FUNDING AGREEMENT 28 OCTOBER between

Transcription

1 FUNDING AGREEMENT 28 OCTOBER 2009 between The Ministry of Construction and Regional Development of the Slovak Republic acting on behalf of the Slovak Republic and European Investment Fund Allen & Overy Bratislava, s.r.o BT:

2 CONTENTS Clause Page 1. Definitions and Interpretation Object of the Agreement Disbursement of the Grants to EIF Contribution of the Grants to SPV Holding Fund Activity Investment Strategy Other Undertakings by the Parties Liability Effective Date; Termination Governing Law; Dispute Resolution Final Provisions...12 Appendix 1. Terms of Reference and Business Plan Principles of selection of Financial Intermediaries; Terms of Operational Agreements Monitoring Reporting Audit Investment Strategy & PLANNING SUMMARY...20 Signatories...26

3 THIS FUNDING AGREEMENT (Agreement) is entered into on 28 October 2009, BETWEEN: (1) The Ministry of Construction and Regional Development of the Slovak Republic, acting on behalf of the Slovak Republic, Prievozská 2/B, Bratislava 26, Slovak Republic (the Ministry of Construction) and (2) The European Investment Fund, 96, boulevard Konrad Adenauer, L-2968, Luxembourg, LUXEMBOURG, (EIF) (The Ministry of Construction and EIF being jointly referred to as the Parties and each of them a Party), as follows: PREAMBLE (A) (B) (C) (D) (E) (F) By Regulation 1080 the principles and strategies governing the European Regional Development Fund (ERDF) have been restated. By Regulation 1083 general provisions regarding, inter alia, the scope, funding and use of the ERDF, of the Cohesion Fund (CF) and European Social Fund (ESF) have been adopted. As one of the instruments for the application of funds disbursed under the Funds (as defined in Regulation 1083), the initiative "Joint European Resources for Micro to Medium Enterprises" (JEREMIE or JEREMIE Initiative) has been jointly developed by the Commission of the European Communities (Commission) and EIF, for the purpose of financing expenditure in respect of operations comprising contributions to support financial engineering instruments, such as venture capital funds, guarantee funds and loan funds, to enterprises, primarily small and medium-sized ones, whereby all funds to be disbursed and applied in the course of JEREMIE shall be made available and used in accordance with Article 44 of Regulation 1083 and the Implementing Regulation. Following the signing of the Memorandum of Understanding and the subsequent submission of the Operational Technical Opinion, an evaluation study prepared by EIF and dated August 2007 (Gap Analysis) has identified major gaps between potential demand and existing supply in the main financial instruments facilitating access to finance for SMEs in Slovakia, hampering their creation and development. By Decree No 832, dated 8 October 2006, the Slovak Government has approved the outline of the Slovak National Strategic Reference Framework, including, inter alia, the Operational Programmes. On 17 August 2007, the Commission approved the National Strategic Reference Framework for the period submitted by the Slovak Republic. In the Operational Programme Bratislava Region managed by the Ministry, EUR 3,529,412 has been earmarked for contribution to the JEREMIE Initiative. On December 23, 2008, the Slovak Republic and EIF have entered into a Framework Agreement (Framework Agreement) in which they agreed that JEREMIE shall be implemented in the Slovak Republic through a holding fund structure pursuant to Article 44 of Regulation 1083 and the Implementing Regulation. The holding fund structure shall comprise of a special purpose company (SPV), controlled by Slovenská záručná a rozvojová banka, a.s. (SZRB), to which JEREMIE BT:

4 Contributions are to be contributed by EIF acting as commission agent (komisionár) on behalf of the Slovak Republic on the basis of individual funding agreements entered into with individual Managing Authorities. EIF shall be a participant (spoločník) in the SPV. Within the SPV, EIF shall exercise the Holding Fund Activity as set out in the Framework Agreement, Funding Agreements and the Holding Fund Agreement. (G) (H) (I) (J) (K) The SPV has been registered in the Commercial Register under the name "Slovenský záručný a rozvojový fond, s. r. o." on By means of Decree No 1013 of December 6, 2006 the Slovak Government has approved the terms of the relevant Operational Programme, for expenditures under which the Ministry of Construction is entitled to obtain reimbursement from the ERDF. The Parties acknowledge that JEREMIE is a novel initiative launched by the Commission and jointly developed in Slovakia by the Slovak Republic and EIF. Accordingly, taking into account the early state of the new institutional infrastructure for the use of EU Structural Funds and implementation of JEREMIE in the Slovak Republic, the Parties declare their readiness to consider the effect of this Agreement, including its compliance with any applicable Community rules and regulations, and to amend it on a need basis. The Ministry of Construction acknowledges its sole responsibility for compliance of the JEREMIE Holding Fund Structure with state aid and public procurement requirements. The purpose of this agreement is to provide a legal basis for the transfer of funds from the Operational Programme managed by the Ministry of Construction to EIF and defining the conditions under which EIF shall contribute such funds to the registered capital of the SPV, acting as a commission agent (komisionár) in its own name but on the account of the Slovak Republic in accordance with the principles laid down in the Framework Agreement. The execution of this Agreement by the Minister of Construction and Regional Development in the name and on behalf of the Slovak Republic has been authorised by Decree of the Slovak Government No 951 of December 17, NOW THEREFORE it is agreed as follows: 1. DEFINITIONS AND INTERPRETATION 1.1 In this Agreement the following defined terms and expressions shall bear the following meaning, unless the context requires otherwise: Agreement means this Agreement and the Appendices as amended from time to time; Annual Progress Report has the meaning given in Appendix 4; Appendix means an appendix to this Agreement which shall form an integral part hereof; Audit Authority means the public authority authorised by the Slovak Republic to carry out audits of the relevant Operational Programmes in line with Article 62 of Regulation 1083; Article means an article of this Agreement; Budgetary Rules Act means Slovak Act No. 523/2004 Coll. on Budgetary Rules of Public Administration and on Amendment of Certain Acts, as amended; BT:

5 Business Day means a day during which EIF Luxembourg office is open, and banks are open for general business in Bratislava, Luxembourg and Brussels; Business Plan means each single business plan submitted by a Financial Intermediary in respect of an Operation in accordance with the conditions laid down in Appendix 1; Commercial Code means Slovak Act No. 513/1991 Coll., as amended; Commission means the Commission of the European Communities; EU Structural Funds mean the European Regional Development Fund and the European Social Fund, both as defined under Regulation 1083, and other funds which the Parties may agree from time to time in accordance with applicable EU law; EU Structural Funds Regulations means Regulation 1080, Regulation 1081, Regulation 1083 and the Implementing Regulation, as well as any other EU legislation from time to time applicable to the EU Structural Funds; Financial Engineering Instrument means any or all of the instruments referred to in Article 44 of Regulation 1083; Financial Intermediary means a Financial Engineering Instrument (for the avoidance of doubt, other than EIF), body or firm, whether public or private, responsible for implementing Operations; Framework Agreement has the meaning given in Recital (F) of the Preamble; Gap Analysis has the meaning given in Recital (D) of the Preamble; Grant means the Initial Grant and any further funds transferred to EIF from the Operational Programme under this Agreement; Holding Fund Activity has the meaning given in Article 5.1; Holding Fund Costs means eligible management costs incurred by EIF and the SPV which are subject to the maximum threshold set out in Article 43(4) of the Implementing Regulation, such threshold to be allocated between EIF and SPV as determined in the Holding Fund Agreement; Implementation Rules means Article 44 of Regulation 1083 and Articles 43 and 44 of the Implementing Regulation; Implementing Regulation means Commission Regulation (EC) No 1828/2006 of 8 December 2006 setting out rules for the implementation of Regulation 1083 and of Regulation 1080; Initial Costs has the meaning given in sub-clause 5.5; Initial Grant means the aggregate of funds in an amount of EUR 3,529,412 to be disbursed by the Ministry of Construction to the JEREMIE Transition Account in accordance with this Agreement, plus interest received from time to time; Intermediate Body has the meaning given in Article 2(6) of Regulation 1083; Investment Board has the meaning given in the Framework Agreement; Investment Strategy has the meaning given in the Framework Agreement; BT:

6 JEREMIE and JEREMIE Initiative has the meaning given in Recital (C) of the Preamble; JEREMIE Contributions means funds contributed from the EU Structural Funds to the relevant Operational Programme and National Contributions, which have been earmarked as funds to be used in support of the implementation of the JEREMIE Initiative in the Slovak Republic in the EU programming period ; JEREMIE Transition Account means the interest bearing segregated bank account, relating to the implementation of JEREMIE, IBAN LU , to be operated by EIF in accordance with Article 4.1 in order to allow the transfer of the Grants to the SPV; JEREMIE Holding Fund means a separate block of assets and rights created within the SPV from the proceeds of the Grants being contributed to the SPV's registered share capital, to be invested and/or administered in the name and on behalf of the SPV by EIF in accordance with the principles laid down in the Framework Agreement, the Shareholders' Agreement and the Holding Fund Agreement; Managing Authority means the public authority designated by the Slovak Republic to manage the relevant Operational Programme according to Article 59 of Regulation The Managing Authority may also act through its Intermediate Body, if relevant; Ministry of Finance or MF SR means the Ministry of Finance of the Slovak Republic; Monitoring Committee means the committee, having the composition, tasks and powers set out in Articles 63 et seq. of Regulation 1083, established by the Slovak Republic in connection with the Operational Programme; National Contributions means funds contributed from the state budget of the Slovak Republic as co-financing for the ERDF funds; National Strategic Reference Framework means the reference document of the Slovak Republic for preparing the programming of the EU Structural and Cohesion Funds, as referred to in Recital (E) of the Preamble; Operations has the meaning given in Article 5.1(c); Operational Agreements means individual agreements concluded by EIF on behalf of the SPV with Financial Intermediaries for individual Operations; Operation Outline means a document prepared and submitted by EIF, following all due analysis of the Financial Intermediary and its Business Plan in which EIF provides and determines a proposal for funding from the JEREMIE Holding Fund; Operational Programme or OPBR means the Operational Programme Bratislava Region, a part of which is to be contributed to EIF in support of the JEREMIE Initiative in accordance with this Agreement; Participation Interest means EIF's participation interest (obchodný podiel) in the SPV, including a share in the profit and in the liquidation balance of the SPV; Parties means the Slovak Republic and EIF; BT:

7 Programme Manual means a document at national level prepared by the Managing Authority for each Operational Programme and containing a detailed description of individual measures and delivered to EIF by each Managing Authority; Regulation 1080 means Regulation (EC) No 1080/2006 of the European Parliament and of the Council of 5 July 2006 on the European Regional Development Fund and repealing Regulation (EC) No 1783/1999; Regulation 1081 means Regulation (EC) No 1081/2006 of the European Parliament and of the Council of 5 July 2006 on the European Social Fund and repealing Regulation (EC) No 1784/1999; Regulation 1083 means Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999; Semi-annual Progress Report has the meaning given in Appendix 4; Small and medium-sized enterprises or SMEs means micro, small and medium-sized enterprises as defined in the Commission Recommendation 2003/361/EC as amended from time to time; SPV Bank Account means the account of the SPV, maintained at the State Treasury, set-up for the purposes of the JEREMIE Holding Fund; SZRB has the meaning given in Recital (F) of the Preamble. 1.2 Subject to Article 1.1 and save where the context otherwise requires: (a) capitalised terms and expressions defined in the Framework Agreement, Regulation 1083 and the Implementing Regulation have the same meaning when used herein; (b) (c) capitalised terms and expressions defined in the Preamble have the same meaning throughout this Agreement; words denoting: (i) (ii) (iii) the singular number only shall include the plural number also and vice versa; one gender only shall include the other gender; persons only shall include firms and corporations and vice versa; (d) (e) (f) any provision of any primary or derivative legislation shall be deemed also to refer to any modification thereof; headings shall be ignored in construing this Agreement; and the Appendices form an integral part of this Agreement and shall have effect accordingly. 2. OBJECT OF THE AGREEMENT 2.1 The Parties are entering into this Agreement for the purpose of: (a) implementing the provisions of the Framework Agreement; BT:

8 (b) (c) (d) (e) transferring the funds which are the subject of a Grant from the Operational Programme managed by the Ministry of Construction to EIF in accordance with the holding fund principles set out in the Framework Agreement; determining the obligations of EIF in respect of the further use of the Grants, in particular their contribution to the registered capital of the SPV; ensuring that the proceeds and/or ultimate economic result of any further use of the Grants will belong to the Slovak Republic, and that for such purpose, EIF shall act under this Agreement as a commission agent (komisionár) in its own name, but on the account of the Slovak Republic; achieving compliance of the JEREMIE Initiative with Regulation 1083, the Implementing Regulation and the Budgetary Rules Act. 2.2 In line with the object of the Agreement, the Ministry of Construction hereby appoints EIF as the commission agent (komisionár) of the Slovak Republic, to act with due professional care in its own name and on the account of the Slovak Republic in relation to the Grants, and EIF hereby accepts such appointment on the terms of this Agreement. 2.3 The Parties have agreed that EIF shall not receive any remuneration from the Ministry of Construction for its activities under this Agreement. This agreement does not provide for any pecuniary interest to be received by EIF from the Ministry of Construction. The Parties have specifically agreed to exclude the application of Section 587 of the Commercial Code to this Agreement. This sub-clause is without prejudice to the right of EIF to receive reimbursement of the Holding Fund Costs under the Holding Fund Agreement. 3. DISBURSEMENT OF THE GRANTS TO EIF 3.1 The Ministry of Construction hereby agrees to transfer Initial Grant, i.e. EUR 3,529,412, to EIF. The full amount of the Initial Grant shall be transferred to the JEREMIE Transition Account as soon as technically possible, and in any case within 60 days from the date of execution of this Agreement. 3.2 The Ministry of Construction may decide to transfer further Grants in excess of the initial aggregate amount set out in sub-clause 3.1 above in accordance with the terms of the Operational Programme. Any such further Grants shall be disbursed within 5 Business Days from the date of execution of a side protocol to this Agreement. 4. CONTRIBUTION OF THE GRANTS TO SPV 4.1 The JEREMIE Transition Account shall be administered and used exclusively for the purposes set out in this Agreement. EIF acknowledges that funds not being contributed to the JEREMIE Initiative by means of a Grant shall not be deposited or held in the JEREMIE Transition Account at any time and that the JEREMIE Transition Account shall remain unencumbered and free of any third party rights at all times. The JEREMIE Transition Account shall at all times and in all respects be used, committed or otherwise disposed of separately from other EIF resources, and shall be used exclusively for the performance of activities in accordance with this Agreement. 4.2 Without undue delay following the crediting of funds under a Grant to the JEREMIE Transition Account, EIF shall do all such steps and actions as may be required for: (a) contributing such funds to the registered capital of the SPV, in accordance with the principles laid down in the Framework Agreement and the Shareholders' Agreement; and BT:

9 (b) transferring such funds to the SPV Bank Account. 4.3 The Ministry of Construction hereby acknowledges and accepts that following the Grant funds being used to increase the registered capital of the SPV, the ownership to them will be transferred to the SPV, in return for an increased nominal value of the Participation Interest. Under the terms of the Framework Agreement and the Shareholders' Agreement, the Participation Interest will be held in the name of EIF, but on the account of the Slovak Republic (represented by the Ministry of Finance). The Participation Interest will carry a share in the profits and liquidation balance of the SPV proportionate to its paid-up value. The Participation Interest will carry a limited number of the voting rights in the SPV as specified in the Framework Agreement. 4.4 The Ministry of Construction acknowledges and accepts that the Participation Interest will represent the only right and proprietary value (majetková hodnota) acquired by EIF on the account of the Slovak Republic as a result of its activities under this Agreement. The Ministry of Construction acknowledges and confirms that EIF will receive grants and perform similar activities to the ones described in this Agreement under separate Funding Agreements entered into with other Managing Authorities. The nominal value of the Participation Interest will therefore ultimately represent the aggregate amount of all grants received by EIF from all Managing Authorities under individual Funding Agreements. 4.5 The Ministry of Construction acknowledges and EIF confirms that it will hold the Participation Interest at all times in its own name, but on the account of the Slovak Republic (represented by the Ministry of Finance) and not on the account of any individual Managing Authority. Following the expiry or termination of the Framework Agreement, EIF will transfer the Participation Interest to the Slovak Republic (represented by the Ministry of Finance) or an entity controlled by it without consideration in accordance with the provisions of the Framework Agreement. 5. HOLDING FUND ACTIVITY 5.1 To ensure the achievement of the objectives of the JEREMIE Initiative, EIF in its capacity as participant (spoločník) in the SPV and contractual party under the Holding Fund Agreement, undertakes to carry out the following activity on behalf of the SPV in compliance with the terms of the Operational Programme Bratislava Region (Holding Fund Activity) as set out in more detail in the Holding Fund Agreement and on the basis of the Framework Agreement, the Investment Strategy and the Foundation Documentation: (a) (b) (c) Preparation and regular revision of the Investment Strategy, which shall include the principles of the investment strategy and planning for the JEREMIE Holding Fund and pursuit of the strategy set out therein, including proposals for reallocation and regular reevaluation of the need to reallocate resources among individual instruments at least once a year; Preparation of Terms of Reference, in accordance with Appendix 1, selection and, where appropriate, revision of the Business Plans, preparation of the Operation Outlines and submission of the relevant proposals and requests for review and comments to the Investment Board; Identification, appraisal and selection of appropriate Financial Intermediaries (by calls for expression of interest and other suitable tools to be employed by the SPV) who shall be entitled to receive financial investments and loans from, or guarantees by, the JEREMIE Holding Fund for purposes of implementation of the strategies for JEREMIE implementation defined in the Investment Strategy (Operations) in accordance with the principles set out in Appendix 2 of this Agreement; BT:

10 (d) (e) (f) (g) (h) (i) (j) (k) Negotiation of commercial terms of Operations and execution of the Operational Agreements on behalf of the SPV on the basis of a power of attorney, including monitoring compliance with the Operational Agreements and taking action when necessary, including the obligation to pursue necessary legal proceedings, when necessary in accordance with the applicable Operational Agreement, including without limitation cases where the Managing Authority would have the obligation to make a financial correction pursuant to Articles 98 to 101 of the Regulation 1083 as a result of irregularities in the course of the implementation of the JEREMIE Initiative; Portfolio management of the contributions from the JEREMIE Holding Fund to the Operations, including monitoring and reporting activities set out in Appendix 3 and Appendix 4 of this Agreement and the exercise of any monitoring and decision-making rights granted to the SPV by the Operational Agreements, including defining and exercising any appropriate exit policies from individual Operations; Reporting to the Investment Board, Ministry of Construction and to the Ministry of Finance on the development of the JEREMIE Holding Fund in accordance with the Framework Agreement and the Holding Fund Agreement; Reasonable assistance in collecting relevant information necessary in order to allow the Ministry of Construction to comply with applicable EU rules on State aid, with the exclusion of overall monitoring and review of compliance with EU rules on State aid, which shall be the Ministry of Construction 's sole responsibility. The Ministry of Construction shall indicate to EIF in writing the type of information required by it for the purpose of the preceding sentence; Acting as central point of contact for the Commission staff, in particular on issues of compliance of the Investment Strategy and of the individual Operations with the JEREMIE objectives, without prejudice to the Slovak Republic s sole responsibility for compliance of the JEREMIE Holding Fund Structure with state aid and public procurement requirements; Making sure that the audit requirements set out in Appendix 5 of this Agreement are complied with by the SPV and the Financial Intermediaries; Advice on structuring, corporate governance and good practice for the selected Financial Engineering Instruments; Where possible, identification of potential leverage for the JEREMIE Initiative with additional funding. 5.2 The scope and standard of performance of the Holding Fund Activity shall be determined with a view to achieve compliance with the framework established by the EU Structural Funds Regulations and the Implementation Rules and with the terms of the Investment Strategy. For the avoidance of doubt the Parties state that satisfaction of any obligations of the Ministry of Construction towards the Commission under the EU Structural Funds Regulations shall remain in the sole responsibility of the Ministry of Construction. 5.3 The Parties acknowledge that as compensation for the costs incurred by EIF as a result of performing the Holding Fund Activity, EIF shall be entitled vis-à-vis the SPV to receive the Holding Fund Costs, which shall be determined in the Holding Fund Agreement in compliance with Article 43 paragraph 4 of the Implementing Regulation. However, EIF shall not receive any financial compensation under this Agreement BT:

11 5.4 The Ministry of Construction hereby acknowledges and accepts that the discharge of EIF's obligations under Article 5.1 is conditional on the Slovak Republic (acting through the Ministry of Finance) procuring that SZRB will exercise its participants' rights in the SPV in accordance with the terms of the Framework Agreement and co-operate with EIF as required. 5.5 In the event the Initial Grant is not transferred to the JEREMIE Transition Account on or before 1 January 2010 in accordance with sub-clause 3.1: (a) (b) (c) the Parties shall without any undue delay enter into consultation to determine appropriate steps for implementing this Agreement and performance of their respective obligations. Such consultation shall be concluded within 30 days from 1 January 2010; EIF shall be entitled to claim and the Ministry of Construction shall be obliged, jointly and severally with the other Managing Authorities, which entered into a similar Funding Agreement with EIF, to pay to EIF any relevant Holding Fund Costs (Initial Costs). For the avoidance of doubt, such Initial Costs shall include both costs prescribed in paragraph 4.10(a) of the Framework Agreement and any amounts due to EIF for the period from the execution of this Agreement; the Ministry of Construction shall pay the Initial Costs on demand by EIF following the end of the consultation period under 5.5(a) above, unless in the meantime the Initial Grant has been deposited into the JEREMIE Transition Account by the Ministry of Construction in accordance with this Agreement, in which case EIF shall invoice the Initial Costs to the SPV in accordance with the Holding Fund Agreement provisions prescribing reimbursement of Holding Fund Costs. 6. INVESTMENT STRATEGY 6.1 EIF shall perform the Holding Fund Activity in accordance with the Investment Strategy, which shall meet the following conditions: (a) (b) (c) The Investment Strategy shall define the general strategy and the instruments to be employed in the administration of the JEREMIE Holding Fund. The Investment Strategy shall be elaborated in compliance with the terms of the EU Structural Funds Regulations, the Implementing Regulation and the Foundation Documentation and on the basis of the Slovak National Strategic Reference Framework and of the Operational Programmes and Programme Manuals and the Investment Strategy which forms Appendix 6 to this Agreement. To the extent not stipulated in the Foundation Documentation and this Agreement, the Investment Strategy shall specify in details the activities to be undertaken in connection with the winding-up of the SPV at the lapse of the JEREMIE programme period as stipulated in the EU Structural Funds Regulations and the further application of any funds of the JEREMIE Holding Fund existing at such time. The initial Investment Strategy for the period 2009 to 2015 shall be prepared by EIF, after consultation with the MF SR, in accordance with the principles set out in this Agreement and the Framework Agreement and on the basis of the Gap Analysis. The first draft of the initial Investment Strategy shall be submitted by EIF to the Investment Board within three months from the date of effectiveness of the Framework Agreement and approval of the initial Investment Strategy shall occur within one month of such submission. Changes necessary to the Investment Strategy as set out in Appendix 6, as a result of changes to the holding fund Investment Strategy, can be effected with the approval of the Ministry of Construction BT:

12 6.2 The Investment Strategy shall be revised by EIF, after consultation with the MF SR and the Managing Authorities, on an annual basis taking into account the historic performance and the impacts on the Slovak economy of the JEREMIE Initiative, any change of the underlying legal regulations for JEREMIE (including but not limited to the EU Structural Funds Regulations and the Implementing Regulation) and any recommendations issued by the Investment Board. A draft of the revised Investment Strategy shall be submitted by EIF to the Investment Board for approval by 15 October of each calendar year (for the first time by 15 October 2010) and the revised Investment Strategy shall be approved by the Investment Board until 15 December of such year. 6.3 EIF shall take into consideration a list of quantifiable measurable indicators tied to the Operational Programme and the Programme Manual. 7. OTHER UNDERTAKINGS BY THE PARTIES 7.1 The Ministry of Construction undertakes for the benefit of EIF as follows: (a) (b) (c) (d) when discharging its obligations and exercising its rights under this Agreement, it will act in accordance with the Framework Agreement; it will provide all necessary information and assistance in accordance with reasonable requests by EIF in order to enable EIF to perform the Holding Fund Activity in accordance with the terms of this Agreement; it will carry out without delay the necessary assessments to ensure compliance with the EU rules on State aid, and will carry out any notifications towards the European Commission for Operations in relation to which such notifications are required under the EU rules on State aid; and it will comply with its obligations under the EU Structural Funds Regulations, independently and irrespective of EIF's assistance on specific tasks as provided under this Agreement. 7.2 EIF undertakes to inform the Ministry of Construction without undue delay following the funds under a Grant having been used to increase the registered capital of the SPV. EIF undertakes to procure that the SPV provides the Ministry of Construction with such information as set out in Appendix 4, for the purposes of any reporting or monitoring obligations of the Ministry of Construction under the EU Structural Funds Regulations and the Implementation Rules. 8. LIABILITY 8.1 EIF shall implement any adequate internal policies to ensure that the Holding Fund Activity is performed in compliance with this Agreement. 8.2 Due to the specific strategic goals on which JEREMIE is based, EIF shall under no circumstances be held responsible or liable for the performance or for the financial results of the JEREMIE Holding Fund or any of the Operations, nor for the failure by the Ministry of Construction to comply with applicable EU Structural Funds Regulations or with any other applicable Community rules. 8.3 Any liability of EIF connected to its own performance of the Holding Fund Activity shall be limited to cases of wilful misconduct and gross negligence. EIF shall not be liable to the Ministry of Construction for consequential damages or lost profit. 8.4 Any liability of EIF in connection with this Agreement shall further be excluded to the extent any action by EIF represents a discharge of EIF's obligations under the Framework Agreement, or is BT:

13 based on information obtained from the Ministry of Construction, whereby EIF shall not assume any obligation to independently verify the accuracy, relevance or completeness of any such information. 8.5 The Ministry of Construction hereby gives a promise of indemnity (sľub odškodnenia) pursuant to Section 725 of the Commercial Code and undertakes to indemnify EIF for any evidenced damages or expenses incurred by EIF as the result of a third party claim brought against EIF in connection with EIF discharging its obligations under this Agreement and performing the Holding Fund Activity. Such obligation to indemnify shall exist only in the event that the cost, expense or damage to EIF has not been caused by wilful misconduct or grossly negligent actions by EIF and that EIF has diligently defended such claim. For the purposes of this promise of indemnity, the Ministry of Construction hereby confirms having requested EIF to perform the Holding Fund Activity and other activities under this Agreement, without EIF having been under a prior legal obligation to do so. The Ministry of Construction shall not be liable to EIF for consequential damages or lost profit. 9. EFFECTIVE DATE; TERMINATION 9.1 This Agreement shall become effective as of the date of its execution by the Ministry of Construction and by EIF and is entered into for the period until 31 December During the term of this Agreement, either of the Parties may cancel this Agreement with immediate effect for material breach of contract by the respective other Party (Cancellation for Cause). The Ministry of Construction may declare a Cancellation for Cause in case of a failure of EIF to comply with any of its material obligations under this Agreement or with the strategies defined in the Investment Strategy, provided that the Ministry of Construction has sent a warning notice to EIF stating such breach and EIF has not cured such breach within a period of sixty days from the date of receipt of the notice. A Cancellation for Cause by the Ministry of Construction requires a prior written consent from the Ministry of Finance. EIF may declare a Cancellation for Cause in case of a failure of the Ministry of Construction to comply with any of its material obligations under this Agreement, in each case provided that EIF has sent a warning notice to the Ministry of Construction stating such breach and the Ministry of Construction has not cured such breach within a period of sixty days from the date of receipt of the notice. For the avoidance of doubt, in case of failure of the Ministry of Construction to comply with its material obligation under sub-clause 3.1 of this Agreement, EIF may declare a Cancellation for Cause in accordance with this Agreement and subject to the consultation prescribed in sub-clause 5.5 of this Agreement. 9.3 If the Framework Agreement is validly terminated for whatever reason, this shall cause an automatic termination of this Agreement as of the effective date of the termination of the Framework Agreement. 9.4 In case of termination of this Agreement in accordance with Article 9.2 or Article 9.3, EIF shall be entitled to terminate the performance of the Holding Fund Activity as of the effective date of such termination. 9.5 Termination of this Agreement shall in no way affect the validity of transfers of the Grant funds to the SPV performed prior to such termination, or EIF's status of participant in the SPV. 9.6 For the purposes of Section 585 of the Commercial Code, the Ministry of Construction confirms that the transfer by EIF of the Participation Interest to the Slovak Republic or SZRB under the principles set out in the Framework Agreement upon its expiry or termination will represent full and conclusive discharge of EIF's obligations towards the Ministry of Construction under the quoted section. 9.7 If, at the time of termination of this Agreement, any Grant funds received from the Managing Authority are still deposited on the JEREMIE Transition Account, such funds shall be returned by EIF without undue delay to the Ministry of Construction, together with interest accrued thereon BT:

14 10. GOVERNING LAW; DISPUTE RESOLUTION 10.1 This Agreement shall be governed by, and construed in accordance with, the laws of the Slovak Republic with the exclusion of its conflicts of laws rules This Agreement is entered into as an innominate contract pursuant to Section 269(2) of the Commercial Code. In respect of EIF's acting as a commission agent (komisionár) on behalf of the Ministry of Construction, the principles of Sections 577 to 590 of the Commercial Code shall apply, however only to the extent that they are not contrary to the express provisions of this Agreement. The Parties agree that the application of any provision of Slovak law that is not of a strictly mandatory nature is expressly excluded to the extent that it could alter the meaning or purpose of any provision of this Agreement The Parties shall use their best endeavours to settle any dispute arising in connection with this Agreement in an amicable manner. However, any dispute arising in connection with this Agreement, including its existence, shall be finally and to the exclusion of the ordinary courts settled by arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce (Rules) by three arbitrators to be appointed in accordance with the Rules. The language of the arbitration proceedings shall be English and the place of arbitration shall be Brussels, Belgium. Arbitral proceedings on any dispute under this Agreement can be consolidated with any proceedings in relation to any disputes arising under the Framework Agreement. 11. FINAL PROVISIONS 11.1 This Agreement relates to Code of request for non-refundable financial contribution: NFP and Project Code: Any notice or communication by one Party to the other Party shall be made in writing and shall be delivered by registered mail or telefax (with transmission confirmation) to the following addresses: If to the Ministry of Construction Ministerstvo výstavby a regionálneho rozvoja Prievozská 2/B Bratislava 26 Slovenská republika Fax no: If to EIF: European Investment Fund Attn: Project Manager JEREMIE Holding Fund Slovak Republic 96, boulevard Konrad Adenauer, L-2968, Luxembourg Luxembourg Fax no: Either Party shall inform the respective other Party without undue delay of any change of the above address details. Until receipt of notification of such changes, a Party may validly serve notice to the last address duly notified to it BT:

15 11.3 This Agreement and the documents referred to herein constitute the entire agreement of the Parties on the subject hereof and replaces and supersedes any prior agreement Amendments to this Agreement shall be made in writing and shall become effective upon execution by both Parties hereto If a provision of this Agreement shall become or be held invalid or unenforceable, the validity and enforceability of the remaining provisions of this Agreement shall not be affected. The invalid or unenforceable provision shall be deemed replaced by a valid and enforceable provision which represents the intentions of the Parties when agreeing on the invalid or unenforceable provision to the utmost possible extent The Parties shall negotiate in good faith and execute any amendments to the terms of this Agreement, which may become necessary or desirable in case of implementation guidance received from the Commission, an amendment of the EU Structural Funds Regulations, of the Implementation Rules, the Foundation Documentation or any laws, regulations or administrative acts of the Slovak Republic This Agreement has been executed in 3 copies in each of the English and Slovak languages, each of which represents an authentic original of this document. In case of discrepancies, the English version shall prevail BT:

16 APPENDIX 1 TERMS OF REFERENCE AND BUSINESS PLAN 1. In respect of each Operation, Terms of Reference shall be prepared by EIF and shall be the basis for any Business Plan submitted by the Financial Intermediaries in accordance with this Appendix. 2. Each Term of Reference shall: (a) (b) (c) be formulated in accordance with the terms of the EU Structural Funds Regulations and on the basis of the Operational Programme and the Programme Manual; reflect, and comply with, the selection criteria as approved each time by the Monitoring Committee of the Operational Programme; and include a section presenting the initial non-exhaustive assessment of any state aid impact. 3. In respect of each Operation, Business Plans shall be submitted to EIF by the relevant Financial Intermediary, on the basis of which a request for review may be submitted by EIF to the Investment Board. 4. Each Financial Intermediary shall be required to draft its Business Plan in accordance with the relevant Terms of Reference. In any case, any Business Plan shall include the following elements: (a) (b) (c) (d) (e) (f) (g) (h) (i) the targeted market of enterprises and the criteria, terms and conditions for financing them; the operational budget of the Financial Engineering Instrument; the ownership of the Financial Engineering Instrument; the co-financing partners or shareholders and the conditions of their participation in the Financial Engineering Instrument; the by-laws or, when not applicable, other internal rules of the Financial Engineering Instrument the provisions on professionalism, competence and independence of the management; the justification for, and intended use of, the contribution from the EU Structural Funds; the policy of the Financial Engineering Instrument concerning exit from investments in enterprises; the winding-up provisions of the Financial Engineering Instrument, including the reutilisation of resources returned to the Financial Engineering Instrument from investments or left over after all guarantees have been honoured, attributable to the contribution from the Operational Programme BT:

17 APPENDIX 2 PRINCIPLES OF SELECTION OF FINANCIAL INTERMEDIARIES; TERMS OF OPERATIONAL AGREEMENTS 1. The selection of Financial Intermediaries shall be carried out by EIF (acting on behalf of the SPV in accordance with the terms of the Holding Fund Agreement) in accordance with the Investment Strategy and with the applicable decisions of the Investment Board. 2. Any Operational Agreement shall be entered into on terms compliant with the EU Structural Funds Regulations and the Implementation Rules and shall in any event include the following conditions: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) the investment strategy and planning; monitoring of implementation in accordance with applicable rules; an exit policy for the contribution from the Operational Programme out of the Financial Engineering Instrument; the winding-up provisions of the Financial Engineering Instrument, including the reutilisation of resources returned to the Financial Engineering Instrument from investments or left over after all guarantees have been honoured that are attributable to the contribution from the Operational Programme; the obligation of the Financial Intermediary to pursue the objectives set out in the Operational Agreement; specification of any ancillary activities to be implemented by the Financial Intermediary directed at raising public awareness regarding the availability of the Financial Engineering Instrument; procedure regarding the revision of the Business Plan agreed for the Operation; terms of regular reporting by the Financial Intermediary to the SPV in a standardised form and scope; terms and procedures for submission of annual accounts for the Operation by the Financial Intermediary to the SPV and auditing procedures to be complied with by the Financial Intermediary for the Operation; the amount of management costs and the performance incentives for the Financial Intermediary in line with the Implementing Regulation; and market standard investor protection and liability provisions to cater for breach of the Operational Agreement. 3. The Operational Agreement shall stipulate the obligation of the Financial Intermediary to provide in the investment agreements between the Financial Intermediary and the individual SMEs financed from the Operation, that: (a) such SMEs shall keep records of the investment or other financial contribution made by the Financial Intermediary for at least the period provided under article 90(1) of Regulation 1083; BT:

18 (b) (c) (d) (e) the Financial Intermediary shall diligently, whether by negotiation or legal action, enforce its claims against such SMEs; the representatives of the Slovak Republic (i.e. authorities, which pursuant to Regulation 1083 are competent for the implementation of the Operational Programmes), the Commission and EIF may access the premises and documents of such SMEs for the purposes of ensuring the legality and regularity of the financing from the Operation; this financing comes in part from EU Structural Funds; such SMEs shall engage in no action or decision contrary to Community law and Slovak law, particularly rules concerning competition. For the avoidance of doubt, and as stipulated in paragraph 5.1(d), EIF shall monitor compliance with the Operational Agreements and take action when necessary in accordance with the applicable Operational Agreement. EIF shall not be liable to the Ministry of Construction for any breaches by the Financial Intermediaries of their obligations under the Operational Agreements. 4. In compliance with Article 78, par. 7 of Regulation 1083, resources returned or left over from the Operations and paid to the SPV shall be reinvested by the SPV in accordance with the Foundation Documentation for the benefit of small and medium-sized enterprises BT:

19 APPENDIX 3 MONITORING 1. Monitoring means the process for the collection and analysis of financial and non-financial information on a regular basis with the aim of measuring the progress of the JEREMIE Initiative against the Investment Strategy and its compliance with the legal and contractual framework (Monitoring). 2. Monitoring shall provide the authorities responsible for the Operational Programme, particularly the Ministry of Construction, with a reasonable assurance that: (a) the implementation of the JEREMIE Initiative: (i) (ii) complies with the applicable rules, in particular with the EU Structural Funds Regulations; includes, where applicable, the necessary arrangements to collect relevant information under State aid rules; and (b) the objectives set out for the JEREMIE Initiative are being pursued. 3. Monitoring of the performance of the Holding Fund Activity by EIF shall be performed by the Ministry of Finance, the Managing Authorities and by the Investment Board. EIF shall provide all reasonable assistance required by the Ministry of Finance to carry out such activity. 4. The Ministry of Finance and the Ministry of Construction shall agree on the manner in which the Ministry of Finance will report to the Ministry of Construction the information collected through Monitoring, which is necessary for the Ministry of Construction to comply with the applicable rules, in particular with the EU Structural Funds Regulations. 5. EIF shall procure that Operational Agreements shall include the necessary provisions enabling SPV to collect relevant information from the Financial Intermediaries, in order to facilitate adequate Monitoring of the Operations, including relevant information to be collected from SMEs receiving support under JEREMIE. 6. EIF shall exercise the Monitoring rights granted to the SPV under the Operational Agreements as a part of the Holding Fund Activity with due diligence and care on behalf of the SPV. EIF shall reflect the information collected through such Monitoring in the reports it is obliged to submit under this Agreement. 7. Without limiting the generality of the foregoing provisions of this Appendix 3, in exercising Monitoring rights of the SPV, EIF shall, without undue delay, report to the Investment Board any change occurring at the level of the Financial Intermediary, provided EIF deems that such change would have an implication on the state aid impact of the Operation. This EIF reporting obligation shall be without prejudice to the Ministry of Construction's overall responsibility to comply with applicable EU rules on State aid. 8. Within six months from the execution of this Agreement, EIF shall notify details of the Monitoring instruments and procedures to be employed by EIF to the Investment Board BT:

20 APPENDIX 4 REPORTING 1. EIF shall prepare for each calendar year (for the first time by 31 March 2010) an annual progress report (Annual Progress Report), setting out a detailed analysis of the Holding Fund Activity performed during the previous calendar year, an analysis on the progress with the implementation of the Investment Strategy and detailed information on the progress of the Operations. 2. The Annual Progress Report shall seek to include the information, relating to the Operations and to the JEREMIE Holding Fund, in order to facilitate the reporting obligations of the Slovak Republic towards the Commission in accordance with the Implementing Regulation. 3. The Annual Progress Report shall be in the English language. 4. The Annual Progress Report shall be submitted by EIF to the Investment Board for review and comments by 31 March of each calendar year. 5. EIF shall prepare a semi-annual progress report (Semi-annual Progress Report), in English, including an analysis on the progress with the implementation of the Investment Strategy and detailed information on the progress of the Operations. Such Semi-Annual Progress report shall be submitted by EIF to the Investment Board for its review and comments by 30 September of each calendar year. 6. Within six months from the execution of this Agreement, EIF shall notify to the Investment Board the details of the reporting procedures applied in the framework of the monitoring system of the JEREMIE Holding Fund BT: