The World Bank 1818 H Street N.W. (202) 473-1000 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVE LOPMENT Washington, D.C. 20433 Cable Address: INTB F D INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDE ,,k July 8 K( '5 H.E. Boris Lalovac Minister of Finance Ministry of Finance Katanciceva 5 Zagreb 10000 Croatia Excellency: Re: IBRD Loan 8518-HR (Innovation and Entrepreneurship Venture Capital Project) Additional Instructions: Disbursement I refer to the Loan Agreement between the International Bank for Reconstruction ar : Development (the "Bank") and th - Republic of Croatia (the "Borrower") for the above- referenced project, dated July 8, 2015. The Loan Agreement provides that the Bank may is5 Ui additional instructions regarding t he withdrawal of the proceeds of Loan No. 8518-HR ("L( Dn This letter ("Disbursement Letter"), as revised from time to time, constitutes the additional instructions. The attached World Bank 9isbursement Guidelines for Projects, dated May 1, 2006 ("Disbursement Guidelines") (Attachment 1), are an integral part of the Disbursement Lett r The manner in which the provisions in the Disbursement Guidelines apply to the Loan is specified below. Sections and subsections in parentheses below refer to the relevant sectioi s z d subsections in the Disbursement Guidelines and, unless otherwise defined in this letter, the capitalized terms used have the meanings ascribed to them in the Disbursement Guidelines. I. Disbursement Arrangements (i) Disbursement Methods (section 2). The following Disbursement Methods may be used under the Loan: * Reimbursement * Advance * Direct Payment * Special Commitment (ii) Disbursement Deadline Date (subsection 3.7). The Disbursement Deadline Date is 4 months after the Closing Date speoified in the Loan Agreement. Any changes to this date w I Ie notified by the Bank. (iii) Disbursement Conditions (sL bsection 3.8). Please refer to the Disbursement Conditio I Is I in the Loan Agreement, Schedule 2, Section IV.B. 1. II. Withdrawal of Loan Proceeds (i) Authorized Signatures (subsetion 3.1). An authorized signatory letter in t ie Form attached (Attachment 2) should be furnished to th Bank at the address indicated belcw providing the name(s) and specimen signature(s) of the official(s) authorized to sign Applications: The World Bank 1818 H Strmet, N.W. Washingtoi., D.C., 20433 Attention: Ilamta Murthi, Country Director, ECCU5 (ii) Applications (subsections 3.2 - 3.3). Please provide completed and signed (a) applicati iis for withdrawal, together with supporting documents, and (b) applications for special commitments, together with a copy of the commercial bank letter of credit, to the address indicated below: The World Bank Radnicka c-sta 80, 9th floor Zagreb, HR - 10 000 Croatia Attention: Loan Department (iii) Electronic Delivery (subsecti gn 3.4) The Bank may permit the Borrower to electronica l/ deliver to the Bank Applications (with supporting documents) through the Bank's Client Connection, web-based portal. The option to deliver Applications to the Bank by electronic means may be effected if: (a) the 3orrower has designated in writing, pursuant to the terms - subparagraph (i) of this Section, iis officials who are authorized to sign and deliver Applica i: r and to receive secure identificatio i credentials ("SIDC") from the Bank for the purpose of delivering such Applications by e ectronic means; and (b) all such officials designated by tf e Borrower have registered as users of Client Connection. If the Bank agrees, the Bank will provide the Borrower with SIDC 'or the designated officials. Following which, the designal;I: officials may deliver Applications electronically by completing Form 2380, which is access Hl. through Client Connection (https:'/clientconnection.worldbank.or ). The Borrower may continue to exercise the option of preparing and delivering Applications in paper form. The Bank reserves the right and may, n its sole discretion, temporarily or permanently disallow : electronic delivery of Application; by the Borrower. (iv) Terms and Conditions of Use of SIDC to Process Applications. By designating offici; k I> use SIDC and by choosing to deli /er the Applications electronically, the Borrower confirm: through the authorized signatory I etter its agreement to: (a) abide by the Terms and Conditi 'f Use of Secure Identification Cred?ntials in connection with Use of Electronic Means to Prc :,, Applications and Supporting Doc imentation ("Terms and Conditions of Use of Secure Identification Credentials") provided in Attachment 3; and (b) to cause such official to abid: b those terms and conditions. 2 (v) Minimum Value ofApplications (subsection 3.5). The Minimum Value of Application 0 Direct Payment, Reimbursement znd issuance of Special Commitments is Euro 400,000. (vi) Advances (sections 5 and 6). * Type of Designated AcciPunt (subsection 5.3): Segregated * Currency of Designated Account (subsection 5.4): Euro * Financial Institution at which the Designated Account Will Be Opened (subsect, a 5.5): Croatian National 3ank * Ceiling (subsection 6.1). Euro 2,000,000 III. Reporting on Use of Loan P -oceeds (i) Supporting Documentation (st ction 4). Supporting documentation should be provided vt each application for withdrawal as set out below: * For requests for Reimbursement and for reporting eligible expenditures paid frl o' the Designated Account - o Records evidencing eligible expenditures (e.g. copies of receipts, supplier invoices) for pay nents for Consultants' services against contracts valued t Euro 100,000 equivalent or more for firms, and Euro 50,000 equivalent or reci : for individual consultants; o Statement of Expenditure in the form attached (Attachment 4a) for all othe expenditures / co itracts, including Training, Operating Costs and Pilot Venture Capital Management Operating Costs as provided for in the L( an Agreement, Proj -ct Operations Manual and the Agreement with the Pilot Venture Capital Management Firm; o Simplified Staten ient of Expenditure (Attachment 4b) showing the Sub- financing approv:-d and amounts disbursed by the Pilot Venture Capital Ii r I and Seed Co-Ini estment Fund under the relevant Sub-financing during tl c reported period; o Evidence satisfactory to the Bank that the withdrawal conditions related to category no. (1) lave been satisfied, as per Schedule 2, Section IV.B.1. of 1l Loan Agreement (please see Section IV. of the Disbursement Letter); o List of payments against contracts that are subject to the Bank's prior revie A I the form attachec (Attachment 5); and o A designated acc )unt reconciliation statement (Attachment 6) and related 1 E iI statement. * For requests for Direct 9ayment: records evidencing eligible expenditures, e.g., c Ds of receipts, supplier invc ices. (ii) Frequency of Reporting Eligi5le Expenditures Paid from the Designated Account (subsection 6.3): At least quarter y, or more frequently if needed. 3 IV. Other Disbursement Instructions * Contributions to the PVC und under Category (1) would be disbursed based on the I '- C sub-financing agreements ;igned between the PVC Fund and PVC beneficiaries. * Disbursements under the relevant Category (1) would start only after the follow' g conditions have been met: (i) the PVC Managerrent Firm has been selected and hired as provided in Sec iM I, Part B, paragraph I (b)(ii) of Schedule 2 of the Loan Agreement; (ii) the PVC Managem-nt Firm has been authorized by HANFA or has notified H., I A of its authorization by another European Union regulator; (iii) the PVC Fund has been established as provided in Section I, Part B, para:yi- h 1 (b)(iii) of Schedul - 2 of the Loan Agreement, with by-laws acceptable to the I. <; (iv) the PVC Fund has )een authorized by HANFA in a manner acceptable to the 3 :1: ; (v) private shareholdei s in the PVC Fund have committed an aggregate of at lea, I fh it million Euros (C4,(00,000); (vi) the management agreement between the PVC Fund and the PVC Managi! - it Firm, acceptable to the Bank, has been signed and complies with the Borrc -e i' Alternative Investment Fund Act; and (vii) a Private Placement Memorandum is in place for the PVC Fund. Based on the evidence provided by the Borrower, the Bank would issue an of,( al notification to the Borrower, con irming that the relevant conditions have been met and s:i1 g that disbursements to PVC Fund may begin, in accordance with other provisions of the o. .n Agreement and this Disbursement Letter. * SCI Fund Contributions m ould be disbursed based on the SCI sub-financing agree r ei ts signed between HAMAG- 3ICRO and SCI beneficiaries. V. Other Important Information For additional information on disbursement arrangements, please refer to the Disbursement Handbook availabl: on the Bank's public website at https://www.worldbank. __ and its secure website "Client Cot nection" at https://clientconnection.worldbank.or2. Print copies are available upon request. From the Client Connecticn website, you will be able to prepare and deliver Applications, monitor the near reel-time status of the Loan, and retrieve related policy, finaii i, and procurement information. 4 If you have not already do -e so, the Bank recommends that you register as a user of Client Connection website (https:./clientconnection.worldbank.or). From this website yot 1 be able to prepare and deliver Applications, monitor the near real-time status of the Loan, a i( retrieve related policy, financial, , nd procurement information. All Borrower officials authorized to sign and deliver Applications by electronic means are required to register witl Client Connection before electronic delivery can be effected. For more information about tic website and registration arrangements, please contact the Bank by email at . If you have any queries in relation to the above, please contact Jasna Mestnik, Finar Officer at jmestnik@worldbank.o -g using the above reference. Yours sincerely, Carlos Pifierta Country Manager World Bank Office, Croatia Attachments: I ,fL -17 1. World Bank Disbursement Guidelines for Projects, dated May 1, 2006 2. Form for Authorized Signatur ,s 3. Terms and Conditions of Use f Secure Identification Credentials in connection with U. Electronic Means to Process ipplications and Supporting Documentation, dated Marc , 2013 4. Forms of "Statement of Exper diture" 5. Form of Payments Against Cc ntracts Subject to the Bank's Prior Review 6. Form of Designated Account 'Zeconciliation Statement Cc with copies: Mr Nikola Dulcic Head of Intern itionalization Sector Hamag-Bicro Nikola.DulcicfDhamagbicro.hr Ms Tatjana Kcvac Klemar Head of Financial Support and Analysis of SME's Sector Directorate for Small and Medium Entrepreneurship and Crafts Ministry of En:repreneurship and Crafts Tatjana.Kovac -Klemar@minpo.hr 5 Attach ivi 2 For n of Authorized Signatory Letter [Letterhead] Ministry of Finance [Street address] [City] [Country] The World Bank 1818 H Street, N.W. Washington, D.C. 20433 United States of America Attention: [Country Director] Re: Loan No. 8518-HR (Innovation and Entrepreneurship Venture Capital Project I refer to the Loan Agreerr ent ("Agreement") between the International Bank for Reconstruction and Development (the "Bank") and the Republic of Croatia (the "Borrower dated July 8, 2015, providing the ibove Loan. For the purposes of Section 2.03 of the Gene EI Conditions as defined in the AgrE ement, any '[one] of the persons whose authenticated specimen signatures appear beloi is authorized on behalf of the Borrower to sign applicat a for withdrawal [and applications for a special commitment] under this Loan. For the purpose of deliver.ng Applications to the Bank, 2[each] of the persons whos., authenticated specimen signatures appears below is authorized on behalf of the Borrower, acting 3[individually] 4[jointly], to deliver Applications, and evidence in support thereof or Ihi terms and conditions specified by the Bank. This confirms that the Bor rower is authorizing such persons to accept Secure Identification Credentials (SIDC) nd to deliver the Applications and supporting documer 1 the Bank by electronic means. In Eull recognition that the Bank shall rely upon such representations and warranties, i icluding without limitation, the representations and warranties contained in the Terms and Conditions of Use of Secure Identification Credentials in connection with Use of Electronic M?ans to Process Applications and Supporting Documentation ("Terms and Conditions of Use ol SIDC"), the Borrower represents and warrants to the Bal : that it will cause such persons to ibide by those terms and conditions. ' Instruction to the Borrower: Stipulate if more than one person needs to sign Applications, and how many or a hi h positions, and if any thresholds apply. Please delete this footnote in final letter that is sent to the Bank. 2 Instruction to the Borrower: Stipulate if more than one person needs to jointly sign Applications, if so, pleas indicate the actual number. Please delete this footnote in final letter that is sent to the Bank. Instruction to the Borrower: Use this b -acket if any one of the authorized persons may sign; if this is not applicable, please delete. Please delete i his footnote in final letter that is sent to the Bank. 4 Instruction to the Borrower: Use this bracket only if several individuals must jointly sign each Application; f it is not applicable, please delete. Please celete this footnote in final letter that is sent to the Bank. 6 This Authorization replaci s and supersedes any Authorization currently in the Bar k records with respect to this Agreement. [Name], [position] 3pecimen Signature: [Name], [position] :pecimen Signature: [Name], [position] ;pecimen Signature: Yours truly, / signed / [Position] 7 Attach n or 3 Terms and Conditions of Use of Secure Identification Credentials in connoction with Use of Electronic Means to Process Applications and Supporting Documentation March 1, 2013 The World Bank (Bank)' wil provide secure identification credentials (SIDC) to perm t Borrower2 to deliver applications for withdrawal and applications for special commitments iil r the Agreement(s) and supporting documentation (such applications and supporting documentation together referred to in these Terms and Conditions of Use as Applications) t ii Bank electronically, on the terms md conditions of use specified herein. SIDC can be either: (a) hardware- :ased (Physical Token), or (b) software-based (Soft Toke . The Bank reserves the right to det ormine which type of SIDC is most appropriate. A. Identification of Users. 1. The Borrower will be required to identify in a completed Authorized Signatory Lettlr (ASL) duly delivered to ar d received by the Bank each person who will be authorizi 6 1 deliver Applications. The - 3ank will provide SIDC to each person identified in the A'S I (Signatory), as provided b.low. The Borrower shall also immediately notify the Ba 1. a Signatory is no longer at thorized by the Borrower to act as a Signatory. 2. Each Signatory must regis:er as a user on the Bank's Client Connection (CC) websil_s (https://clientconnection.w orldbank.org) prior to receipt of his/her SIDC. Registrati : n CC will require that the Si 3natory establish a CC password (CC Password). The Signatory shall not reveal iis/her CC Password to anyone or store or record the CC Password in written or oth,-r form. Upon registration as a CC user, the Signatory wi Ib assigned a unique identify ng account name. B. Initialization of SIDC. 1. Prior to initialization of SIDC by a Signatory, the Signatory will acknowledge havin,Y read, understood and agree d to be bound by these Terms and Conditions of Use. '"Bank" includes IBRD and IDA. 2 "Borrower" includes the borrower of aj IBRD loan, IDA credit, or Project Preparation Facility advance and t. recipient of a grant. 8 2. Where a Physical Token i!, to be used, promptly upon receipt of the Physical Token IIi. Signatory will access CC using his/her account name and CC Password and register his/her Physical Token an I set a personal identification number (PIN) to be used in connection with the use ol his/her Physical Token, after which the Physical Token i 'ill e initialized for use by the Signatory exclusively for purposes of delivering Applicatic rs Where a Soft Token is to be used, the Signatory will access CC using his/her accoui t name and CC Password ai.d set a personal identification number (PIN) to be used ir connection with the use ol his/her Soft Token, after which the Soft Token will be initialized for use by the Signatory exclusively for purposes of delivering Applicati rPs Upon initialization of the :IDC, the Signatory will be a "SIDC User". The Bank wi l1 maintain in its database a iser account (Account) for each SIDC User for purposes < f managing the SIDC of the SIDC User. Neither the Borrower nor the SIDC User wi have any access to the Account. 3. Prior to first use of the SIDC by the SIDC User, the Borrower shall ensure that the 1 1 : User has received training materials provided by the Bank in use of the SIDC. C. Use of SIDC. 1. Use of the SIDC is strictly limited to use in the delivery of Applications by the SIDC User in the manner prescribed by the Bank in the Agreement(s) and these Terms ani Conditions. Any other usc of the SIDC is prohibited. 2. The Bank assumes no resr onsibility or liability whatsoever for any misuse of the SI X by the SIDC User, other r(presentatives of the Borrower, or third parties. 3. The Borrower undertakes :o ensure, and represents and warrants to the Bank (such representation and warran y being expressly relied upon by the Bank in granting SII I that each SIDC User unde -stands and will abide by, these Terms and Conditions of J . including without limitation the following: 4. Security 4.1. The SIDC User sha 1 not reveal his/her PIN to anyone or store or record the P 14 I written or other form. 4.2. The SIDC User sha'l not allow anyone else to utilize his/her SIDC to deliver;.r Application to the Bank. 4.3. The SIDC User sha 1 always logout from CC when not using the system. Fai ia to logout properly can create a route into the system that is unprotected. 4.4. If the SIDC User believes a third party has learned his/her PIN or has lost his, h Physical Token he/she shall immediately notify clientconnection@worldbank.oig. 9 4.5. The Borrower shall immediately notify the Bank at clientconnection@worldb,nk.or of any lost, stolen or compromised SIDC, and taki other reasonable steps to e isure such SIDC are disabled immediately. 5. Reservation of Right to D sable SIDC 5.1. The Borrower shall -eserve the right to revoke the authorization of a SIDC U5 er use a SIDC for any reason 5.2. The Bank reserves t ie right, in its sole discretion, to temporarily or permanen I' disable a SIDC, de-activat: a SIDC User's Account or both. 6. Care of Physical Tokens 6.1. Physical Tokens w 11 remain the property of the Bank. 6.2. The Bank will phy:.ically deliver a Physical Token to each Signatory desigm ic to receive one in a manner to be determined by and satisfactory to the Bank. 6.3. Physical Tokens cc ntain delicate and sophisticated instrumentation and therc F1j should be handled with du-, care, and should not be immersed in liquids, exposed to extreme temperatures, cru. hed or bent. Also, Physical Tokens should be kept more fial five (5) cm from devices that generate electromagnetic radiation (EMR), such as mc bL . phones, phone-enabled PE As, smart phones and other similar devices. Physical Tok U. should be carried and stor d separate from any EMR device. At close range (les-s th u.11 cm), these devices can out )ut high levels of EMR that can interfere with the proper operation of electronic eqL ipment, including the Physical Token. 6.4. Without derogatinj from these Terms and Conditions of Use, other technical instructions on the proper ise and care of Physical Tokens are available at http://www.rsa.com. 7. Replacement 7.1. Lost, damaged, compromised (in terms of 4.5, above) or destroyed Physical Tokens will be replaced at the expense of the Borrower. 7.2. The Bank reserves the right, in its sole discretion, not to replace any Physica Token in the case of misuse, or not to reactivate a SIDC User's Account. 10 Attachment 4a Statement of Expenditures (SOE) Payments made during the period from to Loan No.: Application No.: Category No.: SOE No.: 1 2 3 4 5 6 7 8 9 10 Sunnlier's WR Tvne of Good or Currency and Total Currency and % Financed Amount Currency qlnd Fyrhene nat of Remqrk, Name Contract Service Amount of Contract Total Amount by Eligible Amount Paid Rate Payment Number in (CW/GO/CSIOP/TR) of Invoice IBRD/IDA/TF for from Client Brief Description Covered by Financing Designated Connection Application (5 x 6) Account (if Applicable) TOTALS Supporting documents for this SOE retained at (location) 11 Attachment 4b INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT LOAN NO.: DATE: STATEMENT OF EXPENDITURE - SOE APPLICATION NO.: (No Supporting Documents) PAGE NO.: PILOT VENTURE CAPITAL FUND/SEED CO-INVESTMENT FUND SUB-FINANCING CATEGORY NUMBER: 1 2 3 4 5 6 7 8 9 10 100% of Amount Name or Amount and Description Amounts paid % requested in Date of Rate Euro Amouni Remarks Numoer oT uurrency oT oT in mis r-inancea mis Appication tayment of wixnarawn Sub-financing Sub-financing Costs Application by IBRD (Col 3 X 4) Exchange from DA 12 Attachment - Payments Made during Reporting Period Against Conlracts Subject to the Bank's Prior Review Date of W Us hare of WB's Non Amount Paid to A ii t laid to Contract Contract Contract Objection Supplier during Sul Fl i r during Number Supplier Date Amount to Contract Period _ 4iod 13 Attachme i11 DESIGNATED ACCOUNT RECONCILIATION STATEMENT LOAN/CREDIT/PPF/COFINANC ER NUMBER ACCOUNT NUMBER WITH (BANK) 1. TOTAL ADVANCED BY WORLD HANK (OR COFINANCIER) $ 2 LESS: TOTAL AMOUNT RECOVERED BY WORLD BANK - $ 3. EQUALS PRESENT OUTSTANDIN 3 AMOUNT ADVANCED TO THE DESIGNATED ACCOUNT (N JMBER I LESS NUMBER 2) = $ 4. BALANCE OF DESIGNATED ACC 3UNT PER ATTACHED BANK STATEMENT AS OF DATE $ 5. PLUS: TOTAL AMOUNT CLAIMED IN THIS APPLICATION NO. + $ * 6. PLUS: TOTAL AMOUNT WITHDf AWN AND NOT YET CLAIMED REASON: + $ * 7. PLUS: AMOUNTS CLAIMED IN P REVIOUS APPLICATIONS NOT YET CREDITED AT DATE 01 BANK STATEMENTS APPLICATION NO. AMOUNT * SUBTOTAL OF PREVIOUS APPLICATIONS NOT YET CREDITED + $ 8. MINUS: INTEREST EARNED - $ * 9. TOTAL ADVANCE ACCOUNTED FOR (NO. 4 THROUGH NO. 9) = $ 10. EXPLANATION OF ANY DIFFERI NCE BETWEEN THE TOTALS APPEARING ON LINES 3 AND 9: 11. DATE: _ SIGNATURE: FITLE: 14