EMT REDEMPTION POLICY

REVISION HISTORY

TABLE OF CONTENTS

1. GENERAL
2. DEFINITIONS
3. RIGHT OF REDEMPTION
4. REDEMPTION PROCEDURE
5. VERIFICATION OF IDENTITY AND TRANSACTION MONITORING
6. EXECUTION OF REDEMPTION
7. LIMITATIONS ON REDEMPTION
8. COPIES, FORKS AND UNSUPPORTED PROTOCOLS
9. RECOVERY AND REDEMPTION PLANS
10. AMENDMENTS
11. COMPLAINTS
12. GOVERNING LAW AND JURISDICTION
13. REVIEW AND OVERSIGHT

1.    GENERAL

This EMT Redemption Policy (the "Policy") sets out the conditions and procedures for the exercise of the right of redemption by holders of EMTs issued by Newrails, UAB ("Newrails" or the "Institution"), as required by Article 51(6) and Annex III of MiCA. This Policy is referenced in, and should be read together with, the crypto-asset white paper(s) for EMTs issued by Newrails, available at www.newrails.xyz (the "Website").

Words and expressions capitalised in this Policy shall have the meanings assigned to them in Section 2 (Definitions) below or in the applicable crypto-asset white paper, unless otherwise indicated.

This Policy applies to all EMTs issued by Newrails, including EURW. References to "EMTs" in this Policy include EURW and any future EMTs issued by Newrails unless expressly stated otherwise.

2.    DEFINITIONS

"Applicable Laws" means MiCA, PSD2, the laws of the Republic of Lithuania, and all other applicable laws, regulations, and rules of any governmental or regulatory authority, including all applicable anti-money laundering, counter-terrorist financing, and sanctions provisions.

"Bank of Lithuania" means Lietuvos bankas, the competent authority for the supervision of Newrails.

"Customer" means a Holder who has registered for a Newrails account, completed onboarding, and agreed to the Newrails Terms and Conditions.

"EMT" or "Electronic Money Token" means a type of crypto-asset that purports to maintain a stable value by referencing the value of one official currency and that grants the holder a claim on the issuer for redemption at par value, as defined in Article 3(1)(7) of MiCA.

"EURW" means the Newrails Euro Token, an EMT referencing the Euro, issued by Newrails.

"Holders" means any natural or legal person holding EMTs issued by Newrails, whether or not such person is a Customer.

"Newrails Platform" means the online platform and application operated by Newrails through which Customers may access EMT issuance, redemption, and related services.

"Par Value" means the nominal value of one EMT equal to one unit of the referenced official currency (e.g., 1 EURW = 1 EUR).

"Restricted Person" means any person who:
(a) is unable to provide sufficient information for identity verification and for any other reason to be onboarded as Customer;
(b) is subject to sanctions maintained by the European Union, the United Nations, or other applicable authorities;
(c) is located, organised, or resident in a jurisdiction subject to comprehensive sanctions or designated as high-risk by Newrails;
(d) is owned or controlled by any such person.

"Supported Networks" means the blockchain networks on which EMTs are issued and supported by Newrails, as published on the Website.

"Website" means www.newrails.xyz.

3.    RIGHT OF REDEMPTION

3.1    Pursuant to Article 49 of MiCA, all Holders have the right to redeem their EMTs at any time and at Par Value.

3.2    Redemption rights apply equally to all Holders, regardless of whether they are Customers, whether they acquired EMTs directly from Newrails or on a secondary market, or whether they received EMTs through an on-chain transfer.

3.3    Newrails does not charge any fees for the redemption of EMTs at Par Value. Redemption proceeds are paid in funds by means of SEPA credit transfer to a bank account designated by the Holder. Newrails does not support settlement of redemption proceeds via SWIFT or other non-SEPA payment methods. Third-party fees (such as receiving bank charges or blockchain network transaction fees) that are not charged by or retained by Newrails may apply and are the responsibility of the Holder.

3.4    Redemption of EMTs shall be executed without undue delay, without contractual lock-ups, penalties, or discretionary delays, and independently of new EMT issuance, inflows, or third-party funding availability.

3.5    The right of redemption is not conditional on the existence or availability of secondary markets for the EMTs.

4.    REDEMPTION PROCEDURE

4.1    Customers who wish to redeem their EMTs may do so via the Newrails Platform. Redemption can be requested electronically at any time. Upon submission of a valid redemption request and completion of any required verifications, Newrails will execute the redemption at Par Value by transferring the equivalent funds via SEPA credit transfer to the Customer's designated bank account. Customers must have a valid IBAN for a SEPA-reachable bank account in their own name capable of receiving SEPA credit transfers.

4.2    Holders who are not Customers may exercise their right of redemption by registering on the Newrails Platform and completing the onboarding process, including all applicable identity verification and wallet ownership requirements. Alternatively, such Holders may contact Newrails at eurw@newrails.xyz to initiate the redemption process. In either case, redemption will be executed only upon confirmation of eligibility and completion of all required verifications in accordance with Applicable Laws and this Policy.

4.3    Holders other than Customers shall be required to provide, at a minimum:

• Proof of identity in accordance with Applicable Laws and Newrails requirements;
• Proof of ownership or control of the wallet address from which the EMTs are to be redeemed;
• A valid IBAN for a SEPA-reachable bank account in the Holder's name for receipt of redemption proceeds;
• Any other information required by Newrails for compliance with Applicable Laws.

Upon confirmation of eligibility and completion of all required verifications, Newrails will execute the redemption at Par Value without undue delay.

4.4    Redemption via Secondary Markets
Holders may also sell or exchange their EMTs via regulated crypto-asset service providers or other secondary market venues that support trading of EMTs issued by Newrails. Such transactions are governed by the terms and conditions of the relevant third-party platform and do not constitute direct redemption with Newrails.

5.    VERIFICATION OF IDENTITY AND TRANSACTION MONITORING

5.2    Where the verifications referred to in Section 5.1 reveal inconsistencies, incomplete information, or AML/CTF risks, the redemption request will be subject to further assessment in compliance with Applicable Laws. Newrails may delay or decline redemption in such cases to the extent required by law.

5.3    Newrails will inform the Holder of any additional information or documentation required to complete the verification process. Newrails will not unreasonably withhold or delay completion of verification.

6.    EXECUTION OF REDEMPTION

6.1    Upon receipt of a valid redemption request and successful completion of all required verifications, Newrails will execute the redemption without undue delay.

6.3    For both Customers and Holders other than Customers, Newrails settles redemption by SEPA credit transfer to the bank account designated by the Holder. Newrails does not support settlement of redemption proceeds via SWIFT or other non-SEPA payment methods. Holders who are unable to provide a bank account capable of receiving SEPA credit transfers may transfer their EMTs on-chain to a third party or exchange them on secondary markets.

6.4    Redemption is funded from reserve assets held in segregated safeguarding accounts. Redemption does not depend on the initiation of new minting activities or inflows from other sources.

6.5    If on-chain finality is delayed due to blockchain network congestion or technical disruption, Newrails may proceed with redemption based on predefined internal confirmation thresholds to avoid undue delay to Holders.

6.6    Where a Customer initiates a redemption request, the EMTs are burned and the corresponding EMT liability is extinguished. Any intermediate crediting of the Customer's Newrails e-money balance is a back-office accounting entry only and does not represent completion of the redemption. This intermediate step is not displayed, accessible, or available to the Customer at any point in the redemption workflow. The Customer interface presents the redemption as a single atomic process: EMTs are submitted for redemption, and the corresponding funds are settled via SEPA credit transfer. The Customer shall not at any time be able to view, access, transfer, or otherwise interact with any intermediate e-money balance arising during the redemption process.

7.    LIMITATIONS ON REDEMPTION

7.1    Redemption of EMTs is subject to the identity verification and transaction monitoring requirements set out in Section 5.    Holders who are unable to provide sufficient information for verification, or who fail to satisfy the requirements of Applicable Laws, will not be able to redeem their EMTs directly with Newrails.

7.2    Newrails is required to prevent Restricted Persons from redeeming EMTs. In the event that a Restricted Person has acquired EMTs, such person may not redeem the EMTs directly with Newrails.

7.5    Any temporary suspension must be documented, proportionate, and limited in duration. Newrails will inform the Bank of Lithuania of any suspension in accordance with applicable supervisory reporting obligations. Holders will be informed of any suspension and its expected duration via the Website and, where applicable, through the Newrails Platform.

8.    COPIES, FORKS AND UNSUPPORTED PROTOCOLS

8.1    Due to the decentralised and open-source nature of blockchain networks, it is possible that a party unaffiliated with Newrails could create an alternative version of an EMT on a Supported Network or on an unsupported network (a "Copy"), or an asset that purports to be collateralised by or that incorporates EMTs into its design (a "Wrapper"). Newrails supports only EMTs issued directly by Newrails and is under no obligation to support any Copies or Wrappers. Newrails assumes no responsibility for any value lost as a result of this lack of support.

8.2    In the event of a fork of a Supported Network, Newrails may suspend activities relating to EMTs on that network until Newrails has determined, at its sole discretion, which fork (if any) it will support. During any such suspension, Holders will not be able to redeem EMTs on the affected network via Newrails. Holders are not entitled to any additional tokens that may arise on a forked network.

8.3    Newrails may, based on factors such as security, regulatory requirements, or operational considerations, discontinue support for a Supported Network. In such cases, the process and timeline for redemption by Holders on the affected network will be published on the Website with reasonable advance notice.

9.    RECOVERY AND REDEMPTION PLANS

9.1    This Policy may be automatically amended or suspended by implementation of the Recovery Plan and/or the Redemption Plan maintained by Newrails in accordance with Articles 46 and 55 of MiCA.

9.2    In such a scenario, EMT redemption will be managed as defined in the applicable Recovery Plan or Redemption Plan to ensure the timely implementation of recovery actions and the equitable treatment of all Holders.

9.3    Holders shall refer to Sections D.4 and D.5 of the applicable crypto-asset white paper for further details on rights during implementation of recovery and redemption plans.

9.4    During implementation of the Recovery Plan, Holders retain their fundamental right to redemption at Par Value. Any restrictions on redemption are temporary measures and do not constitute a reduction in the Holder's entitlement. Holders may continue to transfer EMTs on-chain to other holders or secondary markets during any recovery period.

10.    AMENDMENTS

10.1    Newrails may amend any provision of this Policy at any time by publishing the revised version with an updated revision date on the Website.

10.2    Changes will become effective on the date specified in the revised Policy, and shall be deemed accepted by Holders the first time they access or use EMTs after the initial posting of the revised Policy. The changes shall apply on a going-forward basis with respect to redemption requests initiated after the posting date. In the event that a Holder does not agree with any such modification, such Holder's sole and exclusive remedy will be to redeem their EMTs in accordance with the terms of this Policy prior to the effective date of the change. Newrails shall not be liable to any Holder or third party as a result of any losses suffered by reason of any modification or amendment of this Policy.

10.4    If any significant new factor, material mistake, or material inaccuracy capable of affecting the assessment of the EMTs is identified in this Policy, Newrails will notify the revised Policy to the Bank of Lithuania in accordance with Article 51(12) of MiCA.

11.    COMPLAINTS

11.1    Full complaint handling procedures are set out in the applicable crypto-asset white paper (Section D.7) and the Newrails Terms and Conditions.

11.2    Notwithstanding the foregoing, Holders retain the right to initiate legal proceedings before any competent court.

12.    GOVERNING LAW AND JURISDICTION

12.1    This Policy shall be governed by and interpreted in accordance with the laws of the Republic of Lithuania.

12.2    Any dispute arising under or in connection with this Policy shall be brought exclusively in the courts of the Republic of Lithuania, except where prohibited by Applicable Laws.

12.3    This Policy is subject to the laws, regulations, and rules of any applicable governmental or regulatory authority, including all applicable anti-money laundering, counter-terrorist financing, and sanctions provisions. Holders agree to act in compliance with, and to be legally bound by, this Policy and all Applicable Laws.

13.    REVIEW AND OVERSIGHT

13.2    Internal Audit periodically assesses compliance of redemption operations with this Policy, MiCA requirements, and Bank of Lithuania expectations.

13.3    The Chief Compliance Officer is the owner of this Policy. All changes require Management Board approval.