4. Article

Entitlement to EIF Direct Costs 4.1 Entitlement to EIF Standard Costs The Parties acknowledge and agree that EIF shall be entitled to the EIF Standard Costs, quantified for each calendar year in the relevant Cost Payment Statement, which shall be calculated for any given calendar year on the basis of the EIF Standard Cost Rate applicable for such calendar year. The EIF Standard Costs shall be equal to the actual time spent on the Task by any EIF JEREMIE Employee, multiplied by the EIF Standard Cost Rate. It is understood that EIF will be fully responsible for the most efficient allocation of its operational staff in its head office in Luxembourg as well as locally in Riga. The Parties acknowledge that the EIF Standard Cost Rate is reviewed from time to time, and may be modified, by EIF, and that the rate currently in force will be updated at the end of each calendar year based on the audited accounts for that year; in particular, although the updates may not be determined in advance, EIF expects the EIF Standard Cost Rate to be subject to an increase on an annual basis. The current estimate of the EIF Standard Cost Rate applicable for the year 2008 is attached hereto as Annex 1, being it understood that the final EIF Standard Cost Rate applicable to that year shall result from the audited accounts for 2008, as soon as they will be available. The Parties acknowledge and agree with the exclusive use of the EIF Standard Cost Rate for the purposes of the quantification of EIF Standard Costs, and acknowledge the principle for its calculation. 4.2 Entitlement to EIF Travel Costs The Parties acknowledge and agree that EIF shall be entitled to the EIF Travel Costs, quantified for each calendar year in the relevant Costs Payment Statement, which shall correspond to the actual costs incurred by EIF for travel of EIF personnel in connection with the compliance with the Task. 4.3 Entitlement to EIF Local Office Costs The Parties acknowledge and agree that EIF shall be entitled to the EIF Local Office Costs, quantified for each calendar year in the relevant Costs Payment Statement, which shall correspond to the actual costs incurred by EIF for the establishment and operation of the EIF local office in Riga.