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1 Public Disclosure Authorized The World Bank INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION OFFICIAL Lw-::.xiti..-1~ DOCUMENTS 1818 H Street N.W. Washington, D.C U.S.A. (202) Cable Address: INTBAFRAD Cable Address: INDEVAS '2016 Public Disclosure Authorized Ertan Altikulac Department Head Bilgehan Kuru Deputy Director General Tilrkiye Cumhuriyeti Ziraat Bankasi A.S. Ataturk Bulvari No. 8 Ulus, Ankara Turkey Dear Sirs: Public Disclosure Authorized Public Disclosure Authorized Re: Loan. No TU (Small and Medium Enterprises Energy Efficiency Project) Amendments to the Loan Agreement We refer to the Loan Agreement between Tilrkiye Cumhuriyeti Ziraat Bankasi A.S (the Borrower) and the International Bank for Reconstruction and Development (the Bank) dated May 6, 2013, as amended (the Loan Agreement) for the Small and Medium Enterprises Energy Efficiency Project (the Project). We also refer to the letter dated June 16, 2016 from Omer Ethem Bayar, Acting Director of Foreign Economic Relations, Undersecretariat of Treasury, Republic of Turkey, and the letter dated May 11, 2016, from Ertan Altikulac, Department Head and Bilgehan Kuru, Assistant General Manager, Tilrkiye Cumhuriyeti Ziraat Bankasi A.S requesting and confirming on behalf of the Borrower, certain restructuring of the Project and requesting various amendments to the Loan Agreement. We are pleased to inform you that the Bank hereby agrees to your request. Consequently, the Loan Agreement and related Supplemental Letter No. 2(C) are amended as follows: A. Loan Agreement I. Schedule I, Part A, paragraph 2 is amended to read as follows: "2. The establishment of: (a) a loan loss reserve fund within Halkbank to assist in defraying risks associated with new energy efficiency loan products and in addressing SME collateral requirements; and (b) a grant facility within Halkbank for the financing of ESCO Sub-projects through the provision of ESCO Sub-grants by Halkbank to ESCO Sub-project Sponsors to finance the cost of carrying out ESCO Sub-projects." \/

2 2. Schedule 1, Part B, paragraph 2 is amended to read as follows: 2 "2 The establishment of: (a) a loan loss reserve fund within Vakifbank to assist in defraying risks associated with new energy efficiency loan products and in addressing SME collateral requirements; and (b) a grant facility within Vakifbank for the financing of ESCO Sub-projects through the provision of ESCO Sub-grants by Vakifbank to ESCO Sub-project Sponsors to finance the cost of carrying out ESCO Sub-projects." 3. Schedule 1, Part C, paragraph 2 is amended to read as follows: "2. The establishment of: (a) a loan loss reserve fund within Ziraatbank to assist in defraying risks associated with new energy efficiency loan products and in addressing SME collateral requirements; and (b) a grant facility within Ziraatbank for the financing of ESCO Sub-projects through the provision of ESCO Sub-grants by Ziraatbank to ESCO Sub-project Sponsors to finance the cost of carrying out ESCO Sub-projects." 4. Schedule 2, Section 1.B, paragraphs 2 and 3 are amended to read as follows: "2. Each Sub-loan to: (a) a Sub-project Sponsor that is a SME shall not exceed $3,500,000; (b) a Sub-project Sponsor that is a Mid-Cap Company, a Leasing Company or an ESCO shall not exceed $5,000,000; and ( c) a Sub-project Sponsor that is a Vendor shall not exceed $10,000, Except as the Bank shall otherwise agree, the aggregate principal amount under multiple Sub-loans made by the Borrower to any of the following and its affiliates shall not exceed $10,000,000 equivalent: (a) a Sub-project Sponsor that is a SME or Mid-cap Company; (b) a beneficiary of a Sub-project Sponsor that is an ESCO or a Leasing Company; and (c) a Sub-project Sponsor that is a Vendor." 5. Schedule 2, Section 1.B, paragraph 6(b) is amended to read as follows: "(b) each Sub-loan to a Sub-project Sponsor that is a Leasing Company, a Vendor or an ESCO; and" 6. Schedule 2, Section l.b, paragraph 7(a) is amended to read as follows: "7. Unless otherwise agreed between the Bank and the Borrower, each Sub-loan shall be made to a Sub-project Sponsor only if it has established, to the satisfaction of the Borrower, that the following have been satisfied and shall be maintained (except for the requirement in sub-paragraph (a)) during the duration of the its respective Sub-loan: (a) It is: (i) a SME; (ii) a Mid-Cap Company; (iii) a Leasing Company; (iv) an ESCO; or (v) a Vendor."

3 \ 3 7. Schedule 2, Section 1.B, paragraph 8(g) is amended to read as follows: "(g) with respect to a Sub-project being proposed by a Sub-project Sponsor that is a Leasing Company or an ESCO, or a Vendor, the beneficiary of the Sub-projects shall have satisfied the following criteria: (i) (ii) the criteria set out in sub-paragraphs 7(b) through 7(e); and in the event that the Leasing Company, ESCO, or Vendor concerned is not a SME or Mid-cap Company, the beneficiary of the Sub-project has to be a SME or Mid-cap Company." 8. Schedule 2, Section 1.B, paragraphs 9(a), (h) and (i) are amended to read as follows: "(a) Require the Sub-project Sponsor to carry out and operate the facilities, and maintain the equipment/goods, financed under the Sub-project with due diligence and efficiency and in accordance with sound technical, financial and managerial standards, and in accordance with the provisions of the Anti-Corruption Guidelines applicable to recipients of loan proceeds other than the Borrower, and to maintain adequate records." "(h) Unless otherwise agreed between the Bank and the Borrower, require that the Subproject Sponsor (with the exception of a Sub-project Project Sponsor that has entered into an Energy Performance Contract) for any Sub-loan in an amount greater than one million Dollars ($1,000,000) not incur any debt unless a reasonable forecast of its revenues and expenditures shows that its estimated cash flow for each fiscal year during the term of the debt to be incurred shall be at least I. I times its estimated debt service requirements in such year on all its debt, including the debt to be incurred; and: (i) (ii) (iii) (iv) (v) the term "debt" means any indebtedness of the Sub-project Sponsor; debt shall be deemed to be incurred: (A) under a loan contract or agreement or other instrument providing for such debt or for the modification of its terms of payment, on the date of such contract, agreement or instrument; and (B) under a guarantee agreement, on the date the agreement providing for such guarantee has been entered into; the term "debt service requirements" means the aggregate amount of repayments of, and interest and other charges on, debt; the term "reasonable forecast" means a forecast prepared by the Subproject Sponsor not earlier than twelve months prior to the incurrence of the debt in question, which both the Bank, the Borrower and the Subproject Sponsor accept as reasonable and as to which the Bank has notified the Borrower and Sub-project Sponsor of its acceptability, provided that no event has occurred since such notification which has, or may reasonably be expected in the future to have, a material adverse effect on the financial condition or future operating results of the Sub-project Sponsor; and whenever for the purposes of this sub-paragraph 9(h) it shall be necessary to value, in terms of the currency of the Guarantor, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful

4 \ \ 4 rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt, or, in the absence of such rate, on the basis of a rate of exchange acceptable to the Bank." "(i) With respect to a Sub-project Sponsor that is an ESCO, a Leasing Company or a Vendor, require that such Sub-project Sponsor obtains, by written contract or other legal means, rights to ensure that the beneficiary of the Sub-project carries out the Sub-project in accordance with the provisions of the Operational Manual." 9. Paragraphs 8, 18, 23 and 27 of the Appendix are amended to read as follows: "8. "Energy Performance Contract" means a contract which guarantees the realization of energy savings and/or efficiency gain as a result of identified investments or measures and as more particularly defined in the Operational Manual." "18. "Mid-cap Company" means an enterprise that: (a) is not a SME; and (b) employs fewer than 1,500 employees." "23. "SME" means a small or medium enterprise that has less than 50,000,000 in sales and employs fewer than 250 employees." "27. "Sub-project Sponsor" means any of the following and to which the Borrower proposes to make or has made a Sub-loan: a SME, a Mid-cap Company, a Leasing Company, a Vendor, and an ESCO." 10. New paragraphs 30 through 35 are added to the Appendix to read as follows: "30. "ESCO Sub-grant" means a sub-grant made by the Recipient, out of the proceeds of the Grant, to an ESCO Sub-project Sponsor in accordance with the provisions of paragraph 1 of Section I.C of Schedule 2 to this Agreement. 31. "ESCO Sub-grant Agreement" means the agreement entered into between the Recipient and the ESCO Sub-project Sponsor in accordance with the provisions of paragraph 1 of Section I.C of Schedule 2 to this Agreement. 32. "ESCO Sub-loan" means a Sub-loan made to an ESCO Sub-project Sponsor under the Loan Agreement. 33. "ESCO Sub-project" means a Sub-project carried out by an ESCO Sub-project Sponsor with financing from an ESCO Sub-loan. 34. "ESCO Sub-project Sponsor" means: (a) an ESCO, a Vendor, or a Leasing Company that has entered into an Energy Performance Contract with a beneficiary of a Sub-project; or (b) a SME or a Mid-cap Company that has entered into an Energy Performance Contract with an ESCO, a Vendor, a Leasing Company, or the Recipient. 35. "Vendor" means a technology and/or equipment supplier that sells energy efficient equipment and/or services."

5 B. Supplemental Letter No. 2(C): Performance Monitoring Indicators 5 With reference to the provisions of Schedule 2, Section II.A of the Loan Agreement, the performance monitoring indicators for the Project set out in the Supplemental Letter No. 2(C) dated May 6, 2013, and signed by the Bank and the Borrower are hereby amended to read as set forth in Annex I to this Amendment Letter. Except as specifically amended herein, all the other terms and conditions of the Loan Agreement shall remain in full force and effect. Please confirm your agreement to the foregoing amendments to the Loan Agreement and the amended performance monitoring indicators on behalf of the Borrower, by signing and dating the confirmation on the enclosed copy of this Amendment Letter and returning it to us. Upon receipt by the Bank of said duly countersigned original amendment letter, said amendments will come into force and effect as of the date of countersignature by the Borrower. Sincerely, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Johannes Zutt Country Director Turkey Country Unit Europe and Central Asia Region AGREED: By: Title: Date:.,...'-"'.&----'~~M~. ~/c1j;.nah '~~ \:.urt.{a,\at.~f CYWt~ 01 /o'&/?a (o

6 ANNEX 1 Amendment to Supplemental Letter No. 2(C) Results Framework Project Development Objective Indicators Cumulative Target Values Responsibility Unit of Data Source/ for Indicator Name Core Baseline YRI YR2 YR3 YR4 YRS 'YR6 Frequency Measure Methodology Data Collection Sub-, Semi- MWh/Year ,100,000 2,000,000 5,000,000 6,000,000 Commission- ing reports Tons of Semi ,500 57,300 93, ,400 Sub- C02e/year Projected lifetime energy savings Associated GHG reductions from project investments x Intermediate Results Indicators Cumulative Target Values Unit of Frequency Data Source/ Responsibility for Indicator Name Core Baseline YRl YR2 YR3 YR4 YRS YR6 Measure Methodology Data Collection Volume of bank Amount (USO funding: lines of '"' million) credit- SME Total value of EE investments Number of EE loans given... l " Semi- Number Number ofloans given using alternative business models Amount(USD million) Number Semi semi Semi

7 7 No of active loan x Number Semiaccounts -SME x Percentage of project-supported institutions that Percentage Annual are reporting on this indicator x Percentage of project-supported institutions that Percentage Annual are reporting on this indicator Percentage of active loans to women-owned businesses Percentage Portfolio at Risk - x Percentage semi- SME Semi EE investments Midterm,, Amount (USO using the EE at ICR Registered million) screening tool Stage user survey Policy and Final set of Final set of MENR, institutional Diagnostic Set of draft amendments amendments Semi- GORE, amendments to Text n/a n/a n/a assessment recommendat submitted for submitted for Consultant improve EE completed ions prepared approval/adopt approval/ado ion ption Reports programming Number ofsmes personnel attending Number awareness raising activities, MENRGORE MENR,GORE, Semi- MENRGORE,, Consultant MENRGORE Reports,. r~ Notes: Alternative business models would include energy efficient equipment leasing, ESCOs, and cash flow-based financing. Women-owned businesses would include all credit line sub-borrowers with at least 30% of the company shares owned by women.