2. člen MSPEN

Sporazum se v izvirniku v angleškem jeziku ter v prevodu v slovenskem jeziku glasi: LOAN NUMBER 4498 SLO LOAN NUMBER 4498 SLO AGREEMENT, dated November 17, 1999, between REPUBLIC OF SLOVENIA (the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of the project described in Schedule 2 to this Agreement (the Project), has requested the Bank to assist in the financing of the Project; (B) the Borrower intends to contract from the European Union (EU) PHARE Program a grant (the EU Grant) in an amount of three million Euro (Euro 3,000,000) to assist in financing of the Project on terms and conditions to be set forth in an agreement (the EU Grant Agreement) between the Government of the Borrower and EU PHARE; WHEREAS the Bank has agreed, on the basis, inter alia, of the foregoing, to extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: Section 1.01. The “General Conditions Applicable to Loan and Guarantee Agreements for Single Currency Loans” of the Bank, dated May 30, 1995 (as amended through December 2, 1997) (the General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) “Eligible Categories” means categories (1), (2),

(3)and

(4)set forth in the table in Part A.1 of Schedule 1 to this Agreement. (b) “Eligible Expenditures” means the expenditures for goods and services referred to in Section 2.02 of this Agreement. (c) “Euro” and “EUR” each means the lawful currency of the member states of the European Union that adopt the single currency in accordance with the Treaty establishing the European Community, as amended by the Treaty on European Union. (d) “MAFF” means the Borrower’s Ministry of Agriculture, Forestry and Food. (e) “MOF” means the Borrower’s Ministry of Finance. (f) “MOJ” means the Borrower’s Ministry of Justice. (g) “Program Council” means the Borrower’s program council established pursuant to Government Resolution No. 460-11/98-1 (N) on October 1, 1998. (h) “Project Coordination Office” and “PCO” each means the project coordination office established within SMA (as defined hereinafter). (i) “Project Management Report” means each report prepared in accordance with Section 4.02 of this Agreement. (j) “SMA” means the Surveying and Mapping Authority within the Borrower’s Ministry of Environment and Physical Planning. (k) “Special Account” means the account referred to in Part B of Schedule 1 to this Agreement. (l) “Supreme Court” means the Supreme Court of the Borrower. Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, an amount equal to fourteen million and fifty thousand Euro (Euro 14,050,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan and in respect of the fee referred to in Section 2.04 of this Agreement. Section 2.03. The Closing Date shall be June 30, 2005, or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.04. The Borrower shall pay to the Bank a fee in the amount of one hundred and forty thousand and five hundred Euro (Euro 140,500). On or promptly after the Effective Date, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and pay to itself the amount of said fee. Section 2.05. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.06. The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time in accordance with the provisions of Schedule 3 to this Agreement. Section 2.07. Interest and other charges shall be payable in arrears on April 15 and October 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Loan in accordance with the provisions of Schedule 3 to this Agreement. Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project, and, to this end, shall carry out Part A of the Project through SMA; Part B of the Project through the Supreme Court; Part C of the Project through SMA; Part D of the Project through MAFF; Parts E and F of the Project through MOF; Part G of the Project through MOJ; and Part H through SMA, with due diligence and efficiency and in conformity with appropriate administrative, financial, technical, environmental and management practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limitation upon the provisions of paragraph (a) of this Section and except as the Borrower and the Bank shall otherwise agree, the Borrower shall carry out the Project in accordance with the Implementation Program set forth in Schedule 5 to this Agreement. Section 3.02. Except as the Bank shall otherwise agree, procurement of the goods, technical services and consultants’ services required for the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 4 to this Agreement. Section 3.03. For the purposes of Section 9.08 of the General Conditions and without limitation thereto, the Borrower shall: (a) prepare, on the basis of guidelines acceptable to the Bank, and furnish to the Bank not later than six

(6)months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Bank, a plan designed to ensure the sustainability of the Project; and (b) afford the Bank a reasonable opportunity to exchange views with the Borrower on said plan. Section 4.01. (a) The Borrower shall maintain a financial management system, including records and accounts, and prepare financial statements in a format acceptable to the Bank, adequate to reflect the operations, resources and expenditures related to the Project. (b) The Borrower shall: (i) have the records, accounts and financial statements referred to in paragraph (a) of this Section and the records and accounts for the Special Account for each fiscal year audited, in accordance with auditing standards acceptable to the Bank, consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, (A) certified copies of the financial statements referred to in paragraph (a) of this Section for such year as so audited, and (B) an opinion on such statements, records and accounts and report of such audit, by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning such records and accounts, and the audit thereof, and concerning said auditors, as the Bank may from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of Project Management Reports or statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and separate accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank’s representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the Project Management Reports or statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. Section 4.02. (a) Without limitation upon the provisions of Section 4.01 of this Agreement, the Borrower shall carry out a time-bound action plan acceptable to the Bank for the strengthening of the financial management system referred to in paragraph (a) of said Section 4.01 in order to enable the Borrower, not later than June 30, 2000, or such later date as the Bank shall agree, to prepare quarterly Project management reports, acceptable to the Bank, each of which: (i) (A) sets forth actual sources and applications of funds for the Project, both cumulatively and for the period covered by said report, and projected sources and applications of funds for the Project for the six-month period following the period covered by said report, and (B) shows separately expenditures financed out of the proceeds of the Loan during the period covered by said report and expenditures proposed to be financed out of the proceeds of the Loan during the six-month period following the period covered by said report; (ii) (A) describes physical progress in Project implementation, both cumulatively and for the period covered by said report, and (B) explains variances between the actual and previously forecast implementation targets; and (iii) sets forth the status of procurement under the Project and expenditures under contracts financed out of the proceeds of the Loan, as at the end of the period covered by said report. (b) Upon the completion of the action plan referred to in paragraph (a) of this Section, the Borrower shall prepare, in accordance with guidelines acceptable to the Bank, and furnish to the Bank not later than 45 days after the end of each calendar quarter a Project Management Report for such period. Section 5.01. Pursuant to Section 6.02 (p) of the General Conditions, the following additional events are specified: (a) The EU Grant shall have failed to become effective by June 30, 2000, or such later date as the Bank may agree; provided however that the provisions of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Bank that adequate funds are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement; and (b) (i) (A) Subject to subparagraph (ii) of this paragraph, the right of the Borrower to withdraw the proceeds of any grant or loan made to the Borrower for the financing of the Project shall have been suspended, canceled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor; or (B) any such loan shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Bank that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section 5.02. Pursuant to Section 7.01(k) of the General Conditions, the following additional events are specified; the events specified in Section 5.01 (a) (subject to the proviso thereto) and (b)(i)(B) (subject to the proviso of sub-paragraph (b)(ii)) shall occur. Section 6.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) The PCO has been established with a Project administration officer and core staff appointed with qualifications, experience and terms of reference satisfactory to the Bank. (b) The Program Council has been authorized to coordinate Project implementation. (c) A financial management system satisfactory to the Bank has been established for the Project. (d) Project implementation arrangements satisfactory to the Bank have been entered into between MOF and each of SMA, MOJ, the Supreme Court and MAFF. (e) An independent auditor acceptable to the Bank has been appointed to carry out audits required under the Project. (f) A draft annual budget for the Borrower’s fiscal year 2000 (FY 2000) has been submitted to the Parliament of the Borrower showing proposed budgetary allocations for SMA, MOF, MOJ and MAFF in respect of Project expenditures for FY 2000 in amounts agreed with the Bank. Section 6.02. The date ninety

(90)days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 7.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministry of Finance Zupanciceva ulica 3 Ljubljana Republic of Slovenia For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America text="Cable address: Telex: INTBAFRAD 248423 (MCI) or Washington, D.C. 64145 (MCI)" IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in Ljubljana, Republic of Slovenia, as of the day and year first above written. REPUBLIC OF SLOVENIA By Mitja Gaspari, (s) Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Roger Grawe, (s) Regional Vice President Europe and Central Asia A. General 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: text="-------------------------------------------------------------------------- Amount of the % of Loan Allocated Expenditures Category (Expressed in Euro) to be Financed --------------------------------------------------------------------------

(1)Goods 260,000 54%

(2)Technical services 7,670,000 54%

(3)Consultants’ services and training (a) for Parts A through 2,200,000 54% G of the Project (b) for Part H of the Project 1,040,000 100%

(4)Incremental Operating Costs 1,400,000 100%

(5)Fee 140,500 Amount due under Section 2.04 of this Agreement

(6)Unallocated 1,339,500 -------------------------------------------------------------------------- TOTAL 14,050,000 --------------------------------------------------------------------------" 2. For the purposes of this Schedule: (a) the term “technical services” means contracts for the production of digital orthophoto maps, and digital cadastral maps; database development, data collection, data entry, data processing, and map interpretation; database linkages between the land and building registries and other government agencies; the carrying out of surveys of land, buildings and apartments; backlog mitigation for the title registration system; appraisal of land and other property; and support for implementing a new property tax system; and (b) the term “incremental operating costs” means the operating costs of the PCO which would not have been incurred absent the Project and includes office furniture, equipment and supplies, cost of transportation (including mileage allowance for staff), staff salaries (other than salaries of government officials) and the cost of any audits to be carried out under the Project. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. 4. The Bank may require withdrawals from the Loan Account to be made on the basis of statements of expenditure for expenditures for: (i) goods under contracts costing less than $300,000 equivalent each; (ii) technical services under contracts costing less than $200,000 equivalent each; (iii) contracts for consulting firms costing less than $100,000 equivalent each; (iv) contracts for individual consultants costing less than $25,000 equivalent each; and (v) incremental operating costs and training, under such terms and conditions as the Bank shall specify by notice to the Borrower. B. Special Account 1. The Borrower shall open and maintain in Euro a special deposit account in its Central Bank, on terms and conditions satisfactory to the Bank. 2. After the Bank has received evidence satisfactory to it that the Special Account has been opened, withdrawals from the Loan Account of amounts to be deposited into the Special Account shall be made as follows: (a) until the Bank shall have received: (i) the first Project Management Report referred to in Section 4.02(b) of this Agreement; and (ii) a request from the Borrower for withdrawal on the basis of Project Management Reports, withdrawals shall be made in accordance with the provisions of Annex A to this Schedule 1; and (b) upon receipt by the Bank of a Project Management Report pursuant to Section 4.02 (b) of this Agreement, accompanied by a request from the Borrower for withdrawal on the basis of Project Management Reports, all further withdrawals shall be made in accordance with the provisions of Annex B to this Schedule 1. 3. Payments out of the Special Account shall be made exclusively for Eligible Expenditures. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for Eligible Expenditures. 4. Notwithstanding the provisions of Part B.2 of this Schedule, the Bank shall not be required to make further deposits into the Special Account: (a) if the Bank determines at any time that any Project Management Report does not adequately provide the information required pursuant to Section 4.02 of this Agreement; (b) if the Bank determines at any time that all further withdrawals should be made by the Borrower directly from the Loan Account; or (c) if the Borrower shall have failed to furnish to the Bank within the period of time specified in Section 4.01 (b)(ii) of this Agreement, any of the audit reports required to be furnished to the Bank pursuant to said Section in respect of the audit of (A) the records and accounts for the Special Account, or (B) the records and accounts reflecting expenditures with respect to which withdrawals were made on the basis of Project Management Reports. 5. The Bank shall not be required to make further deposits into the Special Account in accordance with the provisions of Part B.2 of this Schedule if, at any time, the Bank shall have notified the Borrower of its intention to suspend in whole or in part the right of the Borrower to make withdrawals from the Loan Account pursuant to Section 6.02 of the General Conditions. Upon such notification, the Bank shall determine, in its sole discretion, whether further deposits into the Special Account may be made and what procedures should be followed for making such deposits, and shall notify the Borrower of its determination. 6. (a) If the Bank determines at any time that any payment out of the Special Account was made for an expenditure which is not an Eligible Expenditure, or was not justified by the evidence furnished to the Bank, the Borrower shall, promptly upon notice from the Bank, provide such additional evidence as the Bank may request, or deposit into the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment. Unless the Bank shall otherwise agree, no further deposit by the Bank into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Bank determines at any time that any amount outstanding in the Special Account will not be required to cover payments for Eligible Expenditures during the six-month period following such determination, the Borrower shall, promptly upon notice from the Bank, refund to the Bank such outstanding amount. (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Bank made pursuant to sub-paragraph (a), (b) or (c) of this paragraph 6 shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the provisions of the Loan Agreement. 1. For the purposes of this Annex: the term “Authorized Allocation” means an amount equivalent to Euro 2,700,000 to be withdrawn from the Loan Account and deposited into the Special Account pursuant to paragraph 2 of this Annex; provided, however, that unless the Bank shall otherwise agree, the Authorized Allocation shall be limited to an amount equivalent to Euro 1,350,000 until the aggregate amount of withdrawals from the Loan Account, plus the total amount of all outstanding special commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions shall equal or exceed the equivalent of Euro 5,400,000. 2. Withdrawals of the Special Account’s Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows: (a) For withdrawals of the Special Account’s Authorized Allocation, the Borrower shall furnish to the Bank a request or requests for deposit into the Special Account of an amount or amounts which in the aggregate do not exceed the Authorized Allocation. On the basis of each such request, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into the Special Account such amount as the Borrower shall have requested. (b) For replenishment of the Special Account, the Borrower shall furnish to the Bank requests for deposit into the Special Account at such intervals as the Bank shall specify. Prior to or at the time of each such request, the Borrower shall furnish to the Bank the documents and other evidence required pursuant to Part B.3 of Schedule 1 to this Agreement for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for Eligible Expenditures. Each such deposit into the Special Account shall be withdrawn by the Bank from the Loan Account under one or more of the Special Account’s Eligible Categories. 3. The Bank shall not be required to make further deposits into the Special Account, once the total unwithdrawn amount of the Loan minus the total amount of all outstanding special commitments entered into by the Bank pursuant to Section 5.02 of the General Conditions in respect of expenditures to be financed out of the proceeds of the Loan, shall equal the equivalent of twice the amount of the Special Account’s Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for Eligible Expenditures. 1. Except as the Bank may otherwise specify by notice to the Borrower, all withdrawals from the Loan Account shall be deposited by the Bank into the Special Account in accordance with the provisions of Schedule 1 to this Agreement. Each such deposit into the Special Account shall be withdrawn by the Bank from the Loan Account under one or more of the Special Account’s Eligible Categories. 2. Each application for withdrawal from the Loan Account for deposit into the Special Account shall be supported by a Project Management Report. 3. Upon receipt of each application for withdrawal of an amount of the Loan, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into the Special Account an amount equal to the lesser of: (a) the amount so requested; and (b) the amount which the Bank has determined, based on the Project Management Report accompanying said application, is required to be deposited in order to finance Eligible Expenditures during the six-month period following the date of such report; provided, however, that the amount so deposited, when added to the amount indicated by said Project Management Report to be remaining in the Special Account, shall not exceed the equivalent of Euro 2,700,000. The objective of the Project is to improve the efficiency and effectiveness of real estate administration systems in the Republic of Slovenia. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives: Part A: Land and Building Cadastre Provision of goods, technical services, consultants’ services and training for: (a) the production of orthophoto maps and improved digital cadastre maps; (b) the interpretation of orthophoto maps, data entry of building information and creation of a database for the building register; and (c) creation of a data interface between the computer systems of SMA and user-agencies. Part B: Land Register Provision of goods, technical services, consultants’ services and training: (a) to assist in clearing the backlog of title registrations in about 44 county court registers; and (b) for the creation of a data-interface between the computer systems of the Supreme Court and SMA. Part C: Apartment Registration Development Development of a methodology for the rapid registration of apartments through the carrying out of pilot projects, preparation of a legislative and policy framework and the provision of goods, consultants’ services, training and technical services. Part D: Agricultural Land Use Monitoring Provision of technical services, goods, consultants’ services and training for the development and implementation of an agricultural land-use monitoring system in compliance with the requirements of the EU’s Common Agricultural Policy. Part E: Real Estate Tax and Valuation Systems Development Development of a real estate property tax system and an associated real estate valuation system through the provision of goods, technical services, consultants’ services and training for: (a) the development of the legislative and policy framework; (b) the carrying out of pilot evaluations of properties and compilation of tax rolls in selected municipalities agreed with the Bank; and (c) institutional development in MOF and selected municipalities and the development of a public relations strategy. Part F: Housing Finance and Mortgage Reform Development of the legal framework related to the housing sector including mortgages through the provision of consultants’ services and training. Part G: Legal Framework for Property Ownership Development of the legal framework for property ownership and registration through the provision of consultants’ services and training. Part H: Project Coordination Support and Strategic Studies (a) Provision of technical assistance, training and goods to the PCO to support the PCO in the implementation of the Project including the carrying out of audits required under the Project. (b) Provision of consultants’ services to the PCO for the development of a strategy for: (i) information technology and management; and (ii) cost recovery for the land registration system and the land and building cadastre. * * * The Project is expected to be completed by December 31, 2004. A. General Definitions For purposes of this Schedule, the following terms have the following meanings: (a) “Disbursed Amount” means, in respect of each Interest Period, the aggregate principal amount of the Loan withdrawn from the Loan Account in such Interest Period. (b) “Interest Period” means the initial period from and including the date of this Agreement to, but excluding, the first Interest Payment Date occurring thereafter, and after the initial period, each period from and including an Interest Payment date to, but excluding, the next following Interest Payment Date. (c) “Interest Payment Date” means any date specified in Section 2.07 of this Agreement. (d) “Rate Fixing Date” means, for each Disbursed Amount, the first day of the Interest Period next following the Interest Period in which such Disbursed Amount is withdrawn. B. Interest 1. The principal amount of the Loan shall be divided into Disbursed Amounts. Interest shall accrue on each Disbursed Amount outstanding from time to time at a rate based on a floating rate index prior to its Rate Fixing Date and at a fixed rate from its Rate Fixing Date, as described in paragraph 2 of this Part B. 2. (a) From the date of withdrawal of each amount of each Disbursed Amount withdrawn and outstanding, to but not including the Rate Fixing Date for such Disbursed Amount, interest on each such amount shall accrue, at a rate equal to the applicable: (i) LIBOR Base Rate; plus (ii) LIBOR Total Spread. (b) From the Rate Fixing Date for each Disbursed Amount until final repayment thereof, interest on such Disbursed Amount shall accrue, at a rate equal to the applicable: (i) Fixed Base Rate; plus (ii) Fixed Total Spread. 3. For purposes of paragraph 2 of this Part B, the following terms have the following meanings: (a) “LIBOR Base Rate” means, for the Interest Period in which a Disbursed Amount is withdrawn, the London interbank offered rate for six-month deposits in Euro for value the first day of such Interest Period (or, in the case of the initial Interest Period, for value the day occurring on the Interest Payment Date preceding the first day of such Interest Period), as reasonably determined by the Bank and expressed as a percentage per annum. (b) “LIBOR Total Spread” means, for the Interest Period in which each Disbursed Amount is withdrawn: (i) three-fourths of one percent (3/4 of 1%); (ii) minus (or plus) the weighted average margin, for such Interest Period, below (or above) the London interbank offered rates, or other reference rates, for six-month deposits, in respect of the Bank’s outstanding borrowings or portions thereof allocated by the Bank to fund single currency loans or portions thereof made by it that include such Disbursed Amount for such Interest Period; as reasonably determined by the Bank and expressed as a percentage per annum. (c) “Fixed Base Rate” means, for each Disbursed Amount, the equivalent of the London interbank offered rate for six-month deposits in Euro for value on the Rate Fixing Date for such Disbursed Amount, expressed as a single fixed interest rate based on the fixed interest rates corresponding to the repayment installments of such Disbursed Amount, as reasonably determined by the Bank and expressed as a percentage per annum. (d) “Fixed Total Spread” means, for each Disbursed Amount: (i) three-fourths of one percent (3/4 of 1%); (ii) minus (or plus) the cost margin, applicable on the Rate Fixing Date for such Disbursed Amount, below (or above) the London interbank offered rates, or other reference rates, for six-month deposits, in respect of the Bank’s outstanding borrowings or portions thereof allocated to fund single currency loans or portions thereof made by it that include such Disbursed Amount; plus (iii) the Bank’s risk spread applicable on the Rate Fixing Date for such Disbursed Amount; as reasonably determined by the Bank and expressed as a percentage per annum. 4. The Bank shall notify the Borrower of LIBOR Base Rate, LIBOR Total Spread, Fixed Base Rate and Fixed Total Spread applicable to each Disbursed Amount, promptly upon the determination thereof. 5. Whenever, in light of changes in market practice affecting the determination of the interest rates referred to in this Schedule, the Bank determines that it is in the interest of its borrowers as a whole and of the Bank to apply a basis for determining the interest rates applicable to the Loan other than as provided in this Schedule, the Bank may modify the basis for determining the interest rates applicable to amounts of the Loan not yet withdrawn upon not less than six

(6)months’ notice to the Borrower of the new basis. The new basis shall become effective on the expiry of the notice period unless the Borrower notifies the Bank during said period of its objection thereto, in which case said modification shall not apply to the Loan. C. Repayment 1. Subject to the provisions of paragraph 2 of this Part C, the Borrower shall repay each Disbursed Amount of the Loan in semiannual installments payable on each April 15 and October 15, the first such installment to be payable on the seventh (7th) Interest Payment Date following the Rate Fixing Date for such Disbursed Amount and the last such installment to be payable on the eighteenth (18th) Interest Payment Date following the Rate Fixing Date for such Disbursed Amount. Each installment shall be one-twelfth (1/12) of such Disbursed Amount. 2. Notwithstanding the provisions of paragraph 1 of this Part C, if any installment of principal of each Disbursed Amount would, pursuant to the provisions of said paragraph 1, be payable after April 15, 2014, the Borrower shall also pay on said date the aggregate amount of all such installments. 3. After each Disbursed Amount shall have been withdrawn, the Bank shall promptly notify the Borrower of the amortization schedule for such Disbursed Amount. Section I. Procurement of Goods and Technical Services Part A: General Goods and technical services shall be procured in accordance with the provisions of Section I of the “Guidelines for Procurement under IBRD Loans and IDA Credits” published by the Bank in January 1995 and revised in January and August 1996, September 1997 and January 1999 (the Guidelines) and the following provisions of Section I of this Schedule. Part B: International Competitive Bidding Except as otherwise provided in Part C of this Section, goods and technical services shall be procured under contracts awarded in accordance with the provisions of Section II of the Guidelines and paragraph 5 of Appendix 1 thereto. Part C: Other Procurement Procedures 1. National Competitive Bidding Technical services estimated to cost less than $300,000 equivalent per contract, up to an aggregate amount not to exceed $1,740,000 equivalent, may be procured under contracts awarded in accordance with the provisions of paragraphs 3.3 and 3.4 of the Guidelines. 2. International Shopping (a) Goods estimated to cost less than $200,000 equivalent per contract, up to an aggregate amount not to exceed $270,000 equivalent, may be procured under contracts awarded on the basis of international shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. (b) Technical services estimated to cost less than $200,000 equivalent per contract, up to an aggregate amount not to exceed $250,000 equivalent, may be procured under contracts awarded on the basis of international shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. 3. National Shopping (a) Goods estimated to cost less than $75,000 equivalent per contract, up to an aggregate amount not to exceed $30,000 equivalent, may be procured under contracts awarded on the basis of national shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. (b) Technical services estimated to cost less than $75,000 equivalent per contract, up to an aggregate amount not to exceed $80,000 equivalent, may be procured under contracts awarded on the basis of national shopping procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. Part D: Review by the Bank of Procurement Decisions 1. Procurement Planning Prior to the issuance of any invitations to bid for contracts, the proposed procurement plan for the Project shall be furnished to the Bank for its review and approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the Guidelines. Procurement of all goods and technical services shall be undertaken in accordance with such procurement plan as shall have been approved by the Bank, and with the provisions of said paragraph 1. 2. Prior Review (a) With respect to: (i) all contracts for technical services awarded in accordance with the provisions of Part B of this Schedule; and (ii) the first contract for technical services awarded in accordance with the provisions of Part C.1 of this Schedule, the procedures set forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply. (b) With respect to: (i) the first contract for goods; and (ii) the first contract for technical services, awarded in accordance with the provisions of each of Parts C.2 and C.3, the following procedures shall apply: (i) prior to the selection of any supplier under shopping procedures, the Borrower shall provide to the Bank a report on the comparison and evaluation of quotations received; (ii) prior to the execution of any contract procured under shopping procedures, the Borrower shall provide to the Bank a copy of the specifications and the draft contract; and (iii) the procedures set forth in paragraphs 2 (f), 2 (g) and 3 of Appendix 1 to the Guidelines shall apply. 3. Post Review With respect to each contract not governed by paragraph 2 of this Part, the procedures set forth in paragraph 4 of Appendix 1 to the Guidelines shall apply. Section II. Employment of Consultants Part A: General Consultants’ services shall be procured in accordance with the provisions of the Introduction and Section IV of the “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” published by the Bank in January 1997 and revised in September 1997 and January 1999 (the Consultant Guidelines) and the following provisions of Section II of this Schedule. Part B: Quality- and Cost-based Selection Except as otherwise provided in Part C of this Section, consultants’ services shall be procured under contracts awarded in accordance with the provisions of Section II of the Consultant Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2 thereto, and the provisions of paragraphs 3.13 through 3.18 thereof applicable to quality- and cost-based selection of consultants. Part C: Other Procedures for the Selection of Consultants 1. Least-cost Selection Services for the carrying out of audits under the Project estimated to cost less than $230,000 equivalent in aggregate may be procured under contracts awarded in accordance with the provisions of paragraphs 3.1 and 3.6 of the Consultant Guidelines. 2. Individual Consultants Services for tasks that meet the requirements set forth in paragraph 5.1 of the Consultant Guidelines shall be procured under contracts awarded to individual consultants in accordance with the provisions of paragraphs 5.1 through 5.3 of the Consultant Guidelines. Part D: Review by the Bank of the Selection of Consultants 1. Selection Planning Prior to the issuance to consultants of any requests for proposals, the proposed plan for the selection of consultants under the Project shall be furnished to the Bank for its review and approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the Consultant Guidelines. Selection of all consultants’ services shall be undertaken in accordance with such selection plan as shall have been approved by the Bank, and with the provisions of said paragraph 1. 2. Prior Review (a) With respect to each contract estimated to cost the equivalent of $200,000 or more, the procedures set forth in paragraphs 1, 2 (other than the second subparagraph of paragraph 2 (a)) and 5 of Appendix 1 to the Consultant Guidelines shall apply. (b) With respect to each contract estimated to cost the equivalent of $100,000 or more, the procedures set forth in paragraph 1.2 (other than the second subparagraph of paragraph 2 (a)) and 5 of Appendix 1 to the Consultant Guidelines shall apply. (c) With respect to each contract for the employment of individual consultants estimated to cost the equivalent of $25,000 or more, the qualifications, experience, terms of reference and terms of employment of the consultants shall be furnished to the Bank for its prior review and approval. The contract shall be awarded only after the said approval shall have been given. 3. Post Review With respect to each contract not governed by paragraph 2 of this Part, the procedures set forth in paragraph 4 of Appendix 1 to the Consultant Guidelines shall apply. 1. The Borrower shall maintain the PCO until the completion of the Project, and ensure that the PCO functions at all times and in accordance with procedures, under terms of reference, and with staff including a Project administration officer, and budgetary resources necessary to meet the objectives of the Project and satisfactory to the Bank. 2. The Borrower shall maintain the Program Council until completion of the Project to coordinate Project implementation with members and terms of reference satisfactory to the Bank. 3. The Borrower shall ensure that the Supreme Court introduces service performance standards for the registration of undisputed transfers of land title so that the maximum processing time would be reduced in accordance with the following timetable: (i) by December 31, 2000, 90 working days; (ii) by June 30, 2001, 50 working days; (iii) by December 31, 2001, 20 working days; (iv) by December 31, 2002, 15 working days; (v) by December 31, 2003, 10 working days; and (vi) by December 31, 2004, 6 working days. 4. No later than June 30, 2001, the Borrower shall complete and submit to the Bank for its review a draft cost recovery strategy for SMA and the land registration system under Part H of the Project, which shall establish fee levels linked to the service provided; and, no later than June 30, 2002, the Borrower shall adopt and implement said strategy, as agreed with the Bank. 5. The Borrower shall, no later than June 30, 2000, develop and submit to the Bank for its review a draft strategy for information technology and information management for the SMA, MAFF, the Supreme Court and MOF; and, no later than December 31, 2001, adopt and implement said strategy as agreed with the Bank. 6. By June 30, 2000, the Borrower shall develop procedures and issue regulations delineating the respective responsibilities of SMA and the Supreme Court in the title registration system. 7. The Borrower shall, during Project implementation, issue any necessary security clearances required to allow maps of the territory of the Borrower to be processed outside the territory of the Borrower in a timely manner and at a reasonable transaction cost and shall ensure that SMA facilitates the issuance of such security clearances. 8. The Borrower shall: (i) no later than June 30, 2002, submit to the Bank for its review a revised draft of the real property tax law reflecting the results of the pilot activities undertaken under Part E of the Project; and (ii) no later than December 31, 2002, submit to Parliament such revised draft law for approval. 9.The Borrower shall: (i) no later than June 30, 2002, submit to the Bank for its review revised draft laws or amendments to existing laws providing for the registration of an individual apartment without the need to register all the apartments in the building in which it is located; and (ii) no later than December 31, 2002, submit such draft laws or amendments to Parliament for approval. 10. Without limitation upon any of its obligations under Section 3.01 of this Agreement, the Borrower shall ensure that sufficient annual allocations will be made in the Borrower’s budget for the Borrower’s counterpart contribution to the costs of the Project in such amounts as agreed with the Bank. 11. The Borrower shall: (a) maintain policies and procedures adequate to enable it to monitor and evaluate on an ongoing basis, in accordance with indicators acceptable to the Bank, the carrying out of the Project and the achievement of the objectives thereof; (b) prepare, under terms of reference satisfactory to the Bank, and furnish to the Bank, on or about April 30, 2002, a report integrating the results of the monitoring and evaluation activities performed pursuant to paragraph (a) of this Section, on the progress achieved in the carrying out of the Project during the period preceding the date of said report and setting out the measures recommended to ensure the efficient carrying out of the Project and the achievement of the objectives thereof during the period following such date; and (c) review with the Bank, by June 30, 2002, or such later date as the Bank shall request, the report referred to in paragraph (b) of this Section, and, thereafter, take all measures required to ensure the efficient completion of the Project and the achievement of the objectives thereof, based on the conclusions and recommendations of the said report and the Bank’s views on the matter. 12. The Borrower shall submit to the Bank on a quarterly basis commencing three

(3)months from the date of effectiveness of this Agreement and until Project completion, progress reports integrating the results of the monitoring and evaluation activities performed pursuant to paragraph 10 (a) of this Schedule. Supplemental Letter No. 1 November 17, 1999 International Bank for Reconstruction and Development 1818 H Street, N.W. Washington DC 20433 United States of America (Real Estate Registration Modernization Project) Section 9.02 of General Conditions Financial and Economic Data Dear Sirs and Mesdames: In connection with the Loan Agreement of this date between the Republic of Slovenia (Member Country) and the International Bank for Reconstruction and Development (the Bank) for the above-captioned Project, I am writing on behalf of the Member Country to set forth the following: 1. We understand and agree that, for the purposes of Section 9.02 of the General Conditions, the Member Country is required by the Bank to report new “loan commitments” (as defined in the World Bank’s Debtor Reporting System Manual, dated January 1989) not later than thirty days after the end of the quarter during which debt is incurred, and to report ”transactions under loans” (as so defined) not later than March 31 of the year following that for which the report is made. 2. We represent that no mortgages, pledges, charges, privileges, priorities, or other liens, other than those excluded pursuant to paragraph (c) of Section 9.03 of the General Conditions, exist on any public assets, as such term is defined in said Section, as security for any external debt. No defaults exist in respect of any external public debt. It is our understanding that, in making the Loan, the Bank may rely on the statements set forth or referred to in this letter. Very truly yours, REPUBLIC OF SLOVENIA By Mitja Gaspari, (s) Authorized Representative Supplemental Letter No. 2 November 17, 1999 International Bank for Reconstruction and Development 1818 H Street, N.W. Washington DC 20433 United States of America (Real Estate Registration Modernization Project) Performance and Monitoring Indicators Dear Sirs and Mesdames: This letter refers to the provisions of Paragraph 11 of Schedule 5 to the Loan Agreement for the Real Estate Registration Modernization Project (Project) of even date herewith between the International Bank for Reconstruction and Development (the Bank) and the Republic of Slovenia (the Borrower). The Borrower hereby confirms to the Bank that the indicators set forth in the attachment to this letter shall serve as the basis for the Borrower to monitor and evaluate the progress of the Project and the achievement of the objectives thereof. Very truly yours, REPUBLIC OF SLOVENIA By Mitja Gaspari, (s) Authorized Representative Attachement: Republic of Slovenia (Real Estate Modernization Project); Performance monitoring indicators ŠTEVILKA POSOJILA 4498 SLO (Projekt za posodobitev evidentiranja nepremičnin) med REPUBLIKO SLOVENIJO in MEDNARODNO BANKO ZA OBNOVO IN RAZVOJ z dne 17. novembra 1999 ŠTEVILKA POSOJILA 4498 SLO SPORAZUM z dne 17. novembra 1999 med Republiko Slovenijo (posojilojemalka) in MEDNARODNO BANKO ZA OBNOVO IN RAZVOJ (banka) KER je (a) posojilojemalka dobila potrebna zagotovila o upravičenosti in prioriteti projekta, opisanega v Prilogi 2 tega sporazuma (projekt), in je zaprosila banko za pomoč pri financiranju projekta; (b) KER namerava posojilojemalka iz programa PHARE Evropske unije (EU) pridobiti pomoč (pomoč EU) v znesku tri milijone evrov (3,000.000 evrov) za financiranje projekta po določilih in pogojih, ki se določijo v sporazumu (sporazum o pomoči EU) med vlado posojilojemalke in EU PHARE; KER se banka med drugim tudi na podlagi omenjenega strinja, da posojilojemalki odobri posojilo po določilih in pogojih, navedenih v tem sporazumu, STA SE pogodbenici dogovorili naslednje: