Reserves for Future Reclamation; Compensation for Damages Caused by Mining Activities The Company has a statutory obligation to reclaim the land affected by the exploitation and to compensate any damage caused to third parties under the Mining Act. As already mentioned above, proposed reclamation works, estimated costs of reclamation, estimated third-party damages and proposed provisions to be created are part of the application for the mining permit under the Mining Act. Although it is a statutory duty to create reserves for such future costs, the actual amount of provision has to be approved by the mining authorities. Therefore, the Company has, on an on-going basis, been creating provisions for future reclamation and compensation for damages. The reserves were created as accounting provisions until 2005 and since then have been created as cash provisions and deposited to a special escrow account controlled by the relevant regional mining authority. The Mining Act stipulates liability for damages caused to property of others as a result of mining and related activities. This liability is construed as quasi-strict liability for environmental damage described under ‘‘The Czech Republic — Environmental Liabilities — Civil Liability Towards a Third Party.’’

Nuclear Act The peaceful use of nuclear energy is governed mainly by the Nuclear Act No. 18/1997 Sb., on peaceful exploitation of nuclear energy or ionising radiation, as amended (the ‘Nuclear Act’) together with numerous implementing regulations. The Nuclear Act stipulates that governmental permission is necessary for almost all activities involving the use of nuclear energy or ionising radiation (in some cases, notification of the authorities is sufficient). The Nuclear Act is based on ‘‘user pays’’ and ‘‘polluter pays’’ principles. Permissions to build or operate any equipment using nuclear materials are granted by the State Authority for Nuclear Safety (in Czech ‘Statn´ ´ı u´ˇrad pro jadernou bezpecnost’ˇ (the ‘SUJB’)). Disposal of ionising radiation sources is governed by the Nuclear Act as well. The Company uses simple sensors which use ionising radiation in the mines and is therefore subject to compliance with the Nuclear Act. The Nuclear Act imposes quasi-strict liability for damages caused by the person or entity operating any equipment using nuclear materials. Unless SUJB permits otherwise, each operator must obtain third-party liability insurance. Insurance is not required in cases where notification of authorities is sufficient. Failure to comply with the Nuclear Act may result in a fine of up to CZK 100,000,000.

Environmental Liabilities Environmental liability is based on statutory regulations encompassing (i) administrative, (ii) civil and (iii) criminal law. Administrative and criminal law provide the means of public control of the environment, whereas civil law is an instrument of private control between private individuals. An overview of liabilities incurred by the Company in compensation for environmental damages in 2011 and a note regarding historical environmental liabilities is also included in this section. The ‘‘polluter pays’’ principle applies under administrative, criminal and civil law. The polluter is required to pay administrative fines, compensate for damages occurring to a third party and is subject to criminal sanctions. The law does not distinguish between instances where the polluter is the owner operating its own property and a third party operating the property on the basis of a lease or any other agreement. Polluters are liable for their own damages. The responsibility of an owner of a business or property cannot be assumed by the lessee and vice versa. A current lessee cannot be held responsible for damages caused by former lessees or the owner. This principle is to some extent modified in respect of historical damage (e.g. damage caused by previous owners of the property) and in cases where the polluter is not known or unable to take necessary actions. In such cases the owner may be required to take action.

Administrative Liability Towards the State Environmental acts set out environmental offences, which may be committed by individuals and legal entities carrying out business activities. The individual or entity does not need to be the owner of the business and the liability is strict. Violation of the general Act No. 17/1992 Sb., on environment, as amended (the ‘Environmental Act’), can result in a fine of up to CZK 1,000,000 in

122 each case. The relevant administrative body has the power to impose these penalties within one year of learning of the offence and not later than three years from the occurrence of the offence. For specific offences under the individual environmental acts mentioned above the penalties may be higher e.g. up to CZK 50,000,000 under the Waste Act. Such penalties do not affect the liability for damages under Act No. 40/1964 Sb. (the ‘Civil Code’), which may be claimed separately. In addition to the above, the Environmental Act has introduced into the Czech legal system a concept of ‘‘environmental damage’’ to ensure the remedy of all such damage. The rationale behind the Environmental Act is that environmental damage must be remedied regardless of whether a private claim for damages has been brought against the person responsible for environmental damage (the polluter). Thus, an administrative body is authorised to order the polluter to restore the natural functions of the impaired ecosystem. This liability does not cover future benefits lost due to environmental damage. However, due to the insufficient and incomplete nature of this regulation, the practical impact of the Environmental Act is marginal.

Criminal Liability Towards the State The most serious offences against the environment are qualified as crimes and can be penalised by fines of up to CZK 36,500,000 or by imprisonment. In such cases the relevant administrative body is also entitled to shut down the operation of the given source of environmental damage. Under Czech criminal law, such criminal acts can be committed both intentionally and negligently. Criminal offences against the environment are described as acts threatening or damaging the environment generally and, specifically, as acts involving unlawful disposal of waste or unlawful release of polluting elements. Czech criminal law acknowledges since 1 January 2012 criminal liability of a legal entity under Act. No. 418/2011 Sb., on criminal liability of legal entities. Therefore legal entities and also the legal entity’s responsible persons can be liable. Criminal liability is subject to public law and as such does not affect general liability for damages under the Civil Code (which may be claimed separately).

Civil Liability Towards a Third Party Except for general liability for damages, the Civil Code imposes, in certain circumstances, a ‘‘quasi-strict liability’’ for damages which is relevant in most environmental damage cases. Quasi- strict liability is applied if the acts of the individual or legal entity cause damage to another party in the course of its business. However, the individual or entity can be exempted from liability if it can prove that the damage was caused by the conduct of the party to which the damage was caused or as a result of an unavoidable event that is not implicit in the business activities. Compensation under civil law includes compensation for current and future damages, including lost profits. The statute of limitations applicable in cases of general liability applies to quasi-strict liability.

Liabilities incurred by the Company for Environmental Impacts of Mining Activities In the year ended 31 December 2011, OKD spent CZK 416.2 million (approximately EUR 16.5 million) relating to the environmental impacts of its mining activities, out of which CZK 245.2 million (approximately EUR 9.7 million) was spent on mining damages and CZK 171 million (approximately EUR 6.8 million) was compensation for reclaiming mining areas. In the year ended 31 December 2011 OKD spent CZK 85.5 million (approximately EUR 3.4 million) from the revitalisation funds received from the Czech State to rectify or correct old mine subsidence damages. Also see ‘‘Risk Factors — Risks relating to the Company’s Business and the Industry — Extensive government regulations impose significant costs on the Company’s mining operations, and future regulations could increase those costs or limit the Company’s ability to produce and sell coal.’’

Historical Environmental Liabilities The Company owns property, which suffers from historical environmental damage caused before its initial privatisation. The process of compensation of historical environmental damage caused before privatisation is subject to several regulations. In particular, compensation of environmental damage is governed by an instruction of the Czech National Property Fund (‘NPF’) No. 3/2004, under which certain entities are entitled to receive funds for reclamation of past damage. This procedure consists of (i) an ecological audit,

123 (ii) conclusion of an ecological agreement with the NPF, (iii) environmental analysis and feasibility studies on the reclamation and (iv) a decision by the Czech Environmental Inspection Agency requiring clean-up action to be taken. In 1996, the Company, through OKD, entered into the Ecological Agreement, as amended. The Ecological Agreement covers the obligation to reclaim the historical environmental damage and the obligation of the NPF to compensate the Company for costs of reclamation of historical environmental damage to the Company’s property. Historical environmental damage covers (i) pollution of ground water, (ii) pollution of soil and mineral environment, (iii) existence of detrimental waste dump and (iv) pollution of structures that arose prior to privatisation. The maximum compensation for reclamation work is limited to the amount of CZK 27.8 billion, out of which the state has already paid approximately CZK 2.56 billion to the Company. All rights and obligations of the NPF, including the rights and duties arising under the Ecological Agreement, passed to the Czech Republic as of 1 January 2006. Therefore, the Czech Republic is obliged to comply with NFP’s obligations under the Ecological Agreement. Due to the restructuring of the Company, all rights and obligations of OKD arising under the Ecological Agreement passed to OKK, which currently holds all contaminated real estate that is subject to the Ecological Agreement. The Ecological Agreement was assigned to OKK by a written amendment. Under the original terms of the Ecological Agreement, the Czech State had the authority, in its sole discretion, to approve any reclamation project (i.e. to decide whether compensation will or will not be paid in respect of reclamation work carried out by the Company). Pursuant to the current terms, the reclamation projects are subject to public procurements arranged by the Czech Republic. The agreement for reclamation works will be concluded by the Czech Republic with the procurement winner, however, with reference to an agreement on reclamation details be subsequently concluded by OKK with the winner. Thus, the Czech Republic is also the direct contractor of the reclamations and obligated to pay the costs effectively expended, subject to the above-mentioned cap. The state is considering one-stop public procurement for reclamation of all historical environmental damage, subject to individual ecological agreements similar to the Ecological Agreement. The Issuer has already provided certain documents and analyses to the state in relation thereto. Environmental analyses between 1997 and 1998 were prepared by OKD for 52 mine operations and properties, out of which eight localities are subject to the historical environmental damage liability. The Czech state repaid the costs for these analyses. With respect to one property, the reclamation works have been finalised and the property is subject to post-reclamation monitoring. Another property is to undergo reclamation conducted by the regional governmental program. The estimate for reclamation works for the remaining six properties amounts to CZK 2.6 billion (in 1997/1998 prices).

Health and Safety Health and safety requirements relevant for the Company are comprised in both general employment legislation and regulations reflecting specific industry conditions. Industry-specific regulation is very detailed and governs all relevant aspects of underground works, coal processing and transport. A large portion of health and safety regulations are decrees of Czech Mining Office issued under the Mining Act or the Act on Mining Activities. Such decrees govern, for instance, mining methods, mining and other equipment, requirements for ventilation, electric lines, transportation, fire prevention, degasification or water removal. Further provisions are concerned with, among others, emergency rescue service, emergency plans and the qualifications for designing underground works. The Company currently has in each of its mines a safety officer (also the mine manager) who is responsible for collecting statistics, investigating and analysing accidents and ensuring that safety measures relating to ventilation, dust and gases are being correctly monitored. The safety officer is usually responsible for maintaining records of ‘‘condition exposure’’ which is based on an assessment of underground conditions and is designed to reduce the possibility of ‘‘black lung

124 diseases’’ or other such lung diseases. Each mine also has an ‘‘anti-dust officer’’ who is responsible for monitoring the number of shifts each miner has worked so as to monitor each miner’s exposure to harmful dust. Each shaft has a safety team, which reports to the manager of each mine. Each mine has a rescue team available for its own use in minor emergencies and maintains an ‘‘emergency procedures manual’’. The Company is subject to almost continuous inspections and checks by both mining inspectors and general labour inspectors. From time to time, inspectors found some minor deficiencies. However, none of these deficiencies are considered by the Company to be material.

Poland General Until 31 December 2011, coal mining was mainly regulated by the Mining and Geological Law of 4 February 1994, together with secondary legislation. On 1 January 2012 a new Mining and Geological Law of 9 June 2011 (the ‘Polish Mining and Geological Law’) came into force, which sets forth the principles and terms for conducting geological works and mining minerals from deposits (including the mining of hard coal), underground storing of waste and other substances. It also sets forth the requirements for protection of mineral deposits, deep ground waters and other environmental elements (for example, air, flora and fauna and landscape) in connection with the execution of geological works and the mining of minerals. The Polish Mining and Geological Law also implements the hydrocarbon directive (Directive 94/22/EC of the European Parliament and of the Council of 30 May 1994 on the conditions for granting and using authorisations for the prospection, exploration and production of hydrocarbons) into Polish legislation, introducing a mandatory tender procedure for authorisation for the prospection, exploration and production of hydrocarbons. Coal and other mineral deposits that do not constitute integral parts of the real properties under which they are located, are generally owned by the Polish State Treasury. The Polish State Treasury, acting through licensing authorities, may make use of minerals deposits itself (for instance, it may profit from the extraction of mineral resources from the deposits and from the sale thereof) or dispose of its rights to minerals by establishing a mining use permit. A mining use permit is established by an agreement for a fixed period of time not exceeding 50 years, with payment to be made to the Polish State Treasury. The amount of the payment is set out in the agreement. In addition, an entity extracting mineral deposits pays a fee for mineral extraction. It is a prerequisite for the issue and holding of a mining use permit that the mining entity is licensed. If a mining entity’s license expires or is withdrawn, the mining use permit will also expire. Generally, an agreement for a mining use permit gives the holder an authorisation to search for, recognise and extract a given mineral to the exclusion of third parties. In some cases a mining use permit may be issued after a tender is held, for example in the case of methane obtained from coal. When an entity recognises and documents a deposit of a certain mineral and then draws up the relevant geological documentation, the entity may request that a priority mining use permit be issued to it (without any tender being held). The right to request the priority mining use permit expires upon the lapse of two years after a written notice is issued that the geological documentation was accepted by the licensing authority. In respect of the coal deposit at D˛ebiensko,´ Karbonia obtained notifications, issued by the Minister of Environmental Protection in August 2007 and November 2008 (both were amended in December 2009). The notifications state that the geological documentation for such deposit has been approved without any reservations. Moreover, Karbonia concluded the following agreements with the State Treasury — Minister of Environmental Protection: an agreement dated 17 April 2001 for the exploration and extraction of methane (coal deposit ‘Kaczyce 1’); an agreement dated 30 October 2003 for the exploration of hard coal deposits (coal deposit ‘Morcinek 1’); an agreement dated 20 November 2008 for the prospecting for and exploration of hard coal, methane obtained from coal and natural gas (coal deposit ‘Zebrzydowice 1’); and an agreement dated 24 June 2008 for the extraction of hard coal and methane as an accompanying mineral (coal deposit ‘D˛ebiensko´ 1’).

125 Mining Licenses (Concessions) Under the Polish Mining and Geological Law, the following types of operations require a license: (i) prospecting and exploring for mineral deposits (including hard coal); (ii) extraction of minerals from deposits (including hard coal); and (iii) no-tank storage of substances and waste in rock masses, including storage in underground mine works. Licenses for these activities are granted for a period not exceeding 50 years. The authority, which issues licenses to search, recognise and extract coal and methane obtained from coal is the Minister of Environmental Protection. The license is issued upon consultation with the Minister of the Economy and the appropriate head of the municipality or mayor or president of the city. The issuance of a license may be conditional upon establishing relevant financial security. An application for a license should be accompanied by, among other things, proof of right to geological documentation. The right to information obtained in the course of geological works that are conducted pursuant to a decision issued by the competent administrative authority is vested in the State Treasury. However, if a given entity incurs costs in connection with such geological works, that entity has the exclusive right, granted free of charge, to use the information obtained in the course of those works for research, scientific purposes and activity regulated by the Polish Mining and Geological Law. The right to use such information expires upon the lapse of five years from the relevant administrative decision pursuant to which the geological works were conducted. Karbonia holds limited licenses granted by the Minister of Environmental Protection for the following purposes: (i) the exploration of hard coal from the Morcinek 1 mining area granted on 30 October 2003 for a period of 12 years; (ii) the exploration and extraction of methane obtained from coal from the Kaczyce 1 mining area granted on 28 January 2000 for a period of 23 years (including a three-year period for the exploration phase and a 20-year period for the extraction phase); (iii) the search and exploration of hard coal and methane obtained from coal and natural gas from the Zebrzydowice 1 mining area granted on 20 November 2008 for a period of six years; and (iv) the extraction of hard coal and methane as an accompanying mineral from the D˛ebiensko´ mining area granted on 24 June 2008 for a period of 50 years (including the construction of a mining plant by 1 January 2018, and 40 years, starting at the latest on 1 January 2018, for the extraction from the deposit). All these mining areas are located in southern Poland.

Mining operations, closure fund In order to operate a mining facility, an operational plan must be prepared in accordance with the terms and conditions specified in the entity’s license, as well as in accordance with the use and management scheme related to a given deposit, that determines, among other things, mining technology and measures aimed at the protection of mineral deposits. The operational plan is approved by an administrative decision issued by the relevant mining supervisory authority. Pursuant to the Polish Mining and Geological Law, there should be a designated mining area for each mineral. A mining area is designated based on geological documentation and a deposit management plan. The register of mining areas is kept by the minister responsible for environmental issues. The Polish Mining and Geological Law requires that a local zoning plan be adopted for every mining area. The holder of a license for the extraction of minerals or the no-tank storage of substances and waste in rock mass, including in underground mine works, is required to create a mining closure fund as security. An entity conducting underground or borehole-based mineral extraction operations must allocate 3 per cent of depreciation charges applied to the fixed assets of its mining facility to the fund, calculated in accordance with the relevant income tax regulations. An entity conducting underground, opencast or borehole-based mineral extraction operations will then use the accrued amounts to cover costs related to the full or partial closure of a mining facility, for example costs associated with the closure and securing of mining operations, extraction chambers, extraction boreholes and drillings, and other activities related to land reclamation and clean-up.

Security Regulations The development projects of the Company in Poland (at the Morcinek and D˛ebiensko´ mines) supervised by Karbonia may be classified as mines involved in the extraction of primary minerals. Such mines are classified by the Regulation of the Council of Ministers on installations of special importance to the security and defence system of the state, dated 24 June 2003, as installations of

126 special importance to the security and defence systems of the state. As such these installations must be protected by the use of special measures. For example, an entity that owns an installation of special importance must prepare plans for protection services and must also ensure the provision of human and financial resources necessary to protect the facility.

Restructuring of the Coal Sector Following the expiry of Regulation (EC) 1407/2002 on 31 December 2010, which set out the rules regarding the granting of aid to the coal industry with a view to contributing to the restructuring of the sector, the European Council Decision of 10 December 2010 on state aid to facilitate the closure of uncompetitive coal mines (2010/787/EU) (the ‘Council Decision’) entered into force on 1 January 2011. This decision aims to facilitate the transition from the application of sector- specific rules applicable to the coal sector, to the application of general State aid rules, which are applicable to all sectors. Under the Council Decision, the granting of aid, which is intended to specifically cover current production losses of coal production units, may be considered compatible with the internal market if certain conditions are met. Aid granted under the Council Decision must concern coal production units whose definite closure is scheduled not later than 31 December 2018. The granting of state aid under the Council Decision does not exclude the notification and standstill obligations imposed by Article 108(3) of the Treaty of the Functioning of the European Union, as well as the requirement for such measures to be compatible with the internal market. Categories of costs that are covered by the Council Decision that do not relate to current production are defined in the annex to the decision. The Act dated 7 September 2007 on the organisation of the hard coal mining sector for the years between 2008 and 2015 (the ‘Polish Mining Industry Act’) regulates issues including, but not limited to, the financial restructuring of coal companies controlled by the Polish State Treasury, the liquidation of coal mines, the exercise of ownership supervision by the State Treasury over mines controlled by the Polish State Treasury and the specific rights of mining municipalities (that is municipalities where mining companies controlled by the Polish State Treasury are located). Under the Polish Mining Industry Act, Polish coal companies controlled by the Polish State Treasury may receive aid from the State Treasury to improve their financial condition. The Polish Mining Industry Act will remain in force until the end of 2015.

Environmental Matters The regulation of environmental matters in Poland is split into a number of acts and secondary legislation. Key acts governing the environmental aspects of mining activities are the Environmental Protection Act of 27 April 2001 (the ‘Polish Environmental Protection Act’), the Waste Act of 27 April 2001 (the ‘Polish Waste Act’) and the Water Act of 18 July 2001 (the ‘Polish Water Act’). The Polish Environmental Protection Act contains detailed regulations regarding: (i) the issuance of permits for activities that may be harmful to the environment; (ii) funds for the protection of the environment (obtained specifically from what is referred to as ‘fees for using the environment’, which are fees payable by entities that use or otherwise affect the environment or natural resources, and administrative fines for breaching environmental laws); (iii) civil, criminal and administrative liability for breaching environmental laws; and (iv) the protection of natural resources, including rules governing the reasonable use of minerals and the reclamation of mineral workings. Mineral extraction companies are specifically required to obtain precise permits and/or licenses, which specify the terms and conditions under which such activity may be conducted, or that such activity must be registered. More often, permits and/or licenses apply to specific emission sources (such as waste generation, disposal and transport, a water permit or a waste permit). However, if the operation of a given installation connected with the activity of a given entity, due to its type or scale, may cause significant harm to particular environmental elements or the environment as a whole, the relevant entity may be required to obtain an integrated permit. Unlike a sector permit that only regulates one source of emission, an integrated permit regulates all emissions from one installation. Entities that carry out business activity without the required permits or breach the terms of their respective permits are subject to fines. If a given installation is operated without the required permit/license, the competent regulatory authority may also suspend its operation.

127 Entities using the environment in a manner affecting the natural environment or its resources are required to pay compensation in the form of a fee, including for polluting the environment as a result of their business activity. The amount of such fee depends on the quantity and quality of the pollutants. Entities using the environment in a manner affecting the natural environment or its resources determine, on their own, the amount of a required fee according to the formula specified in the relevant legal provisions. Entities that exceed permitted emission levels, or otherwise breach the terms of their respective environmental permits, are penalised with fines.

Water Protection and Management In addition to the Polish Environmental Protection Act, water protection and management is mainly governed by the Polish Water Act and the Collective Water Supply and Sewage Disposal Act of 7 June 2001, as amended on 10 January 2012. On the EU level, water conservation is primarily regulated by Directive 2000/60/EC of 23 October 2000 establishing a framework for EC action in the field of water policy. Pursuant to the Polish Water Act, entities must obtain a separate water permit for, among other things, activities involving special water use (for example, water intake and the discharge of surface or underground water, the discharge of sewage into water or soil and water use for energy purposes), water damming, water regulation (e.g. river regulation) and changes in the natural topography, affecting water flow of land adjoining water, building water facilities, drainage of facilities, building excavations and mining facilities and the discharge of industrial sewage that contains substances particularly harmful to the water environment into sewage systems owned by other companies. A water permit is granted in the form of an administrative decision for a fixed term lasting between four and 20 years, depending on the type of operational activity. A water permit is granted by a municipal or regional authority.

Waste Production and Storage Production of waste is mainly governed by the Polish Waste Act and by the Polish Mining and Geological Law, together with extensive secondary legislation. A permit for the generation of waste (‘waste permit’) must be obtained to produce more than one Mg of hazardous waste or more than 5,000 Mg of non-hazardous waste per year. The Polish Waste Act regulates all aspects of waste management, including production, collection, transport, storage, transfer and disposal. Waste producers, entities involved in the transport of waste and waste holders are obliged to keep waste records. Polish regulations concerning trans boundary shipment of waste implement EU Regulations, in particular Regulation (EC) No. 1013/2006 of the European Parliament and of the Council of 14 June 2006 on Shipments of Waste. The Polish Waste Act does not apply to soil and rocks disposed of or moved in connection with mineral extraction if the mining license granted by the Minister of Environmental Protection or the local zoning plan provides conditions regarding the management of such soil and rocks. The Polish Mining and Geological Law contains specific regulations on waste being stored in the orogen (rock mass), including underground workings. Such storage requires a mining license granted by the Minister of Environmental Protection. As from 1 January 2012, in order to obtain a concession for the underground disposal of waste, collateral to secure the claims that may arise as a result of carrying out activities covered by such concession must be established. Mining activities are also subject to the Act of 10 July 2008 on Extractive Waste (the ‘Polish Act on Extractive Waste’), incorporating Directive 2006/21/EC on the management of waste from extractive industries and amending Directive 2004/35/EC into Polish law. The primary goal of the Polish Act on Extractive Waste is to prevent extractive waste in the mining industry and to reduce the potential adverse impact of extractive waste on the environment and life and health among others by setting out guidelines for extractive waste and uncontaminated soil management, in addition to setting out procedures for granting permits for extractive waste management. In accordance with transitional regulations of the Polish Act on Extractive Waste, entities producing extractive waste that were in operation before the Polish Act on Extractive Waste (15 August 2008) came into force are required to be in full compliance with the Polish Act on Extractive Waste by 1 May 2012. Current waste permits, integrated permits and permits for extractive waste management for installations currently being operated are valid for the period for which they are issued up to 1 May 2012.

128 Chemical Substances The treatment of chemical substances is governed mainly by the Chemical Substances Act of 25 February 2011 (the ‘Polish Chemical Substances Act’), together with extensive secondary legislation. The Polish Chemical Substances Act requires certain chemical substances to be classified on the basis of their risk to health and the environment and to be registered before being admitted to the market, while the treatment of other chemical substances should be notified to the relevant authority. Consequently, an entity may be obliged to classify and register, or notify the relevant state authority of the treatment of, certain chemical substances as set out in the Polish Chemical Substances Act. Further obligations concerning chemical substances are set out in Regulation (EC) No. 1907/2006 of the European Parliament and of the Council of 18 December 2006 concerning REACH, establishing a European Chemicals Agency, amending Directive 1999/45/EC and repealing Council Regulation (EEC) No 793/93 and Commission Regulation (EC) No. 1488/94 as well as Council Directive 76/769/EEC and Commission Directives 91/155/EEC, 93/67/EEC, 93/105/EC and 2000/21/EC. The Polish Chemical Substances Act has implemented abovementioned EU regulations.

Environmental Impact Assessment (‘EIA’) Pursuant to the Act of 3 October 2008 on disclosing information on the environment and its protection, public participation in environmental protection and environmental impact assessments (the ‘Polish Act on Disclosing Information’), an EIA must be carried out in certain circumstances before a new investment project can be approved by the relevant authorities. The general public is allowed to actively participate in the EIA process regarding the planned investment project by submitting, in particular, comments and motions regarding the project. The Polish Act on Disclosing Information makes a distinction between projects that always fall within the scope of the EIA and projects in which the relevant authorities decide, on an ad hoc basis, whether the EIA should be carried out. The length of the EIA depends, inter alia, on the impact that a given investment may have on particular elements of the environment, and in certain cases may take one year or more. A decision on the environmental impact of a planned investment project may impose certain obligations on the investor to prevent, restrict and monitor the environmental impact, and to produce a report on the performance of its obligations.

Reclamation of Damaged Land and Damage Caused to Third Parties As a Result of Mining Activities An entity that carries out mining activities has a statutory obligation to reclaim the land affected by exploitation and to compensate for any damage caused to third parties under the Polish Mining and Geological Law. The entity responsible for the damage is obliged to restore the previous state, which may in particular be done by providing land, buildings, equipment, premises, water or other goods of the same kind. The aggrieved party, with the consent of the entity responsible for the damage, can perform this obligation in exchange for receiving an appropriate amount of money. If the aggrieved party has incurred expenses for repairing the damage, compensation is determined taking into account the reasonable cost of repairs. Claims regarding liability for damage set out in the Polish Geological and Mining Law are barred after a period of five years from the date of finding out about the damage. Compensation for damage to agricultural or forested land that is destroyed or degraded as a result of mining operations is regulated in the Act on the Protection of Agricultural and Forested Land of 3 February 1995.

Environmental Liabilities Similar to the Czech Republic, environmental liability is based on statutory regulations encompassing (i) administrative, (ii) civil and (iii) criminal law. Administrative and criminal law provide a means of public control of the environment, while civil law is an instrument of private control designed for all entities. No liabilities were incurred by the Company in Poland.

129 Administrative Liability Towards the State Administrative liability under Polish law takes four different forms. The first is the increase of the standard charges levied from entities that carry out their business operations without holding the required environmental permits (e.g. permits to introduce gases or dust to the atmosphere, to draw water, to dispose of waste water to waters or ground, or to store waste without the required decision determining the storage method and site). The increased charge is calculated as a multiple of the usual charges levied for using the environment in a given settlement period. A second form of administrative liability is an administrative fine. A fine is imposed on an entity for certain breaches of an environmental decision granted to an entity, such as exceeding permitted levels of emissions of particular substances or a failure to stay within admissible noise limits as set out in the relevant decision. Administrative fines are imposed by the Regional Inspector of Environmental Protection. The amount of a fine depends on the degree to which the provisions have been breached by a given entity (for example, the duration of a given breach or the type of substances emitted into the environment) and is calculated as a multiple of specific fine rates. Under the third form of administrative liability, environmental protection authorities may limit the business activity of a given entity, or even stop business activity completely. For example, business activity may be stopped as a result of an installation being used without the required integrated permit. Administrative liability is also regulated by the Act of 13 April 2007 on Preventing and Repairing Damage to the Environment (the ‘Polish Act on Preventing and Repairing Damage to the Environment’). This act incorporates into Polish law the provisions of Directive 2004/35/EC of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage and applies to matters of environmental damage or the imminent threat of such damage. Pursuant to the Polish Act on Preventing and Repairing Damage to the Environment, entities responsible for causing a direct risk of damage to the environment have to take preventive actions. Entities that are responsible for causing damage to the environment are obliged to repair such damage. If the direct risk of, or damage to, the environment was caused by more than one entity, such entities are jointly and severally liable. Additionally, if the direct risk of, or damage to, the environment was caused with the consent of the person managing the land (e.g. the land owner), or this person was aware of such direct risk or damage to the environment being caused, such person is obliged to take preventive or remedial measures jointly and severally with the perpetrator. Costs of such preventive measures are incurred by the entity that is directly responsible for the direct risk of, or damage to, the environment. The Polish Act on Preventing and Repairing Damage to the Environment does not apply to: (i) damage caused before 30 April 2007 or (ii) damage originating from a specific activity, which was completed before 30 April 2007. In such cases, earlier regulations (that is the previous provisions of the Polish Environmental Protection Act) will apply. With respect to the pollution of soil, the Polish Environmental Protection Act applied the rule of ‘possessor liable’ (liability is placed upon the ‘freehold possessor’ of the land) instead of the ‘polluter liable’ principle.

Criminal Liability Towards the State Criminal activity and offences are also subject to criminal sanctions. On 26 December 2008, Directive 2008/99/EC on the protection of the environment through criminal law came into force. It provides a list of environmental crimes and obliges member states to introduce penal sanctions for such crimes. On 10 June 2011 the Act of 25 March 2011 on amendment of the Penal Code Act and certain other laws (the ‘Polish Act dated 25 March 2011’) entered into force. It changed provisions regulating criminal liability for environmental offences, pursuant to directives of the European Parliament and Council 2008/99/WE of 19 November 2008. The changes to art. 182-186 of the Penal Code made by the Polish Act dated 25 March 2011 expanded criminal liability. A greater number of acts against the environment now constitute an offence. In general terms, the most important changes are as follows: • liability for pollution that may threaten the life or health of even a single individual (prior to changes that entered into force on 10 June 2010 this applied only if the life or health of many persons was threatened);

130 • liability for acts against the environment that could significantly decrease the quality of water, air or soil; • harsher sanctions for acts against the environment causing serious harm to human health or death. According to these changes, imprisonment from six months to eight years applies toward destruction to plants or animals on a significant scale or a significant decrease in the quality of water, air or soil. A perpetrator whose environmentally detrimental actions cause serious harm to human health is subject to imprisonment from one to 10 years. Punishment is greater if the consequence of environmentally detrimental actions is human death: from 2 to 12 years imprisonment. Currently, under Polish law, the range of penal sanctions for environmental crimes includes, inter alia: (i) fines; (ii) imprisonment; and (iii) a restriction of freedom. With regard to the criminal liability of legal entities under the Law on Liability of Collective Entities For Acts Prohibited under Penalty of 28 October 2002 (the ‘Polish Act on Liability of Collective Entities’, the person responsible for the observance of environmental protection regulations by a given entity (e.g. the company) will be convicted under a final and non-revisable judgment. Moreover, the Polish Act dated 25 March 2011 supplements the range of offences toward which liability applies, as set forth in the Polish Act on Liability of Collective Entities for punishable acts. New environmental offences were added that were introduced by the Polish Act dated 25 March 2011. The court may impose a fine on such entity of between PLN 1,000 and PLN 5,000,000 (but not, however, exceeding 3 per cent of the revenues made by the company in that financial year). Legal entities may be subject to such sanctions if, for example, they act in a way, which poses an inadmissible risk to human health or the environment and breaching a decision issued by the Inspector for Chemical Substances and Preparations (Article 34 of the Polish Chemical Substances Act).

Civil Liability Towards a Third Party Civil liability is regulated by the Polish Environmental Protection Act and the Polish Civil Code. The provisions of the Polish Civil Code (which in the case of enterprises such as mines provides for liability based on risk) apply to liability for damage caused by impacting the environment, unless the Polish Environmental Protection Act states otherwise. Each person who is directly threatened by damage as a result of an unlawful impact on the environment or to whom damage has been caused, can demand that the entity responsible for that threat or breach restore the original state in accordance with the law and take preventive measures, in particular by setting up installations or equipment safeguarding against a threat or breach if this is impossible or made excessively difficult, he can demand the cessation of the operations causing that threat or breach. Furthermore, civil liability is not excluded even if the activity that caused the damage is carried out in accordance with administrative decisions. Additionally, a claim may be lodged by the State Treasury, a local government authority or ecological organisation if the damage relates to the environment as a public good.

Health and Safety Mining operations are regulated by Directive 92/91/EEC, concerning the minimum requirements for improving the safety and health protection of workers in the mineral extracting industries through drilling, Directive 92/104/EEC on the minimum requirements for improving the safety and health protection of workers in surface and underground mineral-extracting industries, Directive 94/22/EC on the conditions for granting and using authorisations for the prospecting, exploration and production of hydrocarbons, and Directive 2006/21/EC on the management of waste from extractive industries and amending Directive 2004/35/EC. These regulations have been introduced into the Polish legal system by the Polish Mining and Geological Law and by the Polish Act on Extractive Waste.

CO2 Emissions Issues related to CO2 reduction are regulated by the Act of 28 April 2011 on Greenhouse Gas Emission Allowance Trading (the ‘Polish Emission Allowance Act’). The act implements the EU

131 directives on greenhouse gas emission allowance trading, in particular Directive 2003/87/EC. On 23 April 2009 the European Parliament and Council adopted Directive 2009/29/EC on the amendment of Directive 2003/87/EC to improve and extend the greenhouse gas emission allowance trading system. Directive 2009/29/EC is implemented in the Polish Emission Allowance Act. Following articles of the Polish Emission Allowance Act, the auction system is the main method of allocating CO2 emission allowances to the power sector. Certain exemptions from the auction system may apply and Poland may be one of the countries where such an exception is applied (application of such exemption is subject to the fulfilment of various requirements and is subject to the decision of the European Commission). According to the Polish Emission Allowance Act, emission allowances are allocated in accordance with the National Allocation Plans (the ‘NAP’). Allowances are allocated to those industrial installations and fossil fuel generating stations that fall within the scope of the Polish Emissions Allowance Act. Operators of these facilities are required to surrender allowances equal to their regulated emissions on an annual basis. To the extent that the number of allowances allocated under the NAP to the emitter is insufficient for the level of emissions of the emitter, the emitter is able to purchase additional emissions allowances in an EU wide emissions allowance market. The total number of allowances that may be allocated in Poland is specified in the NAP. In the first compliance period (1 January 2005 to 31 December 2007), the total number of allowances for Polish emitters was 716,083,665. In the second compliance period (1 January 2008 to 31 December 2012), the total number of allowances for Polish emitters was 1,042,576,975. For the period 2013-2020, the total number of free allowances for Polish emitters will be determined by the Polish Government and approved by the European Commission. The new NAP for 2013-2020 will comply with the rules implemented by Directive 2009/29/EC. Emission allowances allocated in respect to installations should be 21 per cent below their emission levels by 2020. If this goal is achieved, a 20 per cent reduction in greenhouse gas emission below 1990 levels will be realised. Full auctioning will be the rule for the power sector, with some exceptions connected with free allowances for electricity generators for district heating and cooling. For other sectors covered by the Community system, a transitional system will be put in place for which free allocations will be granted and the number of them will be consequently decreased each year in the period 2013-2020. If an emitter fails to cover its emissions sufficiently with emission allowances, it is penalised at a rate of EUR 100 per each missing allowance and is still obligated to surrender an allowance. Karbonia is not required to surrender allowances against its greenhouse gas emissions, although regulations related to CO2 impact the market in which the Company operates. Until 2020, Karbonia will not be required to acquire allowances for its greenhouse gas emissions.

Promotion of Electricity Produced from Renewables and Promotion of Co-generation Promotion of electricity obtained from renewable energy sources or in the process of joint generation of heat and electricity (co-generation) is regulated by the Act of 10 April 1997, as renewed on 16 May 2006, on Energy Law (the ‘Energy Law’) and other secondary regulations. The Polish Energy Law supports renewable energy by, for example, implementing green certificates (energy companies that generate or supply electricity to end customers connected to the grid in Poland with end customers being members of the power exchange in the scope of transactions on such exchange and/or brokerage houses acting within such transactions of such end customers are obliged to obtain and submit a specified amount of green certificates for redemption or pay a substitution fee) and stipulating that relevant supply companies (last resort suppliers) are obliged to purchase electricity generated from renewable energy sources connected to grids located in the area where such supply companies carry out their business operations, and which is offered by an entity that generated such renewable energy. Furthermore, energy companies involved in heat trading, are required, within specified limits, to purchase heat generated by a renewable energy source connected to the grid in the territory of Poland, in volumes not higher than required by customers connected to the grid to which a given renewable energy source is also connected. This renewable energy support system aims to meet the targets set out in the Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market that provides targets for respective member states. The entire EU Directive 2001/77/EC has been amended by Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009

132 on the promotion of the use of energy from renewable sources that amends and subsequently repeals Directives 2001/77/EC and 2003/30/EC. Although the deadline for implementation of Directive 2009/28/EC was 5 December 2010, the directive has not yet been fully transposed into law in Poland. The Polish Energy Law also establishes a mechanism to support electricity generated from high-efficiency cogeneration sources. The main support mechanism provides that, in particular, energy companies that generate or supply electricity to end customers connected to the grid in Poland are required to obtain and submit for redemption a specified number of cogeneration certificates of origin or, failing such submission, pay a substitution fee. As at the date of this Offering Memorandum, the Ministry of Economy is working on a draft of a new act on renewable sources of energy which is going to significantly modify the system of support for renewable energy sources as currently regulated in the Polish Energy Law.

Carbon Capture and Storage (‘CCS’) The Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide, amending Directive 85/337/EEC, European Parliament and Council Directives 2000/60/EC, 2001/80/EC, 2004/35/EC, 2006/12/EC, 2008/1/EC and Regulation (EC) No 1013/2006 (the ‘CCS Directive’), sets forth a legal framework for the development and application of technologies for the geological storage of CO2 within the European Union. This Directive is intended to harmonise the regulation of CCS activities across the EU and ensure a minimum standard of environmental protection. CCS involves the capture of CO2 from power generators and industrial facilities and the transport and compression into a relevant geological formation for permanent storage. CO2 permanently stored in geological formations, under the CCS Directive, is not deemed as emitted for the purposes of the European Union Emissions Trading Scheme. The CCS Directive establishes that operators of newly built power plants, with an installed capacity equal to or greater than 300 MW, must evaluate whether CO2 capture and transportation facilities are technically and economically feasible for the planned investment project. If the terms are met, an area must be allocated, at the facility’s site, for CO2 capture and compression. In Poland, social consultations are in progress on a draft of amendment to the Polish Mining and Geological Law implementing the CCS Directive.

Air Pollution Emissions of gases and/or dust to the atmosphere exceeding certain levels are subject to permits to introduce such gases and dust into the environment. Emissions below such levels only require a notification to the environmental protection authorities. Additionally, the entity generating emissions is obliged to pay charges every six months for using the environment in a manner affecting the natural environment or its resources. The amount of the charges depends on the quantity and quality of pollution emitted into the atmosphere. Directive 2001/80/EC of the European Parliament and of the Council of 23 October 2001 on the limitation of emissions of certain pollutants into the air from large combustion plants (the ‘LCP Directive’) and Directive 2001/81/EC set forth limitations on emissions from large combustion plants for member states. The LCP Directive regulates SO2, NOx and dust emissions from large combustion plants (facilities with thermal combustion capacity equal to or exceeding 50 MW, regardless of the type of fuel used). The LCP Directive limits the emission of pollutants from these facilities and targets an overall reduction of emissions by the power sector. Directive 2010/751/EU regulating industrial emissions (integrated pollution prevention and control) (the ‘IED’) was enacted in this year and replaces the LCP Directive and IPC Directive. It includes new SO2, NOx and dust emissions limits, which begin to take effect from 2016. At a national level, these issues are regulated by the Polish Environmental Protection Act and the Regulation of the Ministry of Environmental Protection of 22 April 2011 on Standards for Emissions from Installations. In addition, the Ministry of Environmental Protection is preparing a draft act on the system of balancing and settling SO2 and NOx emissions from large combustion plants.

133 Nuclear Act The use of nuclear energy is governed by the Nuclear Law of 29 November 2000 (the ‘Polish Nuclear Law’). The Polish Nuclear Law stipulates that a permit has to be obtained from, or an application has to be filed with, the President of the National Atomic Energy Agency to conduct any activity involving the use of units, which contain radiation sources. The Polish Nuclear Law specifically determines the scope of the relevant civil liability. Any person using units that contain radiation sources is obliged to execute a civil liability insurance agreement for nuclear damage. The last uniform text of the Polish Nuclear Law was published in 2007, the last amendment to the Polish Nuclear Law dated 13 July 2012.

Public Procurement Regulations The Public Procurement Law of 29 January 2004 (the ‘Polish Public Procurement Law’), together with regulations and EU law, regulate the application of public procurement procedures in Poland. The Polish Public Procurement Law provides that certain public procurement requirements (in particular the requirement to apply certain awarding procedures) may apply if a contract is awarded to search for, identify or extract lignite, bituminous coal and other solid fuel. Therefore, the Company may be required to comply with the Polish Public Procurement Law in respect of certain types of contracts and may be required to apply the procedure for awarding sector contracts set out in the law. Karbonia has received an official notification from relevant authorities confirming that Karbonia is not required to comply with the Polish Public Procurement Law, however this does not prevent the authorities from taking a different view in the future.

Local Taxes and Levies Act — real property tax Pursuant to the Local Taxes and Levies Act of 12 January 1991 (‘Polish Local Taxes and Levies Act’), real property tax is payable on land, buildings or parts thereof, and structures or parts thereof used for commercial activity. In the mining sector, there was dispute among tax authorities, administrative courts and taxpayers in relation to real property tax, as to whether excavations should be treated as ‘structures’ within the meaning of the Polish Local Taxes and Levies Act and as a consequence subject to such tax. The tax payable on a structure is calculated on the basis of the value of the structure disclosed in the taxpayer’s tax books, which serves as the basis for the accrual of depreciation charges for corporate tax purposes without taking into account applied depreciation charges (such value is defined in accordance with the regulations set forth in the Corporate Income Tax Act of 15 February 1992). The real property tax rate applicable to structures will not exceed 2 per cent of the value calculated in accordance with the Polish Local Taxes and Levies Act and the Corporate Income Tax Act of 15 February 1992. The tax authorities generally treat excavations as structures that are subject to real property tax. This approach was also adopted by numerous administrative courts, including the Supreme Administrative Court. However, the Voivodeship Administrative Court in Gliwice in its judgment of 1 June 2009 (No. I SA/Gl 110/09) stated that the regulations of the Polish Local Taxes and Levies Act are unclear and the court doubted whether the regulations are in compliance with the Polish Constitution. The Voivodeship Administrative Court in Gliwice has posed a question regarding this issue to the Polish Constitutional Tribunal. The Polish Constitutional Tribunal on 13 September 2011 announced its judgment in this case. The Polish Constitutional Tribunal decided, that excavations shouldn’t be treated as ‘‘structures’’ within the meaning of the Polish Local Taxes and Levies Act, however did not exclude the fact that certain objects and devices located in excavations may be qualified as ‘‘structures’’ within the meaning of the Polish Local Taxes and Levies Act and therefore be subject to real property tax.

134 MANAGEMENT AND DIVISIONS Directors, Management and Corporate Governance Set out below is a summary of certain information concerning the Issuer’s board of directors and management as at the date of this Offering Memorandum.

Management Structure As from its incorporation, the Issuer has a one-tier board structure with a board of directors (raad van bestuur) consisting of executive and non-executive directors (the ‘Board’). Until 1 January 2012, Dutch law only provided for a two-tier governance structure, i.e. a management board and a separate supervisory board. It was, however, established practice in the Netherlands to have a structure in the board of directors (raad van bestuur), which is similar to a one-tier structure. Although in such cases all members of the board of directors are formally directors (bestuurders), the articles of association of the relevant company may provide that certain directors have tasks and obligations, which are similar to those of executive directors and that other directors have tasks and obligations, which are similar to those of non-executive directors. All responsibilities are subject to the overall responsibility of the board of directors. Since 1 January 2012, legislation introducing a one-tier board, the Dutch Act on management and supervision within NV’s and BV’s (‘the Management and Supervision Act’), is in force. However, all prior statutory provisions relating to the members of a management board applied in principle to all members of a ‘one-tier board’. Therefore it was not necessary for the Issuer to amend its Articles of Association.

Role of the Board The role of the Board is to promote the achievement of the corporate objectives of the Issuer, protect the interests of the Issuer and represent the Issuer, the holders of A Shares and B Shares and other stakeholders. The Board directs and controls both the Mining Division and the Real Estate Division. Following the Redomiciliation, strategic business decisions, determination of remuneration, as well as decisions regarding major transactions (including transactions with the Issuer’s subsidiaries), with respect to the Issuer, are now made at the level of NWR Plc. The Board has identified a number of matters specifically reserved for its decision and these include: • appointment of the Chairman of the Board; • approval of internal policies (such as the corporate governance policy of the Issuer (the ‘Corporate Governance Policy’), its Code of Ethics, the Divisional Policy Statements, Business Integrity Policy, its Share Dealing Code and the terms of reference of the Board’s committees); and • review of the Issuer’s financial and annual reports. The Board continues to manage the Mining Division and the Real Estate Division. Day-to-day operational decisions relating to the Mining Division and Real Estate Division at the level of the Issuer are taken by the Issuer’s employees under the oversight authority of the Board. Because the Issuer is a holding company, the subsidiaries of the Issuer are managed by the respective boards of directors and employees of the relevant subsidiaries, which in each case are wholly-owned direct or indirect subsidiaries of the Issuer. The Board has delegated to the Real Estate Committee certain duties to oversee the assets of the Real Estate Division and manage the interaction between the Mining Division and the Real Estate Division, except in relation to audit, accounting, and financial disclosure matters and dividends and distributions (on both a routine basis or on a winding up, although the Real Estate Committee will still be required to provide its opinion to the Board on such dividends or distributions) which are dealt with by the Board. The Real Estate Committee acts, amongst others, in an advisory role to the Board in relation to interpreting policies set out in the Divisional Policy Statements and advises on certain transactions relating to the Assets of the Real Estate Division. See ‘‘— The relationship between the Mining Division and the Real Estate Division — Real Estate Committee.’’

135 Members of the Board At the date of this Offering Memorandum, the Board is composed of the following six members:

Expiration of term of office/ Name Position Date of Birth Reappointment Gareth Penny ...... Director/Executive Chairman 24.12.1962 2016 Marek Jel´ınek ...... Executive Director/CFO 27.12.1972 2016 Hans-Jorg¨ Rudloff ...... Independent Non-Executive Director 11.10.1940 2015 Steven Schuit ...... Independent Non-Executive Director 09.10.1942 2016 Paul Everard ...... Independent Non-Executive Director 06.05.1940 2016 Barry Rourke ...... Independent Non-Executive Director 19.08.1950 2016 Following the Redomiciliation, through which the burden of the day-to-day governance of the Group has shifted to NWR Plc, the Board of the Issuer has been restructured, with seven Directors resigning. In order to safeguard the interest of the shareholders (in particular the minority A Shareholders) as well as other stakeholders, the Board retains a majority of Independent Non-Executive Directors. Gareth Penny was appointed as a Director of the Issuer on 21 August 2012 with effect as of 3 September 2012. He was appointed as Executive Chairman on 13 September 2012 with effect as of 1 October 2012, replacing Miklos Salamon as Executive Chairman of the Issuer and NWR Plc. Mr. Penny also serves as a non-executive member of the board of OKD, non-executive member of Julius Baer Holdings Limited, member of the Advisory Board of TowerBrook Capital Partners and occupies the pro bono position of vice chairman of the Botswana Economic Advisory Committee. Mr. Penny has extensive experience in and knowledge of the international mining industries. During a career that spans over 25 years, Mr. Penny has developed deep experience in many aspects of mining at Anglo American, De Beers, and AMG through his involvement at the operational level in the exploration, development and expansion of resources. Between 2006 and 2010. Mr. Penny served as Chief Executive of De Beers, the world’s leading diamond mining business, and developed a strong track record for shareholder value creation as a result of both a clear strategic insight and the ability to manage change. Mr. Penny became a member of the board of De Beers in 2003, having worked for the De Beers Group since 1991 (between 1991 and 1993 for Teemane Manufacturing Company in Botswana and from 1993 until 2006 for Diamond Trading Company (DTC)). Prior to joining De Beers Group, Mr. Penny worked for Anglo American Corporation in Johannesburg. Mr. Penny graduated in 1985 from The Oxford University, UK, as a Master of Arts (M.A.) in Philosophy, Politics and Economics. Marek Jel´ınek was appointed as a Director of the Issuer on 6 March 2007. He has also been a member of the board of directors of OKD since his appointment on 1 November 2007. Following the Redomiciliation, which he successfully lead, Mr. Jel´ınek serves as of 30 March 2011 as an executive director of the board of directors of the same company. Since March 2007, Marek holds the position of Group Chief Financial Officer. In his capacity as Chief Financial Officer, Mr. Jel´ınek is responsible for the restructuring activities within the Group, the build up of the Issuer’s headquarters team, including the Group-wide finance and treasury functions. In 2007 and 2008, Mr. Jel´ınek led the Company’s bond issue and the successful initial public offering in London, Prague and Warsaw. Between March 2009 and March 2010, Mr. Jel´ınek was a non-executive director of Ferrexpo Plc. Mr. Jel´ınek was a director of BXRP a.s. (formerly RPG Advisors, a.s.) from 2005 to 2006. He joined BXR Group in December 2004 as financial officer and was responsible for a variety of areas including group financing, restructuring and divestitures. Prior to that, Mr. Jel´ınek served as an analyst and associate of the Corporate Finance department at Patria Finance, a Prague based investment banking boutique, from 1995 to 2004, where he managed merger and acquisition transactions for domestic and international clients. Mr. Jel´ınek graduated from the Anglo American College in Prague in 1995 with a Bachelor of Science degree in Business Administration. Hans-Jorg¨ Rudloff was appointed as a Director of the Issuer on 11 September 2007. Following the Redomiciliation, Mr. Rudloff serves since 8 April 2011 as a non-executive director of the board of directors of NWR Plc. Since 1998, he has served as chairman of Barclays Capital. Prior to that, he was chairman of MC-BBL Eastern Europe between 1995 and 1998. Mr. Rudloff was

136 chairman and CEO of Credit Suisse First Boston Ltd from 1989 to 1993, and Member of the Executive Board of Credit Suisse Zurich. Between 1968 and 1980, Mr. Rudloff served at Kidder Peabody International, where he became chairman in 1978. In 1980, he was also nominated to the board of Kidder Peabody Inc. New York. Mr. Rudloff is currently Vice Chairman of Rosneft. Mr. Rudloff also served as Chairman of the International Capital Market Association from 2005 until May 2011. He was Vice Chairman, member of the audit committee and head of the compensation committee of Novartis from 1996 until 2011 and Chairman of BlueBay Asset Management Ltd from 2001 to 2010. He has also been am advisory board member of Thyssen Bornemisza Group since 1995, ABD Capital SA since 2003, Energie Baden-Wurttemberg since 2000 and Landeskreditbank Baden-Wurttemberg since 1993. Mr. Rudloff is a Chairman of the Marcuard Group, a privately held asset management group of companies. Mr. Rudloff graduated from the University of Berne in 1965 with a degree in Economics. Steven Schuit was appointed as a Director of the Issuer on 20 November 2007. Following the Redomiciliation, Mr. Schuit serves since 30 March 2011 as a non-executive director of the board of directors of NWR Plc. He is also currently a part-time professor of International Commercial and Financial Law at Utrecht University and a part-time professor of Corporate Governance and Responsibility at the Strategy Center of Nyenrode Business University. He is also a member of the supervisory board of ZBG Capital N.V. and Breevast B.V. and Chairman of Stichting Giving Back. He is currently legal counsel to Allen & Overy LLP in its Amsterdam office, having served as partner to this firm and its predecessor firm between 1976 and 2005. Mr. Schuit has previously been a member of the supervisory board of Numico from 2002-2006. Mr. Schuit graduated in 1969 from Groningen University with a degree in Law and was admitted to the bar in the Netherlands in 1971. Paul Everard was appointed as a Director of the Issuer on 20 November 2007. Following the Redomiciliation, Mr. Everard serves since 8 April 2011 as a non-executive director of the board of directors of NWR Plc. Between 2001 and 2005, when he retired, Mr. Everard served as deputy president of aluminium for BHP Billiton. From 1994 until 2001, up to Billiton’s merger with BHP, he was executive director of Billiton Aluminium responsible variously for strategy, business development, and operations outside South Africa. He joined Billiton in 1974 becoming executive director in 1983, responsible for Aluminium. Subsequently, in 1986 he assumed responsibility, as director, for all business performance, strategic planning, research, HSE, and public affairs for the Billiton group. He began his career with Shell Group in 1963 mainly working in oil marketing in East Africa until his transfer to Billiton. Mr. Everard graduated in 1962 from Cambridge University, and has an MA in Mechanical Sciences. He completed the Advanced Management Program at Harvard Business School in 1979. Barry Rourke was appointed as a Director of the Issuer on 20 November 2007. Following the Redomiciliation, Mr. Rourke serves since 8 April 2011 as a non-executive director of the board of directors of NWR Plc. He served as an audit partner at PricewaterhouseCoopers from 1984 until 2001. Mr. Rourke is currently director and chairman of the audit committee of 3Legs Resources Plc, independent member of the audit committee for the Department for Energy and Climate Change and a member of the Coal Liabilities Strategy board for that department, and is a non-executive director at Avocet Mining Plc and Ruukki Group Plc. Mr. Rourke is a Fellow of the Institute of Chartered Accountants in England and Wales, having qualified as a Chartered Accountant in 1973. The business address for the members of the board is Jachthavenweg 109h, 1081 KM, Amsterdam, the Netherlands.

Senior Management The Executive Chairman of the boards of directors of the Issuer and NWR Plc, Gareth Penny, is the executive leader of the Group and ensures that the Executive Directors and the Senior Managers meet their objectives. Gareth Penny is the successor of Miklos Salamon, who resigned as executive chairman of the Issuer and NWR Plc on 30 September 2012. The Chief Financial Officer of the Issuer, Marek Jel´ınek, has delegated authority to achieve the corporate objectives of the Group. He is responsible for Group finance and administration, and reports to the Board and its Executive Chairman, Gareth Penny. He oversees planning, financial control, accounting, restructuring, mergers and acquisitions, and investor relations functions

137 throughout the Group. Mr. Jel´ınek is also responsible for ensuring that financial and other information disclosed publicly is timely, complete and accurate. As the former CEO and Chairman of the board of directors of OKD, Klaus-Dieter Beck, was responsible for the operation of OKD. He reported to the board of directors of NWR Plc and its Executive Chairman, Gareth Penny. Mr. Beck resigned as CEO and Chairman of the board of directors of OKD with effect as at 31 December 2012 and remains on the board of OKD and NWR Plc as a non-executive director. Jan´ Fabian´ who acted as Chief Operating Officer of the Issuer has the overall responsibility for the operations of Karbonia and OKK. Mr. Fabian´ reported to the board of NWR Plc. Mr. Fabian ceased to be COO, and replaced Mr. Beck as CEO of OKD and became an executive director of NWR Plc from 1 January 2013.

Name Date of Birth Title Gareth Penny ...... 24.12.1962 Executive Chairman, OKD Board member Marek Jelinek ...... 27.12.1972 Chief Financial Officer, OKD Board member Jan´ Fabian´ ...... 02.05.1966 Chief Executive Officer of OKD, Chairman of the Board of OKD Jarmila Ivankov´ a...... ´ 10.11.1966 Chief Financial Officer of OKD and Chief HR Officer of OKD, OKD Board member Michal Kucaˇ ...... 01.03.1953 General Manager of OKK, Chairman of the Board of OKK Jan´ Fabian´ was appointed as Chief Operating Officer of OKD in November 2008 and replaced Mr. Beck as CEO and chairman of the board of directors of OKD at 1 January 2013. Prior to joining OKD, Mr. Fabian´ was advising companies from the energy sector, resources, steel, machinery and automotive industries. Major areas of focus included turn-around, privatisation, restructuring and process optimisation strategies. He graduated from the Technical University in Kosice,ˇ Slovakia in 1988 with a degree in mining and gained a PhD in production optimisation for the underground mining from the Technical University in Berlin in 1998. Jarmila Ivankov´ a´ has been acting Chief Financial Officer since January 2011. On 31 October 2012, she was appointed as director on the board of directors of OKD. In such capacity, she has overall responsibility for financial strategy and management of OKD. She has also been serving as Chief HR Officer of OKD since July 2012. She has been working for OKD since 2005 in the field of finance, including as deputy CF/ITO for Treasury and Taxes SSC since 2008. She has worked at different management positions within OKD since 1992, including at OKD Restrukturalizace, Ba´nskˇ a´ stavebn´ı spolecnostˇ or OKD, Energo, a.s. She graduated from the Mining University Ostrava with a degree in Industrial Economics. She is a certified tax advisor. Michal Kucaˇ has served as General Manager and Chairman of the board of directors of OKK since 1999. In such capacity, he is responsible for the business and management of OKK. Mr. Kucaˇ joined the Former OKD Group in 1980 and has been manager of Darkov since 1991. Mr. Kucaˇ graduated from the Mining University in Ostrava in 1980 with a master’s degree in Underground Mining. In addition, there are further 2 members of the board of directors of OKD — Mr. Karl Friedrich Jakob, born on 24.11.1951 and Mr. Stanley C. Suboleski, born on 25.07.1941 and further 2 members of the board of directors of OKK — Mr. Radim Taba´sek,ˇ born on 30.05.1967 and Mr. Anton´ın Klimsa,ˇ born on 01.01.1973. There are no potential conflicts of interest between the duties owed by the members of the board of directors and management to New World Resources N.V. and their private interests or other duties

Board Committees Following the Redomiciliation, the Issuer abolished all its committees except for the Real Estate Committee. All committees existing prior to the Redomiciliation, including a audit and risk management committee, a remuneration committee, a finance and investment committee, a health, safety and environment committee as well as the Real Estate Committee, have been established at

138 NWR Plc effective as of 6 May 2011. Furthermore, on 15 September 2011, the Board abolished a sponsorship and donation committee. The Board may at all times establish new committees and change the duties and composition of the Real Estate Committee, with the due understanding that any changes to its rules shall be in line with the Divisional Policy Statements. A brief description of the terms of reference of the Real Estate Committee is described in the section entitled ‘‘The Relationship between the Mining Division and the Real Estate Division — Real Estate Committee.’’

Remuneration The Board On 8 April 2011, the board of directors of NWR Plc adopted a compensation manual, which sets out the remuneration policy for the directors of NWR Plc and outlines compensation principles for senior and key positions within the Company. As part of the Redomiciliation, all directors of the Issuer were also appointed as directors of NWR Plc on 8 April 2011, and therefore the compensation manual, including the remuneration policy contained therein, applies to them in full. As a result, the directors now receive compensation from NWR Plc and such compensation includes the remuneration for serving in their capacity of Director of the Issuer. The salary, bonus, if any, and the other terms and conditions of employment of the Executive Directors of the Issuer (who is at the same time an executive director of NWR Plc) are determined by the remuneration committee of NWR Plc with due observance of the compensation manual.

Executive Directors The tables below provide a description of the pre-tax compensation of Executive Directors of the Issuer for the fiscal year ended 31 December 2011.

Cash Other Total in Name Salary bonus Benefits(3) FY 2011 (EUR) Miklos Salamon ...... 287,522 — — 287,522 Marek Jel´ınek(1,2) ...... 290,000 1,301,342 112,073 1,703,415

Source: NWR (1) Joint compensation for directorship with the Issuer and NWR Plc, which is paid by NWR Plc from 8 April 2011. (2) Gross salary of Mr. Jel´ınek includes remuneration received from OKD for his board membership in January and February 2010. (3) Includes in-kind compensation, e.g. personal travel costs, additional health insurance, housing, etc.

Non-Executive Directors The tables below provide a description of the pre-tax compensation of Non-Executive Directors of the Issuer for the fiscal year ended 31 December 2011(1).

Committee Committee Annual fee Chairmanship membership Name compensation annual fee annual fee Total (EUR) Hans-Jorg¨ Rudloff ...... 76,065 — 57,049 133,114 Steven Schuit ...... 76,065 — 88,742 164,807 Barry Rourke ...... 76,065 63,387 44,371 183,823 Paul Everard ...... 76,065 63,387 31,694 171,146

(1) Joint compensation for directorship, chairmanship and membership in the Board and committees of the Issuer and NWR Plc, which is from 8 April 2011 paid by NWR Plc.

139 Loans to Directors and Senior Managers As of 30 September 2012, no loans were outstanding to any of the Directors or the Senior Managers.

Employment and other Agreements with Directors and Senior Managers Following the Redomiciliation, Marek Jel´ınek’s existing contract of employment with the Issuer was terminated by mutual consent and he has entered into new employment contracts with NWR Plc, the terms of which are substantially the same as his previous employment agreements with the Issuer. NWR Plc has also entered into an employment contract with Gareth Penny, which also governs his position as Executive Chairman of the Issuer. OKD has entered into employment agreements with Jan´ Fabian,´ and Jarmila Ivankov´ a.´ OKK has also entered into employment agreements with Michal Kuca.ˇ

Equity Holdings Following the Redomiciliation, the members of the Board and the Senior Managers do not beneficially own any NWR NV A Shares at the date of this Offering Memorandum, as they have exchanged their NWR NV A Shares for NWR Plc A Shares. At the date of this Offering Memorandum, they beneficially own the following number of NWR Plc A Shares:

Number of Director Interest A Shares Gareth Penny ...... 0 Marek Jel´ınek ...... Beneficial 7,075 Barry Rourke ...... Beneficial 55,843 Steven Schuit ...... Beneficial 25,843 Paul Everard ...... Beneficial 67,843 Hans-Jorg¨ Rudloff ...... Beneficial 35,077

140 Options held by members of the Board and Senior Managers Following the Redomiciliation, the members of the Board have exchanged their NWR NV A Share options for NWR Plc A Share options, and hold the following at the date of this Offering Memorandum:

Number of NWR Plc A Shares over which Exercise Exercise Period/ Director Plan Date of Grant options/awards granted Price Vesting Date Gareth Penny ...... Stock Option Plan* 3 September 2012 750,000 e 0.01 8 years (3-year vesting period) Marek Jel´ınek ...... Stock Option Plan 9 May 2008 39,776 £ 13.25 8 years (3-year vesting period) Stock Option Plan 24 June 2009 221,889 £2.8285 Stock Option Plan 17 March 2010 88,310 £ 7.128 Deferred Bonus Plan 3 March 2011 30,000 N/A 3 March 2014 Employment agreement 1 July 2007 250,045 N/A 1 July 2012 Jan´ Fabian´ ...... Stock Option Plan 9 May 2008 51,335 £ 13.25 8 years (3-year vesting period) Stock Option Plan 24 June 2009 233,986 £2.8285 Stock Option Plan 17 March 2010 95,903 £ 7.128 Deferred Bonus Plan 16 May 2012 63,621 N/A 16 May 2015 Jarmila Ivankova .... Stock Option Plan 9 May 2008 6,780 £ 13.25 8 years (3-year vesting period) Stock Option Plan 24 June 2009 27,039 £2.8285 Stock Option Plan 17 March 2010 18,471 £ 7.128 Deferred Bonus Plan 16 May 2012 11,664 N/A 16 May 2015 Michal Kucaˇ ...... Stock Option Plan 9 May 2008 14,032 £ 13.25 8 years (3-year vesting period) Stock Option Plan 24 June 2009 93,270 £2.8285 Stock Option Plan 17 March 2010 38,228 £ 7.128 Deferred Bonus Plan 16 May 2012 10,144 N/A 16 May 2015

Source: NWR * In September 2012, Mr. Gareth Penny was granted share options in three tranches (the ‘Options’), each over 250,000 ordinary A Shares of EUR 0.40 each in NWR Plc (representing an aggregate of 750,000 ordinary shares) with an exercise price of EUR 0.01 per share. Subject to Mr. Penny remaining in employment with the Issuer, each of the Options will vest, as to one third of the shares subject to it, annually on the relevant anniversary of the grant date, such that:

• one third of the shares subject to the first Option will vest on each of the first, second and third anniversary of the grant date;

• one third of the shares subject to the second Option will vest on each of the second, third and fourth anniversary of the grant date; and

• one third of the shares subject to the third Option will vest on each of the third, fourth and fifth anniversary of the grant date. Once vested, each Option will be exercisable from the date on which it vests until the 7th anniversary of the first vesting date of that Option, when it will lapse.

Corporate Governance In addition to the Corporate Governance Policy, the Issuer has also adopted a Code of Ethics and Business Conduct (the ‘CEBC’). The CEBC governs the behaviour of all officers and employees of the Issuer and its subsidiaries. Appended to the CEBC is the Issuer’s Whistleblower Procedure, pursuant to which, employees of the Issuer and its subsidiaries are able to express concerns to the Chairman, Senior Independent Director of NWR Plc (at present, Bessel Kok) and Designated Officer (at present, Lucie Vavrov´ a,´ Company Secretary) in relation to the conduct of the Issuer, its officers and employees which they consider contrary to the CEBC or if they wish to report a Suspected Irregularity (as defined in the Whistleblower Procedure). The Audit and Risk Management Committee of NWR Plc monitors, through reports received from the company secretary, the effectiveness of the procedure.

141 Dutch Corporate Governance Code The Issuer acknowledges the importance of good corporate governance. The Issuer has made an effort in drawing up internal corporate governance regulations that comply, to the extent possible, with the Dutch Corporate Governance Code. The Issuer has not listed its Shares at any stock exchange and therefore is not required to comply with the Dutch Corporate Governance Code since the delisting of the Issuer on the LSE, PSE and WSE. However the Dutch Corporate Governance Code is reflected in the Corporate Governance Policy as described above. The Issuer has not applied a limited number of best practice provisions from the Dutch Corporate Governance Code, as it has not considered them to be appropriate for the Issuer and its stakeholders. Notwithstanding departures from the Dutch Corporate Governance Code the Board has adopted the Corporate Governance Policy to ensure the maintenance of a coherent and effective system of governance and enable the Board to carry out its direction and control functions. NWR Plc has adopted a similar policy to that of the Issuer and will not apply a limited number of best practice provisions from the UK Corporate Governance Code because it does not consider them to be appropriate to the Group and its stakeholders. NWR Plc explains the deviations from the UK Corporate Governance Code in its annual report and accounts.

The Relationship between the Mining Division and the Real Estate Division Establishment of the Divisions NWR Plc has established two divisions: the Mining Division to manage its coal mining and coking business, and the Real Estate Division to manage its real estate assets which is reflected at the Issuer’s level as well. Both NWR Plc and the Issuer have established two classes of stock to track these divisions, which are ‘tracking stocks’. The A Shares track the performance and represent the economic value of the Mining Division. The B Shares track the performance and represent the economic value of the Real Estate Division. The NWR Plc A Shares are listed and traded on the London, Prague and Warsaw stock exchanges NWR Plc B Shares nor NWR NV B Shares are listed and are held by RPG Property (affiliate of NWR Plc’s controlling shareholder) and NWR Plc, respectively. The Divisional Policy Statements and the Articles of Association govern the relationship between the two divisions.

Real Estate Committee In accordance with the Corporate Governance Policy and the Divisional Policy Statements, the Issuer has established a Real Estate Committee, which oversees the Assets of the Real Estate Division and the interaction between the Mining Division and the Real Estate Division. Pursuant to the Divisional Policy Statements and the rules of the Real Estate Committee, members of the Real Estate Committee have been, and will continue to be, selected and appointed by the Board from amongst the members of the Board. At all times, all of the members will be independent Non-Executive Directors of the Issuer. If a Director, who is also a member of the Real Estate Committee, ceases to act as a Director of the Issuer or ceases to be an independent Non-Executive Director, his membership of the Real Estate Committee shall also immediately cease subject to the Articles of Association and any appropriate rules of the Board. As at the date of this Offering Memorandum, the Real Estate Committee is composed of Barry Rourke (chairman), Steven Schuit and Paul Everard. The boards of directors of OKD, OKK and Karbonia have adopted the Divisional Policy Statements. Under the Divisional Policy Statements, OKD, OKD’s subsidiaries and the other subsidiaries of the Issuer (as applicable) carry out the day-to-day operations of the Real Estate Division. In carrying out such day-to-day operations, OKD, OKD’s subsidiaries and the other subsidiaries of the Issuer (as applicable) are required to seek the prior approval from the Board, after the Real Estate Committee has provided its advice to the Board, when proposing to enter into transactions which: (i) are not considered by the Board to be in the ordinary course of business of the Real Estate Division; or (ii) relate to Assets of the Real Estate Division which have a book value of 5 per cent or more of the total book value of the Assets of the Real Estate Division from time to time (or such

142 lower percentage as determined by the real estate committee from time to time). The Real Estate Committee has provided guidance on the types of other matters or other transactions that require prior approval. In relation to Real Estate Division transactions, which require prior approval of the Board, the Real Estate Committee acts as an advisory body to the Board. In this advisory capacity, the Real Estate Committee submits a report to the Board (either orally or in writing) setting out its advice in relation to the adoption of the referred transaction. When preparing its report, the Real Estate Committee is required to take into account the policies set out in the Divisional Policy Statements and the advice of an independent valuer or other expert (being nominated and appointed under a procedure set out in the Divisional Policy Statements). Directors of the Issuer who have a conflict of interest are required, under the Divisional Policy Statements and the Corporate Governance Policy, not to take part in any discussion or decision making on such a transaction and to abstain from voting upon the adoption of a resolution of the transaction. In making its final decision on a transaction, the Board may, in its sole discretion, decide whether to act upon, or to set aside, the advice of the Real Estate Committee. The Real Estate Committee is also responsible for monitoring the compliance of all the Issuer’s subsidiaries with the Divisional Policy Statements and for reporting to the Board about such compliance.

Divisional Policy Statements The Divisional Policy Statements govern the relationship between the Mining Division and the Real Estate Division that were created within the Company on 31 December 2007. The Divisional Policy Statements have been prepared and adopted on the basis that the Mining Division has the right to maintain: (i) the undisturbed continuation of its mining, coking and related operations that are conducted on certain of the assets of the Real Estate Division; and (ii) the unrestricted access to such assets of the Real Estate Division in connection with such mining, coking and related operations. The Divisions operate separately for accounting and reporting purposes. Under the Divisional Policy Statements, OKD, OKD’s subsidiaries and the other subsidiaries of the Issuer carry out the day-to-day operations of the Real Estate Division. In carrying out such day-to-day operations, they are required to seek the prior approval from the Board, after the Real Estate Committee has provided its advice to the Board, when proposing to enter into transactions which: (i) are not considered by the Board to be in the ordinary course of business of the Real Estate Division; or (ii) relate to assets of the Real Estate Division, which have a book value of 5 per cent or more of the total book value of the assets of the Real Estate Division. During 2008, the Divisional Policy Statements were implemented by the Issuer’s core operations. The compliance with the Divisional Policy Statements is monitored by the Real Estate Committee through monthly reports received from the Company Secretary who acts as an intermediary between the Real Estate Committee, the Issuer and its subsidiaries.

The Articles of Association The Articles of Association contain provisions relating to the rights attaching to the NWR NV A Shares and the NWR NV B Shares. Provisions are contained in the Articles of Association dealing with matters including the issue of further NWR NV A Shares and NWR NV B Shares, pre-emptive rights, the transfer of shares, rights to vote at general meetings, dividends and distributions and the operation of the Board.

143 PRINCIPAL SHAREHOLDERS As from 9 October 2012, NWR Plc holds 100 per cent of the NWR NV A Shares. NWR Plc is a majority-owned indirect subsidiary of BXRG Limited, which is a holding company. BXRG Limited is the indirect parent company of (i) BXR Mining, the direct holder of approximately 63.6 per cent of the NWR Plc A Shares, and (ii) RPG Property, the direct holder of all of the NWR Plc B Shares. The following table sets forth the relevant ownership interests in NWR Plc:

Current percentage of indirectly attributed ownership in NWR Plc A Shares of Total Percentage held: by BXRG Limited(1)(2) ...... 63.6 by public shareholders ...... 36.4 Total A Shares ...... 100

Notes: (1) Peter Kadas, a Non-Executive Director of NWR Plc, owns no direct interest in NWR NV A Shares or NWR NV B Shares but he is considered as being interested in these shares because of his associated family trust having a minority ownership interest in BXRG Limited and BXRG Limited’s indirect ownership interest in the Issuer. BXRG Limited is the indirect parent company of BXR Mining and RPG Property and, accordingly, BXRG Limited owns a 100 per cent indirect interest in the NWR Plc A Shares held by BXR Mining, being approximately 63.6 per cent of the NWR Plc A Shares, and in the NWR Plc B Shares held by RPG Property, being 100 per cent of the B Shares. Mr. Kadas, a Non-Executive Director of NWR Plc, is also a director of Bakala Crossroads Partners Ltd, an affiliate of BXRG Limited. (2) Zdenek Bakala, a Non-Executive Director of NWR Plc, holds no direct interest in NWR NV A Shares or NWR NV B Shares but he is considered as being interested in these shares as a result of a trust and affiliated companies relating to him and his family (collectively the ‘Bakala entities’) holding an indirect ownership interest in BXRG Limited, and BXRG Limited’s indirect ownership interest in the Issuer. Mr. Bakala and his family, through the Bakala entities, own 50 per cent of the outstanding voting capital in BXRG Limited. As set out in note (1) above, BXRG Limited owns a 100 per cent indirect interest in the NWR Plc A Shares held by BXR Mining, being approximately 63.6 per cent of the NWR Plc A Shares, and in the NWR Plc B Shares held by RPG Property, being 100 per cent of the NWR Plc B Shares.

BXRG Limited BXRG Limited is an international investment group focused on investments in Central Europe. It also has investments in Western Europe. BXRG Limited typically takes large or controlling stakes in companies and is active in the management of its investments. In addition to its investment in the Issuer, BXRG Limited currently has investments in real estate, logistics, green energy, financial services and other industries.

New World Resources Plc The Issuer completed a redomiciliation to the United Kingdom by interposing a new English holding company, NWR Plc, between the Issuer and its shareholders. See ‘‘Summary — Redomiciliation’’. This was affected through an exchange offer pursuant to which each holder of NWR NV A Shares of received one NWR Plc A Share in exchange for each NWR NV A Share tendered. NWR Plc owns 100 per cent of the NWR NV A Shares and each holder of NWR Plc A Shares (including, indirectly, BXRG Limited), effectively has the same proportionate direct or indirect interest in the profits, net assets and dividends of the Issuer as they had immediately prior to the exchange offer.

144 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS The following are significant related party transactions (being contracts entered into by, on the one hand, Company entities and, on the other, entities affiliated with them, or contracts in which a director has a material interest, in effect on 31 December 2012).

Agreement related to the Restructuring Cross Guarantee Former OKD was a government-controlled enterprise, and as a result it owned and operated a large range of businesses (including mining businesses, businesses ancillary to mining and unrelated businesses). The Restructuring was concerned primarily with disposing of certain of such ancillary and unrelated businesses in order to focus upon coal mining and coke production businesses. In addition, steps were taken to streamline the corporate structure of the BXR Group (removing certain intermediary holding companies from the structure). In connection with the Restructuring, and pursuant to Czech law, OKD, DPB, AWT, RPG Trading s.r.o. (defunct since January 2010), RPG RE Land s.r.o., RPG RE Commercial s.r.o. and RPG Byty s.r.o., the successor entities of Former OKD, are subject to a statutory cross guarantee. The statutory cross guarantee was given by each successor entity in relation to the liabilities of the demerged entity (Former OKD) that were assumed by each successor entity on the date of the demerger. The cross guarantee of each successor entity is limited to the value of the net assets of the guarantor as at the effective date of the demerger. Similar statutory cross guarantees have arisen as a result of the spin-off of OKK Koksovny, a.s. (formerly known as OKD, OKK) (‘OKK Koksovny’) into NWR Coking, a.s. (‘NWR Coking’), a wholly owned subsidiary of NWR NV. NWR Coking merged with OKK in April 2008, with OKK remaining as the surviving entity. OKK thus became a direct subsidiary of the Issuer and also became subject to the statutory cross guarantee. See ‘‘Operating and Financial Review and Prospects — The Restructuring’’ for more information.

Agreements with the BXR Group Master Advisory and Services Agreement On 28 March 2007, the Issuer entered into a master advisory and services agreement, as amended on 27 July 2007 and on 19 August 2010, with BXR Partners a.s. (‘BXRP’), a member of the BXR Group and holding shares in BXR Mining BV, in respect of the provision of certain non-exclusive advisory services by BXRP to the Issuer effective as of 1 September 2006, including services in connection with the acquisition and divestiture of assets, entry into joint venture arrangements, corporate finance matters and market research initiatives within Central Europe, including the Czech Republic (the ‘Master Advisory and Services Agreement’). The fees to be paid to BXRP are based generally on a cost plus formula, but specific arrangements may be made in respect of individual projects. The Issuer must reimburse BXRP for all expenses incurred by BXRP in connection with the provision of advisory services. The Master Advisory and Services Agreement may be terminated, with or without cause, by either party giving prior written notice to the other party, provided that, if the Master Advisory and Services Agreement is terminated for any reason other than a material breach, the notice period is one month. The Master Advisory and Services Agreement includes a one-year post-termination confidentiality clause. In addition, from time to time, BXRP may provide services to the Issuer and be remunerated for such services on terms that are separately agreed.

Donation Agreements In 2011, the Issuer donated EUR 250,000, and OKD donated CZK 71.04 million to the OKD foundation. In 2012, the Issuer donated EUR 190,000, and OKD donated CZK 72,933 million to the OKD Foundation. The OKD Foundation supports projects in the field of social responsibility, such as the support of health and social care, the public sector, environmental protection and regional development. The donations may also be used to cover the organisational and administrative costs

145 of the OKD Foundation. In 2012 The Issuer further donated EUR 20,000 to the St. Barbara Civic Association.

Relationship Agreement The Issuer, RPGI, Crossroads Capital Investment Inc. (‘CCII’) and Zdenekˇ Bakala entered into a relationship agreement on 22 April 2008, which regulates, in part, the degree of control that RPGI and its affiliates exercise over the management of the Issuer (as amended and/or restated, the ‘Relationship Agreement’). Following RPGI’s transfer to BXR Mining of the NWR NV A Shares held by it, BXR Mining assumed RPGI’s rights and obligations under the Relationship Agreement by way of a Deed of Novation dated 1 February 2010. NWR Plc is also party to this agreement after signing the amended and restated Relationship Agreement on 11 April 2011 and after the listing of NWR Plc on the LSE. The principal purposes of the Relationship Agreement are to ensure that the Issuer is capable at all times of carrying on its business independently of the RPG Group and that all of the Issuer’s transactions and relationships with the RPG Group are on arm’s length terms. Pursuant to the Relationship Agreement, BXR Mining and the Issuer agreed to conduct any transactions and relationships (whether contractual or otherwise) between themselves or their respective subsidiaries on arm’s length terms. The Issuer agreed to treat all holders of the same class of shares that are in the same position equally in respect of the rights attaching to such shares. CCII and Zdenekˇ Bakala undertook to give notice to the Issuer of any opportunities involving the potential acquisition of a controlling stake in a business primarily focused on coal mining or coking facilities in Central Europe. Pursuant to the Relationship Agreement, the Issuer will have first right, for a period of 30 days from notification, to pursue the opportunity and neither CCII nor Zdenekˇ Bakala may pursue the opportunity within those 30 days unless the Issuer decides not to pursue it. The Relationship Agreement will continue until the earlier of, in each case in relation to the Group: (i) NWR Plc’s shares ceasing to be admitted to the Official List and to trading on the London Stock Exchange; or (ii) in case of change of control concerning NWR Plc.

OKD Agreements Dominance Agreement There is a Dominance Agreement between OKD (as controlling party) and OKK (as controlled party). To maintain consistent strategic management of the businesses of OKD and OKK, the Dominance Agreement was established so that OKD could effectively manage OKK. Under Czech law, when a dominance agreement is in place, the board of directors of the controlled party is bound by the instructions issued by the controlling party. The controlling party is required to compensate the controlled party for any loss arising in the annual financial results of the controlled party.

BXRP a.s -OKD Advisory and Service Agreement On 29 September 2006, OKD entered into an advisory and service agreement with BXRP for the provision of certain advisory services by BXRP to OKD with effect from 1 October 2006 (the ‘BXRP-OKD Advisory and Service Agreement’). Under the BXRP-OKD Advisory and Service Agreement, BXRP (or any subcontractors engaged by BXRP with the consent of OKD) is to provide OKD with certain non-exclusive advisory services, including in connection with the realization of strategic projects, any initial public offering, financing and refinancing, services in connection with the Company’s restructuring, acquisition and divestiture of OKD assets and corporate finance and business matters. The advisory fees being paid by OKD to BXRP cover costs and expenses incurred by BXRP together with a specified margin. The costs and expenses of BXRP include remuneration for third-party costs (such as subcontractors) and all relevant expenses incurred by BXRP in connection with the advisory services calculated on a pro rata basis according to the time spent. The BXRP-OKD Advisory and Service Agreement may be terminated, with or without cause, by either party upon one month’s prior written notice to the other party. The BXRP-OKD Advisory and Service Agreement includes a one-year post-termination confidentiality clause.

146 RPGREM-OKD Advisory and Service Agreement On 20 December 2006, OKD entered into an advisory and service agreement with RPG RE Management s.r.o. (‘RPGREM’) for the provision of certain advisory services by RPGREM to OKD with effect from 1 December 2006 (the ‘RPGREM-OKD Advisory and Service Agreement’). Under the RPGREM-OKD Advisory and Service Agreement, RPGREM (or any subcontractors engaged by RPGREM with the consent of OKD) is to provide OKD with certain non-exclusive advisory services, including services in connection with the acquisition and divestiture of fixtures, the initiation of development projects at OKD’s current mining sites and the identification and preparation of possible development projects. The advisory fees paid by OKD to RPGREM should cover costs and expenditure incurred by RPGREM together with a specified margin. The RPGREM-OKD Advisory and Service Agreement includes a one-year post-termination confidentiality clause. Currently, no services are being provided under the RPGREM-OKD Advisory and Service Agreement. The notice period for termination is six months.

Cooperation Agreement on Apartment Lease On 29 May 2009, OKD entered into a cooperation agreement with RPG Byty s.r.o. (‘RPG Byty’), which owns and operates a large apartment portfolio in the OKD region (the ‘Cooperation Agreement’). Under the Cooperation Agreement, RPG Byty has an obligation to initially offer its apartments for lease to the employees of OKD. The lease agreements may be concluded only with employees qualifying under certain non-discriminatory criteria, e.g. not already being a tenant of another RPG Byty apartment with state-regulated rent or not being subject to any criminal or other proceeding that could affect common tenant’s obligations. Each lease is provided for a period of one year and the rent is set at the relevant market price with a reduction of 15 per cent. Employees shall bear no administrative costs in relation to such leases. The Cooperation Agreement will expire on 31 May 2015 and may be rescinded by either party in the case of a material breach. The Cooperation Agreement replaces a similar cooperation agreement concluded on 18 April 2006.

Factory Railway Agreements OKD entered into several factory railway agreements with AWT to provide factory railway transport at OKD mines for an indefinite period of time (the ‘Factory Railway Agreements’ and each a ‘Factory Railway Agreement’). The fees to be paid by OKD to AWT were either set out in accordance with each respective Factory Railway Agreement or in a separate pricing agreement for each calendar year which amended the particular Factory Railway Agreement(s). Either party giving 18 months’ prior written notice to the other party may terminate the Factory Railway Agreements with or without cause. The Factory Railway Agreements have been replaced by a single master agreement between OKD and AWT with effect from 1 January 2011 for the period from 2011 to 2020 (which will automatically be extended for another five years, i.e. until 31 December 2025, provided that neither contracting party terminates the agreement by giving six months’ notice of termination to the other). This OKD master agreement covers all activities to be provided by AWT to OKD at particular business units, including: (a) railway services and assurance of railway transport on factory railways; (b) road transport and non-railway technological transport and transportation of raw and washed coal, sludge, etc., including related manipulations; (c) railway technological transport including related activities; and (d) manipulation activities with coal and other materials. All of the above activities are dealt with in subcontracts, which concern specific conditions for particular time periods.

Transport Agreements In 2010, OKD entered into transport agreements with a group of AWT companies to transport coal and coke, which were concluded pursuant to public procurement tender process (the ‘Transport Agreements’). The contracts’ duration ranges from 1 January 2011 to 31 December 2014. The transport fees to be paid by OKD to the carrier are set out in the respective transport

147 agreement and include all other costs, which the carrier incurs in connection with the provision of the transport services. The agreements deal with railway transportation of coal and coke in: (a) The Czech Republic, where coal and coke is destined for export. In this agreement, the carrier is an association of AWT Cechofracht, a.s. and AWT; (b) The Federal Republic of Germany and the French Republic. In this agreement, the carrier is an association of AWT Cechofracht a.s. and AWT; (c) The Republic of Poland. In this agreement, the carrier was AWT. Pursuant to the agreement on the assignment of rights and obligations, the new carrier is Metalimex; and (d) The Czech Republic. In this agreement, the carrier is AWT

Master Agreements on the Sale of Methane On 20 December 2006, OKD entered into a master agreement on the sale of methane with Green Gas DPB, a.s. (‘DBP’), as amended on 26 September 2007, which envisages the conclusion of individual purchase agreements with respect to each OKD mine (the ‘Master Agreement on the Sale of Methane’). Under the Master Agreement on the Sale of Methane, the minimum total annual volume of methane to be delivered amounts to 19,000m3 while the specific annual volume delivered by the mines shall be stipulated by the individual agreements. The Master Agreement on the Sale of Methane was concluded for the life of the OKD mines and, in the case of a change in the mine owner or operator, OKD shall ensure assignment of all OKD’s obligations arising under the agreement. The price was set at a fixed amount for 2007 and then calculated for each calendar year thereafter using the formula in the agreement. DPB is entitled to purchase all available methane production not used by OKD for its own use. Either party may rescind the agreement if the production of methane stops due to a decrease in coal mining activities or if circumstances of a technical nature preventing performance of this agreement arise of which neither party was aware when entering into the agreement. On 27 November 2008, DPB and OKD entered into a framework agreement for supplies of methane for heat operations, as amended on 21 June 2012, in connection with: (i) the provisions of the Master Agreement on the Sale of Methane under which DPB is entitled to purchase all available methane not used by OKD for its own use; and (ii) the transfer of OKD’s energy equipment to NWR Energy, a.s. (‘NWR Energy’) as part of the spin-off of the Company’s energy assets in 2008 (the ‘Framework Agreement for Supplies of Methane for Heat Operations’). Pursuant to the preamble, DPB shall deliver the processed methane to NWR Energy. The price was set at a fixed amount for 2008 and 2009 and for the following years according to the formula in this agreement. The volume of delivered methane was stipulated for 2008. The agreement has been entered into until 31 December 2028, subject to the prior termination of mining activities.

OKD Trading Agreements OKD has entered into several agreements with AWT in relation to the delivery of coal, coking coal, coke, sludge and other products. In 2000, OKD entered into purchase agreements with AWT under which AWT. sells granulated sediments to OKD. The agreements were originally made for a fixed period of time and later extended for an indefinite period of time. The prices are adjusted annually. The agreements further mention that the granulated sediments are resold to power and heating plants operated by Dalkia and CEZ,ˇ a.s. OKD and OKK entered into several agreements pursuant to which OKD sells coking coal to and buys coke from OKK and also sells coking coal from Poland to OKK. On 30 March 2011, OKD and OKK entered into an agreement pursuant to which OKD sells coking coal from overseas to OKK. This agreement was concluded for a fixed period of time ending on 31 January 2016.

Agreements on Gaseous and Liquid Nitrogen Delivery OKD has entered into four agreements on gaseous and liquid nitrogen delivery with DPB in relation to the delivery of gaseous and liquid nitrogen to OKD mines, namely Darkov and Karvina´ mine) (the ‘Agreements on Gaseous and Liquid Nitrogen Delivery’). The price to be paid by OKD to DPB shall be set out in accordance with each respective Agreement on Gaseous and Liquid

148 Nitrogen Delivery or amendments to it. In addition, OKD shall pay a fixed monthly fee for the lease, maintenance and control of the gas tubing and surface equipment. The majority of the Agreements on Gaseous and Liquid Nitrogen Delivery terminate on 31 December 2015.

Master Services Agreement Related to Mine Safety On 13 March 2007, OKD and DPB entered into a master services agreement related to mine safety, covering a number of different services related to mine security (the ‘Master Services Agreement Related to Mine Safety’). The Master Services Agreement Related to Mine Safety was concluded for a fixed period of time ending on 31 December 2015. The fee to be paid by OKD for 2007 was set at CZK 1,670,000 per month, later increased to CZK 1,734,693 per month for the years 2009 and 2010 (in each case excluding VAT). The fee to be paid by OKD for 2011, and 2012, was set at CZK 1,717,693 per month (in each case excluding VAT). Conclusion of individual agreements with respect to each particular OKD mine are contemplated by this agreement.

Master Services Agreements for Drilling On 13 March 2009, OKD and DPB entered into two master services agreements for work whereby DPB shall provide OKD with drills for degasation and geological surveying (the ‘Master Services Agreements for Drilling’). Amendments to these Master Services Agreements for Drilling shall stipulate the drilling works and price list for the respective calendar year. Individual agreements envisaged by these Master Services Agreements for Drilling shall stipulate the amount of work in detail. In 2010, the total amount of footage for degasation drills was agreed at 31,050m and for geological survey the total amount of footage was agreed at 13,930m. In 2011, the total amount of footage for degasation drills was agreed at 40.800 m and for geological survey the total amount of footage was agreed at 14.570 m. In 2012, the total amount of footage and degastion drills was agreed as 28,620 m and for geological survey the total amount of footage was agreed at 9,380 m. These Master Services Agreements for Drilling expire on 31 December 2015.

Master Agreement Related to Evaluation and Prognosis of Effects of Induce Seismicity On 19 December 2008, OKD and DPB entered into a master services agreement, as amended, for work whereby DPB shall provide OKD with services related to evaluation and prognosis of effects of induce seismicity on surface premises. This master service agreement was concluded for a fixed period of time ending on 31 December 2017.

Framework Agreement on Supplies and Services In connection with the reorganisation of the energy assets of the Company, energy assets of OKD, including its stake in CZECH-KARBON s.r.o. (‘CZECH-KARBON’), were transferred to NWR Energy, which was a direct subsidiary of the Issuer. The spin-off became legally effective as of 1 July 2008. Consequently, a framework agreement on supplies and services and some other related agreements were entered into by OKD, NWR Energy and CZECH-KARBON (the ‘Framework Agreement on Supplies and Services’). The main purpose of these agreements was to ensure the supply of electricity, heat and compressed air and related services to OKD. The Framework Agreement on Supplies and Services has been amended in a complex manner in connection with the divestiture of the Issuer’s energy assets. See ‘‘Sale of Energy Business’’ below for further information. The current name of NWR Energy is Dalkia Industry CZ, a.s. and the current name of CZECH-KARBON is Dalkia Commodities CZ, s.r.o.

Agreements with Directors Consultancy Agreement On 31 October 2006, the Issuer entered into a consultancy agreement with BXL Consulting Ltd (‘BXL’) in respect of certain consultancy services provided by BXL to the Issuer NWR NV commencing on 1 October 2006 (the ‘Consultancy Agreement’). Pavel Telicka,ˇ a Non-Executive Director, is the co-founder and director in charge of the Brussels office of BXL. Under the Consultancy Agreement, the Issuer agreed to pay BXL a monthly consultancy fee of EUR 25,000 in exchange for consultancy services in the field of policies and legislation of the European Union and European Communities. In addition, the Issuer shall reimburse BXL for all of its reasonable out-of-pocket expenses. The Consultancy Agreement also provides for the payment, from time to

149 time as agreed between the Issuer and BXL, of a success fee for the successful completion of certain tasks. The Consultancy Agreement may be terminated, with or without cause, by either party upon one month’s prior written notice to the other party. The Consultancy Agreement includes a confidentiality clause that survives the termination of the Consultancy Agreement.

Material contracts Sale of Energy Business The Issuer entered into a share sale and purchase agreement with Dalkia Ceskˇ a´ republika, a.s. (‘Dalkia’) on 8 January 2010, which provided for the sale by the Issuer to Dalkia of 100 per cent of the ownership in NWR Energy a.s. (‘NWR Energy’), CZECH-KARBON and NWR ENERGETYKA PL Sp.zoo. (together referred to as the ‘Energy Subsidiaries’), which successfully closed on 21 June 2010. The purchase price received by the Issuer to date is CZK 3.584 billion in cash and remained subject to further minimal adjustments based on the trading results of CZECH-KARBON for 2010 and 2011. Dalkia is a leading energy group in the Czech Republic as a heat producer and distributor and is a member of the ‘Veolia Environment Group’. The Share Purchase Agreement provides for put and call options, as well as a pre-emption right of the Issuer, in respect of the energy assets and businesses transferred to Dalkia or replacing such energy assets or businesses upon the occurrence of certain events. Before the closing of the sale, the Energy Subsidiaries supplied the utilities (in particular the supply and distribution of electricity and the production, supply and distribution of heat, compressed air and bathroom water) to OKD, primarily through a framework agreement on supplies and services between OKD, NWR Energy and CZECH-KARBON, dated 27 November 2008 (the ‘Framework Agreement’), although certain other supplies were also made to OKD and other affiliates. The Framework Agreement was initially entered into in connection with the reorganisation of the energy business to provide a framework for the independent operation and arm’s-length pricing of energy services. Karbonia supplied CZECH-KARBON with electricity and distribution services up to 1 April 2009. In addition, OKK and Dalkia were already, prior to closing, party to an agreement pursuant to which OKK supplied Dalkia with coking gas and Dalkia supplied OKK with heat. OKD and the Issuer were parties to an agreement pursuant to which Dalkia, through the Issuer, supplied the CSAˇ mine with heat. In connection with the consummation of the sale of the energy business to Dalkia, the Framework Agreement and certain agreements implementing it were amended to reflect agreed commercial terms. The Framework Agreement, as amended, will terminate on 31 December 2029, subject to an option in favour of OKD to extend the Framework Agreement for an additional five-year period. OKD is obliged, among other things, to supply NWR Energy with certain raw materials (coal, coke and water) used in the production of the utilities and to purchase energy utilities (mainly heat and compressed air) and electricity distribution services from NWR Energy and electric power from CZECH-KARBON; NWR Energy and CZECH-KARBON are obliged, among other things, to deliver the utilities to OKD in the requested volumes (subject to technical minimum and maximum amounts) at agreed prices. The pricing mechanism for supplies under the amended Framework Agreement (in respect of raw materials, utilities, services and relevant leases) will be applicable over the entire duration of the amended Framework Agreement on arm’s-length terms. Dalkia has acceded to the rights and obligations of NWR Energy and CZECH-KARBON arising under the amended Framework Agreement and under implementation agreements relating to the same. The company NWR Energy was renamed to the new name Dalkia Industry CZ on 24 June 2010 and the company CZECH-KARBON was renamed to the new name Dalkia Commodities CZ on 1 August 2011.

Equipment Supply Contracts The Issuer entered into an equipment supply contract on 22 December 2011, whereby it agreed to purchase certain equipment and services for longwall coal extraction to be used in the Karvina´ mine. The Issuer signed contracts with various mining equipment suppliers. The total consideration of these contracts is EUR 22 million. The main supplier of the new longwall set is the Polish company Fabryka Zmechanizovanych Obudow´ Scianowych´ Fazos S.A., delivering equipment with a value of EUR 11.8 million.

150 The Issuer entered into an equipment supply contract with JOY Mining Equipment Plc for the purchase of specialised mining equipment for a total consideration of USD 12.8 million (approximately EUR 9.9 million equivalent). The JOY equipment is intended for use at the CSMˇ mine.

Co-operation Agreement between RPGI and Ferrexpo In October 2008, RPGI, a member of the BXR Group, purchased a shareholding of 25 per cent minus one share in Ferrexpo Plc (‘Ferrexpo’), a Ukrainian iron ore company (the ‘Ferrexpo Transaction’). In connection with the Ferrexpo Transaction, Ferrexpo’s controlling shareholder Fevamotinico Sarl, a company incorporated with limited liability in Luxembourg (‘Fevamotinico’) and RPGI entered into an agreement in which the parties agreed to pursue a strategic alliance whereby RPGI and Fevamotinico would seek to find areas in which they could work together to develop their respective businesses in Central Europe. As part of such strategic alliance, RPGI and Fevamotinico agreed to ask the Issuer and Ferrexpo, respectively, to consider working together to explore strategic opportunities to develop business together in Ukraine, the Czech Republic, Poland and other territories. A further aspect of the strategic alliance was for each of RPGI and Fevamotinico to nominate persons to be appointed to the board of directors of the other’s affiliate, being the Issuer and Ferrexpo, respectively. Miklos Salamon, the former Executive Chairman of the Issuer, and Marek Jel´ınek, the Chief Financial Officer of the Issuer, were appointed as non-executive directors of Ferrexpo, and Kostyantin Zhevago, the Chief Executive Officer of Ferrexpo, was appointed as a Non-Executive Director of the Issuer. Mr. Jel´ınek retired from the board of Ferrexpo in May 2010. In connection with the redomiciliation, Mr. Zhevago resigned from the board of the Issuer and was appointed as a Non-Executive Director of NWR Plc with the effect from 6 May 2011.

151 DESCRIPTION OF CERTAIN OTHER INDEBTEDNESS The following is a summary of the material terms of our principal financing arrangements. The following summaries do not purport to describe all of the applicable terms and conditions of such arrangements and are qualified in their entirety by reference to the actual agreements. We recommend you refer to the actual agreements for further details, copies of which are available upon request.

2018 Notes On 27 April 2010, the Issuer issued EUR 475 million in aggregate principal amount of Senior Secured Notes due 2018. Interest on the 2018 Notes accrues at a rate of 7.875 per cent per annum and is payable semi-annually in arrears on 1 May and 1 November. On 18 May 2010, the Issuer issued an additional EUR 25 million in aggregate principal amount of 2018 Notes, with the same rights and privileges, including interest rate, interest payment dates and maturity date as the 2018 Notes issued on 27 April 2010, which increased the outstanding principal amount of 2018 Notes to EUR 500 million. The 2018 Notes are senior obligations of the Issuer and are guaranteed on a senior basis by OKD, OKK and Karbonia. The 2018 Notes are secured by a pledge of the shares of OKD, OKK and Karbonia but are not secured by any of the other assets of the Issuer. Therefore, the 2018 Notes are effectively subordinated to secured indebtedness of OKD, OKK and Karbonia, but the 2015 Notes (see below) will be effectively subordinated to the 2018 Notes to the extent of the value of the shares of OKD, OKK and Karbonia. The 2018 Notes may be redeemed, in whole or in part, at any time prior to 1 May 2014, at the option of the Issuer at a redemption price equal to 100 per cent of the principal amount of the 2018 Notes outstanding plus the applicable premium (as defined in the 2018 Notes Indenture). After 1 May 2014, the Issuer may, at its option redeem all or any portion of the 2018 Notes at the prices set forth in the 2018 Notes Indenture. In addition, prior to 1 May 2014, the Issuer may redeem up to 35 per cent of the original aggregate principal amount of the 2018 Notes (after giving effect to the issuance of additional 2018 Notes) with the proceeds of one or more equity offers (as defined in the 2018 Notes Indenture), at a redemption price equal to 107.875 per cent of the principal amount thereof, plus accrued and unpaid interest to the redemption date so long as at least 65% of the aggregate principal amount of the 2018 Notes remains outstanding after the redemption. If there is a change of control (as defined in the 2018 Notes Indenture), holders of 2018 Notes shall have the right to require the Issuer to repurchase all or any part of the 2018 Notes at a purchase price equal to 101 per cent of the principal amount. The 2018 Notes Indenture contains covenants that limit the Issuer’s ability and the Restricted Subsidiaries’ ability to, among other things: incur additional indebtedness; make restricted payments (including dividends); create liens; transfer, dispose of voting stock of any Restricted Subsidiary; sell assets; engage in transactions with affiliates; guarantee any debt of the Issuer or any of its Restricted Subsidiaries; consolidate, merge or sell all or substantially all of its assets.

2015 Notes On 18 May 2007, the Issuer issued EUR 300 million in aggregate principal amount of Senior Notes due 2015. Interest on the 2015 Notes accrues at a rate of 7.375 per cent per annum and is payable semi-annually in arrears on 15 May and 15 November. On 30 September 2009, the Issuer closed an invitation for tenders of its 2015 Notes (the ‘Invitation’). Pursuant to the Invitation, the Issuer accepted for purchase EUR 32,435,000 in aggregate principal amount of 2015 Notes, which reduced the outstanding principal amount of 2015 Notes to EUR 267,565,000. In the period 4 October 2011 to 11 October 2011, the Issuer bought back EUR10,000 thousand face value of its 7.375 per cent Senior Notes, which reduced the outstanding principal amount of 2015 Notes to EUR 257,565,000. The 2015 Notes are senior obligations of the Issuer, and rank equal in right of payment to all of its existing and any future senior debt, including the 2018 Notes. The 2015 Notes are secured on

152 a second ranking basis by a pledge on the shares of OKD, OKK and Karbonia, which, pursuant to the terms of the Intercreditor Agreement and such share pledges, are subordinated to the share pledges securing the 2018 Notes, and are not guaranteed by any of the Issuer’s subsidiaries. Therefore, the 2015 Notes are effectively subordinated to any existing and future liabilities of the Issuer’s subsidiaries. The rights and obligations of the 2015 Noteholders in respect of such security are subject to the Intercreditor Agreement. The 2015 Notes may be redeemed, in whole or in part, at any time prior to 15 May 2011, at the option of the Issuer at a redemption price equal to 100 per cent of the principal amount of the 2015 Notes redeemed plus the applicable premium (as defined in the 2015 Notes Indenture). After May 15, 2011, the Issuer may, at its option redeem all or any portion of the 2015 Notes at the prices set forth in the 2015 Notes Indenture. In addition, prior to 15 May 2010, the Issuer may redeem up to 35 per cent of the original aggregate principal amount of the 2015 Notes with the proceeds of one or more equity offers (as defined in the 2015 Notes Indenture), at a redemption price equal to 107.375 per cent of the principal amount thereof, plus accrued and unpaid interest to the redemption date so long as at least 65% of the aggregate principal amount of the 2018 Notes remains outstanding after the redemption. If there is a change of control (as defined in the 2015 Notes Indenture), holders of 2015 Notes shall have the right to require the Issuer to repurchase all or any part of the 2015 Notes at a purchase price equal to 101 per cent of the principal amount. The 2015 Notes Indenture contains covenants that limit the Issuer’s ability and the Restricted Subsidiaries’ ability to, among other things: incur additional indebtedness; make restricted payments (including dividends); create liens; transfer, dispose of voting stock of any Restricted Subsidiary; sell assets; engage in transactions with affiliates; guarantee any debt of the Issuer or any of its Restricted Subsidiaries; consolidate, merge or sell all or substantially all of its assets. In connection with the issuance of the Notes, the Issuer is redeeming all of the 2015 Notes. See ‘‘Use of Proceeds.’’

Revolving Credit Facility On 7 February 2011, the Issuer entered into a revolving credit facility with, among others, Ceskˇ a´ spoˇritelna, as facility agent, Citigroup Global Markets Limited as documentation agent, Ceskˇ a´ spoˇritelna, Ceskoslovenskˇ a´ obchodn´ı banka a.s., Citigroup Global Markets Limited, Komercnˇ ´ı banka, a.s. and ING Bank N.V., Prague branch, as arrangers and original lenders (the ‘RCF’). The lenders under the RCF acceded to the Intercreditor Agreement by signing the RCF. The RCF provides for a bank loan facility of EUR 100 million, which will be available for three years after the date of signing. The proceeds of the RCF will be used for general corporate purposes. At any point in time, a maximum of 12 loans can be outstanding in any of the eligible funding currencies, being Euro, Polish Zloty and Czech Koruna. The RCF also provides for the Issuer to pay certain fees including a commitment fee, arrangement fees and agency fees. The interest rate on each advance under the RCF for each interest period is the rate per annum which is the aggregate of (a) a margin of 1.00 per cent if total net debt to EBITDA is less than or equal to 2.5x or 1.30 per cent if total net debt to EBITDA is greater than 2.5x, (b) EURIBOR, PRIBOR or WIBOR, and (c) any applicable mandatory cost of compliance with (i) the requirements of the Bank of England and/or the Financial Services Authority or (ii) the requirements of the European Central Bank. The RCF is a secured obligation of the Issuer and benefits from the share pledges over the shares in the Issuer’s subsidiaries and is guaranteed by them. The RCF contains certain negative undertakings that, subject to certain customary and other agreed exceptions (and other than as specifically provided for under the RCF), limit the ability of the Issuer and its subsidiaries to, among other things: create or permit to subsist any encumbrance or security interest over any of its assets; make any asset disposals; make any substantial change to the general nature of its business; enter into transactions other than on an arm’s length basis; amalgamate or merge; incur other additional debt or become a creditor itself. The Issuer is also required to comply with certain financial ratios including the ratio of total net debt to EBITDA, and the ratio of EBITDA to net interest. If the Company breaches any of its covenants or is unable to comply with the ratios, it may be in default and amounts due under the RCF may then become immediately due and payable.

153 The RCF also contains certain affirmative undertakings, subject to certain qualifications, and including, but not limited to, undertakings related to: (i) supplying financial statements; (ii) notification of default; (iii) compliance with ‘‘know your customer’’ or similar regulations; (iv) receipt, compliance and maintenance of necessary authorisations; (v) compliance with laws (including environmental laws); (vi) taxation; (vii) pari passu ranking of certain claims; (viii) maintenance of insurance and (ix) maintenance of books of the Issuer and its subsidiaries. Subject to certain exceptions, there are mandatory prepayments required to be made upon the occurrence of certain customary events such as a change of control. The RCF was fully drawn as of 30 September 2012. On 15 November 2012, the Company repaid all outstanding amounts under the RCF. On the date of this Offering Memorandum no amounts were outstanding.

Intercreditor agreement To establish the relative rights of certain of the Issuer’s creditors under its financing arrangements, the Issuer and OKD, OKK and Karbonia, as subsidiary guarantors under certain of the Issuer’s financing arrangements, entered into an intercreditor agreement (the ‘Intercreditor Agreement’) with, among others, the Trustee for the 2015 Notes, the Trustee for the 2018 Notes, certain hedging counter parties and the security agent under the Intercreditor Agreement. The Intercreditor Agreement sets out amongst other things, the following provisions: • the relative ranking of certain debt of the Issuer, OKD and certain of their affiliates; • the relevant ranking of security granted by the Issuer, OKD and certain of their affiliates; • when payments can be made in respect of that debt; • when enforcement action can be taken in respect of that debt; • the effects of certain insolvency events; • turnover provisions; and • when security and guarantees will be released to permit an enforcement sale.

OKK Share Pledge Agreement On 27 April 2010, the Issuer entered into a share pledge agreement (the ‘OKK Share Pledge Agreement’) in order to create a Czech law pledge over the shares it owns in OKK in favour of Citibank N.A., London Branch, as security agent (the ‘Security Agent’). The pledge was granted as security for the payment of all obligations (the ‘Secured Obligations’) of each of the Issuer, OKK, OKD and/or Karbonia towards the Security Agent, including, in particular, liabilities under the 2018 Notes and related guarantees, the 2015 Notes and the Revolving Credit Facility. The OKK Share Pledge Agreement provides that the pledged shares are to be kept in the deposit of Citibank Europe Plc during the tenure of the pledge in accordance with Czech law and pursuant to a separate deposit agreement. The Issuer is subject to certain customary covenants that it shall not grant any other security over, or in any other way dispose of, the pledged shares. The OKK Share Pledge Agreement also sets out: (i) restrictions on the Issuer’s ability to exercise its rights in respect of the pledged shares; (ii) the application of proceeds from the pledged shares before and after the occurrence of a default under certain finance documents; and (iii) the rights of the Security Agent to enforce the pledge. The proceeds of any such enforcement must be applied in accordance with the Intercreditor Agreement.

OKD Share Pledge Agreement On 27 April 2010, the Issuer entered into a share pledge agreement (the ‘OKD Share Pledge Agreement’) in order to create a Czech law pledge over the shares it owns in OKD in favour of the Security Agent as security for the Secured Obligations. The OKD Share Pledge Agreement contains similar terms to the OKK Share Pledge Agreement, but in relation to a pledge over the shares held by the Issuer in OKD.

154 Karbonia Share Pledge Agreement On 27 April 2010, the Issuer entered into a share pledge agreement (the ‘Karbonia Share Pledge Agreement No. 1’) in order to create a Polish law pledge over the shares it owns in Karbonia in favour of the Security Agent as security for the Secured Obligations. The Karbonia Share Pledge Agreement No. 1contains identical terms to the OKK Share Pledge Agreement and OKD Share Pledge Agreement, but in relation to a pledge over the shares held by the Issuer in Karbonia. On 10 April 2012, the Issuer and Karbonia entered into a second share pledge agreement in order to create a Polish law pledge over newly issued shares in Karbonia in favour of the Security Agent as security for the Secured Obligations.

Export Credit Agency Facility On 29 June 2009, the Issuer and OKD, as a co-obligor, entered into the Export Credit Agency Facility (‘ECA Facility’) with, among others, Natixis, as facility agent and documentation agent, KBC Bank Deutschland AG, as ECA Agent, and Ceskˇ a´ spoˇritelna, Ceskoslovenskˇ a´ obchodn´ı banka a.s., KBC Bank Deutschland AG, and Natixis, as mandated lead arrangers, as amended on 3 August 2009. The ECA Facility provides for a term loan of approximately EUR 141.5 million, which, following an amendment dated 21 June 2010, was available to be drawn until 30 November 2010 and which is repayable in seventeen semi-annual equal instalments, with a final maturity of the date falling 102 months after the Starting Point of Credit (as defined in the ECA Facility). The proceeds of the ECA Facility are used to finance up to 85 per cent of the net purchase price of five longwall sets acquired pursuant to POP 2010. As at 30 September 2012, the outstanding balance under the ECA Facility amounted to EUR 85 million. The interest rate on each advance under the ECA Facility for each interest period is the rate per annum which is the aggregate of (a) a margin of 1.65 per cent, (b) EURIBOR, and (c) any applicable mandatory cost of compliance with (i) the requirements of the Bank of England and/or the Financial Services Authority or (ii) the requirements of the European Central Bank. The ECA Facility is an unsecured obligation of the Issuer and OKD as a co-obligor and is not guaranteed by any of the Issuer’s subsidiaries. The ECA Facility is covered by a guarantee issued by the Federal Republic of Germany, represented by a consortium led by Euler Hermes Kreditversicherungs-AG, for which the Issuer has paid a premium. The ECA Facility contains certain negative undertakings that, subject to certain customary and other agreed exceptions (and other than as specifically provided for under the ECA Facility), limit the ability of the Issuer, OKD and certain subsidiaries of the Issuer to, among other things: • create or permit to subsist any encumbrance or security interest over any of its assets; • make any asset disposals; • make any substantial change to the general nature of its business; • enter into transactions other than on an arm’s length basis; • amalgamate or merge; • incur other additional debt; and • dispose of the five longwall sets acquired or create any security over the five longwall sets acquired. The ECA Facility also contains certain affirmative undertakings, subject to certain qualifications, and including, but not limited to, undertakings related to (i) supplying financial statements; (ii) notification of default; (iii) compliance with ‘‘know your customer’’ or similar regulations; (iv) supplying information on the performance of the supply contract for the five longwall sets acquired; (v) compliance with material obligations under the supply contract for the five longwall sets acquired; (vi) receipt, compliance and maintenance of necessary authorizations; (vii) compliance with laws (including environmental laws); (viii) taxation; (ix) pari passu ranking of certain unsecured and unsubordinated claims; (x) maintenance of insurance; and (xi) access to the premises and records of the Issuer and OKD.

155 The ECA Facility contains financial covenants requiring the Issuer and OKD to ensure that at the end of any calculation period: • the ratio of total net debt of the Company to EBITDA of the Company will not exceed 3.25 to 1; and • the ratio of EBITDA of the Company to the net interest payable by the Company will not be less than 3.50 to 1. Amounts outstanding under the ECA Facility may be prepaid at any time after 29 June 2010 (or, if earlier, the day on which the amounts available under the ECA Facility to the Issuer and OKD is zero) in whole or in part on 30 business days’ notice subject to payment of a minimum amount of EUR 5 million. Subject to certain exceptions, there are mandatory prepayments required to be made upon the occurrence of certain customary events such as a change of control and the ECA Facility will also be automatically cancelled where the ECA guarantee is terminated or cancelled. The ECA Facility sets out certain events of default, including non-payment, breach of financial covenants, cross-default above certain agreed amounts, insolvency events, certain insolvency proceedings and the occurrence of events which, in the reasonable opinion of the Majority Lenders (as defined in the ECA Facility) is reasonably likely to have a Material Adverse Effect (as defined in the ECA Facility).

OKK Intercompany Revolving Credit Agreement On 29 April 2009, the Issuer and OKK entered into a credit agreement that was originally structured as a revolving credit facility. The agreement, as amended on 15 July 2009, 24 September 2009 and 11 January 2010, provided that the Issuer would commit to make available to OKK funds in the total amount of CZK 3.6 billion (CZK tranche) and EUR 8 million (EUR tranche), which would be used for general payment purposes in connection with OKK’s operations and activities. The CZK tranche was available for drawing in one or more advances until 30 April 2011, which was the final maturity date for the CZK tranche. The EUR tranche was made available for drawing until 31 October 2009 and was repaid in full on 31 December 2010. On 1 January 2011, the Issuer and OKK restructured the credit facility into a 10-year term loan facility. The outstanding amount of CZK 1,712 million is to be repaid in equal monthly instalments up to the final instalment of CZK 514 million due on 31 December 2020. OKK is charged a fixed interest rate of 8.9 per cent per annum on the outstanding principal amount. OKK shall pay the Issuer interest with respect to the outstanding principal amount at the end of each month.

New OKK Intercompany Revolving Credit Agreement On 14 January 2011, the Issuer and OKK entered into the new intercompany revolving credit agreement (the ‘New OKK RCF’). Under the New OKK RCF, the Issuer makes available funds in the total amount of CZK 1,140 million to OKK for general payment purposes in connection with OKK’s operations and activities. On 19 September 2011, the Issuer and OKK entered into an amendment to the New OKK RCF. Under the amendment the final maturity date was extended to 31 December 2012 and the principal amount of the facility was increased by CZK 600 million to a total aggregate amount of CZK 1,740 million. On 25 October 2012, the New OKK RCF was amended to extend the final maturity date to 31 December 2013 and to increase the principal amount of the facility by CZK 400 million to a total aggregate amount of CZK 2,140 million. The advanced funds shall be repaid within one to 12 months as selected by OKK or as otherwise agreed between the parties. The advances may be rolled over at the option of OKK. OKK is charged a fixed interest rate of 4.75 per cent per annum on the outstanding principal of each advance. OKK shall pay the Issuer interest with respect to the outstanding principal of each advance at the end of each month.

156 2010 OKD Loan Agreement On 18 May 2010, the Issuer, in its capacity as the sole shareholder of OKD, resolved to make a distribution from its profit, retained earnings and other distributable reserves for the year ended 31 December 2009 in the aggregate amount of CZK 12,802,500,000 (the ‘2010 OKD Loan Agreement’). As OKD did not have sufficient funds to cover the distribution, the Issuer agreed to lend this amount to OKD on the basis of a loan agreement dated 12 July 2010. In connection with the decision on the distribution, the Issuer, in its capacity as the sole shareholder of OKD, further resolved, on 18 May 2010, to approve the Issuer’s contingent equity contribution in excess of the registered capital of the Issuer in the amount of up to EUR 700 million. This measure represents a requirement under the 2018 Notes Indenture for the protection of the holders of the 2018 Notes. The contingent contribution will only be triggered upon an event of default under the 2018 Notes Indenture, a continuing event of default under the documentation governing indebtedness that qualifies as material debt under the 2018 Notes Indenture or a continuing event of default under the 2015 Notes Indenture . The loan agreement consists of three tranches: Tranche 1 consists of a EUR 226.8 million facility due on 14 February 2018. Tranche 2 consists of a CZK 1,732 million facility to be repaid in instalments by 15 February 2016. Tranche 3 consists of a EUR 208 million facility to be repaid in instalments by 15 February 2016. On 14 July 2010, OKD drew down the full amount of the loan agreement in an aggregate amount of approximately EUR 502.8 million. On 21 May 2012 the Issuer and OKD entered into an amendment to the 2010 OKD Loan Agreement whereby a new Tranche 4 consisting of a EUR 120 million facility was made available. Tranche 4 is to be repaid in instalments by 14 February 2020.

Hedging Arrangements The Company is party to certain interest rate hedging arrangements to mitigate interest rate risks. The Company is also party to certain foreign currency hedging arrangements to mitigate foreign currency risks resulting from operational costs outflow in Czech Koruna and Polish Zloty.

157 DESCRIPTION OF THE NOTES The Issuer will issue the Notes under an Indenture to be dated on or about 23 January 2013, between the Issuer and Deutsche Trustee Company Limited, as trustee, Deutsche Bank AG, London Branch, as transfer agent and paying agent, and Deutsche Bank Luxembourg S.A., as registrar. The terms of the Notes are stated in the Indenture. The Indenture will not incorporate or include, or be subject to, the terms of the U.S. Trust Indenture Act of 1939, as amended. You can find the definitions of certain terms used in this description under the subheading ‘‘— Certain Definitions.’’ The following description is a summary of the material provisions of the Indenture. It does not purport to be complete and is qualified in its entirety by reference to all of the provisions of that document. You are encouraged to read the Indenture because it, and not this description, defines your rights as a holder of the Notes. Copies of the Indenture will be available upon request to the Issuer at the address indicated under ‘‘Listing and General Information’’. The Indenture will not incorporate or include, or be subject to, any provisions of the U.S. Trust Indenture Act of 1939, as amended. The registered holder of a Note will be treated as the owner of it for all purposes. Only registered holders will have rights under the Indenture.

Principal, Maturity and Interest The Issuer is issuing e 275 million aggregate principal amount of Notes in this offering and, subject to compliance with the limitations described under ‘‘— Certain Covenants — Limitation on Debt’’, and, if applicable, ‘‘— Limitation on Guarantees’’ and ‘‘— Limitation on Liens’’, may in the future issue an unlimited principal amount of additional Notes at later dates under the same Indenture (the ‘‘Additional Notes’’). Any Additional Notes that the Issuer issues in the future will be identical in all respects to the Notes that the Issuer is issuing now, will form a single series with the Notes offered hereby, except that Notes issued in the future will have different issuance dates and may have different issuance prices, and will rank equally in right of payment with the Notes offered hereby. The Issuer will issue the Notes only in fully registered form without coupons. The Issuer will issue the Notes in denominations of e100,000 and integral multiples of e1,000 above e100,000. Notes in denominations of less than e100,000 will not be available. The Notes will mature on 15 January 2021. Interest on the Notes will accrue at a rate of 7.875% per annum. Interest on the Notes will be payable semi-annually in arrears on 15 January and 15 July, commencing on 15 July 2013. The Issuer will pay interest to those persons who were holders of record on the 1 January or 1 July immediately preceding each interest payment date. Interest on the Notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprising twelve 30-day months.

Ranking The Notes will be: • senior unsecured obligations of the Issuer equal in right of payment to all existing and any future senior indebtedness of the Issuer; • senior in right of payment to all existing and any future subordinated indebtedness of the Issuer; • effectively subordinated to all existing and any future secured indebtedness of the Issuer, including the 2018 Notes, to the extent of the value of the assets securing such indebtedness; and • structurally subordinated to all existing and any future indebtedness of any Subsidiaries of the Issuer, including the guarantees issued by OKD, OKK and Karbonia for the benefit of holders of the 2018 Notes. The Issuer is a holding company with limited assets and operates its business through its Subsidiaries. The right of the Issuer and its creditors, including holders of the Notes, to participate in the assets of any of the Issuer’s Subsidiaries in the bankruptcy, liquidation or reorganisation of any such Subsidiary will be subject to the prior claims of the creditors of such Subsidiary, including,

158 but not limited to, trade creditors. On the Issue Date, no Subsidiary of the Issuer will Guarantee or provide any Lien securing the Issuer’s obligations under the Notes. As of 30 September 2012, after giving pro forma effect to this offering and the application of the net proceeds thereof, the Issuer and its Subsidiaries would have had e960 million of outstanding consolidated indebtedness, including e275 million represented by the Notes and e685 million of secured indebtedness. See ‘‘Description of Other Indebtedness’’ for further information regarding the Group’s indebtedness other than the Notes. As of the date of the Indenture, all of the Issuer’s Subsidiaries will be Restricted Subsidiaries. Under the circumstances described below under the caption ‘‘— Certain Covenants — Designation of Restricted and Unrestricted Subsidiaries,’’ the Issuer will be permitted to designate certain of its Subsidiaries as Unrestricted Subsidiaries. The Issuer’s Unrestricted Subsidiaries will not directly be subject to any of the restrictive covenants in the Indenture.

Optional Redemption The Notes may be redeemed, in whole or in part, at any time prior to 15 January 2017, at the option of the Issuer upon not less than 30 nor more than 60 days’ prior notice, at a redemption price equal to 100% of the principal amount of the Notes redeemed plus the Applicable Premium and accrued and unpaid interest, if any, to, but not including, the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). For purposes of this make-whole redemption, ‘‘Applicable Premium’’ means, with respect to any Note on the applicable redemption date, the greater of: 1. 1.0% of the then outstanding principal amount of such Note; and 2. the excess (to the extent positive) of: (a) the present value at such redemption date of (i) the redemption price of such Note on 15 January 2017, as set forth in the second following paragraph plus (ii) all required interest payments due on such Note to and including 15 January 2017 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Bund Rate as of such redemption date plus 50 basis points, over (b) the principal amount of such Note outstanding on such redemption date, as calculated by or on behalf of the Issuer. For the avoidance of doubt, calculation of the Applicable Premium will not be a duty or obligation of the Trustee or any paying agent. For purposes of this make-whole redemption, ‘‘Bund Rate’’ means the yield-to-maturity at the time of computation of direct obligations of the Federal Republic of Germany (Bunds or Bundesanleihen) with a constant maturity (as officially compiled and published in the most recent financial statistics that have become publicly available at least two Business Days (but not more than five Business Days) prior to the redemption date (or, if such financial statistics are not so published or available, any publicly available source of similar market data selected by the Issuer in good faith) most nearly equal to the period from the redemption date to 15 January 2017; provided, however, that if the period from the redemption date to 15 January 2017 is not equal to the constant maturity of a direct obligation of the Federal Republic of Germany for which a weekly average yield is given, the Bund Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of direct obligations of the Federal Republic of Germany for which such yields are given, except that if the period from such redemption date to 15 January 2017 is less than one year, the weekly average yield on actually traded direct obligations of the Federal Republic of Germany adjusted to a constant maturity of one year shall be used. After 15 January 2017, the Issuer may, at its option, redeem all or any portion of the Notes, at any time or from time to time, upon not less than 30 nor more than 60 days’ prior notice. The Notes may be redeemed at the redemption prices set forth below, plus accrued and unpaid interest to the redemption date (subject to the right of holders of record on the relevant record date to

159 receive interest due on the relevant interest payment date). The following prices are for Notes redeemed during the 12-month period commencing on 15 January of the years set forth below, and are expressed as percentages of principal amount:

Redemption Year Price 2017 ...... 103.938% 2018 ...... 101.969% 2019 and thereafter ...... 100.000% In addition, at any time and from time to time prior to 15 January 2016 the Issuer may redeem up to a maximum in aggregate of 35% of the aggregate principal amount of the Notes issued at any time under the Indenture (including any Additional Notes) with the proceeds of one or more Equity Offerings, at a redemption price equal to 107.875% of the principal amount thereof, plus accrued and unpaid interest to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that after giving effect to any such redemption, at least 65% of the aggregate principal amount of the Notes (calculated giving effect to any issuance of Additional Notes) remains outstanding (excluding Notes held by the Issuer or any of its Subsidiaries). Any such redemption shall be made within 90 days of such Equity Offering upon not less than 30 nor more than 60 days’ prior notice. The Issuer will prepare and transmit a notice of redemption to each holder of Notes to be redeemed at least 30 and not more than 60 days prior to the date fixed for redemption except that more than 60 days’ prior notice may be given if the notice is issued in connection with a satisfaction and discharge or defeasance of the Indenture. On and after a redemption date, interest will cease to accrue on the Notes called for redemption (unless the Issuer defaults in the payment of the redemption price and accrued interest). Before a redemption date, the Issuer will deposit with the paying agent money sufficient to pay the redemption price of and accrued interest on the Notes to be redeemed on that redemption date. If less than all of the Notes are to be redeemed, the Trustee or the registrar will select Notes for redemption on a pro rata basis, by a use of a pooling factor or by such other method as the Trustee or the registrar in its sole discretion shall deem fair, in accordance with the applicable procedures of the clearing systems and applicable law or stock exchange requirements. No Notes may be redeemed in part such that the remainder of the Notes is less than e100,000 in principal amount. Neither the Trustee nor the registrar will be liable for selections made by it in accordance with this paragraph. Any redemption and notice may in the Issuer’s discretion be subject to the satisfaction of one or more conditions, which shall be set out in the notice of redemption.

Sinking Fund There will be no mandatory sinking fund payments for the Notes.

Repurchase at the Option of Holders Upon a Change of Control Upon the occurrence of a Change of Control, each holder of Notes shall have the right to require the Issuer to repurchase all or any part of such holder’s Notes pursuant to the offer described below (the ‘‘Change of Control Offer’’) at a purchase price (the ‘‘Change of Control Purchase Price’’) equal to 101% of the current principal amount thereof, plus accrued and unpaid interest to the repurchase date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). Upon exercise of such right by a holder of Notes, the Issuer will make a Change of Control Offer to purchase such holder’s Notes, in whole or in part, in principal amounts of e100,000 and integral multiples of e1,000 above e100,000. Within 30 days following any Change of Control, the Issuer shall: (a) cause a notice of the Change of Control Offer to be sent at least once to the Dow Jones News Service, the Bloomberg Professional Service or a similar business news service in the United States and Europe; and

160 (b) in the event that the Notes are in definitive form, send to each holder of Notes by first- class mail with a copy to the Trustee a notice stating: (1) that a Change of Control has occurred and a Change of Control Offer is being made pursuant to the covenant entitled ‘‘— Repurchase at the Option of Holders Upon a Change of Control’’ and that all Notes timely tendered will be accepted for payment; (2) the Change of Control Purchase Price and the repurchase date, which shall be, subject to any contrary requirements of applicable law, a business day no earlier than 30 days nor later than 60 days from the date such notice is mailed; and (3) the procedures that holders of Notes must follow in order to tender their Notes (or portions thereof) for payment, and the procedures that holders of Notes must follow in order to withdraw an election to tender Notes (or portions thereof) for payment. If at the time of such Change of Control, the Notes are listed on the Official List of the Irish Stock Exchange and admitted for trading on the Global Exchange Market of the Irish Stock Exchange, to the extent required by the rules of the Irish Stock Exchange, the Issuer will notify the Irish Stock Exchange that a Change of Control has occurred and any relevant details relating to such Change of Control. The Issuer will not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Issuer and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. The Issuer will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this covenant, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this covenant by virtue of such compliance. The Issuer has no present intention to engage in a transaction involving a Change of Control, although it is possible that it would decide to do so in the future. Nevertheless, the existence of these Change of Control provisions may deter a third-party from seeking to acquire the Issuer or any of its Subsidiaries in a transaction that would constitute a Change of Control. In addition, subject to certain covenants described below, the Issuer could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control under the Indenture, but that could increase the amount of Debt outstanding at such time or otherwise affect its capital structure or credit ratings. The definition of Change of Control includes a phrase relating to the sale, transfer, assignment, lease, conveyance or other disposition of ‘‘all or substantially all’’ the Property of the Issuer and its Restricted Subsidiaries, considered as a whole. Although there is a developing body of case law interpreting the phrase ‘‘substantially all,’’ there is no precise established definition of the phrase under applicable law. Accordingly, if the Issuer and its Restricted Subsidiaries, considered as a whole, dispose of less than substantially all of this Property by any of the means described above, the ability of a holder of Notes to require the Issuer to repurchase its Notes may be uncertain. The Issuer may not have sufficient funds available when necessary to make any required repurchases. The Issuer’s failure to repurchase Notes in connection with a Change of Control would result in a default under the Indenture. Such a default could, in turn, constitute a default under other debt of the Issuer and its Subsidiaries. The Issuer’s obligation to make an offer to repurchase the Notes as a result of a Change of Control may be waived or modified at any time prior to the occurrence of such Change of Control with the written consent of the holders of at least a majority in aggregate principal amount of the Notes. See ‘‘— Amendments and Waivers.’’

Payment of Additional Amounts All payments of, or in respect of, principal, premium (if any) and interest on the Notes by the Issuer or any Subsidiary Guarantor (as applicable, the ‘‘Payer’’) will be made free and clear of and

161 without withholding or deduction for, or on account of, any present or future taxes, duties, levies, assessments or governmental charges of whatever nature, including penalties, interest and liabilities related thereto (collectively ‘‘Taxes’’) imposed or levied by or on behalf of any taxing authority within the Netherlands, any other jurisdiction in which the Payer is resident for tax purposes, or any other jurisdiction through which the payments are made (each a ‘‘Relevant Jurisdiction’’), unless such withholding or deduction is required by law or by regulation or governmental policy having the force of law. In the event that any such withholding or deduction is so required, the Payer will pay such additional amounts (‘‘Additional Amounts’’) that will result in receipt by the holder of each Note of such amounts as would have been received by such holder had no such withholding or deduction been required. However, no Additional Amounts shall be payable on any payment under any Note: (a) for or on account of: (1) any Taxes that would not have been imposed but for: (A) the existence of any present or former connection between the holder or beneficial owner of such Note and the Relevant Jurisdiction, other than merely holding such Note, including such holder or beneficial owner being or having been a national, domiciliary or resident of or treated as a resident thereof or being or having been physically present or engaged in a trade or business therein or having or having had a permanent establishment therein; (B) the presentation of such Note (in cases in which presentation is required in order to receive payment) more than 30 days after the later of the date on which the payment of the principal, premium (if any) and interest on such Note became due and payable pursuant to the terms thereof and the date on which any such amount was made or duly provided for, except to the extent that the holder or beneficial owner thereof would have been entitled to such Additional Amounts if it had presented such Note for payment on any date within such 30 day period; (C) the failure of the holder or beneficial owner of such Note to respond to a timely request of the Issuer, addressed to the holder or beneficial owner to furnish certifications, information, documents or other evidence to the Issuer concerning such holder’s or beneficial owner’s nationality, residence or identity, if and to the extent that furnishing such information to the Issuer would have reduced or eliminated any taxes as to which Additional Amounts would have otherwise been payable to such holder or beneficial owner; or (D) the presentation of such Note for payment in the Relevant Jurisdiction, unless such Note could not have been presented for payment elsewhere; (2) any estate, inheritance, gift, sale, transfer, personal property or similar Taxes; (3) any withholding or deduction in respect of any Taxes where withholding or deduction is imposed on a payment to an individual and required to be made pursuant to the European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council Meeting of 26-27 November 2000 on the taxation of savings income, or any law implementing or complying with, or introduced to conform to, these Directives; or (4) any combination of taxes, duties, assessments or other governmental charges referred to in the preceding clauses (1), (2) and (3); or (b) with respect to any payment of the principal, premium (if any) or interest on such Note to a holder who is a fiduciary, partnership or person other than the sole beneficial owner of such payment, to the extent that, if the sole beneficial owner had been the holder of the Note, such beneficial owner would not have been entitled to such Additional Amounts. Whenever there is mentioned in any context the payment of principal, premium (if any) or interest on any Note, such mention shall be deemed to include payment of Additional Amounts provided for in the Indenture to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

162 If the Payer becomes aware that it will be obligated to pay Additional Amounts with respect to any payment under or with respect to the Notes, the Payer will deliver to the Trustee on a date which is at least 30 days prior to the date of that payment (unless the obligation to pay Additional Amounts arises after the 30th day prior to that payment date, in which case the Payer shall notify the Trustee promptly thereafter) an Officers’ Certificate stating the fact that Additional Amounts will be payable and the amount estimated to be so payable. The Officers’ Certificate must also set forth any other information reasonably necessary to enable the paying agent to pay Additional Amounts to holders of Notes on the relevant payment date. The Trustee shall be entitled to rely solely on such Officers’ Certificate as conclusive proof that such payments are necessary. The Payer will provide the Trustee with documentation reasonably satisfactory to the Trustee evidencing the payment of Additional Amounts. The Issuer (and/or relevant Subsidiary Guarantors) will pay any present or future stamp, court or documentary taxes, or any other excise or property taxes, charges or similar levies that arise in any jurisdiction from the execution, delivery or registration of any Notes, Subsidiary Guarantees or any other document or instrument referred to therein (other than a transfer of the Notes), or the receipt of any payments with respect to the Notes or any Subsidiary Guarantee excluding any such taxes, charges or similar levies imposed by any jurisdiction outside The Netherlands or any jurisdiction in which a Subsidiary Guarantor or paying agent is located or deemed resident, other than those resulting from, or required to be paid in connection with, the enforcement of the Notes or any Subsidiary Guarantee or any other such document or instrument following the occurrence of any Event of Default with respect to the Notes. The foregoing obligations will survive any termination, defeasance or discharge of the Indenture and will apply mutatis mutandis to any jurisdiction in which any successor to the Issuer is organized or any political subdivision or taxing authority or agency thereof or therein. For a discussion of certain withholding taxes applicable to payments under or with respect to the Notes, see ‘‘Certain Income Tax Consequences — Certain Dutch Income Tax Consequences.’’

Optional Tax Redemption The Notes may be redeemed, at the option of the Issuer, in whole but not in part, at any time upon giving not less than 30 or more than 60 days notice to the holders of the Notes (which notice shall be irrevocable), at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date fixed by the Issuer for redemption (the ‘‘Tax Redemption Date’’) if, as a result of: (a) any change in, or amendment to, the laws or treaties (or any regulations or rulings promulgated thereunder) of a Relevant Jurisdiction affecting taxation; or (b) any change in the existing official position regarding the application, administration or interpretation of such laws, treaties, regulations or rulings (including a holding, judgment or order by a court of competent jurisdiction), which change, amendment, application or interpretation becomes effective on or after the Issue Date (provided that the change, amendment, application or interpretation was not publicly announced prior to the Issue Date) and the Issuer is, or on the next interest payment date would be, required for reasons outside its control to pay any Additional Amounts with respect to any payment due or to become due under the Notes or the Indenture and such requirement cannot be avoided by the taking of reasonable measures by the Issuer, as determined in good faith by the relevant Board of Directors; provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obligated to pay such Additional Amounts if a payment in respect of the Notes was then due. Prior to the publication and mailing of any notice of redemption of the Notes pursuant to the foregoing, the Issuer will deliver to the Trustee (x) an opinion of an independent tax counsel reasonably acceptable to the Trustee or a copy of any judicial decision or regulatory determination, ruling, notice or letter to the effect that the circumstances referred to in clauses (a) and (b) above exist and (y) Officers’ Certificate stating that the Issuer is entitled to effect such redemption and that the conditions precedent to the right of the Issuer to so redeem have occurred. The Trustee will accept such Officers’ Certificate and Opinion of Counsel as sufficient evidence of the existence and

163 satisfaction of the conditions precedent as described above, in which event it will be conclusive and binding on the holders of the Notes. Any Notes that are redeemed will be cancelled.

Certain Covenants Limitation on Debt. The Issuer shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Debt unless either: 1. such Debt is Debt of the Issuer or of a Restricted Subsidiary and, after giving effect to the Incurrence of such Debt and the application of the proceeds thereof, the Consolidated Interest Coverage Ratio of the Issuer would be at least 3.0 to 1.0, or 2. such Debt is Permitted Debt. The term ‘‘Permitted Debt’’ is defined to include the following: (a) (i) Debt of the Issuer evidenced by the Notes (not including any Additional Notes) issued in this Offering and (ii) Existing Debt; (b) (i) Debt of the Issuer and its Restricted Subsidiaries under Revolving Credit Facilities in an aggregate principal amount at any one time outstanding not to exceed e100 million, plus in the case of any Refinancings of any Debt permitted under this clause (b)(i) or any portion thereof, the aggregate amount of fees, underwriting discounts, premiums and other costs and expenses incurred in connection with such Refinancings; and (ii) Debt of the Issuer and its Restricted Subsidiaries (including Guarantees thereof), in an aggregate principal amount at any time outstanding (after giving effect to the Incurrence of such Debt and the application of the proceeds thereof) not to exceed (x) 2.5 times the Adjusted EBITDA of the Issuer for the most recent four consecutive fiscal quarters for which financial statements of the Issuer are internally available, less (y) the sum of (A) the principal amount then outstanding in respect of the 2018 Notes and (B) all other Debt Incurred pursuant to this clause (b)(ii) (and any Refinancings thereof or of the 2018 Notes under this clause (b)(ii) or clause (i) below); (c) Debt of the Issuer or a Restricted Subsidiary in respect of Capital Lease Obligations, finance leases, mortgage financings and Purchase Money Debt; provided that: (1) the aggregate principal amount of such Debt does not exceed the Fair Market Value (on the date of the Incurrence thereof) of the Property acquired, constructed or leased (plus any reasonable fees or expenses Incurred in connection with the relevant acquisition or development); and (2) the aggregate principal amount of all Debt Incurred and then outstanding pursuant to this clause (c) (together with all Permitted Refinancing Debt Incurred and then outstanding in respect of Debt previously Incurred pursuant to this clause (c)) does not exceed 5.0% of Total Assets; (d) Debt of the Issuer owing to and held by any Restricted Subsidiary and Debt of a Restricted Subsidiary owing to and held by the Issuer or any Restricted Subsidiary; provided, however, that: (1) any subsequent issue or transfer of Capital Stock or other event that results in any such Debt being held by a Person other than the Issuer or a Restricted Subsidiary or any subsequent transfer of any such Debt (except to the Issuer or a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Debt by each obligor of such Debt; (2) if the Issuer is the obligor on such Debt, such Debt must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes and to such other Debt of the Issuer that, by its terms, requires such subordination including without limitation the 2018 Notes; and (3) if a Subsidiary Guarantor is the obligor on such Debt, and such Debt is owing to, and held by the Issuer or a Restricted Subsidiary that is not a Subsidiary Guarantor, such Debt must be unsecured and expressly provide that, upon the occurrence of

164 any Major Event of Default, such Debt shall be subordinated to the prior payment in full in cash of all Obligations with respect to the Notes and the Subsidiary Guarantees; (e) Debt under Interest Rate Agreements entered into by the Issuer or a Restricted Subsidiary for the purpose of limiting interest rate risk in the ordinary course of the financial management of the Issuer or such Restricted Subsidiary, as the case may be, or in connection with the payment of principal, premium, if any, or interest on the Notes, and not for speculative purposes, provided that the obligations under such agreements are related to payment obligations on Debt otherwise permitted by the terms of this covenant; (f) Debt under Currency Exchange Protection Agreements entered into by the Issuer or a Restricted Subsidiary for the purpose of limiting currency exchange rate risks in the ordinary course of business, or in connection with the payment of principal, premium, if any, or interest on the Notes, and not for speculative purposes; (g) Debt under Commodity Price Protection Agreements entered into by the Issuer or a Restricted Subsidiary for the purpose of managing price risk relating to commodities used by the Issuer and such Restricted Subsidiaries in the ordinary course of business and not for speculative purposes; (h) Debt in connection with (i) one or more standby letters of credit or performance or surety bonds or completion or performance guarantees and similar bonds or guarantees issued by the Issuer or a Restricted Subsidiary or pursuant to unemployment, statutory, tax funding or self-insurance obligations, in each case in the ordinary course of business and not in connection with the borrowing of money or the obtaining of advances or credit or (ii) any customary cash management, cash pooling or netting or setting off arrangements in the ordinary course of business, consistent with past practice and where the obligors thereunder are limited to the Issuer, its Restricted Subsidiaries and any Parent Entity; (i) Permitted Refinancing Debt Incurred (A) by the Issuer in respect of Debt Incurred by it pursuant to clause (1) of the first paragraph of this covenant, clauses (a), (b)(ii) and (c) above, clauses (n), (o) and (r) below and this clause (i) or (B) by a Restricted Subsidiary in respect of Debt Incurred by it pursuant to clause (1) of the first paragraph of this covenant, clauses (a), (b)(ii) and (c) above, clauses (n) and (o) below and this clause (i); (j) the Guarantee by the Issuer or a Restricted Subsidiary of Debt of a Restricted Subsidiary provided that such Debt was permitted to be Incurred by another provision of this covenant (other than clause (r)), provided further that, if the Debt being guaranteed is subordinated in right of payment to the Notes or any Subsidiary Guarantee, then such Guarantee shall be subordinated to the same extent as the Debt guaranteed; (k) the Guarantee by any Restricted Subsidiary of Debt of the Issuer permitted to be Incurred by another provision of this covenant (other than clause (r) or any Refinancings thereof under clause (i)), provided that the Issuer complies with the covenants described under ‘‘— Limitation on Guarantees’’, and provided further that, if the Debt being guaranteed is subordinated in right of payment to the Notes or any Subsidiary Guarantee, then such guarantee shall be subordinated to the same extent as the Debt guaranteed; (l) the Incurrence by the Issuer or any of its Restricted Subsidiaries of Debt arising from agreements providing for indemnification, adjustment of purchase price, earnouts or similar obligations, insurance company bonds or guarantees, VAT guarantees, Guarantees or letters of credit, bankers’ acceptances, surety bonds or performance bonds or similar bonds securing any obligations of the Issuer or any of its Restricted Subsidiaries pursuant to such agreements, in any case Incurred in connection with the disposition of any business, assets or Capital Stock of a Subsidiary or any minority or joint venture interests or Investments (other than Guarantees of Debt Incurred by any Person acquiring all or any portion of such business, assets or Capital Stock of a Subsidiary or minority or joint venture interest or Investment for the purpose of financing such acquisition), so long as the amount does not exceed the gross proceeds, including

165 the Fair Market Value of non-cash proceeds (measured at the time received and without giving effect to any subsequent changes in value), actually received by the Issuer or any Restricted Subsidiary thereof in connection with such disposition; (m) the Incurrence by the Issuer or any of its Restricted Subsidiaries of Debt arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds, overdrafts or cash pooling arrangements in the ordinary course of business, provided, however, that such Debt is extinguished within five business days of its Incurrence; (n) the Incurrence by the Issuer or any of its Restricted Subsidiaries of Debt and any related Guarantees by Restricted Subsidiaries to the extent that the net proceeds thereof are promptly deposited to defease or to satisfy and discharge the Notes in accordance with their terms; (o) Debt of Persons that are acquired by the Issuer or any of its Restricted Subsidiaries or merged into a Restricted Subsidiary in accordance with the terms of the Indenture; provided, however, that immediately after giving effect to such acquisition and the Incurrence of such Debt on a pro forma basis, either (i) the Issuer would be permitted to Incur at least e1.00 of additional Debt pursuant to clause (1) of the first paragraph of this covenant or (ii) the Consolidated Interest Coverage Ratio of the Issuer is no less after giving effect to the acquisition or merger; (p) customer deposits and advance payments received in the ordinary course of business from customers for goods and services purchased in the ordinary course of business; (q) the Incurrence by a Securitization Entity in a Qualified Securitization Transaction that is non recourse to the Issuer or any Restricted Subsidiary (except for Standard Securitization Undertakings); (r) Debt of the Issuer or Karbonia Incurred to finance the cost (including the cost of design, development, acquisition, construction, installation, improvement or integration) of equipment, inventory, or other tangible assets used or useful in Karbonia’s coal mining business in Poland and any costs for or relating to services provided in connection with the foregoing or any other costs relating to the commencement of mining operations in Poland or to provide, to the extent applicable, for the initial operation of such equipment or asset, which Debt may be secured by assets held by the Issuer or by Karbonia or any of its Subsidiaries and may be Guaranteed by a Restricted Subsidiary in an aggregate principal amount that does not exceed, at any one time outstanding, e200 million (‘‘Polish Project Debt’’); (s) Debt of the Issuer and its Restricted Subsidiaries under the 2015 Notes, provided that such Debt must be redeemed within 65 days of the issuance of the Notes issued in this offering; and (t) Other Debt of the Issuer and its Restricted Subsidiaries in an aggregate principal amount outstanding at any one time not to exceed the greater of e50 million and 2.5% of Total Assets. Notwithstanding anything to the contrary contained in this covenant, accrual of interest, accretion or amortization of original issue discount and the payment of interest or dividends in the form of additional Debt, will be deemed not to be an Incurrence of Debt for purposes of this covenant. Notwithstanding any other provision of this covenant, the maximum amount of Debt that may be Incurred pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. For purposes of determining compliance with this covenant, in the event that any item of Debt could be Incurred under more than one of the clauses described in the first and second paragraphs of this covenant, the Issuer may, in its sole discretion, classify such item of Debt on the date of its Incurrence as Incurred in part under one or more applicable clauses in the second paragraph of this covenant and/or clause (1) of the first paragraph of this covenant if applicable, and may, in its sole discretion, later reclassify such item of Debt in part under one or more such clauses as are

166 then applicable and/or clause (1) of the first paragraph of this covenant if then applicable, provided, however, that Debt Incurred under clause (b)(ii), (r) or (s) above may not be reclassified and provided further that no item of Permitted Debt may be reclassified into a different category of Permitted Debt or into clause (1) of the first paragraph of this covenant save to the extent that the Incurrence of such Debt within that different category or within clause (1) of the first paragraph of this covenant, as applicable, would, at the time of reclassification, have been permitted under the covenant in ‘‘— Limitation on Primary Senior Debt’’ and any other applicable provisions of the Indenture. For the avoidance of doubt, any item of Debt that is secured by a Lien may only be reclassified if such Lien would be permitted under the terms of the Indenture in the event such item of Debt was Incurred under the clause into which it is reclassified as of the date of such reclassification. For purposes of determining compliance with any euro-denominated restriction on the Incurrence of Debt, the euro equivalent of the principal amount of Debt denominated in another currency shall be calculated based on the relevant currency exchange rate in effect on the date such Debt was Incurred, in the case of term Debt, or first committed, in the case of Debt Incurred under a Revolving Credit Facility permitted by clause (b)(i) of the definition of Permitted Debt; provided that (1) if such Debt is Incurred to Refinance other Debt denominated in a currency other than euros, and such Refinancing would cause the applicable euro-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such Refinancing, such euro-denominated restriction will be deemed not to have been exceeded so long as the principal amount of such Refinancing Debt does not exceed the principal amount of such Debt being Refinanced; (2) the euro equivalent of the principal amount of any such Debt outstanding on the Issue Date will be calculated based on the relevant currency exchange rate in effect on the Issue Date; and (3) if and for so long as any such Debt is subject to a Currency Exchange Protection Agreement with respect to the currency in which such Debt is denominated covering principal and interest on such Debt, the amount of such Debt, if denominated in euros, will be the amount of the principal payment required to be made under such Currency Exchange Protection Agreement and, otherwise, the euro equivalent of such amount plus the euro equivalent of any premium which is at such time due and payable but is not covered by such Currency Exchange Protection Agreement.

Limitation on Primary Senior Debt. Notwithstanding the provisions of the covenants described under the caption ‘‘— Limitation on Debt’’, the Issuer: (i) shall not Incur any Primary Senior Debt, other than Permitted Primary Senior Debt, unless the Primary Senior Debt Leverage Ratio, on the date of Incurrence of such Debt and after giving effect thereto on a pro forma basis, is 2.5 to 1.0 or less; and (ii) shall not permit any Restricted Subsidiary to Incur any Primary Senior Debt, other than Permitted Primary Senior Debt, unless the Primary Senior Debt Leverage Ratio, on the date of the Incurrence of such Debt and after giving effect thereto on a pro forma basis, is 2.5 to 1.0 or less.

Limitation on Restricted Payments. The Issuer shall not make, and shall not permit any Restricted Subsidiary to make, directly or indirectly, any Restricted Payment if at the time of, and after giving effect to, such proposed Restricted Payment, (a) a Default or Event of Default shall have occurred and be continuing; (b) the Issuer could not Incur at least e1.00 of additional Debt pursuant to clause (1) of the first paragraph of the covenant described under ‘‘— Limitation on Debt’’; and (c) the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made since the 2018 Notes Issue Date would exceed an amount equal to the sum of (without duplication): (1) 50% of the aggregate amount of Consolidated Net Income of the Issuer accrued during the period (treated as one accounting period) from and including April 1, 2007 to the end of the most recent fiscal quarter for which financial statements of the Issuer are internally available (or if the aggregate amount of Consolidated Net Income of the Issuer for such period shall be a deficit, minus 100% of such deficit); plus

167 (2) 100% of any Capital Stock Sale Proceeds; plus (3) 100% of the aggregate net cash proceeds, and the Fair Market Value of marketable securities, received by the Issuer or any Restricted Subsidiary from the issuance or sale (other than to the Issuer or a Restricted Subsidiary of the Issuer or an employee stock ownership plan or trust established by the Issuer or any Subsidiary of the Issuer for the benefit of its employees to the extent funded by the Issuer or any Restricted Subsidiary) after the 2018 Notes Issue Date of Debt that has been converted into or exchanged for Capital Stock (other than Disqualified Stock) or Subordinated Shareholder Debt (less (or plus) the net amount of any cash and the Fair Market Value of any Property distributed (and/or received) by the Issuer or any Restricted Subsidiary, as the case may be, upon such conversion or exchange); plus (4) an amount equal to the sum of: (A) to the extent that any Restricted Investment that was made after the 2018 Notes Issue Date is sold for cash or otherwise disposed of, repurchased, exchanged, redeemed or repaid, or, if such Restricted Investment is a Guarantee, released or cancelled, 100% of the aggregate amount received in cash and the Fair Market Value of Property (other than cash) received or, the amount of the Guarantee so released or cancelled; plus (B) to the extent that any Unrestricted Subsidiary of the Issuer designated as such after the Issue Date is redesignated as a Restricted Subsidiary or has been merged into, consolidated or amalgamated with or into, or transfers or conveys its assets to, the Issuer or a Restricted Subsidiary of the Issuer, 100% of the Fair Market Value of the Issuer’s Investment in such Subsidiary (or of the assets transferred or conveyed, as applicable) as of the date of such redesignation, combination or transfer; plus (C) to the extent that any Restricted Investment that was made after the 2018 Notes Issue Date is made in a Person that subsequently becomes a Restricted Subsidiary, the Fair Market Value of such Investment of the Issuer and its Restricted Subsidiaries as of the date such Person becomes a Restricted Subsidiary; plus (6) 100% of any dividends, distributions or payments received by the Issuer or a Restricted Subsidiary of the Issuer after the 2018 Notes Issue Date from an Unrestricted Subsidiary or Restricted Investments of the Issuer or a Restricted Subsidiary, including from the sale of Capital Stock or other Investments in respect of that Unrestricted Subsidiary, to the extent such dividends, distributions or payments were not otherwise included in the Consolidated Net Income of the Issuer for such period. Notwithstanding the foregoing limitation, the preceding provisions will not prohibit: (a) the payment of dividends by the Issuer on its Capital Stock or the consummation of any redemption of any Subordinated Obligation within 60 days of the date of declaration of the dividend or giving of the redemption notice if, on the date of declaration or notice, such dividends or redemption payment, as applicable, could have been paid in compliance with the Indenture; provided, however, that such dividend or redemption payment, as applicable, shall be included in any calculation of the amount of Restricted Payments subsequent to such declaration or notice; (b) the making of any Restricted Payment in exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Issuer (other than Disqualified Stock and other than Capital Stock issued or sold to a Restricted Subsidiary of the Issuer or an employee stock ownership plan or trust established by the Issuer or any Subsidiary for the benefit of their employees), Subordinated Shareholder Debt or a substantially concurrent contribution to the equity of the Issuer (other than through the issuance of Disqualified Stock); provided, however, that the Capital Stock Sale Proceeds from such exchange or sale of Capital Stock, Subordinated Shareholder Debt or such contribution

168 shall be excluded from the calculation pursuant to clause (c)(2) of the first paragraph of this covenant; (c) the purchase, repurchase, redemption, legal defeasance, acquisition or retirement for value of any Subordinated Obligations in exchange for, or out of the proceeds of the substantially concurrent sale of, Permitted Refinancing Debt provided, however, that such purchase, repurchase, legal defeasance, acquisition or retirement for value shall be excluded in any subsequent calculation of the amount of Restricted Payments; (d) the repurchase of shares of, or options to purchase shares of, the Issuer or any Parent Entity (or dividends or distributions to any Parent of the Issuer to finance any such repurchase) from current or former officers, directors, consultants or employees (or their assigns, estates, trusts, foundations, usufruct and heirs) of the Issuer or any of its Restricted Subsidiaries or any Parent of the Issuer, pursuant to the terms of agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors of the Issuer or the Parent of the Issuer, as applicable; provided, however, that the aggregate price paid for all such repurchases shall not exceed e2.0 million per annum (with unused amounts in any 12-month period carried over to the next 12-month period), up to e5.0 million in the aggregate prior to the maturity of the Notes; provided further, however, that such repurchases shall be excluded in any subsequent calculation of the amount of Restricted Payments; (e) the repurchase of Capital Stock deemed to occur upon the exercise of options or warrants to the extent that such Capital Stock represents all or a portion of the exercise price thereof; provided, however, that such repurchases shall be excluded in any subsequent calculation of the amount of Restricted Payments; (f) cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock of the Issuer or any Parent Entity; provided, however, that any such cash payment shall not be for the purpose of evading the limitations of this covenant (as determined in good faith by the Board of Directors of the Issuer); provided further, however, that such dividends or distributions shall be excluded in any subsequent calculation of the amount of Restricted Payments; (g) for so long as the Issuer is a member of a group filing a consolidated or combined tax return with its Parent, payments to the Parent in respect of an allocable portion of the tax liabilities of such group that is attributable to the Issuer and its Subsidiaries; provided that such payments shall not exceed the amount of tax that the Issuer and its Subsidiaries would owe on a stand-alone basis and the amount of such payments to the Parent are used to meet such tax liabilities; provided further, however, that any such payments (unless any related tax liabilities of the Issuer and its Subsidiaries shall not have been relieved thereby) shall be excluded in any subsequent calculation of the amount of Restricted Payments; (h) any Permitted Real Estate Transfer; provided, however, that any such Restricted Payment shall be included in any subsequent calculation of the amount of Restricted Payments; (i) customary fees relating to transaction, management, consulting and Parent services related to the performance of transactions and customary fees for the performance of monitoring services not to exceed e1.0 million in any calendar year (which unused amounts may be carried over, in whole or in part, to any subsequent calendar year) and e5.0 million over the term of the Notes; provided, however, that any such fees shall be included in the calculation of the amount of Restricted Payments; (j) dividends and distributions to holders of any class or series of Disqualified Stock of the Issuer or any of its Restricted Subsidiaries Incurred in accordance with the covenant described above under ‘‘— Limitation on Debt;’’ provided, however, that such dividends and distributions are included in Consolidated Interest Expense; and provided further, that such dividends and distributions shall be excluded in the calculation of the amount of Restricted Payments;

169 (k) sales, transfers or distributions, as a dividend or otherwise (including a demerger or spinoff), of assets or Capital Stock of any Unrestricted Subsidiary or the payment of dividends or distributions of an amount up to the net proceeds received from the sale of the foregoing; provided, however, that such amounts shall be excluded in the calculation of the amount of Restricted Payments; (l) dividends, loans, advances or distributions to any Parent or other payments by the Issuer or any Restricted Subsidiary in amounts equal the amounts required for any Parent to pay any Parent Expenses; provided, however, that any such payments shall be included in the calculation of the amount of Restricted Payments; (m) dividends or other distributions to all holders of Capital Stock of any Restricted Subsidiary on a pro rata basis or on a basis that results in the receipt by the Issuer or any other Restricted Subsidiary of dividends or distributions of greater value than the Issuer or such Restricted Subsidiary would receive on a pro rata basis; provided, however, that 50% of such dividends or distributions made other than to the Issuer or such Restricted Subsidiary shall be excluded in the calculation of the amount of Restricted Payments; and (n) other Restricted Payments in an aggregate amount not to exceed e5.0 million; provided, however, that such Restricted Payments shall be excluded in the calculation of the amount of Restricted Payments. The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued to or by the Issuer or such Subsidiary, as the case may be, pursuant to the Restricted Payment. If the Fair Market Value of any asset(s) or securities are required to be valued by this covenant, the Issuer shall make that determination in good faith, provided that, if such asset(s) or securities have a Fair Market Value in excess of e1.0 million, Fair Market Value shall be determined by at least a majority of the disinterested members of the Board of Directors or by an Independent Financial Advisor and evidenced by a Board Resolution or written opinion, as applicable, dated within 30 days of the relevant transaction.

Limitation on Liens. The Issuer shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, Incur or suffer to exist, any Lien securing Debt (other than Permitted Liens) upon any of its Property (including Capital Stock of a Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired, or any interest therein or any income or profits therefrom, unless it has made or will make effective provision whereby the Notes will be secured by such Lien senior to, or equally and ratably with all other Debt of the Issuer or any Restricted Subsidiary secured by such Lien for so long as such other Debt is secured by such Lien.

Limitation on Asset Sales. The Issuer shall not, and shall not permit any Restricted Subsidiary, to, directly or indirectly, consummate any Asset Sale unless: (a) the Issuer or such Restricted Subsidiary receives consideration (including by way of release from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise, of the Issuer and its Restricted Subsidiaries as a result of which the Issuer and its Restricted Subsidiaries are no longer obligated with respect to such liabilities) at least equal to the Fair Market Value of the Property subject to such Asset Sale (such Fair Market Value to be determined at the time of contractually agreeing to such Asset Sale); and (b) at least 75% of the consideration paid to the Issuer or such Restricted Subsidiary in connection with such Asset Sale is in the form of cash, Cash Equivalents or Additional Assets or a combination thereof. For purposes of this provision, each of the following will be deemed to be cash: (1) any liabilities in respect of Debt of the Issuer or any Restricted Subsidiary other than any Restricted Subsidiary that ceases to be a Restricted Subsidiary as a result of such Asset Sale (other than liabilities that are by their terms subordinated to the Notes) that are assumed by the transferee of any such Property or Capital Stock, as applicable, to the extent that the Issuer and its Restricted Subsidiaries have no

170 further liability with respect to such liabilities or against which the transferee has granted a full indemnity to the Issuer or such Restricted Subsidiary; (2) any securities, notes or other obligations received by the Issuer or any such Restricted Subsidiary from such transferee that are within 90 days of the Asset Sale converted by the Issuer or such Restricted Subsidiary into cash or Cash Equivalents (to the extent of the cash received in that conversion); and (3) any Capital Stock or assets of the kind referred to in clause (b) of the next paragraph of this covenant; (4) Primary Senior Debt of any Restricted Subsidiary that is no longer a Restricted Subsidiary as a result of such Asset Sale, to the extent that any of the Issuer or any Restricted Subsidiary which is a Guarantor in respect of such Debt prior to such Asset Sale is released from any obligation or Guarantee in respect of such Debt in connection with such Asset Sale; and (5) consideration consisting of Primary Senior Debt of the Issuer or any Restricted Subsidiary other than any Restricted Subsidiary that ceases to be a Restricted Subsidiary as a result of such Asset Sale received from Persons who are not the Issuer or any Restricted Subsidiary that is cancelled in connection with its receipt. Within 365 days after the receipt of any Net Available Cash from Asset Sales, such Net Available Cash may be applied by the Issuer or a Restricted Subsidiary to the extent the Issuer or such Restricted Subsidiary elects (or is required by the terms of any Debt) to one or more of the following uses: (a) to repay any Debt of the Issuer or any Restricted Subsidiary under Revolving Credit Facilities or other Debt that constitutes Primary Senior Debt, and, in the case of Debt under Revolving Credit Facilities, correspondingly cancel commitments thereunder; (b) to make a capital expenditure or invest or reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Issuer or another Restricted Subsidiary); (c) to purchase the Notes and other Debt in an offer to all holders of Notes and such other Debt (in accordance with and subject to the procedures and provisions set forth below for a Prepayment Offer) at a purchase price for the Notes of not less than 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the date of purchase; or (d) to enter into a binding commitment to apply the Net Available Cash pursuant to clause (a), (b) or (c) above; provided that such binding commitment shall be treated as a permitted application of the Net Available Cash from the date of such commitment until the earlier of (x) the date on which such repayment, expenditure or reinvestment is consummated or abandoned, and (y) the 180th day following the expiration of the 365-day period referred to above, provided that, pending the final application of any Net Available Cash, the Issuer and its Restricted Subsidiaries may temporarily reduce Debt or otherwise invest such net Available Cash in any manner not prohibited by the indenture. Any Net Available Cash from an Asset Sale not applied or invested in accordance with the preceding paragraph within 365 days from the date of the receipt of such Net Available Cash or the subject of a permitted application under clause (d) above shall constitute ‘‘Excess Proceeds.’’ When the aggregate amount of Excess Proceeds exceeds e10 million, the Issuer will thereupon be required to make an offer to repurchase Notes (the ‘‘Prepayment Offer’’), which offer shall be in the amount of the Allocable Excess Proceeds (rounded to the nearest e1,000), on a pro rata basis among holders of the Notes according to principal amount, at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), in accordance with the procedures (including prorating in the event of oversubscription) set forth in the Indenture, provided that if the Issuer elects to prepay any other Debt that ranks pari passu with claims under the Notes or any Subsidiary Guarantee, then the

171 Issuer or any Restricted Subsidiary may prepay the Notes and such other Debt ratably. To the extent that any portion of the amount of Excess Proceeds remains after compliance with the preceding sentence and provided that all holders of Notes have been given the opportunity to tender their Notes for repurchase in accordance with the Indenture, the Issuer or such Restricted Subsidiary may use such remaining amount for any purpose permitted by the Indenture, and the amount of Excess Proceeds will be reset to zero. The term ‘‘Allocable Excess Proceeds’’ shall mean the product of: (a) the Excess Proceeds; and (b) a fraction, (1) the numerator of which is the aggregate principal amount of the Notes outstanding on the date of the Prepayment Offer, and (2) the denominator of which is the sum of (A) the aggregate principal amount of the Notes outstanding on the date of the Prepayment Offer and (B) the aggregate principal amount or accreted value of other Debt of the Issuer outstanding on the date of the Prepayment Offer that ranks pari passu in right of payment with the Notes and any relevant Subsidiary Guarantees in respect of which Debt the Issuer or a Restricted Subsidiary elects to make an offer to repurchase such Debt at substantially the same time as the Prepayment Offer. Within ten business days after the Issuer is obligated to make a Prepayment Offer as described in the preceding paragraph, the Issuer shall send a written notice, by first-class mail, to the holders of Notes stating that such Holder may elect to have its Notes purchased by the Issuer, either in whole or in part, and in principal amounts of e100,000 and integral multiples of e1,000 above e100,000. Such notice shall also state, among other things, the purchase price and the repurchase date, which shall be, subject to any contrary requirements of applicable law, a business day no earlier than 30 days nor later than 60 days from the date such notice is mailed. The Issuer will comply, to the extent applicable, with the requirements of Section 14(e) and Rule 14e-1 of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this covenant by virtue thereof.

Limitation on Sale of Capital Stock of Restricted Subsidiaries. The Issuer (a) shall not, and the Issuer shall not permit any Restricted Subsidiary to, transfer, convey, sell, lease or otherwise dispose of any Capital Stock (other than Disqualified Stock) of any Restricted Subsidiary (other than shares of Capital Stock constituting directors’ qualifying shares or to nominal shareholders if required by applicable law or similar legal requirements) to any Person and (b) shall not permit any Restricted Subsidiary to issue any of its Capital Stock (other than Disqualified Stock) (other than shares of Capital Stock constituting directors’ qualifying shares or to nominal shareholders if required by applicable law or similar legal requirements) to any Person, in each instance except (i) to the Issuer or a Wholly Owned Restricted Subsidiary; (ii) in compliance with the covenant described under ‘‘— Limitation on Asset Sales’’ if immediately after giving effect to such issuance or sale (A) such Restricted Subsidiary would no longer be a Restricted Subsidiary and the Investment of the Issuer or the Restricted Subsidiary, as the case may be, in such Person (after giving effect to such issuance or sale) would have been permitted to be made under the covenant described under ‘‘— Limitation on Restricted Payments’’ as if made on the date of such issuance or sale or (B) the Issuer would be permitted to Incur at least e1.00 of additional Debt pursuant to clause (1) of the first paragraph of the covenant described under ‘‘— Limitation on Debt’’ (after giving pro forma effect to application of the proceeds of such issuance or sale and any such issuance or sale by reducing the Consolidated Net Income of the relevant Restricted Subsidiary by the same proportion as the proportion of the dividends or distributions of such Restricted Subsidiary to which the Capital Stock so issued or sold is entitled); or (iii) in relation to a Permitted Real Estate Transfer.

172 Limitation on Restrictions on Distributions from Restricted Subsidiaries. The Issuer shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist any consensual restriction on the right of any Restricted Subsidiary to: (a) pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stock, or pay any Debt or other obligation owed, to the Issuer or any other Restricted Subsidiary; (b) make any loans or advances to the Issuer or any other Restricted Subsidiary; or (c) sell, lease or otherwise transfer any of its Property to the Issuer or any other Restricted Subsidiary, provided that (x) the priority of any Preferred Stock in receiving dividends or distributions prior to any such payments on common stock and (y) the subordination of (including the application of standstill requirements to) loans or advances (including Subordinated Shareholder Debt) made to the Issuer or any Restricted Subsidiary shall not be deemed to constitute such an encumbrance or restriction. The foregoing limitations will not apply: 1. with respect to clauses (a), (b) and (c), to restrictions: (A) in effect on the Issue Date pursuant to the terms of the 2018 Notes and related agreements, the 2015 Notes and related agreements, the Indenture, the Notes, any Senior Credit Facilities and Revolving Credit Facilities, any Intercreditor Agreement and any other security, intercreditor or other agreements or instruments related thereto; (B) imposed on Karbonia and/or its Subsidiaries under the terms of the Polish Project Debt; (C) relating to Interest Rate Agreements, Currency Exchange Protection Agreements or Commodity Price Protection Agreements on customary terms; (D) relating to Debt of a Restricted Subsidiary of the Issuer and existing at the time it became a Restricted Subsidiary if such restriction was not created in connection with or in anticipation of the transaction or series of transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Issuer, provided that the Incurrence of such Debt was permitted under the terms of the indenture; (E) agreements governing Debt permitted to be Incurred subsequent to the Issue Date pursuant to the covenants described above under the captions ‘‘— Limitation on Debt’’ and ‘‘— Limitation on Primary Senior Debt’’ and any guarantees thereof or Liens with respect thereto, if the restrictions in any such agreement or instrument are not materially less favourable to the holders of the Notes than those in effect on the Issue Date; (F) that result from any Permitted Refinancing Debt that Refinances any Debt referred to in clause 1(A), (B), (C), (D) or (E) above or (2)(A) below; provided that such restrictions are no more restrictive in any material respect than those in the Debt being Refinanced; (G) existing under, or by reason of or with respect to applicable law, rule, regulation, order, approval, license or permit of any governmental authority; (H) on cash or other deposits or net worth imposed by customers that are not Affiliates of the Issuer or required by insurance, surety or bonding companies, in each case, under contracts entered into in the ordinary course of business; (I) with respect to any Person or the Property of a Person acquired by the Issuer or any of its Restricted Subsidiaries existing at the time of such acquisition and not Incurred in connection with or in anticipation of such acquisition, which restriction is not applicable to any Person or Property, other than the Person, or the Property of the Person, so acquired and any amendments, modifications, restatements,

173 renewals, extensions, supplements, refundings, replacements or refinancings thereof, provided that the restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacement or refinancings are no more restrictive than those in effect on the date of the acquisition; (J) contained in customary provisions in asset sale agreements limiting the transfer of such Property or distributions or loans from the Property to be sold pending the closing of such sale; (K) relating to Debt of a Securitization Entity pursuant to Qualified Securitization Transactions; provided that such restrictions apply only to such Securitization Entity; (L) resulting from customary restrictions in Capital Lease Obligations, mortgage financings and Purchase Money Debt; or (M) resulting from customary provisions limiting the disposition or distribution of assets or property in partnership agreements, limited liability company organizational governance documents, joint venture agreements and other similar agreements, entered into in the ordinary course of business and not otherwise prohibited by the terms of the Indenture or the Notes, that restrict the transfer of ownership interest in, or the assets of, such partnership, limited liability company, joint venture or similar Person; 2. with respect to clause (c) only, to restrictions: (A) relating to Liens that are permitted to be Incurred pursuant to the covenant described under ‘‘— Limitation on Liens’’ that limit the right of the debtor to dispose of the Property subject to such Lien; or (B) resulting from customary provisions in leases restricting subletting or assignment of leases or customary provisions in other agreements that restrict assignment of such agreements or rights thereunder.

Limitation on Transactions with Affiliates. The Issuer shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, conduct any business or enter into or suffer to exist any transaction or series of transactions (including the purchase, sale, transfer, assignment, lease, conveyance or exchange of any Property or the rendering of any service) with, or for the benefit of, any Affiliate of the Issuer (an ‘‘Affiliate Transaction’’) involving consideration in excess of e2.0 million, unless: (a) the terms of such Affiliate Transaction are not materially less favorable to the Issuer or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable arm’s length transaction with a Person that is not an Affiliate of the Issuer; (b) if such Affiliate Transaction involves aggregate payments or value in excess of e5.0 million, the Board of Directors (including at least a majority of the disinterested members of the Board of Directors) approves such Affiliate Transaction and, in its good faith judgment, believes that such Affiliate Transaction complies with clause (a) of this paragraph as evidenced by a Board Resolution promptly delivered to the Trustee; provided, however, if there are no disinterested members of the Board of Directors, the Issuer shall receive a written opinion from an Independent Financial Advisor described in clause (c) below; and (c) if such Affiliate Transaction involves aggregate payments or value in excess of e10.0 million, the Issuer obtains a written opinion from an Independent Financial Advisor (copied to the Trustee) to the effect that (i) the consideration to be paid or received in connection with such Affiliate Transaction is fair, from a financial point of view, to the Issuer or such Restricted Subsidiary, as the case may be or (ii) the transaction is on terms not materially less favorable to the Issuer or such Restricted Subsidiary than might have been obtained in a comparable transaction at such time on an arm’s length basis from a Person who is not an Affiliate of the Issuer.

174 Notwithstanding the foregoing limitation, the Issuer or any Restricted Subsidiary may enter into or suffer to exist the following: (a) any transaction or series of transactions between the Issuer and one or more Restricted Subsidiaries or between two or more Restricted Subsidiaries; (b) any Restricted Payment permitted to be made pursuant to the covenant described under ‘‘— Limitation on Restricted Payments’’ or Permitted Investments (other than pursuant to clause (b), (c) or (h) of the definition thereof); (c) any reasonable and customary employment, consulting, service or termination agreement, or indemnification arrangement, entered into by the Issuer or any of its Restricted Subsidiaries with officers, directors, employees and consultants of the Issuer or any of its Restricted Subsidiaries and the payment of reasonable and customary fees, payments (including reimbursements or indemnification) or compensation to current or former officers, directors, employees and consultants of the Issuer or any of its Restricted Subsidiaries (including amounts paid, including in the form of shares, pursuant to employee benefit plans, employee stock option, stock awards or similar plans), in each case in the ordinary course of business; (d) agreements in effect on the Issue Date and described in this Offering Memorandum or on the date the relevant Person became a Restricted Subsidiary of the Issuer (to the extent such agreements were not entered into in connection with or in anticipation of the transaction or series of transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary) and any modifications, extensions or renewals thereto that are no less favorable to the Issuer or any Restricted Subsidiary than such agreements as in effect on the Issue Date; (e) any issuance or sale of Capital Stock (other than Disqualified Stock) of the Issuer to Affiliates; (f) transactions with a Person (other than an Unrestricted Subsidiary) that is an Affiliate of the Issuer solely because the Issuer owns, directly or through a Restricted Subsidiary, Capital Stock in, or otherwise controls, such Person; (g) pledges of Capital Stock of Unrestricted Subsidiaries for the benefit of lenders to such Unrestricted Subsidiaries; (h) agreements providing for the provision of administrative, treasury, accounting, management or other similar corporate services or engineering or similar services by the Issuer or any Restricted Subsidiary to an Affiliate or by a Permitted Holder to the Issuer or any Restricted Subsidiary, in each case in the ordinary course of business; provided that any such agreement shall (x) have terms that are no less favorable to the Issuer or such Restricted Subsidiary than agreements of such Person with a non-Affiliate providing for similar services as in effect on the Issue Date or (y) comply with the requirements of clause (a) of the first paragraph of this covenant; (i) loans or advances to employees or consultants in the ordinary course of business or consistent with past practice not to exceed e2.0 million in the aggregate at any one time outstanding; (j) transactions with Unrestricted Subsidiaries or other customers, suppliers, joint venture partners or purchasers or sellers of goods or services, or lessors or lessees of property, in each case in the ordinary course of business and otherwise in compliance with the terms of the Indenture which are (taking into account all the costs and benefits associated with such transactions and market prices for comparable transactions) materially no less favorable to Issuer or its Restricted Subsidiaries than those that could have been obtained in a comparable arms’ length transaction by the Issuer or such Restricted Subsidiary with an unrelated Person, in the reasonable determination of the Board of Directors of the Issuer (as evidenced by a resolution of the Board of Directors delivered to the Trustee); (k) any transaction effected as part of a Qualified Securitization Transaction;

175 (l) any sale of securities (including Disqualified Stock but excluding other Capital Stock) made to an Affiliate on the same terms as are being made to non-Affiliate investors in any public or private sale of such securities and any transactions involving such securities where such Affiliate is treated no more favorably than the non-Affiliate investors; (m) any transaction that constitutes a Permitted Real Estate Transfer; and (n) the Incurrence of any Subordinated Shareholder Debt.

Designation of Restricted and Unrestricted Subsidiaries. The Board of Directors of the Issuer may designate any Restricted Subsidiary of the Issuer to be an Unrestricted Subsidiary; provided that: (a) any Guarantee by the Issuer or any Restricted Subsidiary thereof of any Debt of the Subsidiary being so designated will be deemed to be an Incurrence of Debt by the Issuer or such Restricted Subsidiary (or both, if applicable) at the time of such designation, and such Incurrence of Debt would be permitted under the covenant described above under the captions ‘‘— Limitation on Debt’’ and ‘‘— Limitation on Liens’’; (b) the aggregate Fair Market Value of all outstanding Investments owned by the Issuer and the Restricted Subsidiaries in the Subsidiary being so designated (including any Guarantee by the Issuer or any Restricted Subsidiary of any Debt of such Subsidiary) will be deemed to be a Restricted Payment made as of the time of such designation and that such Investment is a Permitted Investment or would be permitted under the covenant described above under the caption ‘‘— Limitation on Restricted Payments;’’ (c) such Subsidiary does not hold any Liens on any Property of the Issuer or any Restricted Subsidiary other than as permitted following such designation under the covenant described above under the caption ‘‘— Limitation on Liens’’; (d) the Subsidiary being so designated is a Person with respect to which neither the Issuer nor any of its Restricted Subsidiaries has any direct or indirect obligation (i) to subscribe for additional Capital Stock or (ii) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and (e) no Default or Event of Default would result from such designation. Any designation of a Restricted Subsidiary of the Issuer as an Unrestricted Subsidiary will be evidenced to the Trustee by filing with the Trustee the Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions and was permitted by the Indenture. The Board of Directors of the Issuer may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that: (a) such designation will be deemed to be an Incurrence of Debt by a Restricted Subsidiary of the Issuer of any outstanding Debt of such Unrestricted Subsidiary and such designation will only be permitted if such Debt is permitted under the covenant described under the caption ‘‘— Limitation on Debt;’’ (b) all outstanding Investments owned by such Unrestricted Subsidiary will be deemed to be made as of the time of such designation and such designation will only be permitted if such Investments would be permitted under the covenant described above under the caption ‘‘— Limitation on Restricted Payments;’’ (c) all Liens upon property or assets of such Unrestricted Subsidiary existing at the time of such designation would be permitted under the caption ‘‘— Limitation on Liens;’’ and (d) no Default or Event of Default would be in existence following such designation.

Limitation on Guarantees. The Issuer shall not permit any Restricted Subsidiary to, directly or indirectly, Guarantee any Debt of the Issuer or any of its Restricted Subsidiaries (other than Debt which is (or will contemporaneously with the giving of such Guarantee become) Primary Senior

176 Debt permitted to be Incurred under the captions ‘‘— Limitation on Debt’’ and ‘‘— Limitation on Primary Senior Debt’’), unless such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to the Indenture providing for a Guarantee by it of the payment of the Notes. If the Guaranteed Debt is a Subordinated Obligation, the Guarantee of such Guaranteed Debt must be subordinated in right of payment to the Guarantee given pursuant to this covenant to at least the extent that the Guaranteed Debt is subordinated to the Notes. Upon the execution and delivery of such supplemental indenture, such Restricted Subsidiary shall become a Subsidiary Guarantor. Each Subsidiary Guarantee created for the benefit of the holders of the Notes pursuant to this covenant will be provided to the fullest extent permitted by applicable law. Notwithstanding the foregoing, the Issuer shall not be obligated to cause such Restricted Subsidiary to Guarantee the Notes pursuant to this covenant to the extent that such Guarantee by such Restricted Subsidiary would reasonably be expected to give rise to or result in (i) a violation of applicable law which cannot be prevented or otherwise avoided through measures reasonably available to the Issuer or the Restricted Subsidiary or (ii) any personal liability for the officers, directors or shareholders of such Restricted Subsidiary. Notwithstanding the foregoing, the Subsidiary Guarantees will be subject to automatic and unconditional release: (1) upon the full and final payment and performance of all Obligations of the Issuer under the Indenture and the Notes; (2) if the Issuer exercises its legal defeasance option or covenant defeasance option as described under ‘‘— Defeasance’’ or if its obligations under the Indenture are satisfied and discharged as described under ‘‘Satisfaction and Discharge’’; (3) upon a release of the guarantee or Debt that resulted in the creation of the Subsidiary Guarantee under the covenant described under the caption ‘‘— Certain Covenants — Limitation on Guarantees’’; (4) in connection with any sale or other disposition of all or substantially all of the assets of that Subsidiary Guarantor (including by way of merger, consolidation, amalgamation or combination) to a Person that is not (either before or after giving effect to such transaction) the Issuer or a Restricted Subsidiary, if the sale or other disposition does not violate the ‘‘Asset Sale’’ or ‘‘Merger, Consolidation or Sale of Assets’’ provisions of the Indenture; (5) in connection with any sale or other disposition of Capital Stock of that Subsidiary Guarantor to a Person that is not (either before or after giving effect to such transaction) the Issuer or a Restricted Subsidiary, if the sale or other disposition does not violate the ‘‘Asset Sale’’ or ‘‘Merger, Consolidation or Sale of Assets’’ provisions of the Indenture and the Subsidiary Guarantor ceases to be a Restricted Subsidiary of the Issuer as a result of the sale or other disposition; (6) upon defeasance or satisfaction and discharge of the Indenture as provided below under the captions ‘‘— Defeasance’’ and ‘‘— Satisfaction and Discharge’’; (7) if the Issuer designates any Restricted Subsidiary that is a Subsidiary Guarantor to be an Unrestricted Subsidiary in accordance with the terms of the Indenture; or (8) as described under the caption ‘‘— Amendments, Waivers’’. In the event that a Subsidiary Guarantor enters into a Subsidiary Guarantee or a Subsidiary Guarantor is released from its obligations under a Subsidiary Guarantee at a time when the Notes are listed on the Global Exchange Market, the Issuer will, to the extent required by the guidelines of the Irish Stock Exchange, publish notice of such Subsidiary Guarantee or release in the manner specified in such guidelines.

Limitation on Business Activities. The Issuer shall not and shall not permit any Restricted Subsidiary to, engage in any type of business other than the Permitted Business.

177 Intercreditor Agreements; Amendments to Intercreditor Agreements. (a) If, after the Issue Date, the Notes obtain the benefit of a Lien created pursuant to the covenant described under ‘‘— Certain Covenants — Limitation on Liens’’ or a guarantee by a Subsidiary Guarantor pursuant to the covenant described under ‘‘— Certain Covenants — Limitation on Guarantees’’ as a result of a Lien or Guarantee having been given in respect of another Debt, the Issuer, any relevant Restricted Subsidiary and, without the consent of Holders, the Trustee shall enter into an intercreditor agreement (an ‘‘Intercreditor Agreement’’) with the holders of such Debt (or their duly authorized agents), providing for the relative ranking of the Notes to other Debt of the Issuer and the Restricted Subsidiaries with respect to Liens and Guarantees and related provisions restricting enforcement action and payments in connection with defaults and insolvency proceedings. Any such Intercreditor Agreement may include subordination provisions and contractual restrictions customarily applicable in intercreditor arrangements where Liens or Guarantees are junior or second ranking to Liens and Guarantees of other creditors. Such entry into an Intercreditor Agreement may be made by accession to an existing intercreditor agreement to which the Issuer and its relevant Restricted Subsidiaries are party or one or more new intercreditor agreements. (b) At the direction of the Issuer and without the consent of Holders of the Notes, the Trustee shall from time to time enter into one or more amendments to an Intercreditor Agreement to: (i) cure any ambiguity, omission, defect or inconsistency or reflect changes of minor, technical or administrative nature in such Intercreditor Agreement, (ii) increase the amount of Debt of the types covered by such Intercreditor Agreement that may be Incurred by the Issuer or a Subsidiary Guarantor that is subject to such Intercreditor Agreement (including the addition of provisions relating to new Debt ranking junior in right of payment to the Notes), (iii) add Subsidiary Guarantors to such Intercreditor Agreement or (iv) make any other such change to such Intercreditor Agreement that does not adversely affect the holders of Notes in any material respect, provided, in each case, that the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee under the Indenture or such Intercreditor Agreement. In signing such amendment, the Trustee shall be entitled to receive indemnity and/or security satisfactory to it and to receive, and (subject to the Trustee satisfying its obligations under the Indenture) shall be fully protected in relying upon, an Officer’s Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by the Indenture and such Intercreditor Agreement. (c) The Indenture will provide that each holder of a Note, by accepting such Note, will be deemed to have agreed to, accepted the terms and conditions of, and to have directed the Trustee and the Security Agent to enter into, any Intercreditor Agreement and any amendment, restatement or other modification referred to in the preceding paragraphs (whether then entered into or entered into in the future pursuant to the provisions described herein) and the Trustee or the Security Agent will not be required to seek the consent of any holders of Notes to perform its obligations under and in accordance with this covenant.

Listing. The Issuer will use its commercially reasonable efforts to cause the Notes to be listed on the Official List of the Irish Stock Exchange and to be admitted to trading on the Global Exchange Market (or, failing the approval of such listing, it will use its commercially reasonable efforts to cause the Notes to be listed on another stock exchange) as soon as practicable and in any event prior to the first Interest Payment Date and to cause the Notes to remain so listed for so long as any of the Notes are outstanding.

Merger, Consolidation and Sale of Property The Issuer shall not merge, consolidate or amalgamate with or into any other Person or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all of its Property in any one transaction or series of related transactions unless: (a) the Issuer is the Surviving Person or the Surviving Person (if other than the Issuer) formed by such merger, consolidation or amalgamation or to which such sale, transfer, assignment, lease, conveyance or disposition is made shall be a corporation organized

178 and existing under the laws of the United States of America or a State thereof or the District of Columbia, Switzerland or any European Union Member State; (b) the Surviving Person (if other than the Issuer) expressly assumes, by supplemental indenture in form reasonably satisfactory to the Trustee, executed and delivered to the Trustee by such Surviving Person, the due and punctual performance and observance of all the obligations of the Issuer under the Indenture to be performed by the Issuer; (c) immediately after giving effect to such transaction or series of transactions, no Default or Event of Default shall have occurred and be continuing, and any Liens created pursuant to the covenant described under ‘‘— Certain Covenants — Limitation on Liens’’ shall remain in full force and effect, or, to the satisfaction of the Trustee, shall have been transferred to such Surviving Person and have been perfected and be in full force and effect, unless immediately after giving effect to such transaction or series of transactions the other Debt secured by Liens giving rise to such Liens so created is no longer secured by Liens; (d) immediately after giving effect to such transaction or series of transactions on a pro forma basis, either (i) at least e1.00 of additional Debt would be able to be Incurred under clause (1) of the first paragraph of the covenant described under ‘‘— Certain Covenants — Limitation on Debt’’ or (ii) the Consolidated Interest Coverage Ratio of the Issuer is not less than immediately prior to giving effect to such transaction or series of transactions; and (e) the Issuer shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers’ Certificate and an Opinion of Counsel, each stating that such transaction or series of transactions and the supplemental indenture, if any, in respect thereto comply with this covenant and that all conditions precedent herein provided for relating to such transaction or series of transactions have been satisfied; and that (i) the supplemental indenture, the Indenture, any Intercreditor Agreement and the Notes are legal, valid and binding obligations of the Surviving Person (if other than the Issuer) enforceable (subject to customary exceptions and exclusions) in accordance with their terms and each Subsidiary Guarantee remains a legal, valid and binding obligation of the relevant Subsidiary Guarantor enforceable (subject to customary exceptions and exclusions) in accordance with its terms, provided that in giving an Opinion of Counsel, counsel may rely on an Officers’ Certificate as to any matters of fact. The Surviving Person shall succeed to, and be substituted for, and may exercise every right and power of the Issuer under the Indenture, but the Issuer, in the case of a lease shall not be released from any of the obligations or covenants under the Indenture. The Issuer shall not permit any Subsidiary Guarantor to merge, consolidate or amalgamate with or into, or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all of its Property to, any other Person (other than to the Issuer or another Subsidiary Guarantor) in any one transaction or series of related transactions unless: (a) such Subsidiary Guarantor is the Surviving Person or the Surviving Person (if other than such Subsidiary Guarantor) formed by such merger, consolidation or amalgamation or to which such sale, transfer, assignment, lease, conveyance or disposition is made shall be a corporation organized and existing under the laws of the United States of America or a State thereof or the District of Columbia, Switzerland or any European Union Member State; (b) the Surviving Person (if other than such Subsidiary Guarantor) expressly assumes, by supplemental indenture in form reasonably satisfactory to the Trustee, executed and delivered to the Trustee by such Surviving Person, the due and punctual performance and observance of all the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee of the Notes and the Indenture; (c) immediately after giving effect to such transaction or series of transactions, no Default or Event of Default shall have occurred and be continuing, and any Liens created pursuant to the covenant described under ‘‘— Certain Covenants — Limitation on Liens’’ shall remain in full force and effect, or, to the satisfaction of the Trustee, shall have been

179 transferred to such Surviving Person and have been perfected and be in full force and effect, unless immediately after giving effect to such transaction or series of transactions the other Debt secured by Liens giving rise to such Liens so created is no longer secured by Liens; (d) immediately after giving effect to such transaction or series of transactions on a pro forma basis, either (i) at least e1.00 of additional Debt would be able to be Incurred under clause (1) of the first paragraph of the covenant described under ‘‘— Certain Covenants — Limitation on Debt’’ or (ii) the Consolidated Interest Coverage Ratio of the Issuer is not less than immediately prior to giving effect to such transaction or series of transactions; and (e) the Issuer shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers’ Certificate and an Opinion of Counsel, each stating that such transaction or series of transactions and the supplemental indenture, if any, in respect thereto comply with this covenant and that all conditions precedent herein provided for relating to such transaction or series of transactions have been satisfied; and that the supplemental indenture, the Indenture and the Subsidiary Guarantee are legal, valid and binding obligations of the Surviving Person (if other than such Subsidiary Guarantor) enforceable (subject to customary exceptions and exclusions) in accordance with their terms, provided that in giving an Opinion of Counsel, counsel may rely on an Officers’ Certificate as to any matters of fact. The provisions set forth in this covenant shall not restrict (and shall not apply to) any Restricted Subsidiary that is not a Subsidiary Guarantor from consolidating with, merging or liquidating into or transferring all or substantially all or part of its properties and assets to the Issuer, a Subsidiary Guarantor or any other Restricted Subsidiary that is not a Subsidiary Guarantor. In addition, the provisions set forth in clause (c) and (d) of the first and third paragraphs of this covenant shall not apply to (i) any merger, consolidation or sale, assignment, transfer, conveyance or other disposition of assets in which the Issuer merges into, consolidates with, or sells, assigns, transfers, conveys or disposes all or part of its assets to any Subsidiary Guarantor and (ii) the Issuer or any Guarantor consolidating into or merging or combining with an Affiliate incorporated or organized for the sole purpose of changing the legal domicile of such entity, reincorporating such entity in another jurisdiction, or changing the legal form of such entity. Although there is a limited body of case law interpreting the phrase ‘‘substantially all,’’ under New York law, which governs the Indenture, there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve ‘‘all or substantially all’’ of the property or assets of a Person.

Payments for Consents The Issuer will not, and will not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid or is paid to all holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Reports The Issuer will furnish to the Trustee and, upon request, to beneficial owners of, and prospective investors in, the Notes, a copy of all of the following information and reports: 1. within 120 days after the end of the Issuer’s fiscal year, annual reports containing, to the extent applicable, the following information: (i) audited consolidated balance sheets of the Issuer as of the end of the two most recent fiscal years and audited consolidated income statements and statements of cash flow of the Issuer for the two most recent fiscal years, including footnotes to such financial statements as required by IFRS and the report of the independent auditors on the financial statements; (ii) pro forma income statement and balance sheet information of the Issuer together with explanatory

180 footnotes, for any significant acquisitions or dispositions or material recapitalizations that have occurred since the beginning of the most recently completed fiscal year unless pro forma information has been provided in a previous report pursuant to clause (2) or (3) below; (iii) an operating and financial review of the audited financial statements, including a discussion of the results of operations, financial condition, and liquidity and capital resources of the consolidated Issuer Restricted Subsidiaries, and a discussion of material commitments and contingencies and critical accounting policies; (iv) a description of the business, management and shareholders of the Issuer, all material affiliate transactions and a description of all material contractual arrangements, including material debt instruments; (v) a description of material risk factors and material recent developments; (vi) earnings before interest, taxes, depreciation and amortization (‘‘EBITDA’’); and (vii) capital expenditures, provided that any reports delivered to other holders of Public Debt of the Issuer or its Restricted Subsidiary shall also be delivered to holders of the Notes; 2. within 60 days following the end of the first three fiscal quarters in each fiscal year of the Issuer, quarterly financial statements of the Issuer containing the following information: (i) an unaudited condensed consolidated balance sheet as of the end of such quarter and unaudited condensed statements of income and cash flow for the most recent quarter and year-to-date periods ending on the unaudited condensed balance sheet date, and the comparable prior year period together with condensed footnote disclosure; (ii) an operating and financial review of the unaudited financial statements, including a discussion of the results of operations, financial condition, EBITDA and liquidity and capital resources of the Issuer, and a discussion of material commitments and contingencies and critical accounting policies; and (iii) material recent developments; and 3. promptly after the occurrence of any material acquisition, disposition or restructuring of the Issuer and its Restricted Subsidiaries, taken as a whole, or the release of any Subsidiary Guarantee, or the release of any material portion of any Lien created pursuant to the covenant described under ‘‘— Certain Covenants — Limitation on Liens’’, or any senior executive officer changes at the Issuer or change in auditors of the Issuer or any other material event that the Issuer or any of its Restricted Subsidiaries announces publicly, a report containing a description of such event. If the Issuer has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by this covenant will include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations,’’ of the financial condition and results of operations of the Issuer and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Issuer. The Issuer will: (a) hold a quarterly conference call to discuss the information contained in the annual and quarterly reports required under clause (1) of the first paragraph of this covenant (the ‘‘Financial Reports’’) not later than 15 business days from the time the Issuer furnishes such reports to the Trustee; (b) no fewer than three business days prior to the date of the conference call required to be held in accordance with clause (1) above, issue a press release to the appropriate news wire services announcing the time and date of such conference call and directing the beneficial owners of, and prospective investors in, the Notes and securities analysts to contact an individual at the Issuer (for whom contact information shall be provided in such press release) to obtain the Financial Reports and information on how to access such conference call; and (c) maintain either a public or non-public website to which beneficial owners of, and prospective investors in, the Notes and securities analysts are given access and to which the reports required by this covenant are posted along with, as applicable, details on the time and date of the conference call required by clause (1) of this paragraph and information on how to access that conference call.

181 In addition, as long as the Notes remain outstanding and during any period in which the Issuer is neither subject to Section 13 or 15(d) of the Exchange Act nor exempt from registration pursuant to Rule 12g3-2(b) therewith, the Issuer shall furnish to the holders of the Notes and to securities analysts and prospective investors, upon their request, any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the Notes are not freely transferable under the Securities Act by persons who are not ‘‘affiliates’’ under the Securities Act. The Issuer shall be entitled to require certification as to a person’s bona fide status as a beneficial owner, prospective investor or securities analyst, as applicable, prior to distributing to such person the reports and other information to be provided by the Issuer.

Events of Default Events of Default in respect of the Notes include: 1. failure to make the payment of any interest on the Notes when the same becomes due and payable, and such failure continues for a period of 30 days; 2. failure to make the payment of any principal of, or premium, if any, on, any of the Notes when the same becomes due and payable at its Stated Maturity, upon acceleration, optional redemption, required repurchase or otherwise; 3. failure to comply with the covenant described under ‘‘— Merger, Consolidation and Sale of Property’’ or to make or consummate a Change of Control Offer or Prepayment Offer in accordance with the provisions described under ‘‘— Repurchase at the Option of Holders Upon a Change of Control’’ and ‘‘— Certain Covenants — Limitation on Asset Sales’’, respectively; 4. failure to comply with any other covenant or agreement in the Notes or the Indenture (other than a failure that is the subject of the foregoing clause (1), (2) or (3)), and such failure continues for 60 days after written notice is given to the Issuer as provided below; 5. a default under any Debt by the Issuer or any Restricted Subsidiary that results in acceleration of the maturity of such Debt, or failure to pay any such Debt at final maturity prior to the expiration of the grace period provided in such Debt, in an aggregate amount greater than e25.0 million or its foreign currency equivalent at the time (the ‘‘cross acceleration provisions’’); 6. any final judgment or judgments for the payment of money in an aggregate amount in excess of e25.0 million (or its foreign currency equivalent at the time), to the extent such judgments are not paid or covered by insurance provided by a reputable carrier that has the ability to perform and has acknowledged coverage in writing, that shall be rendered against the Issuer or any Restricted Subsidiary and that shall not be waived, satisfied, stayed or discharged for any period of 60 consecutive days after the date on which the right to appeal has expired (the ‘‘judgment default provisions’’); 7. (A) any Subsidiary Guarantee of a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms thereof or of the Indenture) for a continuous period of 21 days or any such Subsidiary Guarantor denies or disaffirms its obligations under its Guarantee; or (B) any Lien created pursuant to the covenant described under ‘‘— Certain Covenants — Limitation on Liens’’ over collateral with a Fair Market Value in excess of e25.0 million (or its foreign currency equivalent at the time) shall, at any time, cease to be in full force and effect for any reason (other than in accordance with the terms thereof or of the Indenture or of any applicable Intercreditor Agreement and other than by reason of the satisfaction in full of all obligations under the Indenture) and such failure to be in full force and effect shall have continued uncured for a period of 21 days or any of the Issuer or any Restricted Subsidiary shall assert, in any pleading in any court of competent jurisdiction, that any Lien is invalid or unenforceable; and 8. certain events involving bankruptcy, insolvency or reorganization of the Issuer or any Significant Subsidiary (or any group of Restricted Subsidiaries that together would constitute a Significant Subsidiary) (the ‘‘bankruptcy provisions’’).

182 A Default under clause (4) is not an Event of Default until the Trustee or the holders of not less than 25% in aggregate principal amount of the Notes then outstanding notify the Issuer of the Default and the Issuer does not cure (or cause the Restricted Subsidiaries to cure) such Default within the time specified after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a ‘‘Notice of Default.’’ The Issuer shall deliver to the Trustee, within 15 days after the occurrence thereof, written notice in the form of an Officers’ Certificate of any event that with the giving of notice or the lapse of time or both would become an Event of Default and its status. If an Event of Default with respect to the Notes or the Subsidiary Guarantees (other than an Event of Default resulting from the bankruptcy provisions) shall have occurred and be continuing, the Trustee or the registered holders of not less than 25% in aggregate principal amount of the Notes then outstanding may declare to be immediately due and payable the principal amount of all the Notes then outstanding, plus accrued but unpaid interest to the date of acceleration. In case an Event of Default resulting from the bankruptcy provisions shall occur, such amount with respect to all the Notes shall be due and payable immediately without any declaration or other act on the part of the Trustee or the holders of the Notes. After any such acceleration, the Trustee or the registered holders of not less than 25% in aggregate principal amount of the Notes then outstanding may provide the direction contemplated by the covenant described in clause (d)(4)(iv) described under the caption ‘‘Certain Covenants — Limitation on Debt’’. In the event of an Event of Default arising from cross acceleration provisions, such cross acceleration shall be annulled automatically if the default or failure to make the payment resulting in an Event of Default shall be remedied, cured or waived within 10 days after the declaration of acceleration of the Notes with respect thereto. After any such acceleration, but before a judgment or decree based on acceleration is obtained by the Trustee, the registered holders of at least a majority in aggregate principal amount of the Notes then outstanding may, under certain circumstances, rescind and annul such acceleration if all Events of Default, other than the nonpayment of accelerated principal, premium or interest, have been cured or waived as provided in the Indenture. Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default shall occur and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the holders of the Notes, unless such holders shall have offered to the Trustee indemnity and/or security satisfactory to it. Subject to such provisions for the indemnification and/or securing of the Trustee, the holders of at least a majority in aggregate principal amount of the Notes then outstanding will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Notes. No holder of Notes will have any right to institute any proceeding with respect to the Indenture, or for the appointment of a receiver or trustee, or for any remedy thereunder, unless: (a) such holder has previously given to the Trustee written notice of a continuing Event of Default; (b) the registered holders of at least 25% in aggregate principal amount of the Notes then outstanding have made a written request and offered indemnity and/or security satisfactory to the Trustee to institute such proceeding as Trustee; and (c) the Trustee shall not have received from the registered holders of at least a majority in aggregate principal amount of the Notes then outstanding a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days. However, such limitations do not apply to a suit instituted by a holder of any Note for enforcement of payment of the principal of, and premium, if any, or interest on, such Note on or after the respective due dates expressed in such Note.

Amendments and Waivers Except as provided in the next two succeeding paragraphs, the Issuer and the Trustee with the consent of the holders of at least a majority in aggregate principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for the

183 Notes) may amend the Indenture, the Notes or any Subsidiary Guarantees and the holders of at least a majority in aggregate principal amount of the Notes outstanding may waive any past default or compliance with any provisions of the Indenture, the Notes or any Subsidiary Guarantees. Without the consent of the holders of at least 90% of the aggregate principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes) no amendment or waiver may: 1. reduce the principal amount of Notes whose holders must consent to an amendment or waiver; 2. reduce the rate of, or extend the time for payment of, interest on any Note; 3. reduce the principal of, or extend the Stated Maturity of, any Note; 4. make any Note payable in money other than that stated in the Note; 5. impair the right of any holder of the Notes to receive payment of principal of, premium, if any, and interest, on, such holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder’s Notes; 6. reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed, as described under ‘‘— Optional Redemption;’’ 7. at any time after a Change of Control has occurred, reduce the premium payable upon a Change of Control or change the time at which the Change of Control Offer relating thereto must be made or at which the Notes must be repurchased pursuant to such Change of Control Offer; 8. at any time after the Issuer is obligated to make a Prepayment Offer with the Excess Proceeds from Asset Sales, change the time at which such Prepayment Offer must be made or at which the Notes must be repurchased pursuant thereto; 9. modify or change any provision of the Indenture affecting the ranking of the Notes or any Subsidiary Guarantee in a manner adverse to the holders of the Notes; 10. make any change in the covenants described under the caption ‘‘— Certain Covenants — Intercreditor Agreements; Amendments to Intercreditor Agreements’’, the provision regarding the automatic and unconditional release of Subsidiary Guarantors described under the caption ‘‘— Certain Covenants — Limitation on Guarantees’’; 11. release any Lien granted for the benefit of holders of the Notes, except in accordance with the terms of the Indenture or any applicable Intercreditor Agreement; or 12. make any change in the preceding amendment or waiver provisions. The Indenture and the Notes may be amended by the Issuer and the Trustee without the consent of any holder of the Notes to: (a) cure any ambiguity, omission, mistakes, defect or inconsistency; (b) provide for the assumption by a Surviving Person of the obligations of the Issuer under the Indenture, or a Subsidiary Guarantor under its Subsidiary Guarantee; (c) add Guarantees with respect to the Notes or confirm and evidence the release, termination or discharge of any security or Guarantee when such release, termination or discharge is permitted by the Indenture; (d) secure the Notes or any Subsidiary Guarantee, add to the covenants of the Issuer or any Subsidiary Guarantor or provide any additional rights or benefits for the benefit of the holders of the Notes or surrender any right or power conferred upon the Issuer or any Subsidiary Guarantor or confirm and evidence the release, termination or discharge of any security when such release, termination or discharge is permitted by the Indenture; (e) make any change that does not adversely affect the rights of any holder of the Notes; (f) provide for certificated Notes in addition to, or in place of, uncertificated Notes; (g) provide for the issuance of Additional Notes in accordance with the Indenture;

184 (h) to evidence and provide for the acceptance of appointment by a successor Trustee; or (i) enter into any amendments or supplements to any Intercreditor Agreement, or any security document that is not prohibited by the terms of the Indenture and any Intercreditor Agreement, as applicable. The consent of the holders of the Notes is not necessary to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. In formulating its opinion on any of the matters in the preceding paragraphs, the Trustee shall be entitled to rely absolutely on such evidence as it deems appropriate, including an Opinion of Counsel and an Officers’ Certificate.

Defeasance The Issuer at any time may terminate all of its obligations under the Notes and the Indenture (‘‘legal defeasance’’), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain a registrar and paying agent in respect of the Notes. The Issuer at any time may terminate: 1. its obligations under the covenants described under ‘‘— Repurchase at the Option of Holders Upon a Change of Control,’’ ‘‘— Certain Covenants’’ and ‘‘— Reports’’ (and thereafter any omission to comply with these covenants will not constitute a Default or Event of Default with respect to the Notes); 2. the operation of the cross acceleration provisions, the judgment default provisions and the bankruptcy provisions with respect to Significant Subsidiaries described under ‘‘— Events of Default’’ above; and 3. the limitations contained in clause (d) under the first paragraph of ‘‘— Merger, Consolidation and Sale of Property’’ above (‘‘covenant defeasance’’). The Issuer may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Issuer exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. If the Issuer exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in clause (4) (with respect to the covenants described under ‘‘— Certain Covenants’’, ‘‘— Payments for Consents’’ or ‘‘— Reports’’), (5), (6) or (7) (with respect only to Significant Subsidiaries) under ‘‘— Events of Default’’ above or because of the failure to comply with clause (d) under the first paragraph of ‘‘— Merger, Consolidation and Sale of Property’’ above. The legal defeasance option or the covenant defeasance option may be exercised only if: (a) the Issuer irrevocably deposits in trust with the Trustee (or such entity designated by the Trustee for this purpose) euro or euro-denominated European Government Obligations, or a combination thereof, for the payment of principal of, premium, if any, and interest on the Notes to maturity or redemption, as the case may be; (b) the Issuer delivers to the Trustee a certificate from an internationally recognized investment bank, appraisal firm or firm of independent certified public accountants expressing their opinion that the payments of principal, premium, if any, and interest when due and without reinvestment will provide cash at such times and in such amounts as will be sufficient to pay principal, premium, if any, and interest when due on all the Notes to be defeased to maturity or redemption, as the case may be; (c) 121 days pass after the deposit is made, and during the 121 day period, no Default described in clause (7) under ‘‘— Events of Default’’ occurs with respect to the Issuer or any other Person making such deposit which is continuing at the end of the period; (d) no Default or Event of Default has occurred and is continuing on the date of such deposit and after giving effect thereto;

185 (e) such deposit does not constitute a default under any other material agreement or instrument binding on the Issuer or any of its Restricted Subsidiaries; (f) in the case of the legal defeasance option, the Issuer delivers to the Trustee an Opinion of Counsel stating that: (1) the Issuer has received from the United States Internal Revenue Service a ruling, or (2) since the date of the Indenture there has been a change in the applicable U.S. Federal income tax law, in either case, to the effect that, and based thereon such Opinion of Counsel shall confirm that, the holders of the Notes will not recognize income, gain or loss for U.S. Federal income tax purposes as a result of such defeasance and will be subject to U.S. Federal income tax on the same amounts, in the same manner and at the same time as would have been the case if such defeasance has not occurred; (g) in the case of the covenant defeasance option, the Issuer delivers to the Trustee an Opinion of Counsel to the effect that the holders of the Notes will not recognize income, gain or loss for U.S. Federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and (h) the Issuer delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Notes have been complied with as required by the Indenture.

Satisfaction and Discharge The Indenture will be discharged and will cease to be of further effect as to all Notes issued thereunder, when: (a) either: (1) all Notes that have been authenticated (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Issuer) have been delivered to the Trustee for cancellation; or (2) all Notes that have not been delivered to the Trustee for cancellation are to be called for redemption within one year and an irrevocable notice of redemption with respect thereto has been deposited with the Trustee or will become due and payable within one year and the Issuer has irrevocably deposited or caused to be deposited with the Trustee (or such entity designated by the Trustee for this purpose) as trust funds in trust solely for the benefit of the holders, cash in euro or euro-denominated European Government Obligations, or a combination thereof in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption; (b) no Default or Event of Default will have occurred and be continuing on the date of such deposit or will occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Issuer is a party or by which the Issuer is bound; (c) the Issuer has paid or caused to be paid all sums payable by it under the Indenture; and (d) the Issuer has delivered irrevocable instructions to the Trustee under the Indenture to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be.

186 In addition, the Issuer must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

No Personal Liability of Directors, Officers, Employees and Shareholders No director, officer, employee, incorporator, shareholder, member, manager or partner of the Issuer, as such, will have any liability for any obligations of the Issuer under the Notes, the Indenture, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

Governing Law The Indenture and the Notes and any Subsidiary Guarantees will be governed by the laws of the State of New York.

The Trustee Deutsche Trustee Company Limited will be the Trustee under the Indenture. Except during the continuance of an Event of Default, the Trustee will perform only such duties as are specifically set forth in the Indenture. During the existence of an Event of Default, the Trustee will exercise such of the rights and powers vested in it under the Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise under the circumstances in the conduct of such person’s own affairs.

Unclaimed Money, Prescription If money deposited with the Trustee or any paying agent for the payment of principal of, premium, if any, or interest on, the Notes remains unclaimed for two years, the Trustee and such paying agent shall return the money to the Issuer at its written request. After that, holders of Notes entitled to the money must look to the Issuer for payment unless applicable abandoned property law designates another person and all liability of the Trustee and such paying agent shall cease. Other than as set forth in this paragraph, the Indenture will not provide for any prescription period for the payment of principal of, premium, if any or interest on, the Notes.

Certain Definitions Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all such terms as well as any other capitalized terms used herein for which no definition is provided. Unless the context otherwise requires, an accounting term not otherwise defined has the meaning assigned to it in accordance with IFRS. ‘‘2015 Notes’’ means the 7.375% Senior Secured Notes due 2015 of the Issuer issued under an Indenture dated as of May 18, 2007 (as amended), among the Issuer, those certain subsidiaries of the Issuer as Subsidiary Guarantors and, among others, Deutsche Trustee Company Limited, as Trustee. ‘‘2018 Notes’’ means the 7.875% Senior Secured Notes due 2018 of the Issuer issued under an Indenture dated as of April 27, 2010 (as amended), among the Issuer, those certain subsidiaries of the Issuer as Subsidiary Guarantors and, among others, Deutsche Trustee Company Limited, as Trustee. ‘‘2018 Notes Indenture’’ means the Indenture governing the 2018 Notes. ‘‘2018 Notes Issue Date’’ means April 27, 2010. ‘‘Additional Assets’’ means (1) non-current assets that will be used or useful in a Permitted Business or (2) substantially all the assets of a Permitted Business or Capital Stock of any Person engaged in a Permitted Business that will become a Restricted Subsidiary of the Issuer within 30 days of such acquisition.

187 ‘‘Adjusted EBITDA’’ of the Issuer means, for any period, an amount equal to, for the Issuer and its consolidated Restricted Subsidiaries: (a) the sum of Consolidated Net Income for such period, plus the following to the extent reducing Consolidated Net Income for such period: (1) the provision for taxes based on income or profits or utilized in computing net loss; plus (2) Consolidated Interest Expense; plus (3) depreciation and depletion; plus (4) amortization of intangibles; plus (5) any other non-cash items, including without limitation write- downs and impairment of property, plant, equipment and intangibles and other long-lived assets and the impact of purchase accounting, but excluding any such non-cash item to the extent that it represents an accrual of, or reserve for, cash expenditures in any future period (other than Subordinated Shareholder Debt); plus (6) accruals of medical liabilities and retirement obligations, to the extent such liabilities or obligations are required under IFRS, net of cash payments for such liabilities and obligations; plus (7) the amount of any extraordinary, unusual or non-recurring restructuring charges (which, for avoidance of doubt, shall include retention, severance, systems establishment costs or excess pension, black lung settlement or other excess charges); minus (b) all non-cash items increasing Consolidated Net Income for such period (other than any such non-cash item to the extent that it (x) will result in the receipt of cash payments in any future period or (y) represents the reversal of any accrual, or cash reserve for, anticipated cash expenditures in any prior period where such accrual or reserve is no longer required). ‘‘Affiliate’’ of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, ‘‘control,’’ as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms ‘‘controlling,’’ ‘‘controlled by’’ and ‘‘under common control with’’ have correlative meanings. ‘‘Approved Bank’’ means a commercial bank or a subsidiary thereof organized under the laws of a member state of the European Union or the United States of America and having a combined capital and surplus in excess of e500.0 million and whose long-term debt is rated at least ‘‘A’’ or the equivalent thereof by S&P or the equivalent thereof by Moody’s (or if at the time neither is issuing comparable ratings, then a substantially equivalent rating by at least one ‘‘nationally recognized statistical rating organization’’ as defined in Rule 436 under the U.S. Securities Act. ‘‘Articles of Association’’ means the articles of association of the Issuer as of the Issue Date. ‘‘Asset Sale’’ means any sale, lease, transfer, issuance or other disposition (or series of related sales, leases, transfers, issuances or dispositions) by the Issuer or any of its Restricted Subsidiaries, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a ‘‘disposition’’), of: (a) any shares of Capital Stock of a Subsidiary (other than directors’ qualifying shares); or (b) any other Property of the Issuer or any of its Restricted Subsidiaries outside of the ordinary course of business of the Issuer or such Restricted Subsidiary,

188 other than, in the case of clause (a) or (b) above, (1) any disposition by a Restricted Subsidiary to the Issuer or by the Issuer or its Restricted Subsidiary to a Restricted Subsidiary, or an issuance of Capital Stock by a Restricted Subsidiary of the Issuer to the Issuer or to a Restricted Subsidiary of the Issuer; (2) any disposition that constitutes a Permitted Investment or Restricted Payment permitted by the covenant described under ‘‘— Certain Covenants — Limitation on Restricted Payments;’’ (3) any issuance or disposition of Capital Stock, Debt or other securities of an Unrestricted Subsidiary; (4) any disposition effected in compliance with the first paragraph of the covenant described under ‘‘— Merger, Consolidation and Sale of Property;’’ (5) the sale or other disposition of cash or Cash Equivalents; (6) any sale of assets received by the Issuer or any of its Restricted Subsidiaries from a Person (other than the Issuer or a Restricted Subsidiary) upon its foreclosure of its Lien on the assets of such Person; (7) any single transaction or a series of related transactions for aggregate consideration of less than e3.0 million; (8) the creation of a Lien not prohibited by the Indenture; (9) the sale, lease or other transfer of accounts receivable, inventory, trading stock and general intangibles in the ordinary course of business and without recourse to the Issuer or any Restricted Subsidiary; and the abandonment, sale or other disposition of damaged, worn out or obsolete assets or assets or intellectual property that are, in the reasonable judgment of the Issuer, no longer economically practicable to maintain or useful in the conduct of business of the Issuer and its Restricted Subsidiaries taken as a whole; (10) licenses, sublicenses, subleases, assignments or other disposition by the Issuer or any of its Restricted Subsidiaries of software or intellectual property in the ordinary course of business; (11) any surrender or waiver of contract rights or settlement, release, recovery on or surrender of contract, tort or other claims of any kind (other than claims which relate to an Investment); (12) the disposition of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings other than by way of factoring or similar arrangements or in respect of receivables relating to an Investment; and (13) the foreclosure, condemnation or any similar action with respect to any property or other assets. ‘‘Attributable Debt’’ in respect of a Sale and Leaseback Transaction means, at any date of determination, (a) if such Sale and Leaseback Transaction is a Capital Lease Obligation, the amount of Debt represented thereby according to the definition of ‘‘Capital Lease Obligations;’’ and (b) in all other instances, the present value (discounted at the interest rate implicit in such transaction, determined in accordance with IFRS, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended). ‘‘Average Life’’ means, as of any date of determination, with respect to any Debt or Preferred Stock, the quotient obtained by dividing: (a) the sum of the product of the numbers of years (rounded to the nearest one-twelfth of one year) from the date of determination to the dates of each successive scheduled

189 principal payment of such Debt or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (b) the sum of all such payments. ‘‘Board of Directors’’ means the board of directors, or equivalent, of the Issuer. ‘‘B Shares’’ means the B Shares in the capital of the Issuer as of the Issue Date. ‘‘Capital Lease Obligations’’ means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with IFRS; and the amount of Debt represented by such obligation will be the capitalized amount of such obligation determined in accordance with IFRS; and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. For purposes of ‘‘— Certain Covenants — Limitation on Liens,’’ a Capital Lease Obligation shall be deemed secured by a Lien on the Property being leased. ‘‘Capital Stock’’ means, with respect to any Person, any shares or other equivalents (however designated) of any class of corporate stock or partnership or limited liability company interests or any other participations, rights, warrants, options or other interests in the nature of an equity interest in such Person, including Preferred Stock, but excluding any debt security convertible or exchangeable into such equity interest. ‘‘Capital Stock Sale Proceeds’’ means the aggregate proceeds, including cash and the Fair Market Value of Property (other than cash), received by the Issuer from (1) the issuance or sale (other than to a Subsidiary of the Issuer or an employee stock ownership plan or trust established by the Issuer or any such Subsidiary for the benefit of their employees) by the Issuer of its Capital Stock (other than Disqualified Stock) or Subordinated Shareholder Debt or (2) a contribution to its ordinary equity capital, in each case after the 2018 Notes Issue Date and net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts or commissions and brokerage, consultant and other fees and expenses actually Incurred in connection with such issuance, sale or contribution, as the case may be, and net of taxes paid or payable as a result thereof. ‘‘Cash Equivalents’’ means any of the following: (a) direct obligations of the United States of America or any European Union Member State or any agency thereof or obligations guaranteed by the United States of America, Japan, Norway, Switzerland, Canada or any European Union Member State, or any agency thereof, in each case denominated in the relevant local currency of such jurisdiction and with maturities not exceeding one year from the date of acquisition; (b) certificates of deposit, time deposits and eurodollar time deposits with maturities of 12 months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding 12 months and overnight bank deposits, in each case denominated in the relevant local currency of such jurisdiction, with any commercial bank having capital and surplus in excess of e500.0 million and whose long-term debt is rated at least ‘‘A’’ or the equivalent thereof by S&P or ‘‘A2’’ or the equivalent thereof by Moody’s (or if at the time neither is issuing comparable ratings, then a substantially equivalent rating by at least one ‘‘nationally recognized statistical rating organization’’ (as defined in Rule 436 under the Securities Act)); (c) repurchase obligations with a term of not more than 30 days for underlying securities or the types described in clauses (a) and (b) above entered into with any financial institution meeting the qualifications specified in clause (b) above; (d) commercial paper maturing within 12 months after the date of acquisition and denominated in the relevant local currency of such jurisdiction, issued by a corporation (other than an Affiliate of the Issuer) organized and in existence under the federal or state laws of the United States of America, Japan, Norway, Switzerland, Canada or any European Union Member State, with a rating at the time as of which any Investment therein is made of at least ‘‘A-1’’ from Moody’s or ‘‘P-1’’ from S&P (or if at the time neither is issuing comparable ratings, then a substantially equivalent rating by at least

190 one ‘‘nationally recognized statistical rating organization’’ (as defined in Rule 436 under the Securities Act)); (e) securities with maturities of one year or less from the date of acquisition and denominated in the relevant local currency of such jurisdiction, issued or fully guaranteed by any State, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, Japan, Norway, Switzerland, Canada or any European Union Member State, or any political subdivision thereof, and, in each case, having one of the two highest ratings categories obtainable from S&P or Moody’s (or if at the time neither is issuing comparable ratings, then a substantially equivalent rating by at least one ‘‘nationally recognized statistical rating organization’’ (as defined in Rule 436 under the Securities Act)); and (f) interests in any investment company or money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (e) of this definition. ‘‘Change of Control’’ means the occurrence of any of the following events: (a) any ‘‘person’’ or ‘‘group’’ (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act or any successor provisions to either of the foregoing), including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act, other than a Permitted Holder, becomes the ‘‘beneficial owner’’ (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Issuer (for purposes of this clause (a), such person or group shall be deemed to beneficially own any Voting Stock of a corporation held by any other corporation (the ‘‘parent corporation’’) so long as such person or group beneficially owns, directly or indirectly, in the aggregate at least a majority of the total voting power of the Voting Stock of such parent corporation); or (b) the sale, transfer, assignment, lease, conveyance or other disposition (other than by way of merger or consolidation), directly or indirectly, of all or substantially all the Property of the Issuer and its Restricted Subsidiaries, considered as a whole (other than a disposition of such Property as an entirety or virtually as an entirety to a Restricted Subsidiary of the Issuer or to a Permitted Holder), shall have occurred; or (c) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election or appointment by such Board or whose nomination for election by the shareholders of the Issuer was approved by a vote of not less than a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the Board of Directors then in office; or (d) the adoption of any plan of liquidation or dissolution of the Issuer; or (e) any occurrence similar to the foregoing which results in an obligation on the Issuer or a Restricted Subsidiary to repay or offer to repay the 2015 Notes or the 2018 Notes. ‘‘Commodity Price Protection Agreement’’ means, in respect of a Person, any forward contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in commodity prices. ‘‘Consolidated Interest Coverage Ratio’’ of the Issuer means, as of any date of determination, the ratio of: (a) the aggregate amount of Adjusted EBITDA of the Issuer for the most recent four consecutive fiscal quarters for which financial statements of the Issuer are internally available to

191 (b) Consolidated Interest Expense of the Issuer for such four fiscal quarters; provided, however, that: (1) if (A) since the beginning of such period and on or prior to the date on which the event for which the calculation of the Consolidated Interest Coverage Ratio is made (the ‘‘Calculation Date’’) the Issuer or any Restricted Subsidiary has Incurred any Debt that remains outstanding or Repaid any Debt (other than Debt that constitutes ordinary working capital borrowings); (B) the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is an Incurrence or Repayment of Debt, then Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Incurrence or Repayment as if such Debt was Incurred or Repaid on the first day of such period, provided that, in the event of any such Repayment of Debt, Adjusted EBITDA for such period shall be calculated as if the Issuer or such Restricted Subsidiary had not earned any interest income actually earned during such period in respect of the funds used to Repay such Debt; provided, further, however, that the pro forma calculation of Consolidated Interest Expense shall not give effect to (i) any Debt incurred on the Calculation Date pursuant to one or more of the clauses set forth in the definition of ‘‘Permitted Debt’’ or (ii) the discharge on the Calculation Date of any Debt to the extent that such discharge was made using the proceeds of Debt incurred pursuant to one or more of the clauses set forth in the definition of ‘‘Permitted Debt’’. In addition, for purposes of calculating the Consolidated Interest Coverage Ratio: 1. acquisitions and dispositions of business entities or Property, including increases or decreases in ownership, that have been made by the Issuer or any of the Restricted Subsidiaries, including through mergers or consolidations, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect as if they had occurred on the first day of the four-quarter reference period and Adjusted EBITDA for such reference period will be calculated on a pro forma basis (including, in the case of issuances or sales of Capital Stock (other than Disqualified Stock) governed by the covenant described under ‘‘— Certain Covenants — Limitation on Sale of Capital Stock of Restricted Subsidiaries’’, after giving pro forma effect to the application of the proceeds of such issuance or sale and any such issuance or sale by reducing the Consolidated Net Income of the relevant Restricted Subsidiary by the same proportion as the proportion of the dividends or distributions of such Restricted Subsidiary to which the Capital Stock so issued or sold is entitled), but without giving effect to clause (f) of the proviso set forth in the definition of Consolidated Net Income; 2. the Adjusted EBITDA attributable to discontinued operations, as determined in accordance with IFRS, will be excluded; and 3. the Consolidated Interest Expense attributable to discontinued operations, as determined in accordance with IFRS will be excluded, but only to the extent that the obligations giving rise to such Consolidated Interest Expense will not be obligations of the Issuer or any of the Restricted Subsidiaries following the Calculation Date. For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Debt Incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting officer of the Issuer. If any Debt bears a floating rate of interest and is being given pro forma effect, the interest expense on such Debt shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Debt with a remaining term in excess of 12 months or, if shorter, for a period equal to the remaining term of such Interest Rate Agreement). In the event the Capital Stock of any Restricted Subsidiary of the Issuer is sold during the period, the Issuer shall be deemed, for purposes of clause (1) above, to have Repaid during such period the Debt of such Restricted Subsidiary to the

192 extent neither the Issuer nor its continuing Restricted Subsidiaries is liable for such Debt after such sale. ‘‘Consolidated Interest Expense’’ means, for any period, the total interest expense of the Issuer and its consolidated Restricted Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent Incurred by the Issuer or the Restricted Subsidiaries, the sum of: (a) interest expense attributable to Capital Lease Obligations and the interest portion of rent expense associated with Attributable Debt in respect of the relevant lease giving rise thereto, determined as if such lease were a capitalized lease in accordance with IFRS; (b) amortization of debt discount (but excluding amortization of deferred financing fees or debt issuance cost, commissions, fees and expenses which have been paid); (c) capitalized interest (other than interest on Subordinated Shareholder Debt); (d) non-cash interest expense (other than interest on Subordinated Shareholder Debt and non-cash interest expense attributable to the movement in the mark to market valuation of Hedging Obligations or other derivative instruments); (e) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing; (f) net costs associated with Hedging Obligations (including amortization of fees and discounts); (g) Disqualified Stock Dividends (unless payable to the Issuer or a Restricted Subsidiary); (h) Preferred Stock Dividends (unless payable to the Issuer or a Restricted Subsidiary); (i) interest accruing on any Debt of any other Person to the extent such Debt is Guaranteed by the Issuer or any of its Restricted Subsidiaries or secured by a Lien on Property of the Issuer or any of its Restricted Subsidiaries whether or not such Guarantee or Lien is called upon; and (j) less interest income. ‘‘Consolidated Net Income’’ means, for any period, the net income (loss) of the Issuer and its consolidated Restricted Subsidiaries, determined in accordance with IFRS (and, if not required by IFRS, after minority interests); provided, however, that there shall not be included in such Consolidated Net Income: (a) any net income (loss) of any other Person (other than the Issuer) if such other Person is not a Restricted Subsidiary, except that equity of the Issuer and its consolidated Restricted Subsidiaries in the net income of any such other Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such other Person during such period to the Issuer or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (b) below); (b) solely for the purpose of determining the amount available for Restricted Payments under clause (c)(i) of the first paragraph under the caption ‘‘— Certain Covenants — Limitation on Restricted Payments’’ or Adjusted EBITDA for purposes of determining the Consolidated Interest Coverage Ratio (but not, for the avoidance of doubt, Adjusted EBITDA for other purposes), any net income (loss) of any Restricted Subsidiary (other than any Subsidiary Guarantor) will be excluded if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Issuer (or any Subsidiary Guarantor that holds the Equity Interests of such Restricted Subsidiary, as applicable) by operation of the terms of such Restricted Subsidiary’s charter or any agreement, instrument, judgment, decree, order, statute or governmental rule or regulation applicable to such Restricted Subsidiary or its shareholders (other than (a) restrictions that have been waived or otherwise released and (b) any restriction listed under clauses 1(A), (B), (D), (E), (F), (G) and (I) (but, in relation to clause 1(I), only to the extent that the restrictions in such agreement or instrument are no more restrictive in any material respect than those contained in agreements or instruments of the Issuer or a

193 Restricted Subsidiary as in effect on the Issue Date) of the second paragraph of the covenant described above under the caption ‘‘— Certain Covenants — Limitation on Restrictions on Distributions from Restricted Subsidiaries’’), except that the Issuer’s equity in the net income of any such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash or Cash Equivalents actually distributed by such Restricted Subsidiary during such period to the Issuer or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend to another Restricted Subsidiary (other than any Subsidiary Guarantor), to the limitation contained in this clause); (c) any gain or loss realized upon the sale or other disposition of any Property of the Issuer or any of its consolidated Restricted Subsidiaries (including pursuant to any Sale and Leaseback Transaction) that is not sold or otherwise disposed of in the ordinary course of business; (d) any extraordinary, unusual or non-recurring gains or losses, including, without limitation, any fees, expenses or charges related to any offering of Capital Stock or Debt of the Issuer or a Restricted Subsidiary, acquisition, disposition, recapitalisation or listing permitted under the Indenture but excluding any restructuring or similar charges; (e) any gains or losses associated with a Permitted Real Estate Transfer; (f) the cumulative effect of a change in accounting principles; (g) any non-cash compensation charge or expense realized for grants of performance shares, stock options or other equity-based awards or rights to officers, directors and employees of the Issuer or any Restricted Subsidiary; (h) any unrealized gains or losses in respect of Hedging Obligations or any ineffectiveness recognized in earnings related to qualifying hedge transactions or the fair value or changes therein recognized in earnings for derivatives that do not qualify as hedge transactions; (i) any goodwill or other intangible asset impairment charges; and (j) all deferred financing costs written off to the extent paid in prior periods and premium paid in connection with any early extinguishment of Debt and any net gain or loss from any write-off or forgiveness of Debt Notwithstanding the foregoing, for purposes of the covenant described under ‘‘— Certain Covenants — Limitation on Restricted Payments’’ only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of Property from Unrestricted Subsidiaries to the Issuer or a Restricted Subsidiary to the extent such dividends, repayments or transfers increase the amount of Restricted Payments permitted under such covenant pursuant to clause (c)(4) thereof. ‘‘Currency Exchange Protection Agreement’’ means, in respect of a Person, any spot or forward foreign exchange agreement, currency swap agreement, currency option, futures contract or other similar agreement or arrangement designed to protect such Person against fluctuations in currency exchange rates. ‘‘Debt’’ means, with respect to any Person on any date of determination (without duplication): (a) debt of such Person for money borrowed, and debt evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (b) all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale and Leaseback Transactions entered into by such Person; (c) all obligations of such Person representing the deferred purchase price of Property or services, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement in each case due more than six months after such Property is acquired or such services are completed (but excluding trade accounts payable arising in the ordinary course of business), or, in the case of Property previously acquired, obligations of such Person in respect of such acquisition of Property due more

194 than six months after the date on which the amount due (or any relevant portion thereof) was definitively determined; (d) all obligations of such Person for the reimbursement of any obligor on any letter of credit, bankers’ acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations of such Person entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the thirtieth day following receipt by such Person of a demand for reimbursement following payment on the letter of credit); (e) the amount of all obligations of such Person with respect to the Repayment of any Disqualified Stock (except for any Capital Stock that is subject to mandatory redemption or repurchase by the Issuer, provided that any amount payable in respect of such Capital Stock is only payable if and to the extent such payment would be permitted under clause (c)(2) of ‘‘— Limitation on Restricted Payments’’) and (if such Person is a Restricted Subsidiary of the Issuer) any Preferred Stock (but excluding, in each case, any accrued dividends); (f) all obligations of the type referred to in clauses (a) through (e) above of other Persons for the payment of which such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee; (g) all obligations of the type referred to in clauses (a) through (f) above of other Persons secured by any Lien on any Property of such Person (whether or not such obligation is assumed by such Person); and (h) to the extent not otherwise included in this definition, Hedging Obligations of such Person. Notwithstanding the foregoing, ‘‘Debt’’ shall not include (a) accrued expenses and royalties arising in the ordinary course of business; (b) asset retirement obligations and obligations in respect of reclamation and workers’ compensation that are not overdue by more than 90 days; (c) Subordinated Shareholder Debt; (d) any lease, concession or license of property (or Guarantee thereof) which would be considered an operating lease under IFRS as in effect on the Issue Date; (e) any prepayments or deposits received from clients or customers in the ordinary course of business; and (f) obligations under any license, permit or other approval (or Guarantees given in respect of such obligations) Incurred prior to the Issue Date or in the ordinary course of business. The amount of Debt of any Person at any date shall be determined as set forth above or otherwise provided in the indenture, and (other than with respect to letters of credit, Disqualified Stock, Guarantees, Debt secured by Liens or Capital Leases or Hedging Obligations) shall equal the amount thereof that would appear on a balance sheet of such Person (excluding any notes thereto) prepared on the basis of IFRS, provided however that: 1. in the case of any Disqualified Stock of the specified Person or Preferred Stock of a Restricted Subsidiary, the greater of its voluntary or involuntary maximum repurchase price plus accrued dividends calculated in accordance with the terms of such Disqualified Stock or Preferred Stock as if such Disqualified Stock or Preferred Stock were repurchased on the date on which Debt is required to be determined pursuant to the Indenture; provided that if such Disqualified Stock or Preferred Stock is not then permitted to be repurchased, the greater of the liquidation preference and the book value of such Disqualified Stock or Preferred Stock; 2. in the case of Debt of others secured by a Lien on any Property of the specified Person, the lesser of (A) the fair market value of such Property on the date on which Debt is required to be determined pursuant to the Indenture and (B) the amount of the Debt so secured; 3. in the case of the Guarantee by the specified Person of any Debt of any other Person, the maximum liability to which the specified Person may be subject upon the occurrence of the contingency giving rise to the obligation; and

195 4. in the case of any Hedging Obligations, the net amount payable if such Hedging Obligations were terminated at that time due to default by such Person (after giving effect to any contractually permitted set-off); and provided further that the amount of Debt with a principal amount shall not be less than that principal amount. ‘‘Default’’ means any event which is, or after notice or passage of time or both would be, an Event of Default. ‘‘Disqualified Stock’’ means any Capital Stock of a Person or any of its Restricted Subsidiaries that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, in either case at the option of the holder thereof) or otherwise: (a) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise; (b) is or may become redeemable or repurchaseable at the option of the holder thereof, in whole or in part; or (c) is convertible or exchangeable at the option of the holder thereof for Debt or Disqualified Stock, on or prior to, in the case of clause (a), (b) or (c) 184 days after the Stated Maturity of the Notes. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Issuer to repurchase or redeem such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock. ‘‘Disqualified Stock Dividends’’ of a Person means all dividends with respect to Disqualified Stock of such Person held by Persons other than a Wholly Owned Restricted Subsidiary of such Person. The amount of any such dividend shall be equal to the quotient of such dividend divided by the difference between one and the maximum statutory corporate income tax rate (expressed as a decimal number between 1 and 0) then applicable to such Person. ‘‘Divisional Policy Statements’’ means the divisional policy statements established pursuant to the Articles of Association of the Issuer, as in effect on the Issue Date. ‘‘Equity Offering’’ means any public or private sale of Capital Stock (other than Disqualified Stock) of the Issuer (or of a Parent of the Issuer to the extent the net proceeds therefrom are provided to the Issuer under Subordinated Shareholder Debt or contributed to the equity capital of the Issuer) to any Person except a public or private sale: (a) with respect to equity securities issuable under any employee benefit plan of the Issuer; or (b) to any Subsidiary of the Issuer or a Permitted Holder. ‘‘European Government Obligations’’ means direct obligations (or certificates representing an ownership interest in such obligations) of any country that is a European Union Member State (including any agency or instrumentality thereof) and which are not callable at the issuer’s option. ‘‘European Union Member State’’ means the Czech Republic and any country that was a member of the European Union as of January 1, 2004. ‘‘Event of Default’’ has the meaning set forth under ‘‘— Events of Default.’’ ‘‘Exchange Act’’ means the United States Securities Exchange Act of 1934, as amended. ‘‘Existing Debt’’ means Debt of the Issuer or any Restricted Subsidiary outstanding on the Issue Date (other than Debt described in clause (b), (c), (d), (r) and (s) of the covenant described under the caption ‘‘— Limitation on Debt’’). ‘‘Fair Market Value’’ means, with respect to any Property, the price that could be negotiated in an arm’s length transaction, for cash, between a willing seller and a willing buyer, neither of whom is under undue pressure or compulsion to complete the transaction. ‘‘Guarantee’’ means, as to any Person, a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business) direct or indirect, in any manner,

196 including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Debt of another Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise). ‘‘Hedging Obligation’’ of any Person means any obligation of such Person pursuant to any Interest Rate Agreement, Currency Exchange Protection Agreement or Commodity Price Protection Agreement. ‘‘holder’’ means a Person in whose name a Note is registered. ‘‘IFRS’’ means International Financial Reporting Standards as in effect in The Netherlands from time to time. Except as otherwise expressly provided in the Indenture, all ratios and calculations based on IFRS contained in the Indenture shall be computed in conformity with IFRS. ‘‘Incur’’ means, with respect to any Debt or other obligation of any Person, to create, issue, incur (by merger, conversion, exchange or otherwise), extend, assume, Guarantee or become directly or indirectly liable in respect of such Debt or other obligation or the recording, as required pursuant to IFRS or otherwise, of any such Debt or obligation on the balance sheet of such Person (and ‘‘Incurrence’’ and ‘‘Incurred’’ shall have meanings correlative to the foregoing); provided, however, that any Debt or other obligations of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Restricted Subsidiary at the time it becomes a Subsidiary; provided, however, that a change in IFRS that results in an obligation of such Person that exists at such time, and is therefore not classified as Debt, becoming Debt shall not be deemed an Incurrence of Debt; and provided further, however, that solely for purposes of determining compliance with ‘‘— Certain Covenants — Limitation on Debt,’’ amortization of debt discount shall not be deemed to be the Incurrence of Debt, provided that in the case of Debt sold at a discount, the amount of such Debt Incurred shall at all times be the accreted amount. ‘‘Independent Financial Advisor’’ means an accounting, appraisal, engineering or investment banking firm of international standing, provided that such firm is not an Affiliate of the Issuer. ‘‘Interest Rate Agreement’’ means, for any Person, any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement designed to protect against fluctuations in interest rates. ‘‘Investment’’ means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the form of loans or other extensions of credit (including Guarantees), advances (excluding commission, travel and similar advances to officers, employees and consultants made in the ordinary course of business), capital contributions (by means of any transfer of cash or other Property to others or any payment for Property or services for the account or use of others), purchases or other acquisitions for consideration of Debt, Capital Stock or other securities, together with all items that are or would be classified as investments on a balance sheet (excluding notes) prepared in accordance with IFRS. If the Issuer or any Restricted Subsidiary of the Issuer sells or otherwise disposes of any Capital Stock of any direct or indirect Subsidiary of the Issuer such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Issuer, the Issuer will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Investment in such Subsidiary not sold or disposed of. The acquisition by the Issuer or any Restricted Subsidiary of the Issuer of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Issuer or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investment held by the acquired Person in such third Person. In determining the amount of any Investment made by or as a result of transfer of any Property other than cash, such Property shall be valued at its Fair Market Value at the time of such Investment in an amount determined as provided in the final paragraph of the covenant described above under the caption ‘‘— Certain Covenants — Restricted Payments.’’ ‘‘Issue Date’’ means the date on which the Notes are initially issued. ‘‘Karbonia’’ means NWR Karbonia S.A., a company organized under the laws of Poland and any successor entity.

197 ‘‘Lien’’ means, with respect to any Property of any Person, any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, lien, charge, encumbrance, or other security agreement of any kind or nature whatsoever on or with respect to such Property (including any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing). ‘‘Major Event of Default’’ means any default in payment of principal, interest or premium in respect of any Material Debt and any event of default of the type specified in clauses 3 and 5 through 8 described under the caption ‘‘Events of Default’’ in respect of any Material Debt. ‘‘Material Debt’’ means Debt of the Issuer or any Restricted Subsidiary having an aggregate principal amount outstanding greater than e25 million (or its foreign currency equivalent at the time). ‘‘Moody’s’’ means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof. ‘‘Net Available Cash’’ from any Asset Sale means cash payments received therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Debt or other obligations relating to the Property that is the subject of such Asset Sale or received in any other non-cash form), in each case net of: (a) all legal, title and recording tax expenses, commissions and other fees and expenses Incurred, and all taxes required to be accrued as a liability under IFRS, as a consequence of such Asset Sale; (b) all payments made on or in respect of any Debt that is secured by any Property subject to such Asset Sale and that must, by its terms or by the terms of any Lien upon such Property or in order to obtain a necessary consent to such Asset Sale, or by applicable law, be repaid out of the proceeds from such Asset Sale; (c) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale; and (d) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with IFRS, against any liabilities associated with the Property disposed of in such Asset Sale and retained by the Issuer or any Restricted Subsidiary after such Asset Sale. ‘‘Non-Core Real or Other Property’’ means any Property of the Real Estate Division that may be distributed to the holder of the B Shares in accordance with the Articles of Association of the Issuer and its Divisional Policy Statements, subject to the Issuer’s right to the undisturbed continuation of its mining, coking, and related operations conducted on the Issue Date or which are expected by the Board of Directors to be conducted in the future on certain of such Property and to unrestricted access to Real Estate Assets, as specified in the Articles of Association, in connection with such operations. ‘‘Obligations’’ means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Debt. ‘‘Officer’’ means the Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer, any managing director or any Vice President of the Issuer. ‘‘Officers’ Certificate’’ means a certificate signed by two Officers, at least one of whom shall be the principal executive officer or principal financial officer, and delivered to the Trustee. ‘‘Opinion of Counsel’’ means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Issuer or the Trustee. ‘‘Parent’’ means, with respect to any Person, any direct or indirect parent company of such Person.

198 ‘‘Parent Entity’’ means New World Resources plc (or any successor entity) or any Subsidiary thereof through which New World Resources plc (or any successor entity) indirectly holds an interest in the Issuer. ‘‘Parent Expenses’’ means: (a) costs (including all professional fees and expenses) Incurred by the Parent Entity in connection with reporting obligations under or otherwise Incurred in connection with compliance with applicable laws, rules or regulations of any governmental, regulatory or self-regulatory body or stock exchange, the indenture or any other agreement or instrument relating to Indebtedness of the Issuer or any Restricted Subsidiary, including in respect of any reports filed with respect to the Securities Act, Exchange Act or the respective rules and regulations promulgated thereunder; (b) customary indemnification obligations of the Parent Entity owing to directors, officers, employees or other Persons under its charter or by-laws or pursuant to written agreements with any such Person to the extent relating to the Issuer and its Subsidiaries; (c) obligations of the Parent Entity in respect of director and officer insurance (including premiums therefor) to the extent relating to the Issuer and its Subsidiaries; (d) fees and expenses payable by the Parent Entity in connection with the issuance of the Notes and any related transactions and the payment of fees and expenses related thereto; (e) general corporate overhead expenses, including (a) professional fees and expenses and other operational expenses of the Parent Entity related to the ownership or operation of the business of the Issuer or any of its Restricted Subsidiaries or (b) costs and expenses with respect to any litigation or other dispute relating to the issuance of the Notes and any related transactions or the ownership, directly or indirectly, of the Issuer or any of its Restricted Subsidiaries by the Parent Entity; (f) other fees, expenses and costs relating directly or indirectly to activities of the Issuer and its Subsidiaries or the Parent Entity or any other Person established for purposes of or in connection with the issuance of the Notes and any related transactions, in an amount not to exceed e5.0 million in any fiscal year; and (g) expenses Incurred by the Parent Entity in connection with any public offering of its Capital Stock or Debt, in proportion to the net proceeds therefrom reasonably expected to be contributed to the capital of the Issuer (or used to purchase an additional issuance of Equity Interests of the Issuer (other than Disqualified Stock) or Subordinated Shareholder Debt) and actually so contributed within 30 days of the closing of such offering. ‘‘Permitted Business’’ means the coal mining and coke production activities conducted by the Issuer and its Restricted Subsidiaries on the Issue Date, together with any activities to hold, maintain, operate or dispose of any Non-Core Real or Other Property, prior to the occurrence of any Permitted Real Estate Transfer thereof, and any business that is related or ancillary to the coal mining and coke production activities of the Issuer and its Restricted Subsidiaries on the Issue Date. ‘‘Permitted Debt’’ has the meaning set forth in the second paragraph of the covenant described under the caption ‘‘— Certain Covenants — Limitation on Debt.’’ ‘‘Permitted Holders’’ means any person who is at the Issue Date an ultimate holder, directly or indirectly (including through any other Persons) of a beneficial interest in the issued share capital of BXR Group Limited (each, a ‘‘Shareholder’’); or a spouse, parent, grandparent, grandchild, brother, sister, son or daughter of legal age of any of the Shareholders (each a ‘‘Family Member’’); or a person, company, entity, trust, fund, partnership or otherwise in each case substantially used for the purpose of holding and managing financial investments and, for the avoidance of doubt, not having a substantial operating business (each a ‘‘Relevant Entity’’), in each case where such Relevant Entity is controlled directly or indirectly by, or participated in by, or created for the benefit of, any Shareholders or Family Members.

199 ‘‘Permitted Investment’’ means any Investment by the Issuer or any Restricted Subsidiary in: (a) the Issuer or any Restricted Subsidiary; (b) any Person that will, upon the making of such Investment, become a Restricted Subsidiary, provided that such Restricted Subsidiary is engaged in a Permitted Business; (c) any Person if as a result of such Investment such Person is merged or consolidated with or into, or transfers or conveys all or substantially all its Property to, the Issuer or its Restricted Subsidiary, provided that such Person is engaged in a Permitted Business; (d) cash and Cash Equivalents; (e) receivables owing to the Issuer or any Restricted Subsidiary, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Issuer or such Restricted Subsidiary deems reasonable under the circumstances; (f) loans and advances to directors or employees made in the ordinary course of business permitted by law and consistent with past practices of the Issuer or such Restricted Subsidiary, as the case may be; provided that such loans and advances do not exceed e0.5 million in the aggregate at any one time outstanding; (g) stock, obligations or other securities received in settlement of debts created in the ordinary course of business and owing to the Issuer or a Restricted Subsidiary or in satisfaction of judgments; (h) any Person to the extent such Investment represents the non-cash portion of the consideration received in connection with an Asset Sale consummated in compliance with the covenant described under ‘‘— Certain Covenants — Limitation on Asset Sales’’ or any non-cash consideration received in connection with a disposition of Property excluded from the definition of Asset Sale; (i) any Investment that replaces, refinances or refunds an Investment existing on the Issue Date; provided, that the new Investment is in an amount that does not exceed the amount replaced, refinanced or refunded, and is made directly or indirectly in the same Person as the Investment replaced, refinanced or refunded; (j) Hedging Obligations that constitute Permitted Debt; (k) (i) advances, loans or extensions of credit to customers, suppliers or vendors that are, in conformity with IFRS, recorded as accounts receivable or prepaid expenses, as applicable, (ii) workers’ compensation, utility, lease and similar deposits and prepaid expenses that are recorded as deposits on the balance sheet of the Issuer or its Restricted Subsidiaries and (iii) endorsements for collection or deposit, in each case, in the ordinary course of business; (l) Investments in the proposed joint venture between the Issuer or any Subsidiary and Green Gas International Limited, for the operation of a natural gas energy business, in an aggregate amount not to exceed e10.0 million; (m) guarantees, keepwells and similar arrangements in respect of Debt issued in accordance with the covenants described under ‘‘— Certain Covenants — Limitation on Debt’’, provided that any payment made thereunder shall be deemed a Restricted Payment until reimbursed; (n) other Investments made for Fair Market Value that do not exceed e10.0 million in the aggregate outstanding at any one time (with the Fair Market Value of such Investment being measured at the time made and without giving effect to subsequent changes in value); provided, however, that if any Investment pursuant to this clause (n) is made in a Person that is not a Restricted Subsidiary of the Issuer at the date of the making of such Investment and such Person becomes a Restricted Subsidiary of the Issuer after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (a) above (to the extent the Investment is permitted under such clause) and shall

200 cease to have been made pursuant to this clause (n) for so long as such Person continues to be a Restricted Subsidiary; (o) any Investments received in compromise or resolution of (a) obligations of trade creditors or customers that were Incurred in the ordinary course of business of the Issuer or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (b) litigation, arbitration or other disputes; (p) Investments in the Notes and any other Debt of the Issuer or any Restricted Subsidiary; (q) any Investment existing on, or made pursuant to binding commitments existing on, the Issue Date and any Investment consisting of an extension, modification or renewal of any Investment existing on, or made pursuant to a binding commitment existing on, the Issue Date; provided that the amount of any such Investment may be increased (a) as required by the terms of such Investment as in existence on the Issue Date or (b) as otherwise permitted under the Indenture; (r) Investments acquired after the Issue Date as a result of the acquisition by the Issuer or any Restricted Subsidiary of another Person, including by way of a merger, amalgamation or consolidation with or into the Issuer or any of its Restricted Subsidiaries in a transaction that is not prohibited by the covenant described above under the caption ‘‘— Certain Covenants — Merger, Consolidation or Sale of Assets’’ after the Issue Date to the extent that such Investments were not made in connection with or in anticipation of such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation; and (s) any Investment to the extent made using as consideration Capital Stock of the Issuer (other than Disqualified Stock) or the Parent Entity or Subordinated Shareholder Debt. ‘‘Permitted Liens’’ means: (a) Liens in effect on, or provided for under written arrangements existing on, the Issue Date; (b) Liens to secure Debt Incurred (i) under a Revolving Credit Facility in an aggregate principal amount not to exceed the amount permitted to be Incurred pursuant to clause (b)(i) of the definition of ‘‘Permitted Debt’’ and (ii) under any Senior Credit Facilities not to exceed the amounts permitted to be Incurred pursuant to clause (b)(ii) of the definition of ‘‘Permitted Debt’’, in each case in an aggregate principal amount not to exceed the amount permitted to be Incurred pursuant to such provisions; (c) Liens pursuant to the provisions of clause (r) of the definition of ‘‘Permitted Debt’’; (d) Liens to secure Capital Lease Obligations, mortgage financings and Purchase Money Debt of the Issuer or any of its Restricted Subsidiaries and permitted to be Incurred pursuant to clause (c) of the definition of Permitted Debt; provided that any such Lien may not extend to any Property of the Issuer or any Restricted Subsidiary, other than the Property acquired, constructed or leased and any improvements or accessions to such Property (including, in the case of the acquisition of Capital Stock of a Person that becomes a Restricted Subsidiary, Liens on the Property of the Person whose Capital Stock was acquired and such Capital Stock), and such Lien is Incurred within 180 days of the acquisition, construction or lease of such Property; (e) Liens for taxes, assessments or governmental charges or levies on the Property of the Issuer or any Restricted Subsidiary if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision that shall be required in conformity with IFRS shall have been made therefor; (f) Liens imposed by law, such as carriers’, warehousemen’s, landlord’s, repairmen’s and mechanics’ Liens and other similar Liens, on the Property of the Issuer or any Restricted Subsidiary arising in the ordinary course of business and securing payment of obligations that are not more than 60 days past due or are being contested in good faith

201 and by appropriate proceedings, provided that any reserve or other appropriate provision that shall be required in conformity with IFRS shall have been made therefor; (g) Liens on the Property of the Issuer or a Restricted Subsidiary Incurred in the ordinary course of business to secure performance of obligations with respect to statutory or regulatory requirements, performance or return-of-money bonds, surety bonds or other obligations of a like nature and Incurred in a manner consistent with industry practice, in each case which are not Incurred in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of Property and which do not in the aggregate impair in any material respect the use of Property in the operation of the business of the Issuer and the Restricted Subsidiaries taken as a whole; (h) Liens on Property at the time the Issuer or a Restricted Subsidiary acquired such Property, including any acquisition by means of a merger or consolidation with or into the Issuer or any Restricted Subsidiary; provided, however, that any such Lien may not extend to any other Property of the Issuer or any Restricted Subsidiary; provided further, however, that such Liens shall not have been Incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Property was acquired by the Issuer or any Restricted Subsidiary; (i) Liens on the Property of a Person at the time such Person becomes a Restricted Subsidiary; provided, however, that any such Lien may not extend to any other Property of the Issuer or any other Restricted Subsidiary that is not a direct Subsidiary of such Person; provided further, however, that any such Lien was not Incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Person became a Restricted Subsidiary; (j) pledges or deposits by the Issuer or any Restricted Subsidiary under workers’ compensation laws, unemployment insurance laws, old-age pensions or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Debt) or leases to which the Issuer or any Restricted Subsidiary is party, or deposits to secure public or statutory obligations of the Issuer, or deposits for the payment of rent, in each case Incurred in the ordinary course of business; (k) utility easements, building restrictions and such other encumbrances or charges against real Property as are of a nature generally existing with respect to properties of a similar character; (l) Liens on the Property of the Issuer or any Restricted Subsidiary to secure any Permitted Refinancing Debt in respect of Debt secured by Liens described under this definition; provided, however, that any such Lien shall be limited to all or part of the same Property that secured the original Lien (together with improvements and accessions to such Property), and the aggregate principal amount of Debt that is secured by such Lien shall not be increased to an amount greater than the sum of: (1) the outstanding principal amount, or, if greater, the committed amount, of the Debt being Refinanced at the time the original Lien became a Permitted Lien under the Indenture, and (2) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, Incurred by the Issuer or such Restricted Subsidiary in connection with such Refinancing; (m) Liens on Property used to defease or to satisfy and discharge Debt; provided that (a) the Incurrence of such Debt was not prohibited by the Indenture and (b) such defeasance or satisfaction and discharge is not prohibited by the Indenture; (n) Liens in favor of the Issuer or any Restricted Subsidiary; (o) Liens to secure Debt Incurred pursuant to clause (e), (f) and (g) of the definition of Permitted Debt; provided that with respect to any such agreements related to Debt such Liens only extend to the Property securing the Debt;

202 (p) judgment Liens not giving rise to an Event of Default, that are being contested in good faith by appropriate legal proceedings and for which adequate reserves have been made in conformity with IFRS; (q) Liens over credit balances on bank accounts of the Issuer or any Restricted Subsidiary with Approved Banks created in order to facilitate the ordinary course operation of such bank accounts and other bank accounts of the Issuer and such Restricted Subsidiaries with such Approved Banks on a net balance basis with credit balances and debit balances on the various accounts being netted off or set off (including cash pooling arrangements permitted under clause (h) or (m) of the definition of Permitted Debt); (r) Liens upon specific items of inventory or other goods and proceeds of the Issuer or its Subsidiaries securing the Issuer’s or any Restricted Subsidiary’s obligations in respect of bankers’ acceptances issued or created for the account of any such Person to facilitate the purchase, shipment or storage of such inventory or other goods; (s) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (t) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other assets relating to such letters of credit and products and proceeds thereof; (u) contract mining agreements and leases or subleases granted to others that do not materially interfere with the ordinary conduct of business of the Issuer or any of its Restricted Subsidiaries; (v) Liens on Capital Stock of an Unrestricted Subsidiary that secure Debt or other obligations of such Unrestricted Subsidiary for which there is no other recourse to the Issuer or any Restricted Subsidiary; or (w) Liens not otherwise permitted by clauses (a) through (v) above encumbering Property having an aggregate Fair Market Value not in excess of 1.0% of Total Assets. For purposes of determining compliance with this definition, in the event that a Lien meets the criteria of more than one of the categories of Permitted Liens described in clauses (a) through (w) above, the Issuer will be permitted to classify such Lien on the date of its Incurrence and reclassify such Lien, in each case at any time and in any manner that complies with this covenant at the time of such reclassification. ‘‘Permitted Primary Senior Debt’’ means: (a) with respect to the Issuer, Primary Senior Debt permitted to be Incurred by the Issuer pursuant to the definition of Permitted Debt, other than pursuant to clauses (b)(ii), (d), (i) (except for Debt Incurred under such clause (i) to Refinance the Notes or to Refinance Debt previously Incurred pursuant to clause (c) of the definition of Permitted Debt to the extent that it exceeds the aggregate principal amount specified in sub-clause (c)(2) of such definition), (j), (o) and (s) thereof; (b) with respect to any Restricted Subsidiary, Primary Senior Debt permitted to be Incurred by a Restricted Subsidiary pursuant to the definition of Permitted Debt, other than pursuant to clauses (b)(ii), (d), (i) (except for Debt Incurred under such clause (i) in respect of any Subsidiary Guarantees in respect of the Notes or to Refinance Debt previously Incurred pursuant to clause (c) of the definition of Permitted Debt to the extent that it exceeds the aggregate principal amount specified in sub-clause (c)(2) of such definition), (o) (unless after giving effect to such relevant acquisition or merger the Primary Senior Debt Leverage Ratio is no higher), (n) and (k) thereof; and (c) any Permitted Refinancing Debt that Refinances Primary Senior Debt Incurred pursuant to the covenant ‘‘— Limitation on Primary Senior Debt’’. ‘‘Permitted Real Estate Transfer’’ means any dividend or distribution, declared or paid on or with respect to the B Shares of Non-Core Real or Other Property or a transaction, whether by sale, transfer or otherwise, for the purpose of facilitating a subsequent such dividend or distribution.

203 ‘‘Permitted Refinancing Debt’’ means any Debt that Refinances any other Debt, including any successive Refinancings, so long as: (a) such Debt is in an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) not in excess of the sum of: (1) the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding of the Debt being Refinanced and all accrued and unpaid interest thereon, and (2) the amount of any reasonably determined premium necessary to accomplish any such Refinancing and such reasonable fees and expenses Incurred in connection therewith; (b) the Average Life of such Debt is equal to or greater than the Average Life of the Debt being Refinanced or, if shorter, more than 180 days after the final maturity date of the Notes; (c) the Stated Maturity of such Debt is no earlier than the Stated Maturity of the Debt being Refinanced or, if shorter, more than 180 days after the final maturity date of the Notes; and (d) the new Debt shall not be senior in right of payment to the Debt that is being Refinanced; provided, however, that Permitted Refinancing Debt shall not include: (a) Debt of a Subsidiary of the Issuer that Refinances Debt of the Issuer; or (b) Debt of the Issuer or a Restricted Subsidiary that Refinances Debt of an Unrestricted Subsidiary. ‘‘Person’’ means any individual, corporation, company (including any limited liability company), association, partnership, joint venture, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. ‘‘Preferred Stock’’ means any Capital Stock of a Person, however designated, which entitles the holder thereof to a preference with respect to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of any other class of Capital Stock issued by such Person. ‘‘Preferred Stock Dividends’’ of a Person means all dividends with respect to Preferred Stock of Restricted Subsidiaries of such Person (other than dividends paid in Capital Stock (except Disqualified Stock) of the Issuer) held by Persons other than such Person or a Restricted Subsidiary of such Person. The amount of any such dividend shall be equal to the quotient of such dividend divided by the difference between one and the maximum statutory corporate income rate (expressed as a decimal number between 1 and 0) then applicable to the issuer of such Preferred Stock. ‘‘Primary Senior Debt’’ means (1) any Debt of the Issuer that (a) is secured by a Lien on any Property more senior to a Lien on the same Property securing the Notes, or (b) is Guaranteed by a Restricted Subsidiary (or, if such Restricted Subsidiary is a Subsidiary Guarantor, Guaranteed through a Guarantee to which its Subsidiary Guarantee is subordinate in right of payment, or through a Guarantee that is secured by a Lien on any Property more senior to a Lien on the same Property securing its Subsidiary Guarantee) and (2) any Debt of any Restricted Subsidiary (or, if such Restricted Subsidiary is also a Subsidiary Guarantor, any such Debt to which its Subsidiary Guarantee is subordinate in right of payment, or that is secured by a Lien on any Property more senior to a Lien on the same Property securing its Subsidiary Guarantee), but in each case other than Debt Incurred pursuant to clause (b)(i) or clause (q) of the definition of Permitted Debt. ‘‘Primary Senior Debt Leverage Ratio’’ means, as of any date of determination, the ratio of (1) Primary Senior Debt outstanding as of the end of the most recent fiscal quarter for which financial statements are available under ‘‘— Reports’’ to (2) the aggregate amount of the Adjusted EBITDA of the Issuer and its Restricted Subsidiaries for the period of the most recent four consecutive fiscal quarters for which financial statements are available under ‘‘— Reports,’’ in each case with such pro forma adjustments to Primary Senior Debt outstanding and Adjusted EBITDA as

204 are appropriate and consistent with the pro forma provisions set forth in the definition of Consolidated Interest Coverage Ratio. ‘‘pro forma’’ means, with respect to any calculation made or required to be made pursuant to the terms hereof, a calculation performed in accordance with applicable law and IFRS, as interpreted in good faith by the Board of Directors after consultation with the independent certified public accountants of the Issuer, or otherwise a calculation made in good faith by the an Officer of the Issuer after consultation with independent certified public accountants of the Issuer, as the case may be. ‘‘Property’’ means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including Capital Stock in, and other securities of, any other Person. For purposes of any calculation required pursuant to the Indenture, the value of any Property shall be its Fair Market Value. ‘‘Public Debt’’ means, any Debt consisting of bonds, debentures, notes or other similar debt securities issued in (1) a public offering registered under the Securities Act or (2) a private placement to institutional investors that is underwritten for resale in accordance with Rule 144A or Regulation S under the Securities Act, whether or not it includes registration rights entitling the holders of such debt securities to registration thereof with the U.S. Securities and Exchange Commission or any successor thereto for public resale. ‘‘Purchase Money Debt’’ means Debt: (a) consisting of the deferred purchase price of Property, conditional sale obligations, obligations under any title retention agreement, other purchase money obligations and obligations in respect of industrial revenue bonds, in each case where the maturity of such Debt does not exceed the anticipated useful life of the Property being financed; and (b) Incurred to finance the acquisition, construction or lease by the Issuer or a Restricted Subsidiary of such Property, including additions and improvements thereto; provided, however, that such Debt is Incurred within 180 days after the acquisition, construction or lease of such Property by the Issuer or such Restricted Subsidiary. ‘‘Qualified Securitization Transaction’’ means any transaction or series of transactions that may be entered into by the Issuer or any of its Restricted Subsidiaries pursuant to which the Issuer or a Restricted Subsidiary may sell, convey or otherwise transfer, pursuant to customary terms which are (taking into account all the costs and benefits associated with such transactions and market prices for comparable transactions) materially no less favorable to Issuer or its Restricted Subsidiaries than those that would have been obtained in a comparable arms’ length transaction, in the reasonable determination of the Board of Directors of the Issuer (as evidenced by a resolution of the Board of Directors delivered to the Trustee), to (a) a Securitization Entity or the Issuer which subsequently transfers to a Securitization Entity (in the case of a transfer by the Issuer or a Restricted Subsidiary) and (b) any other person (in the case of transfer by a Securitization Entity), or may grant a security interest in any accounts receivable (whether now existing or arising or acquired in the future) of the Issuer or Issuer Subsidiary, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and contract rights and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets (including contract rights) which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable. ‘‘Real Estate Division’’ means the Real Estate division of the Issuer as established by the Issuer in its Articles of Association and Divisional Policy Statements and which had a recorded value for its Total Assets as at December 31, 2008 of e29.97 million. ‘‘Refinance’’ means, in respect of any Debt, to refinance, extend, renew, refund, replace, exchange or Repay, or to issue other Debt, in exchange or replacement for, such Debt. ‘‘Refinanced’’ and ‘‘Refinancing’’ shall have correlative meanings.

205 ‘‘Repay’’ means, in respect of any Debt, to repay, prepay, repurchase, redeem, legally defease or otherwise retire such Debt. ‘‘Repayment’’ and ‘‘Repaid’’ shall have correlative meanings. For purposes of the covenant described under ‘‘— Certain Covenants — Limitation on Asset Sales’’ and the definition of ‘‘Consolidated Interest Coverage Ratio,’’ Debt shall be considered to have been Repaid only to the extent the related loan commitment, if any, shall have been permanently reduced in connection therewith. ‘‘Restricted Investment’’ means any Investment other than a Permitted Investment. ‘‘Restricted Payment’’ means: (a) any dividend or distribution (whether made in cash, securities or other Property) declared or paid on or with respect to any shares of Capital Stock of the Issuer or any Restricted Subsidiary (including any payment in connection with any merger or consolidation with or into the Issuer or any Restricted Subsidiary), except for any dividend or distribution that is made to the Issuer or a Restricted Subsidiary, or any dividend or distribution payable solely in shares of Capital Stock (other than Disqualified Stock) of the Issuer; (b) the purchase, repurchase, redemption, acquisition or retirement for value of any Capital Stock of the Issuer or any Restricted Subsidiary (other than from the Issuer or a Restricted Subsidiary); (c) the purchase, repurchase, redemption, defeasance, acquisition or retirement for value, prior to the date for any scheduled maturity, sinking fund or amortization or other instalment payment, of any Subordinated Obligation (other than the purchase, repurchase or other acquisition of any Subordinated Obligation purchased in anticipation of satisfying a scheduled maturity, sinking fund or amortization or other instalment obligation, in each case due within one year of the date of acquisition and any Debt Incurred pursuant to clause (d) of the definition of ‘‘Permitted Debt’’ to the extent such Debt is still held by the Issuer or a Restricted Subsidiary); or (d) any Investment (other than Permitted Investments) in any Person. ‘‘Restricted Subsidiary’’ means any Subsidiary of the Issuer other than an Unrestricted Subsidiary. ‘‘Revolving Credit Facilities’’ means any one or more other revolving credit facilities permitted to be Incurred under clause (b)(i) of the definition of Permitted Debt. ‘‘S&P’’ means Standard & Poor’s Ratings Services or any successor to the rating agency business thereof. ‘‘Sale and Leaseback Transaction’’ means any direct or indirect arrangement relating to Property now owned or hereafter acquired whereby the Issuer or a Restricted Subsidiary transfers such Property to another Person and the Issuer or a Restricted Subsidiary leases it from such Person. ‘‘Securities Act’’ means the United States Securities Act of 1933, as amended. ‘‘Securitization Entity’’ means an entity to which the Issuer or any Restricted Subsidiary transfers accounts receivable or equipment and related assets which engages in no activities other than in connection with the financing of accounts receivable or equipment and which is designated by the Board of Directors of the Issuer (as provided below) as a Securitization Entity: (a) no portion of the Debt or any other obligations (contingent or otherwise) of which: (1) is guaranteed by the Issuer or any Restricted Subsidiary (other than the Securitization Entity), excluding guarantees of Obligations (other than the principal of, and interest on, Debt) pursuant to Standard Securitization Undertakings, (2) is recourse to or obligates the Issuer or any Subsidiary (other than the Securitization Entity) in any way other than pursuant to Standard Securitization Undertakings or (3) subjects any property or asset of the Issuer or any Restricted Subsidiary (other than the Securitization Entity), directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings any

206 other than any interest in the accounts receivable or equipment and related assets being financed (whether in the form of an equity interest in such assets or subordinated indebtedness payable primarily from such financed assets) retained or acquired by the Issuer or any Restricted Subsidiary, (b) with which neither the Issuer nor any Restricted Subsidiary has any material contract, agreement, arrangement or understanding other than on terms no less favourable to the Issuer or such Restricted Subsidiary than those that might be obtained at the time from persons that are not Affiliates of the Issuer, other than fees payable in the course of the ordinary course of business in connection with servicing receivables of such entity (other than Standard Securitization Undertakings), and (c) to which neither the Issuer nor any subsidiary of the Issuer has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results (other than Standard Securitization Undertakings). Any such designation by the Board of Directors of the Issuer shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Issuer giving effect to such designation and an officers’ certificate certifying that such designation complied with the foregoing conditions. ‘‘Senior Credit Facility’’ or ‘‘Senior Credit Facilities’’ means with respect to the Issuer or any of its Restricted Subsidiaries, one or more debt facilities, instruments or arrangements (including the 2018 Notes Indenture) or commercial paper facilities or indentures or trust deeds or note purchase agreements, in each case, with banks, other institutions, funds or investors, providing for revolving credit loans, term loans, letters of credit, bonds, notes, debentures or other corporate debt instruments or other Indebtedness, in each case, as amended, restated, modified, renewed, refunded, replaced, restructured, refinanced, repaid, increased or extended in whole or in part from time to time (and whether in whole or in part and whether or not with the original administrative agent and lenders or another administrative agent or agents or trustees or other banks or institutions and whether provided under one or more other credit or other agreements, indentures, financing agreements or otherwise) and in each case including all agreements, instruments and documents executed and delivered pursuant to or in connection with the foregoing (including any notes and letters of credit issued pursuant thereto and any Guarantee and collateral agreement, patent and trademark security agreement, mortgages or letter of credit applications and other Guarantees, pledges, agreements, security agreements and collateral documents). Without limiting the generality of the foregoing, the term ‘‘Credit Facilities’’ shall include any agreement or instrument (1) changing the maturity of any Indebtedness Incurred thereunder or contemplated thereby, (2) adding Subsidiaries of the Issuer as additional borrowers, issuers or guarantors thereunder, (3) increasing the amount of Indebtedness Incurred thereunder or available to be borrowed thereunder or (4) otherwise altering the terms and conditions thereof. ‘‘Significant Subsidiary’’ means: any Restricted Subsidiary of the Issuer for which, for or at the end of the most recent fiscal year, (i) the pre-tax profits of which represent 10% or any greater percentage of the EBITDA of the Issuer, (ii) the book value of the gross assets of which is 10% or more of the consolidated gross assets of the Issuer, determined in accordance with IFRS or (iii) the aggregate sales of which to third parties in any fiscal year, calculated on a consolidated basis in accordance with IFRS (and excluding VAT and/or sales tax) have been at least 10% or more of the aggregate sales of the Issuer to third parties (calculated on the same basis); provided, that in the case of a Restricted Subsidiary which itself has Subsidiaries, such calculation shall be made by using the consolidated pre-tax profits or gross assets or aggregate sales, as the case may be, of such Restricted Subsidiary and its Subsidiaries. ‘‘Standard Securitization Undertakings’’ means representations, warranties, undertakings, covenants and indemnities entered into by the Issuer or any Restricted Subsidiary which are reasonably customary in an accounts receivable securitization transaction. ‘‘Stated Maturity’’ means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the

207 repurchase of such security at the option of the holder thereof upon the happening of any contingency or other contingent obligations to repay, redeem, or repurchase unless in each case such contingency has occurred). ‘‘Subordinated Obligation’’ means any Debt of the Issuer (whether outstanding on the Issue Date or thereafter Incurred) that is subordinate or junior in right of payment to the Notes pursuant to a written agreement to that effect; provided that no Debt will be deemed to be subordinate or junior in right of payment to the Notes solely by virtue of being unsecured or by virtue of being secured with different collateral or by virtue of being secured on a junior priority basis or by virtue of the application of waterfall or other payment-ordering provisions affecting different tranches of Debt. ‘‘Subordinated Shareholder Debt’’ means any subordinated indebtedness issued by the Issuer to any Parent or any Permitted Holder that by its terms or pursuant to the terms of subordination agreement to which the Trustee, on behalf of the holders of the Notes, is a party: (a) does not mature and is not mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder, in whole or in part, and does not include any provision requiring repurchase or otherwise become due and payable prior to the date that is one year after the date on which the Notes mature (other than through conversion or exchange of any such security or instrument for Capital Stock of the Issuer (other than Disqualified Stock) or for any other security or instrument constituting Subordinated Shareholder Debt); (b) does not require or provide for the payment, in cash, of interest or any other amounts prior to its final Stated Maturity (provided, that interest may accrue while such subordinated indebtedness is outstanding); (c) does not provide for the acceleration of its maturity or the exercise of remedies prior to the date that is one year after the date on which the Notes mature and are repaid other than by converting it into Capital Stock; and (d) is not secured by a Lien on any asset of the Issuer or any Restricted Subsidiary, provided, however, that any subsequent amendments, modifications or other changes in the terms of such indebtedness following the initial issuance or Incurrence thereof shall be deemed, in each case, to constitute the Incurrence of Debt unless the conditions of this definition are then satisfied. ‘‘Subsidiary’’ means, with respect to any specified Person: (a) any corporation, company (including any limited liability company), association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, members, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (b) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof). ‘‘Subsidiary Guarantee’’ means a Guarantee given by a Subsidiary Guarantor of the Issuer’s obligations with respect to the Notes pursuant to the covenant described under ‘‘— Certain Covenants — Limitation on Guarantees’’. ‘‘Subsidiary Guarantor’’ means any Restricted Subsidiary that that has become a Subsidiary Guarantor in accordance with ‘‘— Certain Covenants — Limitation on Guarantees’’. ‘‘Surviving Person’’ means the surviving Person formed by a merger, consolidation or amalgamation and, for purposes of the covenant described under ‘‘— Merger, Consolidation and Sale of Property,’’ a Person or Persons to whom all or substantially all of the Property of the Issuer is sold, transferred, assigned, leased, conveyed or otherwise disposed. ‘‘Taxes’’ will have the meaning set forth above under ‘‘— Payment of Additional Amounts.’’

208 ‘‘Total Assets’’ means, as of any date of determination, the amount that would appear on a consolidated balance sheet of the Issuer and its consolidated Restricted Subsidiaries, as of the end of the most recent fiscal quarter for which financial statements of the Issuer are internally available, as the total assets of the Issuer and its Restricted Subsidiaries; provided that the Issuer may give pro forma effect to the same events and transactions and on the same basis as specified in the definition of Consolidated Interest Coverage Ratio. ‘‘Unrestricted Subsidiary’’ means: (a) any Subsidiary of the Issuer that is designated after the Issue Date as an Unrestricted Subsidiary as permitted or required pursuant to the covenant described under ‘‘— Certain Covenants — Designation of Restricted and Unrestricted Subsidiaries’’ and is not thereafter redesignated as a Restricted Subsidiary as permitted pursuant thereto; and (b) any Subsidiary of an Unrestricted Subsidiary. ‘‘Voting Stock’’ of any Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. ‘‘Wholly Owned Restricted Subsidiary’’ of a Person means, at any time, a Restricted Subsidiary all the Voting Stock of which (except directors’ qualifying shares and any de minimis number of shares held by other Persons to the extent required by applicable law to be held by a Person other than by its Parent or a Subsidiary of its Parent) is at such time owned, directly or indirectly, by such Person and its other Wholly Owned Subsidiaries.

209 BOOK-ENTRY, SETTLEMENT AND CLEARANCE General Each series of Notes sold outside the United States pursuant to Regulation S under the U.S. Securities Act will initially be represented by a global note in registered form without interest coupons attached (the ‘Regulation S Global Note’). The Regulation S Global Note will be deposited, on the closing date, with a common depository and registered in the name of the nominee of the common depository for the accounts of Euroclear and Clearstream. Each series of Notes sold within the United States to qualified institutional buyers pursuant to Rule 144A will initially be represented by a global note in registered form without interest coupons attached (the’Rule 144A Global Note’ and, together with the Regulation S Global Note, the ‘Global Notes’). The 144A Global Note will be deposited, on the settlement date, with a common depository and registered in the name of the nominee of the common depository for the accounts of Euroclear and Clearstream. Ownership of interests in the Rule 144A Global Note and ownership of interests in the Regulation S Global Note, together, the ‘Book-Entry Interests’) will be limited to persons that have accounts with Euroclear and/or Clearstream or persons that may hold interests through such participants. Book-Entry Interests will be shown on, and transfers thereof will be effected only through, records maintained in book-entry form by Euroclear and Clearstream and their participants. The Book-Entry Interests will be issued only in denominations of EUR 100,000 and in integral multiples of EUR 1,000 in excess thereof. The Book-Entry Interests will not be held in definitive form. Instead, Euroclear and/or Clearstream will credit on their respective book-entry registration and transfer systems a participant’s account with the interest beneficially owned by such participant. The laws of some jurisdictions, including certain states of the United States, may require that certain purchasers of securities take physical delivery of such securities in definitive form. The foregoing limitations may impair the ability to own, transfer or pledge Book-Entry Interests. In addition, while the Notes are in global form, owners of interest in the Global Notes will not have the Notes registered in their names, will not receive physical delivery of the Notes in certificated form and will not be considered the registered owners or ‘‘holder’’ of Notes under the indenture for any purpose. So long as the Notes are held in global form, the common depositary for Euroclear and/or Clearstream (or its nominee) will be considered the holders of Global Notes for all purposes under the Indenture. As such, participants must rely on the procedures of Euroclear and/or Clearstream and indirect participants must rely on the procedures of Euroclear and/or Clearstream and the participants through which they own Book-Entry Interests in order to exercise any rights of holders under the Indenture. Neither the Issuer nor the Trustee, the paying agent, transfer agent or a registrar under the Indenture nor any of the Issuer’s respective agents will have any responsibility or be liable for any aspect of the records relating to the Book-Entry Interests.

Issuance of Definitive Registered Notes Under the terms of the Indenture, owners of Book-Entry Interests will receive definitive Notes in registered form (the ‘Definitive Registered Notes’): • if Euroclear and Clearstream notify the Issuer that it is unwilling or unable to continue to act as depository and a successor depository is not appointed by the Issuer within 120 days; • if the Issuer, at its option, notifies the Trustee in writing that it elects to exchange in whole, but not in part, the Global Note for Definitive Registered Notes; or • if the holder of a book entry interest so requests following an event of default under the Indenture. In such an event, the Registrar will issue Definitive Registered Notes, registered in the name or names and issued in any approved denominations, requested by or on behalf of Euroclear and/or Clearstream or the Issuer, as applicable (in accordance with their respective customary procedures and based upon directions received from participants reflecting the beneficial ownership of

210 Book-Entry Interests), and such Definitive Registered Notes will bear the restrictive legend referred to in a ‘‘notice to investors,’’ unless that legend is not required by the Indenture or applicable law.

Redemption of Global Notes In the event any Global Note, or any portion thereof, is redeemed, Euroclear and/or Clearstream, as applicable, will distribute the amount received by it in respect of the Global Note so redeemed to the holders of the Book-Entry Interests in such Global Note from the amount received by it in respect of the redemption of such Global Note. The redemption price payable in connection with the redemption of such Book-Entry Interests will be equal to the amount received by Euroclear or Clearstream, as applicable, in connection with the redemption of such Global Note (or any portion thereof). The Issuer understands that under existing practices of Euroclear and Clearstream, if fewer than all of the Notes are to be redeemed at any time, Euroclear and Clearstream will credit their respective participants’ accounts on a proportionate basis (with adjustments to prevent fractions) or by lot or on such other basis as they deem fair and appropriate; provided, however, that no Book-Entry Interest of less than EUR 100,000 principal amount at maturity, or less, may be redeemed in part.

Payments on Global Notes Payments of amounts owing in respect of the Global Notes (including principal, premium, interest, additional interest and additional amounts), will be made by the Issuer to the paying agent. The paying agent will, in turn, make such payments to Euroclear and Clearstream, which will distribute such payments to participants in accordance with their respective procedures. Under the terms of the Indenture governing the Notes, the Issuer and the Trustee will treat the registered holder of the Global Notes (i.e., the common depositary for Euroclear or Clearstream (or its nominee)) as the owner thereof for the purpose of receiving payments and for all other purposes. Consequently, neither the Issuer nor the Trustee or any of their respective agents has or will have any responsibility or liability for: • any aspects of the records of Euroclear, Clearstream or any participant or indirect participant relating to or payments made on account of a Book-Entry Interest, for any such payments made by Euroclear, Clearstream or any participant or indirect participant, or for maintaining, supervising or reviewing the records of Euroclear, Clearstream or any participant or indirect participant relating to, or payments made on account of, a Book-Entry Interest; or • payments made by Euroclear, Clearstream or any participant or indirect participant, or for maintaining, supervising or reviewing the records of Euroclear, Clearstream or any participant or indirect participant relating to or payments made on account of a Book-Entry Interest; or • Euroclear, Clearstream or any participant or indirect participant. Payments by participants to owners of Book-Entry Interests held through participants are the responsibility of such participants, as is now the case with securities held for the accounts of subscribers registered in ‘‘street name’’.

Currency and payment for the Global Notes The principal of, premium, if any, and interest on, and all other amounts payable in respect of, the Global Notes will be paid to holders of interest in such Notes through Euroclear and/or Clearstream in euro.

Action by owners of Book-Entry Interests Euroclear and Clearstream have advised the Issuer that they will take any action permitted to be taken by a holder of Notes only at the direction of one or more participants to whose account the Book-Entry Interests in the Global Notes are credited and only in respect of such portion of the aggregate principal amount of Notes as to which such participant or participants has or have given such direction. Euroclear and Clearstream will not exercise any discretion in the granting of consents, waivers or the taking of any other action in respect of the Global Notes. However, if there

211 is an event of default under the Notes, each of Euroclear and Clearstream reserves the right to exchange the Global Notes for Definitive Registered Notes in certificated form, and to distribute such Definitive Registered Notes to their respective participants.

Transfers Transfers between participants in Euroclear and Clearstream will be effected in accordance with Euroclear’s and Clearstream’s rules and will be settled in immediately available funds. If a holder of Notes requires physical delivery of Definitive Registered Notes for any reason, including to sell Notes to persons in states which require physical delivery of such securities or to pledge such securities, such holder of Notes must transfer its interest in the Global Notes in accordance with the normal procedures of Euroclear and Clearstream and in accordance with the procedures set forth in the Indenture. The Global Notes will bear a legend to the effect set forth in the ‘‘Transfer Restrictions’’ section. Book-Entry Interests in the Global Notes will be subject to the restrictions on transfers and certification requirements discussed in the ‘‘Transfer Restrictions’’ section. Transfer of 144A Book-Entry Interests to persons wishing to take delivery of 144A Book-Entry Interests will at all times be subject to such transfer restrictions. 144A Book-Entry Interests may be transferred to a person who takes delivery in the form of any Regulation S Book-Entry Interest only upon delivery by the transferor of written certification (in the form provided in the Indenture) to the effect that such transfer is being made in accordance with Regulation S or Rule 144 (if available) under the U.S. Securities Act. Regulation S Book-Entry Interests may be transferred to a person who takes delivery in the form of 144A Book-Entry Interests only upon delivery by the transferor of a written certification (in the form provided in the Indenture) to the effect that such transfer is being made to a person who the transferor reasonably believes is a ‘‘qualified institutional buyer’’ within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any other jurisdiction. Any Book-Entry Interest in one of the Global Notes that is transferred to a person who takes delivery in the form of a Book-Entry Interest in the other Global Note will, upon transfer, cease to be a Book-Entry Interest in the first mentioned Global Note and become a Book-Entry Interest in such Global Note, and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to Book-Entry Interests in such other Global Note for as long as it remains such a Book-Entry Interest.

Information Concerning Euroclear and Clearstream The Issuer understands as follows with respect to Euroclear and Clearstream: All Book-Entry Interests will be subject to the operations and procedures of Euroclear and Clearstream, as applicable. The following summaries of those operations and procedures are provided solely for the convenience of investors. The operations and procedures of each settlement system are controlled by that settlement system and may be changes at any time. None of the Issuer or the Initial Purchasers is responsible for those operations or procedures. Euroclear and Clearstream hold securities for participating organisations and facilitate the clearance and settlement of securities transactions between their respective participants through electronic book-entry changes in accounts of such participants. Euroclear and Clearstream provide to their participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclear and Clearstream participants are financial institutions such as underwriters, securities brokers and dealers, banks, trust companies and certain other organisations. Indirect access to Euroclear or Clearstream is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodian relationship with Euroclear or Clearstream participants, either directly or indirectly. Because Euroclear and Clearstream can only act on behalf of participants, who in turn act on behalf of indirect participants and certain banks, the ability of an owner of a beneficial interest to pledge such interest to persons or entities that do not participate in the Euroclear or Clearstream

212 systems, or otherwise take actions in respect of such interest, may be limited by the lack of a definite certificate for that interest. The laws of some jurisdictions require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer beneficial interests to such persons may be limited. In addition, owners of beneficial interests through Euroclear or Clearstream systems will receive distributions attributable to the Global Notes only through Euroclear or Clearstream participants. The business address of Euroclear is 1 Boulevard du Roi Albert II, B-1210 Brussels, Belgium, and the business address of Clearstream is 42, Avenue JF Kennedy, L-1855, Luxembourg.

Settlement Date It is expected that delivery of the Notes will be made against payment therefor on or about five business days following the date of the pricing of the Notes (‘‘T + 5’’). Trades in the secondary market generally are required to settle in three business days unless the parties to any such transfer expressly agree otherwise. Accordingly, purchasers who wish to trade Notes on the date of pricing or in the next three business days will be required by virtue of the fact that the Notes will initially settle in T + 5 to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement.

213 TAX CONSEQUENCES Certain Income Tax Consequences Certain U.S. Federal Income Tax Consequences TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230, HOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES IN THIS OFFERING MEMORANDUM IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON, BY HOLDERS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON HOLDERS UNDER THE INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS INCLUDED HEREIN BY THE ISSUER IN CONNECTION WITH THE PROMOTION OR MARKETING (WITHIN THE MEANING OF CIRCULAR 230) BY THE ISSUER OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) HOLDERS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISER. * * * * * The following is a summary of certain U.S. federal income tax consequences of the acquisition, ownership and disposition of Notes by a U.S. Holder (as defined below). This summary deals only with initial purchasers of Notes at the issue price that are U.S. Holders and that will hold the Notes as capital assets. The discussion does not cover all aspects of U.S. federal income taxation that may be relevant to, or the actual tax effect that any of the matters described herein will have on, the acquisition, ownership or disposition of Notes by particular investors, and does not address state, local, foreign or other tax laws. This summary also does not discuss all of the tax considerations that may be relevant to certain types of investors subject to special treatment under the U.S. federal income tax laws (such as financial institutions, insurance companies, investors liable for the alternative minimum tax, individual retirement accounts and other tax-deferred accounts, tax-exempt organisations, dealers in securities or currencies, investors that will hold the Notes as part of straddles, hedging transactions or conversion transactions for U.S. federal income tax purposes or investors whose functional currency is not the U.S. dollar). As used herein, the term ‘‘U.S. Holder’’ means a beneficial owner of Notes that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States, (ii) a corporation created or organised under the laws of the United States or any State thereof, (iii) an estate the income of which is subject to U.S. federal income tax without regard to its source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or the trust has validly elected to be treated as a domestic trust for U.S. federal income tax purposes. The U.S. federal income tax treatment of a partner in an entity treated as a partnership for U.S. federal income tax purposes that holds Notes will depend on the status of the partner and the activities of the partnership. Prospective purchasers that are entities treated as partnerships for U.S. federal income tax purposes should consult their tax advisers concerning the U.S. federal income tax consequences to their partners of the acquisition, ownership and disposition of Notes by the partnership. This summary is based on the tax laws of the United States, including the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations thereunder, published rulings and court decisions, all as of the date hereof and all subject to change at any time, possibly with retroactive effect. THE SUMMARY OF U.S. FEDERAL INCOME TAX CONSEQUENCES SET OUT BELOW IS FOR GENERAL INFORMATION ONLY. ALL PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX ADVISERS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF OWNING THE NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND POSSIBLE CHANGES IN TAX LAW.

214 Payments of Interest General. Interest on a Note will be taxable to a U.S. Holder as ordinary income at the time it is received or accrued, depending on the holder’s method of accounting for tax purposes. Interest paid by the Issuer on the Notes constitutes income from sources outside the United States. Prospective purchasers should consult their tax advisers concerning the applicability of the foreign tax credit and source of income rules to income attributable to the Notes.

Foreign Currency Denominated Interest. The amount of income recognised by a cash basis U.S. Holder will be the U.S. dollar value of the interest payment, based on the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars. An accrual basis U.S. Holder may determine the amount of income recognised with respect to an interest payment denominated in Euro in accordance with either of two methods. Under the first method, the amount of income accrued will be based on the average exchange rate in effect during the interest accrual period (or, in the case of an accrual period that spans two taxable years of a U.S. Holder, the part of the period within the taxable year). Under the second method, the U.S. Holder may elect to determine the amount of income accrued on the basis of the exchange rate in effect on the last day of the accrual period (or, in the case of an accrual period that spans two taxable years, the exchange rate in effect on the last day of the part of the period within the taxable year). Additionally, if a payment of interest is actually received within five business days of the last day of the accrual period, an electing accrual basis U.S. Holder may instead translate the accrued interest into U.S. dollars at the exchange rate in effect on the day of actual receipt. Any such election will apply to all debt instruments held by the U.S. Holder at the beginning of the first taxable year to which the election applies or thereafter acquired by the U.S. Holder, and will be irrevocable without the consent of the Internal Revenue Service (the ‘‘IRS’’). Upon receipt of the interest payment (including a payment attributable to accrued but unpaid interest upon the sale or retirement of a Note) denominated in Euro, the U.S. Holder may recognise U.S. source exchange gain or loss (taxable as ordinary income or loss) equal to the difference between the amount received (translated into U.S. dollars at the spot rate on the date of receipt) and the amount previously accrued, regardless of whether the payment is in fact converted into U.S. dollars.

Sale and Retirement of the Notes A U.S. Holder will generally recognise gain or loss on the sale or retirement of a Note equal to the difference between the amount realised on the sale or retirement and the tax basis of the Note. A U.S. Holder’s tax basis in a Note will generally be its U.S. dollar cost (as defined below). The U.S. dollar cost of a Note purchased with Euros will generally be the U.S. dollar value of the purchase price on the date of purchase, or the settlement date for the purchase, in the case of Notes traded on an established securities market, within the meaning of the applicable Treasury Regulations, that are purchased by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects). The amount realised does not include the amount attributable to accrued but unpaid interest, which will be taxable as interest income to the extent not previously included in income. The amount realised on a sale or retirement for an amount in Euros will be the U.S. dollar value of this amount on the date of sale or retirement, or the settlement date for the sale, in the case of Notes traded on an established securities market, within the meaning of the applicable Treasury Regulations, sold by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects). A U.S. Holder will recognise U.S. source exchange rate gain or loss (taxable as ordinary income or loss) on the sale or retirement of a Note equal to the difference, if any, between the U.S. dollar values of the U.S. Holder’s purchase price for the Note (i) on the date of sale or retirement and (ii) the date on which the U.S. Holder acquired the Note. Any such exchange rate gain or loss (including any exchange gain or loss with respect to the receipt of accrued but unpaid interest) will be realised only to the extent of total gain or loss realised on the sale or retirement. Except to the extent of changes in exchange rates, gain or loss recognised by a U.S. Holder on the sale or

215 retirement of a Note will be capital gain or loss and will be long-term capital gain or loss if the Note was held by the U.S. Holder for more than one year. Gain or loss realised by a U.S. Holder on the sale or retirement of a Note generally will be U.S. source. Prospective purchasers should consult their tax advisers as to the foreign tax credit implications of the sale or retirement of Notes.

Disposition of Foreign Currency Foreign currency received as interest on a Note or on the sale or retirement of a Note will have a tax basis equal to its U.S. dollar value at the time the foreign currency is received. Foreign currency that is purchased will generally have a tax basis equal to the U.S. dollar value of the foreign currency on the date of purchase. Any gain or loss recognised on a sale or other disposition of a foreign currency (including its use to purchase Notes or upon exchange for U.S. dollars) will be U.S. source ordinary income or loss.

Additional Notes The Issuer may, without the consent of the Holders of outstanding Notes, issue additional Notes with identical terms. These additional Notes, even if they are treated for non-tax purposes as part of the same series as the original Notes, in some cases may be treated as a separate series for U.S. federal income tax purposes. In such a case, the additional Notes may be considered to have been issued with original issue discount (‘‘OID’’) even if the original Notes had no OID. These differences may affect the market value of the original Notes if the additional Notes are not otherwise distinguishable from the original Notes.

Backup Withholding and Information Reporting Payments of principal and interest on, and the proceeds of sale or other disposition of Notes, by a U.S. paying agent or other U.S. intermediary will be reported to the IRS and to the U.S. Holder as may be required under applicable regulations. Backup withholding may apply to these payments if the U.S. Holder fails to provide an accurate taxpayer identification number or certification of exempt status or fails to report all interest and dividends required to be shown on its U.S. federal income tax returns. Certain U.S. Holders are not subject to backup withholding. U.S. Holders should consult their tax advisers as to their qualification for exemption from backup withholding and the procedure for obtaining an exemption.

Reportable Transactions A U.S. taxpayer that participates in a ‘‘reportable transaction’’ will be required to disclose its participation to the IRS. Under the relevant rules, a U.S. Holder may be required to treat a foreign currency exchange loss from the Notes as a reportable transaction if this loss exceeds the relevant threshold in the regulations (U.S.USD 50,000 in a single taxable year, if the U.S. Holder is an individual or trust, or higher amounts for other non-individual U.S. Holders), and to disclose its investment by filing Form 8886 with the IRS. A penalty in the amount of USD10,000 in the case of a natural person and USD 50,000 in all other cases is generally imposed on any taxpayer that fails to timely file an information return with the IRS with respect to a transaction resulting in a loss that is treated as a reportable transaction. Prospective purchasers are urged to consult their tax advisers regarding the application of these rules.

Foreign Financial Asset Reporting Recently enacted legislation imposes reporting requirements on the holding of certain foreign financial assets, including debt of foreign entities, if the aggregate value of all of these assets exceeds USD 50,000 at the end of the taxable year or USD 75,000 at any time during the taxable year. The thresholds are higher for individuals living outside of the United States and married couples filing jointly. The Notes are expected to constitute foreign financial assets subject to these requirements unless the Notes are held in an account at a financial institution (in which case the account may be reportable if maintained by a foreign financial institution). U.S. Holders should consult their tax advisors regarding the application of this legislation.

216 Certain Dutch Tax Consequences Introduction The following summary does not purport to be a comprehensive description of all Dutch tax considerations that could be relevant for holders of the Notes. This summary is intended as general information only. Each prospective holder should consult a professional tax adviser with respect to the tax consequences of an investment in the Notes. This summary is based on Dutch tax legislation and published case law in force as of the date of this document. It does not take into account any developments or amendments thereof after that date, whether or not such developments or amendments have retroactive effect. For the purposes of this section, ‘‘the Netherlands’’ and ‘‘Dutch’’ shall refer to that part of the Kingdom of the Netherlands that is in Europe.

Scope Regardless of whether or not a holder of Notes is, or is treated as being, a resident of the Netherlands, with the exception of the section on withholding tax below, this summary does not address the Dutch tax consequences for such a holder: (i) having a substantial interest (aanmerkelijk belang) in the Issuer (such a substantial interest is generally present if an equity stake of at least 5 per cent, or a right to acquire such a stake, is held, in each case by reference to the Issuer’s total issued share capital, or the issued capital of a certain class of shares); (ii) who is a private individual and may be taxed in box 1 for the purposes of Dutch income tax (inkomstenbelasting) as an entrepreneur (ondernemer) having an enterprise (onderneming) to which the Notes are attributable, or who may otherwise be taxed in box 1 with respect to benefits derived from the Notes; (iii) which is a corporate entity and a taxpayer for the purposes of Dutch corporate income tax (vennootschapsbelasting), having a participation (deelneming) in the Issuer (such a participation is generally present in the case of an interest of at least 5 per cent of the Issuer’s nominal paid-in capital); (iv) which is a corporate entity and an exempt investment institution (vrijgestelde beleggingsinstelling) or investment institution (beleggingsinstelling) for the purposes of Dutch corporate income tax, a pension fund, or otherwise not a taxpayer or exempt for tax purposes; or (v) which is a corporate entity and a resident of Aruba, Cura¸cao or Sint Maarten, or which is not considered the beneficial owner (uiteindelijk gerechtigde) of the Notes and/or the benefits derived from the Notes. (vi) This summary does not describe the Netherlands tax consequences for a person to whom the Notes are attributed on the basis of the separated private assets provisions (afgezonderd particulier vermogen) in the Netherlands Tax Act 2001 (Wet inkomstenbelasting 2001) and/or the Netherlands Gift and Inheritance Tax Act 1956 (Successiewet 1956).

Withholding tax All payments made by the Issuer under the Notes may be made free of withholding or deduction for any taxes of whatsoever nature imposed, levied, withheld or assessed by the Netherlands or any political subdivision or taxing authority thereof or therein.

Income tax Resident holders: A holder who is a private individual and a resident, or treated as being a resident of the Netherlands for the purposes of Dutch income tax, must record Notes as assets that are held in box 3. Taxable income with regard to the Notes is then determined on the basis of a deemed return on income from savings and investments (sparen en beleggen), rather than on the basis of income actually received or gains actually realized. This deemed return is fixed at a rate of 4 per cent of the holder’s yield basis (rendementsgrondslag) at the beginning of the calendar year,

217 insofar as the yield basis exceeds a certain threshold. Such yield basis is determined as the fair market value of certain qualifying assets held by the holder of the Notes, less the fair market value of certain qualifying liabilities at the beginning of the calendar year . The fair market value of the Notes will be included as an asset in the holder’s yield basis. The deemed return on income from savings and investments is taxed at a rate of 30 per cent. Non-resident holders: A holder who is a private individual and neither a resident, nor treated as being a resident of the Netherlands for the purposes of Dutch income tax, will not be subject to such tax in respect of benefits derived from the Notes, unless such holder is entitled to share in the profits of an enterprise or a co-entitlement to the net worth which is effectively managed in the Netherlands to which enterprise the Notes are attributable.

Corporate income tax Resident holders or holders having a Dutch permanent establishment: A holder which is a corporate entity and for the purposes of Dutch corporate income tax a resident, or treated as being a residents of the Netherlands, is taxed in respect of benefits derived from the Notes at rates of up to 25 per cent. Non-resident holders: A holder which is a corporate entity and for the purposes of corporate income tax neither a resident, nor treated as being a resident, of the Netherlands, will not be subject to such tax in respect of benefits derived from the Notes, unless such holder has an interest in an enterprise that is, in whole or in part, carried on through a permanent establishment or a permanent representative in the Netherlands, a Netherlands Enterprise (Nederlandse onderneming), to which Netherlands Enterprise the Notes are attributable, or such holder is (other than by way of securities) entitled to a share in the profits of an enterprise or a co-entitlement to the net worth of an enterprise, which is effectively managed in the Netherlands and to which enterprise the Notes are attributable. Such holder is taxed in respect of benefits derived from the Notes at rates of up to 25 per cent.

Gift and inheritance tax Resident holders: Dutch gift tax or inheritance tax (schenk- of erfbelasting) will arise in respect of an acquisition (or deemed acquisition) of Notes by way of a gift by, or on the death of, a holder of Notes who is a resident, or treated as being a resident, of the Netherlands for the purposes of Dutch gift and inheritance tax. Non-resident holders: No Dutch gift tax or inheritance tax will arise in respect of an acquisition (or deemed acquisition) of Notes by way of a gift by, or on the death of, a holder of Notes who is neither a resident, nor treated as being a resident, of the Netherlands for the purposes of Dutch gift and inheritance tax.

Other taxes No Dutch turnover tax (omzetbelasting) will arise in respect of any payment in consideration for the issue of Notes, with respect to any cash settlement of Notes or with respect to the delivery of Notes. Furthermore, no Dutch registration tax, capital tax, transfer tax or stamp duty (nor any other similar tax or duty) will be payable in connection with the issue or acquisition of the Notes.

Residency A holder will not become a resident, or a deemed resident of the Netherlands for Dutch tax purposes by reason only of holding the Notes.

EU Directive on the Taxation of Savings Income The EU has adopted a Council Directive 2003/48/EC (the ‘Directive’) on the taxation of savings income. The Directive requires each Member State of the European Union to provide to the tax authorities of other Member States details of payments of interest and other similar income paid by a person within its jurisdiction to, or secured by such person for, an individual beneficial owner resident in, or to certain limited types of entity established in, another Member State, except that Austria and Luxembourg instead impose a withholding system for a transitional period (subject to a

218 procedure whereby, on meeting certain conditions, the beneficial owner of the interest or other income may request that no tax be withheld and certain provision of information procedures should be applied instead) unless during such period they elect otherwise. The current rate of withholding is 20 per cent and it will be increased to 35 per cent with effect from 1 July 2011. The transitional period is to terminate at the end of the first full fiscal year following agreement by certain non-EU countries to exchange of information procedures relating to interest and other similar income. The European Commission has proposed certain amendments to the Directive, which may, if implemented, amend or broaden the scope of the requirements described above. A number of EU countries, including Switzerland, and certain dependent or associated territories of certain Member States have adopted or agreed to adopt similar measures to the Directive. In addition, the Member States have entered into provision of information or transitional withholding arrangements with certain of those countries and territories in relation to payments made by a person in a Member State to, or secured by such a person for, an individual beneficial owner resident in, or certain limited types of entity established in, one of those countries or territories.

219 PLAN OF DISTRIBUTION Subject to the terms and conditions set forth in the purchase agreement between the Issuer and the Initial Purchasers dated as of the date hereof, the Issuer has agreed to sell, and the Initial Purchasers have agreed to use reasonable efforts to procure purchasers or purchase from the Issuer, the entire principal amount of the Notes. Sales in the United States will be made through affiliates of the Initial Purchasers. The purchase agreement provides that the Initial Purchasers will purchase all the Notes if any of them are purchased. In the purchase agreement, the Issuer has agreed to indemnify the Initial Purchasers against certain liabilities, including liabilities under U.S. securities laws, or contribute to payments that the Initial Purchasers may be required to make in respect of those liabilities. The purchase agreement provides that the obligations of the Initial Purchasers to purchase and accept delivery of the Notes offered hereby are subject to certain conditions precedent. The Initial Purchasers initially propose to offer the Notes for resale at the issue price that appears on the cover of this Offering Memorandum within the United States to qualified institutional buyers (as defined in Rule 144A) in reliance on Rule 144A and outside the United States in reliance on Regulation S. See ‘‘Transfer Restrictions.’’ After the initial offering, the Initial Purchasers may change the offering price and any other selling terms. The Initial Purchasers reserve the right to withdraw, cancel or modify offers to investors and to reject orders in whole or in part. The Initial Purchasers may offer and sell Notes through certain of its affiliates.

Selling Restrictions The Notes have not been and will not be registered under the U.S. Securities Act or the securities laws of any other jurisdiction. In the purchase agreement, the Initial Purchasers have agreed that during the initial distribution of the Notes, it will offer or sell Notes only to qualified institutional buyers in compliance with Rule 144A and outside the United States in compliance with Regulation S. In addition, with respect to Notes initially sold pursuant to Regulation S until 40 days after the commencement of the offering of the Notes, an offer or sale of Notes within the United States by a dealer (whether or not participating in the offering) may violate the registration requirements of the U.S. Securities Act unless the dealer makes the offer or sale in compliance with Rule 144A or another exemption from registration under the U.S. Securities Act. In the purchase agreement, the Initial Purchasers have represented, warranted and agreed that: • they (a) have only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by them in connection with the issue or sale of the Notes in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer and (b) have complied and will comply with all applicable provisions of the FSMA with respect to anything done by them in relation to the Notes in, from or otherwise involving the United Kingdom; • they have not offered or sold, and agree not to offer or sell, directly or indirectly, any Notes in Japan or for the account of any resident thereof except pursuant to any exemption from the registration requirements of the Securities and Exchange Law of Japan and otherwise in compliance with applicable provisions of Japanese law; and • in the Czech Republic they will offer or sell the Notes or distribute this Offering Memorandum or any other document relating to the Notes only to professional investors (kvalifikovan´ı investoˇri), as defined in Section 34(2)(d) of the Act No. 256/2004 Sb., on the Undertakings on the Capital Markets (‘CMU Act’), as amended, or in other circumstances which are exempted from the rules on public offerings pursuant to Section 35 Subsections 2 and 3 of the CMU Act. No action has been taken in any jurisdiction, including the United States, by the Issuer or the Initial Purchasers that would permit a public offering of the Notes or the possession, circulation or distribution of this Offering Memorandum or any other material relating to the Company or the Notes in any jurisdiction where action for the purpose is required. Accordingly, the Notes may not

220 be offered or sold, directly or indirectly, and neither this Offering Memorandum nor any other offering material or advertisements in connection with the Notes may be distributed or published, in or from any country or jurisdiction, except in compliance with any applicable rules and regulations of any such country or jurisdiction. This Offering Memorandum does not constitute an offer to purchase or a solicitation of an offer to sell in any jurisdiction where such offer or solicitation would be unlawful. Persons into whose possession this Offering Memorandum comes are advised to inform themselves about and to observe any restrictions relating to the offering of the Notes, the distribution of this Offering Memorandum and resale of the Notes including those set out under ‘‘Important Information’’. Each purchaser of the Notes will be deemed to have made acknowledgements, representations and agreements as described under ‘‘Transfer Restrictions’’.

Lock-up The Issuer has agreed that, subject to certain exceptions, for 180 days after the date of this Offering Memorandum without first obtaining the written consent of the Initial Purchasers, it will not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any debt securities or preferred stock of the Issuer, its parent or its subsidiaries.

No Established Trading Market The Notes are a new issue of securities, and there is currently no established trading market for the Notes. In addition, the Notes are subject to certain restrictions on transfer as described under ‘‘Transfer Restrictions.’’ The Issuer does not intend to apply for the Notes to be listed on any securities exchange other than the Global Exchange Market of the Irish Stock Exchange. The Initial Purchasers have advised the Issuer that they may make a market in the Notes after completion of this Offering, but they are not obligated to do so. The Initial Purchasers may discontinue any market making in the Notes at any time in their sole discretion. Accordingly, there is a risk that a trading market for the Notes may not develop, that you may be unable to sell your Notes at a particular time or that the prices you receive when you sell your Notes may not be favourable. You should be aware that the laws and practices of certain countries require investors to pay stamp taxes and other charges in connection with purchases of securities.

Price Stabilisation and Short Positions In connection with this Offering, the Stabilising Managers or any person acting for them, may (but will be under no obligation to), to the extent permitted by applicable law, over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail in the open market. However, there is no assurance that the Stabilising Managers (or any other person acting for them) will undertake stabilising action. Any stabilising action, if commenced, may be discontinued at any time, and may only be undertaken during the period beginning on the date on which adequate public disclosure of the final terms of the offer of the Notes is made and ending no later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of the allotment of the Notes. Save as required by law, the Stabilising Managers do not intend to disclose the extent of any over-allotments and/or stabilisation transactions under the Offering. Any stabilisation action will be undertaken in accordance with applicable laws and regulations.

Other Relationships The Initial Purchasers and their affiliates have from time to time performed certain financial advisory investment banking, commercial banking and/or other financial services and/or corporate brokerage services for and entered into financial transactions with the Company, its affiliates or its former affiliates, for which it received customary fees and reimbursement of expenses. The Initial Purchasers and their affiliates may in the future provide financial advisory, investment banking, commercial banking or other financial services to and/or enter into transactions with the Company or its affiliates. The Initial Purchasers and certain of their related entities may acquire, for their own accounts, a portion of the Notes offered hereby.

221 WHERE YOU CAN FIND MORE INFORMATION For so long as any of the Notes are restricted securities within the meaning of Rule 144(a)(3) under the U.S. Securities Act, the Issuer will, during any period in which the Issuer is neither subject to the reporting requirements of Section 13 or 15(d) of the U.S. Exchange Act, nor exempt from the reporting requirements of the U.S. Securities Exchange Act of 1934 (the ‘U.S. Exchange Act’) under Rule 12g3-2(b) thereunder, provide to the holder or beneficial owner of such restricted securities or to any prospective purchaser of such restricted securities designated by such holder or beneficial owner, in each case upon the written request of such holder, beneficial owner or prospective purchaser, the information required to be provide by Rule 144A(d)(4) under the U.S. Securities Act. The Issuer is currently not subject to the reporting requirements of the U.S. Exchange Act. However, pursuant to the Indenture and so long as the Notes are outstanding, the Issuer will furnish certain periodic information to holders of the Notes. See ‘‘Description of the Notes — Reports.’’ This Offering Memorandum contains summaries of certain agreements that the Company has entered into or expect to enter into in connection with this offering such as the Indenture and the other agreements described in this Offering Memorandum. The descriptions contained in this Offering Memorandum of these agreements do not purport to be complete and are subject to, or qualified in their entirety by reference to, the definitive agreements. The Issuer will provide you with copies of the Indenture and the form of the Notes upon receiving a written request from you at the following address: New World Resources N.V. Jachthavenweg 109h 1081 KM Amsterdam The Netherlands Attention: Compliance Officer

222 LISTING AND GENERAL INFORMATION 1. Application has been made for the Notes to be admitted to the Official List of the Irish Stock Exchange and admitted to trading on the Global Exchange Market in accordance with the rules of that exchange. There can be no assurance that the Issuer will be admitted to the Official List of the Irish Stock Exchange. This Offering Memorandum constitutes listing particulars for the purposes of such application. 2. Notification of any optional redemption, change of control or any change in the rate of interest payable on the Notes will be provided by the Issuer to the Irish Stock Exchange. 3. Paper copies of the following documents (or copies thereof, translated into English, where relevant) will be available for physical inspection while the Notes remain outstanding and listed on the Global Exchange Market of the Irish Stock Exchange at the registered office of the Issuer and the registered office of the listing agent during normal business hours on any weekday: • the organisational documents of the Issuer; • the most recent audited consolidated financial statements and any interim financial statements of the Company; and • the Indenture which includes the form of Notes. 4. The Trustee for the Notes is Deutsche Trustee Company Limited and its address is Winchester House, 1 Great Winchester Street, London EC2N 2DB. The Trustee will be acting in its capacity as trustee for the holders of the Notes and will provide such services to the holders of the Notes as described in the Indenture. 5. The Issuer, New World Resources N.V. is a public limited liability company incorporated on 29 December 2005 under the laws of the Netherlands with its corporate seat at Amsterdam, the Netherlands, and its registered address at Jachthavenweg 109h, 1081 KM Amsterdam, the Netherlands, registered in the trade register administered by the Chamber of Commerce for Amsterdam, under registration number 34239108. The Issuer’s telephone number is +31 20 570 2200 and its website is www.newworldresources.eu. The information and other content on its website is not part of this Offering Memorandum. 6. The auditors of the Issuer are KPMG Accountants N.V. of Laan van Langerhuize 1, 1186 DS Amstelveen, the Netherlands. 7. The Notes sold pursuant to Regulation S and the Notes sold pursuant to Rule 144A in this Offering have been accepted for clearance through the facilities of Euroclear and Clearstream under common codes 087798623 and 087798658 respectively. The ISIN for the Notes sold pursuant to Regulation S is XS0877986231 and the ISIN for the Notes sold pursuant to Rule 144A is XS0877986587. 8. The amount of the fees and expenses of this Offering, including underwriting commissions and discounts of the Initial Purchasers, is expected to be approximately EUR 4.5 million. The net proceeds of the offering are expected to be approximately EUR 271 million. The estimated total expenses relating to the admission of the Notes to trading are approximately EUR 5,041.20. 9. There has been no significant change in the financial position or prospects of the Issuer and no significant change in its financial position or prospects since 31 December 2011, except as may be indicated in this Offering Memorandum. 10. There has been no significant change in the financial position or trading position of the Issuer since 31 December 2011, except as may otherwise be indicated in this Offering Memorandum. Except as it may otherwise be indicated in this Offering Memorandum, the Issuer has not been involved in any litigation, governmental or arbitration proceedings during the 12 months preceding the date of this Offering Memorandum which may have, or have had in the recent past, a significant effect on its financial position. 11. The issuance of the Notes was duly authorized by resolutions of the Issuer’s Board of Directors on 1 March 2012 and 13 November 2012. 12. Claims against the Issuer for the payment of principal or Additional Amounts, if any, and interest on the Notes will be subject to the applicable statute of limitations pursuant to New York law after the applicable due date for payment thereof.

223 TRANSFER RESTRICTIONS You are advised to consult legal counsel prior to making any offer, resale, pledge or other transfer of any of the Notes offered hereby. The Notes offered hereby are subject to restrictions on transfer as summarized below. By purchasing Notes, you will be deemed to have made the following acknowledgments, representations to and agreements with the Issuer and the Initial Purchasers: (i) You acknowledge that: • the Notes have not been registered under the U.S. Securities Act or any other securities laws and are being offered for resale in transactions that do not require registration under the U.S. Securities Act or any other securities laws; and • the Notes may not be offered, sold or otherwise transferred except under an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act or any other applicable securities laws, and in each case in compliance with the conditions for transfer set forth in paragraph (v) below. (ii) You acknowledge that this Offering Memorandum relates to an offering that is exempt from registration under the U.S. Securities Act and may not comply in important respects with SEC rules that would apply to an offering document relating to a public offering of securities. (iii) You represent that you are not an affiliate (as defined in Rule 144 under the U.S. Securities Act) of the Issuer, that you are not acting on the Issuer’s behalf and that either: • you are a qualified institutional buyer (as defined in Rule 144A under the U.S. Securities Act) and are purchasing Notes for your own account or for the account of another qualified institutional buyer, and you are aware that the Initial Purchasers are selling the Notes to you in reliance on Rule 144A; or • you are not a person in the United States (as defined in Regulation S under the U.S. Securities Act) or purchasing for the account or benefit of a person in the United States, and you are purchasing Notes in an offshore transaction in accordance with Regulation S. (iv) You acknowledge that neither the Company nor the Initial Purchasers nor any person representing the Issuer or the Initial Purchasers has made any representation to you with respect to the Company or the offering of the Notes, other than the information contained in this Offering Memorandum. You represent that you are relying only on this Offering Memorandum in making your investment decision with respect to the Notes. (v) You represent that you are purchasing Notes for your own account, or for one or more investor accounts for which you are acting as a fiduciary or agent, in each case not with a view to, or for offer or sale in connection with, any distribution of the Notes in violation of the U.S. Securities Act. If you are a qualified institutional buyer who is in the United States, you agree on your own behalf and on behalf of any investor account for which you are purchasing Notes, and each subsequent holder of the Notes by its acceptance of the Notes will agree, that until the end of the Resale Restriction Period (as defined below), the Notes may be offered, sold or otherwise transferred only: (a) to the Issuer; (b) for so long as the Notes are eligible for resale under Rule 144A, to a person the seller reasonably believes is a qualified institutional buyer that is purchasing for its own account or for the account of another qualified institutional buyer and to whom notice is given that the transfer is being made in reliance on Rule 144A; (c) through offers and sales that occur outside the United States within the meaning of Regulation S under the U.S. Securities Act; and (d) under any other available exemption from the registration requirements of the U.S. Securities Act.

224 (vi) You also acknowledge that: • the above restrictions on resale will apply to holders of Rule 144A Notes from the closing date until the date that is one year after the later of the closing date and the last date that the Issuer or any of its affiliates was the owner of the Notes or any predecessor of the Notes (the Resale Restriction Period), and will not apply after the Resale Restriction Period ends; • the Company and the Trustee reserve the right to require in connection with any offer, sale or other transfer of Notes before the Resale Restriction Period ends under clauses (v)(d) above the delivery of an opinion of counsel, certifications and/or other information satisfactory to the Company and the Trustee; and • each Rule 144A note will contain a legend substantially to the following effect: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE ‘U.S. SECURITIES ACT’), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE RESALE RESTRICTION TERMINATION DATE) THAT IS ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE U.S. SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A ‘‘QUALIFIED INSTITUTIONAL BUYER’’ AS DEFINED IN RULE 144A UNDER THE U.S. SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE U.S. SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT, SUBJECT TO THE ISSUER’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. (vii) Any resale or other transfer, or attempted resale or other transfer, made other than in compliance with the above stated restrictions shall not be recognised by the Company or the Initial Purchasers. (viii) You acknowledge that the Company, the Initial Purchasers and others will rely upon the truth and accuracy of the above acknowledgments, representations and agreements. If you are purchasing any Notes as a fiduciary or agent for one or more investor accounts, you represent that you have sole investment discretion with respect to each of those accounts and that you have full power to make the above acknowledgments, representations and agreements on behalf of each account.

225 LEGAL MATTERS The validity of the issuance of the Notes and certain legal matters in connection with this Offering will be passed upon for the Issuer by Linklaters LLP, U.S., Dutch, Polish and English law counsel to the Issuer. Certain legal matters in connection with this Offering will be passed upon by Cleary Gottlieb Steen & Hamilton LLP U.S. and English law counsel to the Initial Purchasers, Linklaters LLP, Polish counsel to the Initial Purchasers and PRK Partners, Czech law counsel to the Initial Purchasers.

INDEPENDENT AUDITORS The consolidated financial statements of the Group and/or the Company as of and for the years ended 31 December 2011, 2010 and 2009 incorporated by reference in this Offering Memorandum have been audited by KPMG Accountants N.V., independent auditors, as stated in their reports appearing herein. The business address of KPMG Accountants N.V. is Laan van Langerhuize 1, 1186 DS Amstelveen, the Netherlands. The auditor signing the auditor’s reports on behalf of KPMG Accountants N.V. is registered with the Royal Dutch Institute of Chartered Accountants (Koninklijk Nederlands Instituut van Registeraccountants).

226 DEFINITIONS ‘‘9M 2011’’ refers to the nine months period ended on 30 September 2011. ‘‘9M 2012’’ refers to the nine months period ended on 30 September 2012. ‘‘2009 Consolidated Financials’’ refers to the audited consolidated financial statements of the Issuer as of and for the year ended 31 December 2009. ‘‘2010 Consolidated Financials’’ refers to the audited consolidated financial statements of the Issuer as of and for the year ended 31 December 2010. ‘‘2010 PD amending Directive’’ refers to Directive 2010/73/EU. ‘‘2011 Consolidated Financials’’ refers to the audited consolidated financial statements of the Issuer as of and for the year ended 31 December 2011. ‘‘2015 Notes’’ refers to the senior notes issued under the 2015 Notes Indenture dated 18 May 2007 entered into by and among the Issuer, Deutsche Trustee Company Limited, Deutsche Bank AG, London Branch, Deutsche Bank Luxembourg S.A. and Deutsche International Corporate Services (Ireland) Limited. ‘‘2015 Notes Indenture’’ refers to the indenture governing the 2015 Notes. ‘‘2015 Perspective Programme’’ refers to the 2015 Perspective capital investment programme as described in more detail in ‘‘Operating and Financial Review and Prospects.’’ ‘‘2018 Notes’’ refers to the senior secured notes issued under the 2018 Notes Indenture dated 27 April 2010 entered into by and among the Issuer, OKD, OKK, Karbonia, Deutsche Trustee Company Limited, Deutsche Bank AG, London Branch, Deutsche Bank Luxembourg S.A. and Citibank N.A., London Branch. ‘‘2018 Notes Indenture’’ refers to the indenture governing the 2018 Notes. ‘‘Act on Air’’ refers to the Czech Act No. 201/2012 Sb., as amended. ‘‘Act on Mining Activities’’ refers to the Czech Act No. 61/1988 Sb., as amended. ‘‘Act on Renewable Resources’’ refers to the Czech Act No. 165/2012 Sb., on supported energy sources, as amended. ‘‘AMCI’’ refers to American Metals & Coal International, Inc., a corporation incorporated under the laws of the state of Connecticut, United States, its affiliate AMCI Acquisition IV, LLC, a limited liability company organised under the laws of Delaware or any other affiliate of American Metals & Coal International, Inc. ‘‘Arcelor Mittal Steel’’ refers to Mittal Steel Company N.V., a naamloze vennootschap organised under the laws of the Netherlands, or any of its affiliates. ‘‘ArcelorMittal’’ refers to ArcelorMittal S.A. or any of its affiliates. ‘‘Articles of Association’’ refers to the articles of association of the Issuer as of the date of the Offering. ‘‘Assets of the Real Estate Division’’ refers, to: (i) all of the rights, rental or lease income, title and interest in or to all assets of the Real Estate Division owned and/or registered (with the exception of leases (other than leases with an unexpired lease term in excess of 50 years)) and options to acquire assets of the Real Estate Division (other than to the extent any such option has been exercised and paid for by the Commencement Time) in favour of the Issuer as at the Commencement Time; and (ii) all rights, rental or lease income, title and interest in or to all the assets referred to in (i) as they are supplemented, modified or reduced subsequently pursuant to the terms of the Divisional Policy Statements (including any business, rights, benefits, shares in companies and other assets related to or derived from the assets in (i), (ii), (iii) and (iv) (whether existing at, or arising after, the Commencement Time), including the goodwill attached to the assets in (i) and the business, assets, rights, benefits or property thereof or which arise when the disposal of such assets and the income generated thereof (as such may be reinvested from time to time). ‘‘AWT B.V.’’ refers to Advanced World Transport B.V., a private company with limited liability organised under the laws of the Netherlands, with a corporate seat in Amsterdam, the Netherlands.

227 ‘‘AWT ‘‘ refers to Advanced World Transport a.s. (formerly known as OKD, Doprava, akciova´ spolecnost),ˇ a joint-stock company (akciova´ spolecnost)ˇ incorporated under the laws of the Czech Republic, with its corporate seat in Ostrava, Czech Republic, and having its registered address at Hornopolni 3314/38, Ostrava, Czech Republic. ‘‘Barclays Capital’’ refers to Barclays Bank Plc. ‘‘Board’’ refers to the board of directors of the Issuer from time to time. ‘‘Bogdanka’’ refers to Lubelski W˛egiel Bogdanka SA., a company incorporated under the laws of Poland. ‘‘Book-Entry Interests’’ refers to the Unrestricted Book-Entry Interests together with the Restricted Book-Entry Interests. ‘‘Bridge Facility Agreement’’ refers to the unsecured bridge facility agreement entered into between, amongst others, The Issuer, Citibank Europe Plc acting through its Prague branch Citibank Europe Plc, organizacni slozka, JPMorgan Chase Bank, N.A. and BXR Finance No. 1 Limited (an affiliate of BXR Mining) dated 5 October 2010 as amended and restated by an amendment and restatement agreement dated 25 November 2010. ‘‘Buildings’’ refers to buildings, constructions and similar real estate assets. ‘‘Business’’ refers to the coal mining and coke production and trade business of the Company. ‘‘BXL’’ refers to BXL Consulting Ltd. ‘‘BXR Group’’ refers to BXRG Limited and BXR Mining and each of their affiliates. ‘‘BXRG Limited’’ refers to BXR Group Limited, a company organised under the laws of the British Virgin Islands, with its corporate seat in the British Virgin Islands. ‘‘BXR Mining’’ refers to BXR Mining B.V., a company organised under the laws of the Netherlands, the direct holder of NWR PLC A Shares. ‘‘BXRP a.s. Advisory and Service Agreement’’ refers to the advisory and service agreement dated 29 September 2006 between OKD and BXRP a.s. for the provision of certain advisory services by BXRP a.s. to OKD that came into effect on 1 October 2006. ‘‘CCII’’ refers to Crossroads Capital Investments Inc., a company organised under the laws of the British Virgin Islands. ‘‘CDˇ Cargo’’ refers to CDˇ Cargo, a.s., a company organised under the laws of the Czech Republic. ‘‘CEBC’’ refers to the Issuer’s internal Code of Ethics and Business Conduct. ‘‘CE’’ refers to the geographic region of Central Europe, which includes Austria, Czech Republic, Germany, Hungary, Liechtenstein, Poland, Slovakia, Slovenia, Switzerland. ‘‘Ceskˇ a´ spoˇritelna’’ refers to the Czech bank Ceskˇ a´ spoˇritelna, a.s. ‘‘CEZ’’ˇ refers to CEZˇ a.s. a joint-stock company (akciova´ spolecnostˇ ) organised under the laws of the Czech Republic. ‘‘Chemical Act’’ refers to the Czech Act No. 350/2011 Sb., chemical act. ‘‘Civil Code’’ refers to the Czech Act No. 40/1964 Sb., as amended, the Civil Code. ‘‘Clearstream’’ refers to Clearstream Banking societ´ e´ anonyme, a public limited company incorporated under the laws of the G. D. of Luxembourg R.C.S. Luxembourg B 9248 with a registered address at 42 Avenue JF Kennedy, L-1855, Luxembourg. ‘‘CMD’’ˇ refers to the now non-existent CMD,ˇ a.s., a mining company in the Former OKD Group and a joint-stock company (akciova´ spolecnostˇ ) organised under the laws of the Czech Republic which was merged with Former OKD on 30 November 2005. ‘‘CMU Act’’ refers to the Czech Act No. 256/2004 Sb., on the Undertakings on the Capital Markets. ‘‘CNB’’ refers to the Czech National Bank.

228 ‘‘Commencement Time’’ refers to the time of commencement of the operation of the Real Estate Division and the Mining Division as separate divisions of the Issuer pursuant to the Articles of Association being 11:59 p.m. on 31 December 2007. ‘‘Company’’ refers to NWR NV and all its subsidiaries. ‘‘Company’s business’’ refers to the coal mining and coke production and trade business of the Company. ‘‘CONSOB’’ refers to the Italian Commissione Nazionale per la Societa e la Borsa. ‘‘Consultancy Agreement’’ refers to the consultancy agreement concluded between the Issuer and BXL on 31 October 2006. ‘‘COP 2010’’ refers to the coking plant optimization programme as described in more detail in ‘‘Description of the Business — Capital Investment Programmes’’. ‘‘Core Business’’ refers to the Issuer’s principal business, being hard coal mining and coke production. ‘‘Corporate Governance Policy’’ refers to the corporate governance policy of the Issuer adopted by the Board, including, amongst other things, rules governing the Board principles and best practices. ‘‘CODM’’ refers to the chief operating decision maker of the Company.’’CSA’’ˇ refers to the CSAˇ mine, an OKD mine located in the Northeastern region of the Czech Republic. ‘‘CSM’’ˇ refers to the CSMˇ mine, an OKD mine located in the Northeastern region of the Czech Republic. ‘‘CZECH-KARBON’’ refers to CZECH-KARBON s.r.o. a company organised under the laws of the Czech Republic, with the current name of Dalkia Commodities CZ, s.r.o. ‘‘Czech law’’ or ‘‘Czech regulations’’ refers to statutes of the Czech parliament, decrees and regulations of the Czech government, ministries and other competent state agencies and regulators as well as EU law as applicable in the Czech Republic. ‘‘Czech Mining Office’’ refers to Ceskˇ y´ ba´nskˇ y´ u´ˇrad, the supreme mining regulatory body in the Czech Republic. ‘‘Czech State’’ refers to Ministry of Finance of the Czech Republic. ‘‘Dalkia’’ refers to the DALKIA group of companies. ‘‘Dalkia Commodities CZ’’ refers to Dalkia Commodities CZ, s.r.o., (former CZECH-KARBON s.r.o.) a company organised under the laws of the Czech Republic. ‘‘Dalkia Industry CZ’’ refers to Dalkia Industry CZ, a.s., a company organised under the laws of the Czech Republic. ‘‘Darkov’’ refers to the Darkov mine, an OKD mine located in the Northeastern region of the Czech Republic. ‘‘Data Processing Agreement’’ refers to the Agreement on Conduct of Work and Services of Automatic Data Processing between OKD and Doprava dated 21 January 2002 in respect of providing certain services of automatic data processing for an undefined period of time, which came into effect on 1 January 2002. ‘‘D˛ebiensko’’´ refers to the D˛ebiensko´ mining region in the southern part of Poland. ‘‘Development Projects’’ refers to Frenstˇ at,´ D˛ebiensko´ and Morcinek. ‘‘Definitive Registered Notes’’ refers to definitive Notes in registered form. ‘‘Directive’’ refers to Council Directive 2003/48/EC on the taxation of savings income. ‘‘Directors’’ refers to Executive Directors and Non-Executive Directors of the Issuer and/or NWR PLC from time to time. ‘‘Division(s)’’ refers to the Real Estate Division and/or the Mining Division, as applicable.

229 ‘‘Divisional Policy Statements’’ refers to the divisional policy statements allocating rights and responsibilities between the Mining Division and the Real Estate Division adopted by the Board. ‘‘Doprava’’ refers to OKD, Doprava, akciova´ spolecnost,ˇ a joint- stock company (akciova´ spolecnostˇ ) organised under the laws of the Czech Republic. ‘‘DPB’’ refers to Green Gas DPB, a.s., a joint-stock company (akciova´ spolecnostˇ ) organised under the laws of the Czech Republic. ‘‘Dukla Industrial Zone’’ refers to Dukla Industrial Zone a.s., a joint-stock company (akciova´ spolecnostˇ ) organised under the laws of the Czech Republic. ‘‘Dutch Act’’ refers to the Dutch Act on Financial Supervision. ‘‘Dutch Code’’ refers to the Dutch Corporate Governance Code, as amended. ‘‘EBITDA’’ with respect to the Company, refers to the definition of EBITDA set forth in footnote 6 of the table set forth in ‘‘Summary Financial and Other Data’’ of this document. ‘‘ECA Facility’’ refers to the ECA loan agreement entered into between, amongst other parties, the Issuer and OKD on 29 June 2009 as described in ‘‘Description of Certain Other Indebtedness.’’ ‘‘ECB’’ refers to the European Central Bank. ‘‘Ecological Agreement’’ refers to the agreement entered into in 1996 by Former OKD and NPF on environmental liability caused prior to the privatisation of OKD, as amended in 1998. ‘‘EEA’’ refers to the European Economic Area. ‘‘EIA’’ refers to an environmental impact assessment. ‘‘EIB’’ refers to the European Investment Bank. ‘‘Emission Allowances Act’’ refers to Act No. 383/2012 Sb., on conditions of greenhouse gas emission allowance trading, as amended. ‘‘Energy Subsidiaries’’ refers to Dalkia Industry CZ and Dalkia Commodities CZ. ‘‘Environmental Impact Assessment Act’’ refers to the Czech Act No. 100/2001 Sb., as amended. ‘‘EU’’ refers to the European Union. ‘‘EU Insolvency Regulation’’ refers to the EU Insolvency Regulation (1346/2000). ‘‘Euroclear’’ refers to Euroclear S.A./N.V., a company registered under RPM Brussels 0429 875 591 with a registered address at 1 Boulevard du Roi Albert II, B-1210 Brussels, Belgium. ‘‘Exchange Offer’’ refers to an exchange offer pursuant to which each holder of a NWR NV A Share will receive one NWR Plc A Share. ‘‘Executive Director(s)’’ refers to executive directors of the Issuer being Gareth Penny and Marek Jel´ınek as at the date of this Offering Memorandum. ‘‘EXW’’ refers to the ‘‘Ex Works’’ Incoterm, which is when the seller fulfils his obligation to deliver upon having the goods available at his premises to the buyer. ‘‘Factory Railway Agreements’’ refers to agreements between OKD and AWT for the provision of factory railway transport at OKD mines for an indefinite period of time. ‘‘Financial Promotion Order’’ refers to the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended. ‘‘Financial Services Act’’ refers to the Italian Legislative Decree No 58 of 24 February 1998. ‘‘Financial Regulator’’ refers to the Central Bank of Ireland. ‘‘Former OKD’’ refers to the now non-existent OKD, a.s., the legal predecessor of OKD, CMD,ˇ CMD’sˇ former holding company KOP a.s., Doprava, DPB and certain entities owning real estate. ‘‘Former OKD Group’’ refers to, in the aggregate, Former OKD, Doprava, DPB, RPGICZ and their respective subsidiaries.

230 ‘‘Frenstˇ at’’´ refers to the Frenstˇ at´ mine, an OKD mine being considered for development in the northeastern region of the Czech Republic. ‘‘FSA’’ or ‘‘Financial Services Authority’’ refers to the Financial Services Authority in its capacity as the competent authority for the purposes of Part VI of FSMA. ‘‘FSMA’’ refers to the Financial Services and Markets Act 2000, as amended. ‘‘FSU System’’ refers to the classification system and estimation methods for reserves and resources established by the former Soviet Union, last revised in 1981. ‘‘FTSE Index Series’’ refers to the series of indices designed to represent the performance of UK Companies and administered by FTSE International Limited. ‘‘Gara´ze’’ˇ refers to the 49.03 per cent of the entire issued share capital of Gara´zeˇ Ostrava a.s., a Czech company previously owned by the Issuer and held as part of the Real Estate Division and distributed to RPGI on 30 September 2008. ‘‘GJ’’ refers to Giga Joule. ‘‘GGI’’ refers to Green Gas International B.V., a private company with limited liability organised under the laws of the Netherlands, with a corporate seat in Amsterdam, the Netherlands. ‘‘GGI Service Agreement’’ refers to the service agreement between the Issuer and GGI, dated 10 December 2007, for the provision of certain services by the Issuer to GGI with effect from 23 May 2007. ‘‘Global Notes’’ refers to the Regulation S Global Notes together with the Rule 144A Global Notes. ‘‘Group’’ refers to NWR Plc and all its subsidiaries. ‘‘Guide 7’’ refers to SEC Industry Guide 7, which governs disclosures of mineral reserves in registration statements and reports filed with the SEC. ‘‘HBZS’’ refers to OKD HBZS, a.s., a wholly owned Czech subsidiary of OKD responsible for all safety and rescue operations in the Company. ‘‘IFRS’’ refers to International Financial Reporting Standards as adopted by the EU. ‘‘IMF’’ refers to the International Monetary Fund. ‘‘Indenture’’ refers to the indenture governing the Notes dated on or about 23 January 2013 entered into by and among the Issuer and the Trustee. ‘‘Initial Purchasers’’ refers to Citigroup Global Markets Limited, Morgan Stanley & Co. International plc, Goldman Sachs International, Erste Group Bank AG. ‘‘Intercreditor Agreement’’ refers to the intercreditor agreement dated 27 April 2010, among the Issuer, OKD, OKK, Karbonia, the Trustee and the Security Agent. ‘‘IPPC Act’’ refers to the Czech Act No. 76/2002 Sb., on integrated pollution prevention and control, as amended. ‘‘Irish Stock Exchange’’ refers to the Irish Stock Exchange Plc. ‘‘ISIN’’ refers to the international security identification number. ‘‘Issuer’’ refers to New World Resources N.V. (also referred to as ‘‘NWR NV’’), a public company with limited liability organised under the laws of the Netherlands, with a corporate seat in Amsterdam, the Netherlands. ‘‘JORC Code’’ refers to the Australasian Code for Reporting Mineral Resources and Ore Reserves (2004) published by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Minerals Council of Australia. ‘‘JSW’’ refers to Jastrz˛ebska Spo´łka W˛eglowa´ S.A., a company incorporated under the laws of Poland. ‘‘Karbon Invest’’ refers to the now non-existent KARBON INVEST, a.s., a joint stock company (akciova´ spolecnost)ˇ organised under the laws of the Czech Republic which was merged with

231 Charles Capital, a.s. and RPG Industries Public Limited into RPG Industries SERPGI on 3 August 2006. ‘‘Karbonia’’ refers to NWR Karbonia S.A., (formerly NWR KARBONIA Spo´łka z ograniczon˛a odpowiedzialnosci˛´ a), a joint stock company organised and existing under the laws of Poland. Karbonia is a fully owned subsidiary of the Issuer. ‘‘Karbonia Share Pledge Agreement’’ refers to the 27 April 2010 share pledge agreement between Karbonia and the Issuer. ‘‘Karvina’’´ refers to Karvina´ Mine, located in the North-eastern region of the Czech Republic and is a result of merger of CSA Mine and Lazy Mine on 1 April 2008. ‘‘Lazy’’ refers to the Lazy mine, an OKD mine located in the North-eastern region of the Czech Republic.’’London Stock Exchange’’ or ‘‘LSE’’ refers to the London Stock Exchange Plc. ‘‘LTIFR’’ or ‘‘Lost Time Injury Frequency Rate’’ means number of reportable injuries after three days of absence divided by total hours worked multiplied by one million. ‘‘Manipulation Agreements’’ refers to the agreements between OKD and Doprava on manipulation of substrates. ‘‘Master Advisory and Services Agreement’’ refers to the master advisory and services agreement dated 28 March 2007 between the Issuer and BXRP a.s. ‘‘Master Agreement on the Sale of Methane’’ refers to the master agreement on the sale of methane between OKD and DPB dated 20 December 2006. ‘‘Master Services Agreement Related to Mines’ Safety’’ refers to the master services agreement on provision of specialised services (in geophysics, seismology, etc.) related to mines’ safety by DPB between OKD and DPB dated 13 March 2007. ‘‘Metalimex’’ refers to Metalimex, a.s., a joint-stock company (akciova´ spolecnostˇ ) organised under the laws of the Czech Republic. ‘‘Mining Act’’ refers to Czech Act No. 44/1988 Sb., on protection and use of mineral treasure, as amended. ‘‘Mining Division’’ refers to the division of the Issuer consisting of all assets and liabilities of the Issuer other than the assets and liabilities of the Real Estate Division (being the Assets of the Real Estate Division). ‘‘Moravia Steel’’ refers to Moravia Steel, a.s. a joint-stock company (akciova´ spolecnostˇ ) organised under the laws of the Czech Republic. ‘‘Morcinek’’ refers to the Morcinek mining region, Poland. ‘‘NAP’’ the National Allocation Plans under which emission allowances are allocated. ‘‘Notes’’ refers to the 7.875 per cent Senior Notes due 2021. ‘‘NPF’’ refers to the Czech National Property Fund, a quasi-governmental body in the Czech Republic. ‘‘Nuclear Act’’ refers to the Czech Act No. 18/1997 Sb. as amended. ‘‘NWR Coking’’ refers to NWR Coking, a.s., a joint-stock company (akciova´ spolecnostˇ ) incorporated under the laws of the Czech Republic. ‘‘NWR Communications’’ refers to NWR Communications s.r.o., a wholly owned Czech subsidiary of the Issuer responsible for investor relations services for the Company and NWR Plc. ‘‘NWR Energetyka’’ refers to NWR Energetyka PL Spo´łka z ograniczon˛a odpowiedzialnosci˛´ a, a limited liability company organised under the laws of Poland. ‘‘NWR Energy’’ refers to NWR Energy, a.s., a sold subsidiary of the Issuer organised under the laws of the Czech Republic, with the current name of Dalkia Industry CZ. ‘‘NWR NV’’ refers to New World Resources N.V. (also referred to as ‘‘Issuer’’), a public company with limited liability organised under the laws of the Netherlands, with a corporate seat in Amsterdam, the Netherlands.

232 ‘‘NWR NV A Shares’’ refers to the ‘‘A’’ ordinary shares, with a nominal value of EUR 0.40 each, in the share capital of NWR NV, which are designed to track the performance of, and represent the economic value in, the Mining Division, or depository interests representing such shares, as applicable. ‘‘NWR NV B Shares’’ refers to ordinary ‘‘B’’ shares in the share capital of NWR NV, with a nominal value of EUR 0.40 each, in the share capital of NWR NV, which are designed to track the performance of, and represent the economic value in, the Real Estate Division to the extent the B Shares are held by NWR NV. ‘‘NWR Plc’’ refers to New World Resources Plc, a public limited company incorporated under the laws of England and Wales and having its registered address at One Silk Street, London, EC2Y 8HQ. ‘‘NWR Plc Board’’ refers to the board of directors of NWR Plc. ‘‘NWR Plc A Shares’’ refers to the ‘‘A’’ ordinary shares, with a nominal value of EUR 0.40 each, in the share capital of NWR Plc, which are designed to track the performance of, and represent the economic value in, the Mining Division to the extent the A Shares are held by NWR Plc, or depository interests representing such shares, as applicable. ‘‘NWR Plc B Shares’’ refers to ordinary ‘‘B’’ shares in the share capital of NWR Plc, with a nominal value of EUR 0.40 each, in the share capital of NWR Plc, which are designed to track the performance of, and represent the economic value in, the Real Estate Division to the extent the B Shares are held by NWR Plc. ‘‘Non-Executive Director(s)’’ refers to non-executive directors of the Issuer being Hans-Jorg¨ Rudloff, Steven Schuit, Paul Everard, and Barry Rourke, as at the date of this Offering Memorandum. ‘‘Offering’’ refers to the offer by the Issuer of its Senior Notes due 2021 ‘‘Offering Memorandum’’ refers to this offering memorandum relating to the Offering. ‘‘Official List’’ refers to the list maintained by the Financial Services Authority in accordance with Part VI of the Financial Services and Markets Act 2000, as amended. ‘‘OKD’’ refers to OKD, a.s. (formerly OKD, Mining, a.s.), a joint-stock company (akciova´ spolecnostˇ ) organised under the laws of the Czech Republic and the principal direct subsidiary of the Issuer, which assumed the Business as a part of the Restructuring. ‘‘OKD, Bastro’’ refers to OKD, BASTRO, a.s., a joint-stock company (akciova´ spolecnostˇ ) organised under the laws of the Czech Republic. ‘‘OKK’’ refers to OKK Koksovny, a.s. (formerly OKD, OKK, a.s.), a joint-stock company (akciova´ spolecnost)ˇ organised under the laws of the Czech Republic. ‘‘Paskov’’ refers to the Paskov mine, an OKD mine located in the north-eastern region of the Czech Republic. ‘‘Patria Finance’’ refers to Patria Finance, a.s., a Czech equities broker. ‘‘Paying Agent’’ refers to Deutsche Bank AG London Branch. ‘‘PKU’’ refers to Palivovy´ kombinat´ Ust´ ´ı, s.p. a state-owned company incorporated under the laws of the Czech Republic. ‘‘Polish Act dated 25 March 2011’’ refers to the Act on amendment of the Penal Code Act and certain other laws of 25 March 2011. ‘‘Polish Act on Disclosing Information’’ refers to the Act on disclosing information on the environment and its protection, public participation in environmental protection and environmental impact assessments of 3 October 2008. ‘‘Polish Act on Liability of Collective Entities’’ refers to the Law on Liability of Collective Entities For Acts Prohibited under Penalty of 28 October 2002. ‘‘Polish Act on Preventing and Repairing Damage to the Environment’’ refers to the Act on Preventing and Repairing Damage to the Environment of 13 April 2007.

233 ‘‘Polish Act on Extractive Waste’’ refers to the Extractive waste Act of 10 July 2008. ‘‘Polish Chemical Substances Act’’ refers to the Chemical Substances Act of 11 January 2001. ‘‘Polish Civil Code’’ refers to the Polish Civil Code of 23 April 1964. ‘‘Polish Chemical Substances Act’’ refers to the Act on Chemical Substances of 25 August 2011. ‘‘Polish Emission Allowance Act’’ refers to the Act on greenhouse gas allowance trading of 28 April 2011. ‘‘Polish Energy Law’’ refers to the Act on Energy Law of 10 April 1997. ‘‘Polish Environmental Protection Act’’ refers to the Environmental Protection Act of 27 April 2001. ‘‘Polish Mining and Geological Law’’ refers to the Mining and Geological Law of 9 June 2011. ‘‘Polish Mining Industry Act’’ refers to the Act dated 7 September 2007 on the organisation of the hard coal mining sector for the years between 2008 and 2015. ‘‘Polish Nuclear Law’’ refers to the Nuclear Law of 29 November 2000. ‘‘Polish Local Taxes and Levies Act’’ refers to the Local Taxes and Levies Act of 12 January 1991. ‘‘Polish Public Procurement Law’’ refers to the Public Procurement Law of 29 January 2004. ‘‘Polish Waste Act’’ refers to the Waste Act of 27 April 2001. ‘‘Polish Water Act’’ refers to the Water Act of 18 July 2001. ‘‘POP 2010’’ refers to the Company’s capital investment program (Production Optimization Program 2010). ‘‘PPE’’ refers to property, plant and equipment. ‘‘Prague Stock Exchange’’ or ‘‘PSE’’ refers to Burza cenn´ych pap´ıru˚ Praha, a.s. ‘‘Prospectus’’ refers to the prospectus published by NWR Plc on 17 April 2011 pursuant to which the Exchange Offer is made. ‘‘Public Procurement Act’’ refers to the Czech Act No. 137/2006 Sb. on Public Procurement, as amended. ‘‘REACH’’ refers to Regulation (EC) No 1907/2006 concerning the to the Registration, Evaluation, Authorization and Restriction of Chemicals. ‘‘Real Estate Assets’’ refers to all real estate assets owned by the Company at the time of the establishment of the divisions. ‘‘Real Estate Committee’’ refers to the committee established by the Board, which is responsible for providing advice and recommendations to the Board on matters relating to the Real Estate Division. ‘‘Real Estate Division’’ refers to the division of the Issuer consisting of all Real Estate Assets, as defined in the Articles of Association of the Issuer as at the date of this Offering Memorandum. ‘‘Redomiciliation’’ refers to the Company re-incorporating from the Netherlands to the United Kingdom effected through the establishment of NWR Plc. ‘‘Registrar’’ refers to Deutsche Bank Luxembourg S.A. ‘‘Regulation S’’ refers to Regulation S of the U.S. Securities Act. ‘‘Regulation S Global Notes’’ refers to Notes sold to persons outside the United States in reliance on Regulation S. ‘‘Regulatory Information Service’’ refers to any of the services set out in Appendix 3 to the Listing Rules of the UKLA.

234 ‘‘Rekultivace’’ refers to OKD, Rekultivace, a.s., a company organised under the laws of the Czech Republic. ‘‘Relationship Agreement’’ refers to the relationship agreement between, inter alia, the Issuer, NWR Plc and BXR Mining designed to ensure that the Group is capable at all times of carrying on its business independently of BXR Mining and its subsidiaries and that all of the Group’s transactions and relationships with BXR Mining and its subsidiaries are on arm’s-length terms. ‘‘Relevant Persons’’ refer to relevant persons under the FSMA. ‘‘Resale Restriction period’’ refers to the period from the closing date until the date that is one year after the later of the closing date and the last date that the Issuer or any of its affiliates was the owner of the Notes or any predecessor of the Notes. ‘‘Restricted Book-Entry Interests’’ refers to ownership of interests in the Rule 144A Global Notes. ‘‘Restricted Subsidiaries’’ refers to all of the subsidiaries of the Issuer other than the Unrestricted Subsidiaries. ‘‘Restructuring’’ refers to the restructuring transactions of OKD as described under the caption ‘‘Operating and Financial Review and Prospects — The Restructuring’’ in this Offering Memorandum. ‘‘Revolving Credit Facility’’ refers to the revolving credit facility dated 7 February 2011 between the Issuer and, among others, Ceskˇ a´ spoˇritelna, as facility agent, Citigroup Global Markets Limited as documentation agent, and Ceskˇ a´ spoˇritelna, Ceskoslovenskˇ a´ obchodn´ı banka a.s., Citigroup Global Markets Limited, Komercnˇ ´ı banka, a.s. and ING Bank N.V., Prague branch, as arrangers and original lenders. ‘‘RPG Byty’’ refers to RPG Byty, s.r.o. (formerly RPG RE Residential, s.r.o.) a limited liability company (spolecnostˇ srucenimˇ omezenym)´ incorporated under the laws of the Czech Republic and a legal successor to Former OKD that assumed the residential property of Former OKD as a result of the Restructuring, with its corporate seat in Ostrava, Czech Republic, and having its registered address at Gregorova 2582/3, Ostrava, Czech Republic. ‘‘RPG Gara´ze’’ˇ refers to RPG Gara´zeˇ a.s, a joint-stock company (akciova´ spolecnostˇ ) organised under the laws of the Czech Republic. ‘‘RPG Property’’ refers to RPG Property B.V., a private company with limited liability organised under the laws of the Netherlands, with its corporate seat in Amsterdam, the Netherlands, which is the direct holder of 10,000 NWR Plc B Shares. ‘‘RPG RE Commercial’’ refers to RPG RE Commercial, s.r.o., a limited liability company (spolecnostˇ s rucemˇ ´ın omezenym)´ incorporated under the laws of the Czech Republic and a legal successor to Former OKD that assumed the commercial real property of Former OKD as a result of the Restructuring, with its corporate seat in Ostrava, Czech Republic, and having its registered address at Gregorova 2582/3, Ostrava, Czech Republic. ‘‘RPG RE Land’’ refers to RPG RE Land, s.r.o., a limited liability company (spolecnostˇ s rucemˇ ´ın omezenym)´ incorporated under the laws of the Czech Republic and a legal successor to Former OKD that assumed part of the real property consisting of land not used for mining operations of Former OKD as a result of the Restructuring, with its corporate seat in Ostrava, Czech Republic, and having its registered address at Gregorova 2582/3, Ostrava, Czech Republic. ‘‘RPG RE Property’’ refers to RPG RE Property a.s., a joint stock company (akciova´ spolecnost)ˇ organised under the laws of the Czech Republic. ‘‘RPG Rekultivace’’ refers to RPG Rekultivace, a.s., a joint stock company (akciova´ spolecnost)ˇ organised under the laws of the Czech Republic. ‘‘RPG Trading’’ refers to the defunct RPG Trading, s.r.o., a legal successor to Former OKD that assumed the commodities trading business of Former OKD as a result of the Restructuring. ‘‘RPGI’’ refers to RPG Industries Public Limited (formerly RPG Industries Plc, RPG Industries SE and RPG Industries Public Limited), a private limited company organised under the laws of Cyprus, with its corporate seat in Nicosia, Cyprus.

235 ‘‘RPGICZ’’ refers to the defunct RPG Industries, a.s., a joint-stock company (akciova´ spolecnostˇ ) organised under the laws of the Czech Republic. ‘‘RPGP’’ refers to RPG Partners Limited, a company organised under the laws of Cyprus, with its corporate seat in Nicosia, Cyprus. ‘‘RPGREM’’ refers to RPG RE Management, s.r.o. a Czech based indirect subsidiary of RPGP. ‘‘Rule 144A’’ refers to Rule 144A under the U.S. Securities Act. ‘‘Rule 144A Global Notes’’ refers to Notes sold to qualified institutional buyers in reliance on Rule 144A and initially represented by one or more global notes in registered form without interest coupons attached. ‘‘SEC’’ refers to the U.S. Securities Exchange Commission. ‘‘Security Agent’’ refers to Citibank N.A., London Branch. ‘‘Senior Managers’’ refers to the senior management of the Company from time to time, being Marek Jel´ınek, Jan´ Fabian,´ Michal Kuca,ˇ Leszek Chrascina, and Jarmila Ivankova as at the date of this document. ‘‘Senior Secured Facilities’’ refers to the senior secured term loan facilities made available under the Senior Facilities Agreement. ‘‘Share Dealing Code’’ refers to the share dealing code adopted by the Issuer. ‘‘Stabilising Managers’’ refers to Citigroup Global Markets Limited and Morgan Stanley & Co. International Plc. ‘‘Takeover Directive’’ refers to the European Takeover Directive (2004/25/EC). ‘‘Tauron’’ refers to TAURON Sprzedaz˙ GZE Sp. z o.o. ‘‘Technical Consulting Agreement’’ refers to the technical consulting agreement between the Issuer and AMCI dated 15 August 2006. ‘‘Third Party’’ refers to each of a central bank, government or governmental, quasi- governmental, supranational, statutory, regulatory, environmental, administrative, fiscal or investigative body, court, trade agency, association, institution, environmental body, employee representative body or any other body or person whatsoever in any jurisdiction. ‘‘Transport Agreements’’ refers to the agreements on transport between OKD and AWT relating to the transport of coal and coke. ‘‘Trustee’’ refers to Deutsche Trustee Company Limited. ‘‘UK Corporate Governance Code’’ refers to the UK corporate governance code on corporate governance published by the United Kingdom Financial Reporting Council. ‘‘UK Takeover Panel’’ refers to the Panel on Takeovers and Mergers. ‘‘Unrestricted Book-Entry Interests’’ refers to ownership of interests in the Regulation S Global Notes. ‘‘Unrestricted Subsidiaries’’ refers to any subsidiaries of the Issuer that are or may be designated as unrestricted subsidiaries in the future in accordance with the terms of the 2015 Notes Indenture. ‘‘U.S. Exchange Act’’ refers to the U.S. Securities Exchange Act of 1934. ‘‘U.S. holder’’ refers to a beneficial owner of the New A Shares that is for U.S. federal income tax purposes (i) an individual citizen or resident of the United States, (ii) a corporation or other business entity taxable as a corporation that is created or organised under the laws of the United States or its political subdivisions, (iii) an estate the income of which is subject to U.S. federal income tax without regard to its source or (iv) a trust subject to the primary supervision of a U.S. court and the control of one or more U.S. persons or that has elected to be treated as a domestic trust for U.S. federal income tax purposes. ‘‘U.S. Securities Act’’ refers to the U.S. Securities Act of 1933, as amended.

236 ‘‘U.S. Steel’’ refers to U.S. Steel Kosice,ˇ s.r.o. ‘‘Voestalpine Stahl’’ refers to Voestalpine Stahl GmbH, a company organised under the laws of Germany. ‘‘Warsaw Stock Exchange’’ or ‘‘WSE’’ refers to Gielda Papierow´ Wartosciowych´ w Warszawie S.A. ‘‘Waste Act’’ refers to the Czech Act No. 185/2001 Sb., as amended. ‘‘Water Act’’ refers to the Czech Act No. 254/2001 Sb., as amended. ‘‘WCA’’ refers to the World Coal Association. ‘‘WSA’’ refers to World Steel Association.

237 GLOSSARY OF TECHNICAL TERMS The following definitions shall apply to the technical terms used herein: ‘‘apparent steel use’’ refers to the deliveries of steel to the marketplace from the steel producers as well as from importers. This differs from real steel use, which takes into account steel delivered to or drawn from inventories. ‘‘ash content’’ refers to the inert percentage of a laboratory sample of coal remaining after incineration to a constant weight under standard conditions. ‘‘ash fusion temperature’’ refers to a physical measurement of the temperature at which a cone of ash begins to soften, deform and flow. This is performed either through an oxidizing or reducing atmosphere. Temperatures are reported as initial deformation, spherical, hemispherical and flow. ‘‘bituminous coal’’ refers to a class of coal high in carbonaceous matter, having less than 86 per cent fixed carbon, and more than 14 per cent volatile matter on a dry mineral-matter-free basis. ‘‘BTU’’ refers to British thermal units, which is the amount of heat needed to raise the temperature of one pound of water by one degree Fahrenheit (equal to 252 calories). ‘‘by-product’’ refers to material, other than the principal product, that is generated as a consequence of an industrial process. ‘‘cleanup’’ refers to actions taken to deal with a release or threat of release of a hazardous substance that could affect humans, the environment, or both. ‘‘coal’’ refers to a readily combustible rock containing more than 50 per cent by weight and 70 per cent by volume of carbonaceous material, including inherent moisture. It is formed from plant remains that have been compacted, indurated, chemically altered and metamorphosed by heat and pressure during geological time. ‘‘coking coal’’ refers to high volatile coal used to create coke, which is consumed in the steel reduction process. ‘‘CCS’’ Carbon Capture Storage. ‘‘deposit’’ refers to an area of coal resources or reserves identified by surface mapping, drilling or development. ‘‘drew boys’’ refers to a dense medium bath separator wherein a rotating wheel extracts the sinks. ‘‘dump’’ refers to a site used to dispose of solid wastes without environmental controls. ‘‘emission’’ refers to pollution discharged into the atmosphere from smokestacks, other vents, and surface areas of commercial or industrial facilities, from residential chimneys; and from motor vehicle, locomotive, or aircraft exhausts. ‘‘ex works’’ refers to A trade term requiring the seller to deliver goods at his or her own place of business. All other transportation costs and risks are assumed by the buyer. ‘‘fly ash’’ refers to non-combustible residual particles from the combustion process carried by flue gas. ‘‘groundwater’’ refers to the supply of fresh water found beneath the Earth’s surface (usually in aquifers), which is often used for supplying wells and springs. Because groundwater is a major source of drinking water, there is growing concern about areas where leaching agricultural or industrial pollutants or substances from leaking underground storage tanks are contaminating it. ‘‘hard coal’’ means both metallurgical coking coal (which is used to produce metallurgical coke) and thermal coal. ‘‘hard coking coal’’ refers to a type of coking coal which enables the coke to be more efficient in steel making when it converts iron ore to raw steel.

238 ‘‘hazardous waste’’ refers to waste that can pose a substantial or potential hazard to human health or the environment when improperly managed. Substances classified as hazardous wastes possess at least one of four characteristics: ignitability, corrosivity, reactivity, or toxicity, or appear on special lists. ‘‘lignite’’ refers to the lowest quality of coal with a high moisture content of up to 45 per cent by weight and heating value of 6,500 to 8,300 BTUs per pound of coal. It is brownish black and tends to oxidize and disintegrate when exposed to air. ‘‘long wall mining’’ is a fully mechanized underground mining technique in which a coal face is excavated by a shearer and then transported to the surface by conveyor belts. ‘‘metallurgical coal’’ refers to an informally recognised name for bituminous coal that is suitable for making coke by industries that refine, smelt and work with iron. Generally, this coal will have less than 1 per cent sulfur and less than 8 per cent ash on an air-dried basis. Metallurgical coal is sometimes referred to as coking coal. ‘‘mining face’’ refers to the working area where the extraction of coal takes place in an underground mine. ‘‘moisture content’’ refers to the amount of moisture in coal, expressed as a percentage of the weight of the coal. Two types of moisture can be found in coal, including: (i) free or surface moisture, which can be removed by exposure to air, and (ii) inherent moisture, which is trapped in the coal and can be removed by heating the coal. ‘‘open-pit mining’’ refers to mining in which the coal is extracted after removing the overlying strata or overburden. ‘‘preparation plant’’ refers to a plant used to make raw coal a product suitable for a particular use. ‘‘probable reserves’’ refers to probable reserves which are the economically mineable part of an indicated coal resource, and in some circumstances, measured coal resource. They include diluting materials, and allowances for losses which may occur when the material is mined. ‘‘project’’ refers to a mineral deposit with insufficient data available on the mineralization to determine if it is economically recoverable, but warranting further investigation and not currently included in the Company’s future mining plans. ‘‘proved reserves’’ refers to proved reserves which are the economically mineable part of a measured coal resource. They include diluting materials, and allowances for losses which may occur when the material is mined and after accounting for preparation plant yield. ‘‘raw coal’’ refers to coal in its raw, untreated state subsequent to extraction and prior to sizing and other treatment. ‘‘reclamation’’ refers to the restoration of land and environmental values to land affected by coal extraction. Reclamation operations are usually undertaken where the coal has already been taken from a mine, even as production operations are taking place elsewhere at the site. This process commonly includes recontouring or reshaping the land to its approximate original appearance, restoring topsoil and planting native grasses, trees and ground covers. ‘‘room-and-pillar mining’’ refers to the method of underground mining in which the mine roof of an area being mined, the ‘‘room,’’ is supported by coal pillars left at regular intervals. ‘‘screen’’ refers to a device for separating by size. ‘‘seam’’ refers to a geological structure containing a series of layers of coal, shale and other mineral materials of various thickness within a defined zone. ‘‘shaft’’ refers to a mine-working (usually vertical) used to transport miners, supplies, ore, or waste. ‘‘short ton’’ refers to a short or net ton, which is a measurement of mass equal to 2,000 pounds or approximately 907 kilograms. ‘‘sludge’’ refers to the …

239 ‘‘thermal coal’’ refers to coal used in combustion processes by power producers and industrial users to produce steam for power and heat, also known as ‘‘steam’’ or ‘‘steaming’’ coal. ‘‘sub-bituminous coal’’ refers to a rank class of coal with a heat value content of more than 4,600 kcal/kg and less than 6,400 kcal/kg on a moist mineral-matter-free basis. ‘‘surface water’’ refers to all water naturally open to the atmosphere (rivers, lakes, reservoirs, streams, impoundments, seas, estuaries, etc.); also refers to springs, wells, or other collectors that are directly influenced by surface water. ‘‘swelling index’’ refers to the measure of increase in the volume of coal when heated, with the exclusion of air. ‘‘tonne’’ refers to a metric tonne, which is a measurement of mass equal to 1,000 kilograms or approximately 2,205 pounds. ‘‘underground mining’’ refers to the extraction of coal or its products from layers of rock by underground mining methods such as room-and-pillar mining and longwall mining. ‘‘volatile matter content’’ refers to that portion of coal comprising both gases and liquids that is released following heating it from 105⍭C to 800⍭C. The amount of volatile matter in coal is a function the coal rank (thermal maturity) and of the coal type. High rank coals have a low volatile matter content (<20 per cent) medium rank coals have a higher volatile matter content (20-30 per cent) and low rank coals have a high percentage of volatile matter. The type of coal also effects volatile matter, coal with a high inertinite content will produce less volatile matter than a coal with high vitrinite content that will produce less volatile matter than a coal with high liptinite content.

240 REGISTERED OFFICE OF THE ISSUER New World Resources N.V. Jachthavenweg 109h 1081 KM Amsterdam The Netherlands

LEGAL ADVISORS TO THE ISSUER as to U.S. law as to Dutch law Linklaters LLP Linklaters LLP One Silk Street World Trade Centre Amsterdam London EC2Y 8HQ Tower H, 22nd floor United Kingdom Zuidplein 180 1077 XV Amsterdam The Netherlands as to Czech law as to Polish law PRK Partners s.r.o. advokatn´ ´ı kancela´ˇr Linklaters C. Wisniewski´ i Wspolnicy´ Jachymova´ 2 Spo´łka Komandytowa 110 00 Prague 1 Warsaw Towers Czech Republic ul. Sienna 39 PL-00-121 Warsaw Poland

LEGAL ADVISORS TO THE INITIAL PURCHASERS as to U.S. law Cleary Gottlieb Steen & Hamilton LLP City Place House 55 Basinghall Street London EC2V 5EH United Kingdom

INDEPENDENT AUDITORS KPMG Accountants N.V. Laan van Langerhuize 1 1186 DS, Amstelveen The Netherlands

TRUSTEE REGISTRAR Deutsche Trustee Company Limited Deutsche Bank Luxembourg S.A. Winchester House 2, Boulevard Konrad Adenaur 1 Great Winchester Street L-1115 Luxembourg London EC2N 2DB Grand Duchy of Luxembourg United Kingdom

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