Auction applications should be submitted by 13 September 2010. The auction will be held on 17 September 2010 at 12:00 o'clock.

The Minister of Treasury
hereby invites to an oral public auction

to purchase shares of the company

NITROERG S.A. with registered office in Bieruń

The Minister of Treasury, ul. Krucza 36/Wspólna 6, 00-522 Warszawa, acting on behalf of the Treasury, pursuant to Article 31a, in conjunction with Article 33(1)(5) of the Commercialisation and Privatisation Act of 30 August 1996 (Journal of Laws of 2002 No. 171, item 1397, as amended), hereinafter referred to as the “Act”, and the Resolution of the Council of Ministers of 17 February 2009 on the Detailed Procedure of Selling Treasury Shares (Journal of Laws No. 34, item 264, as amended), hereby invites all interested parties to participate in an auction to purchase 5.260.820 (five million two hundred and sixty thousand eight hundred and twenty) ordinary registered shares of series “A” for one buyer, of a nominal value of PLN 10,00 (ten zloty) each, constituting 85% of the share capital of the company NITROERG S.A. with registered office in Bieruń (hereinafter referred to as “Shares”) ul. Chemików 133, 43-150 Bieruń, registered under KRS number 0000268394, Vat reg. no. (NIP): 646-74-69-61, hereinafter referred to as the “Company”.

The Company’s activity is manufacture of explosives.

The starting price for the stake of 5.260.820 Shares is PLN 138.354.305,18 (one hundred and thirty-eight million three hundred and fifty-four thousand three hundred and five zloty and eighteen groszy).

The starting price for one Share is PLN 26,299 (twenty-six zloty and two hundred and ninety-nine groszy).

The minimum bidding increment for the entire stake of 5.260.820 Shares is PLN 692.000,00 (six hundred and ninety-two thousand zloty). The bidders will place their bids orally. If no further bids are placed by the bidders, subsequent calls of the highest bid shall be made not later than every two minutes.

The highest bidder shall be obliged to purchase the shares that will not be acquired by eligible employees who are entitled to acquire such shares on a free-of-charge basis in accordance with the Act, under the terms and conditions set forth in the Share Purchase Agreement, hereinafter referred to as the “Share Purchase Agreement”, enclosed to the Invitation.

Entities interested in the purchase of the Company’s shares through an oral public auction may purchase the “Company Memorandum”. For this purpose they should:

• approach the Ministry of Treasury, room 546, on business days from 26 July 2010 to 13 September 2010, between 12:00 and 2:00 PM;
• present a Transcript from the Register of Entrepreneurs of the National Court Register / Certificate on Entry into the Register of Business Activity, showing the current representation of the entity (certificate must be issued not earlier than three months prior to the date of submission), and if the interested party is a natural person who is not an entrepreneur – present an identity document;
• sign the “Confidentiality Obligation” through their duly authorised representatives.

The Company Memorandum contains information on the Company’s legal, economic and financial standing. The fee for the Company Memorandum is PLN 100,00 (one hundred zloty) and should be paid to the Cashier (room 372) of the Division of General Accounting and Reporting of the Department of Budget and Finance at the Ministry of Treasury, between 12:00 and 2:00 PM, or to the account of the Ministry of Treasury held with Bank Gospodarstwa Krajowego, Branch No. 1 in Warsaw, account no. 83 1130 1017 0019 9426 2520 0008.

The person responsible for releasing the above documentation is Ms. Diana Gawełek-Tutalak, room 546, Tel: (22) 695 89 69.

Examination of Company

An entity interested in purchasing the Company’s Shares may be allowed to examine the documents and the enterprise of the Company. For this purpose the entity should: read the Scope and Procedures of a Limited Examination of the Company NITROERG S.A. with registered office in Bieruń, constituting an integral part of the supplemented Company Memorandum, and to submit between 28 July 2010 and 4 August 2010 a Request for Examining the Company to the Ministry of Treasury, 00 522 Warszawa, ul. Krucza 36/Wspólna 6, Secretary’s Office of the Department of Ownership Supervision and Privatisation IV, room 553, fax no. (22) 695 87 09, along with a statement from a bank or a savings and credit union (issued after 15 July 2010) where the entity holds an account, confirming that the entity has financial resources equal to the amount of the starting price of the stake of 5.260.820 (five million two hundred and sixty thousand eight hundred and twenty) Shares or has creditworthiness to that amount. Entities that will be allowed to examine the Company will be required to sign the Confidentiality Obligation. Template of the Request for Examining the Company and of the Confidentiality Obligation is attached to the Scope and Procedures of a Limited Examination of the Company NITROERG S.A. with registered office in Bieruń.

Auction applications should be made in the Polish language and should contain:

1. name, surname and address or name and registered office of the entity interested in participating in the auction;
2. Regon number;
3. Vat reg. no. (NIP);
4. e-mail;
5. address for correspondence;
6. telephone number;
7. fax number;
8. attached proof of payment of the bid security, along with an indication of the bank account to which the bid security should be returned;
9. If the entity interested in participating in the auction is a natural person:
   
   a) a photocopy of an identity document confirming the identity of such person, certified by a notary public to be a true copy of the original,
   
   b) if the natural person is engaged in a business activity – a valid certificate confirming entry in the Register of Business Activity, if separate provisions of law require the entity to be entered in the Register of Business Activity, submitted in original or as a certified copy made by a notary public,
   
   c) information on the method of financing the Share purchase transaction;
10. If the entity interested in participating in the auction is a legal person:
    
    a) a valid extract from the relevant register;
    
    b) details of the person(s) entitled to participate in the auction, along with a power of attorney;
    
    c) details of the person(s) entitled to represent the entity in signing the agreement, along with a duly executed power of attorney, in the event that the identity of the signee is different than the identity of the person specified in item 10(b);
    
    d) information on the method of financing the Share purchase transaction;
11. declaration that the entity interested in participation in the auction:
    
    a) is not in default with payment of any taxes, or a declaration that the entity obtained, in accordance with the law, the required exemption, deferral, division of overdue amounts into instalments or a stay of execution (in full) of the decision of a relevant authority;
    
    b) is not in default with payment of fees or premiums for social or medical insurance, or a declaration that the entity obtained, in accordance with the law, the required exemption, deferral, division of overdue amounts into instalments or a stay of execution (in full) of the decision of a relevant authority;
    
    c) is not in breach of any other privatisation agreements concluded to date and that the entity is not party to any court disputes in this regard;
    
    d) is not in breach of any other agreements concluded with the Treasury, and that the entity is not party to any court disputes in this regard;
    
    e) is not subject to liquidation proceedings and was not adjudged bankrupt, apart from entities which upon announcement of bankruptcy made an arrangement with creditors approved under a valid court decision, provided that such arrangement does not provide for satisfaction of creditors by liquidation of the assets of the bankrupt entity;
    
    f) is not entered in the Register of Insolvent Debtors;
    
    g) is not registered in the Credit Information Bureau as an unreliable borrower.

The documents specified in the Invitation must be submitted in hard copy (in original or as a certified copy made by a notary public).

Documents written in a foreign language must be submitted together with their translations into the Polish language, made by a certified translator.

Public documents – within the meaning of the Hague Convention of 5 October 1961 (Journal of Laws of 2005 No. 112, item 938) abolishing the requirement of legalisation for foreign public documents – made under the applicable laws of a state being the signatory to the Convention, must by supported by an Apostille.

Public documents (within the meaning of the Convention abolishing the requirement of legalisation for foreign public documents) made under the applicable laws of a state not being the signatory to the Convention, must by submitted after their prior legalisation.

Legalisation or issuance of an Apostille shall not be required within the scope in which the bilateral or multilateral agreement signed by Poland waived or simplified the process of legalisation or waived the requirement to legalise documents in matters covered by the scope of these agreements.

Auction applications should be submitted in a single copy, in a sealed envelope, to the front office of the Ministry of Treasury or the front office of the Department of Treasury Property, room 447, Ministry of Treasury, 00-522 Warszawa, ul. Krucza 36/Wspólna 6, on business days, during office hours 8:15 AM – 4:15 PM, by 13 September 2010.

The envelope should be marked as follows:

“Zgłoszenie do wzięcia udziału w aukcji dotyczącej nabycia akcji spółki
NITROERG S.A. z siedzibą w Bieruniu
Nie otwierać
Zgłoszenie przekazać do sekretariatu
Departamentu Mienia Skarbu Państwa w Ministerstwie Skarbu Państwa”

(Application to participate in the auction for the purchase of shares of the company NITROERG S.A. with registered office in Bieruń – Do not open.
Attn: Department of Treasury Property at the Ministry of Treasury)

Applications to participate in the auction will not be accepted after the expiry of the stipulated date and/or if the envelope is not marked as indicated above.

The auction will be held on 17 September 2010 at 12 o’clock in room 116 at the Ministry of Treasury, Warsaw, ul. Krucza 36/Wspólna 6.

The auction invitation and the terms and conditions of auction are subject to change or withdrawal by the Minister of Treasury.

A bid security of PLN 13.830.000,00 (thirteen million eight hundred and thirty thousand zloty), which corresponds to 10% of the starting price of the Shares, should be paid by bank transfer to the account of the Ministry of Treasury held with Bank Gospodarstwa Krajowego, Branch No. 1 in Warsaw, account no. 13 1130 1017 0019 9426 2520 0007, by 13 September 2010.

The bid security is not returnable in the event that the highest bidder refuses to sign the Share Purchase Agreement and when the entity which deposited the required bid security decides not to participate in the auction after the date for submitting applications has passed.

If an eligible entity fails to attend the auction, it shall also be considered as withdrawal from the auction, as well as the failure of the auction participants to offer the starting price during the auction.

The Share Purchase Agreement will be concluded with the highest bidder within up to 5 days from the date of payment of the full purchase price for the Shares (reduced by the amount of the bid security) by a bank transfer to the account of the Ministry of Treasury, account no. 03 1010 1010 0025 1213 3920 0000, held with the National Bank of Poland (NBP), Branch in Warsaw.

Payment of the amount equal to the amount of the total price of the Shares the must be made within 2 (two) weeks from the date of announcing the highest bidder.

In the case when the purchase of Shares requires:

1. the decision of the Chairman of the Office of Competition and Consumer Protection (UOKiK) on no impediments to the intended merger of companies;
2. the consent of the Minister of Internal Affairs;

the highest bidder should immediately, however not later than within 60 days from announcing the highest bidder, apply to appropriate authorities for issuing the above decisions. In such case, the payment must be made in full within 2 (two weeks) from the day of submitting the above mentioned decisions to the Minister of Treasury.

Payment of the total price of the Shares may also be made by payment of the amount equal to the starting price of the Shares reduced by the paid bid security within 2 (two) weeks from the announcement of the winning bidder, and the payment of the amount constituting the difference between the starting price of the Shares and the total price of the Shares shall be made within 1 (one) month from the day of payment of the amount equal to the starting price of the Shares. In such case the time limit for conclusion of the Share Purchase Agreement starts on the day of payment of the amount constituting the difference between the starting price of the Shares and the total price of the Shares.

The Share Purchase Agreement will be concluded at the organisational unit of the Ministry of Treasury responsible for budget and finance (ul. Krucza 36/Wspólna 6, 00-522 Warsaw) after receipt of the full payment for the shares has been confirmed.

The auction shall be closed upon signing the Share Purchase Agreement.

Text of the Share Purchase Agreement: