Project Agreement. Public Disclosure Authorized. IFFICiAL DOCUMENTS LOAN NUMBER 1822 BR. Public Disclosure Authorized

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized IFFICiAL DOCUMENTS Project Agreement (SWo Paulo Industrial Pollution Control Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and STATE OF SAo PAULO and LOAN NUMBER 1822 BR BANCO DE DESENVOLVIMENTO DO ESTADO DE SAO PAULO S.A. - BADESP and Public Disclosure Authorized CETESB - COMPANHIA DE TECNOLOGIA DE SANEAMENTO AMBIENTAL and COMPANHIA DE SANEAMENTO BASICO DO ESTADO DE SAG PAULO - SABESP Dated, 1980

2 LOAN NUMBER 1822 BR PROJECT AGREEMENT AGREEMENT, dated, 1980, between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank) and STATE OF SAO PAULO (hereinafter called the State) and BANCO DE DESENVOLVIMENTO DO ESTADO DE SKO PAULO S.A. - BADESP (hereinafter called BADESP) and CETESB - COMPANHIA DE TECNOLOGIA DE SANEAMENTO AMBIENTAL (hereinafter called CETESB) and COMPANHIA DE SANEAMENTO BASICO DO ESTADO DE SAO PAULO - SABESP (hereinafter called SABESP). WHEREAS (A) by the Loan Agreement of even date herewith between Federative Republic of Brazil (hereinafter called the Borrower) and the Bank and Banco Nacional do Desenvolvimento Econ5mico (hereinafter called BNDE), a development bank wholly owned by, and created and operating under the laws of the Borrower, the Bank has agreed to make available to the Borrower an amount in various currencies equivalent to fifty-eight million dollars ($58,000,000), on the terms and conditions set forth in the Loan, Agreement, but only on condition that the State, a political sub-division of the Borrower, BADESP, a development bank created and operating under the laws of the Borrower and the State and on which the State owns a majority interest, and CETESB and SABESP, both companies created and operating under the laws of the Borrower and the State and on which the State owns a majority interest, agree to undertake such obligations toward the Bank as are hereinafter set forth; (B) by a subsidiary loan agreement to be entered into between BNDE on behalf and as financial agent (agente financeiro) of the Borrower, and the State and BADESP, the latter as financial agent (agente financeiro) of the State and administrator of PROCOP (as the term is defined in Section 1.02 (b) of the Loan Agreement), the proceeds of the Loan provided for under the Loan Agreement will be made available to PROCOP on the terms and conditions therein set forth; and WHEREAS the State, BADESP, CETESB and SABESP, in consideration of the Bank's entering into the Loan Agreement with the Borrower and BNDE, have agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows:

3 - 2 - ARTICLE I Definitions Section Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Loan Agreement, the Preamble to this Agreement and the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section The purpose of the Project is to assist the State in financing such facilities and resources in the State as will contribute to the air and water pollution control in the State. The Project consists of the financing of specific air and water pollution control projects within the State through either: (i) loans to Investment Enterprises operating within the State which (A) in order to comply with the State Pollution Control Legislation and, when applicable, with the Water Pollution Control and Air Pollution Control Strategies, undertake (1) the treatment or pretreatment of their effluents and emission discharges or (2) substantial change of their technological or productive processes, or (B) are required by CETESB to relocate; or (ii) in the case of Technical Assistance projects, grants to CETESB. Section (a) When presenting a sub-loan (other than a free-limit sub-loan) to the Bank for approval, BADESP shall furnish to the Bank an application, in form satisfactory to the Bank, together with: (i) a description of the Investment Enterprise and an appraisal of the Sub-project, including a description of the expenditures proposed to be financed out of the proceeds of the Loan; (ii) the proposed terms and conditions of the sub-loan, including the schedule of amortization thereof; (iii) evidence of approval of the Sub-project by CETESB which, if such Sub-project consists of control of water pollution within SANEGRAN, shall show that such Sub-project conforms to the pretreatment conditions established by SABESP; and (iv) such other information as the Bank shall reasonably request. BADESP shall furnish to BNDE copy of all the aforesaid. (b) Each request by BADESP for authorization to make withdrawals from the Loan Account in respect of a free-limit sub-loan

4 - 3 - shall contrin: (i) a summary description of the Investment Enterprise and an appraisal of the Sub-project, including a description of the expenditures proposed to be financed out of the proceeds of the Loan; (ii) the terms and conditions of the sub-loan, including the schedule of amortization thereof; (iii) evidence of approval of the Sub-project by CETESB which, if such Sub-project consists of control of water pollution within SANEGRAN, shall show that such Sub-project conforms to the pretreatment conditions established by SABESP; and (iv) such other information as the Bank shall reasonably request. BADESP shall furnish to BNDE copy of all the aforesaid. (c) When presenting a grant to the Bank for approval BADESP shall furnish to the Bank an application, in form satisfactory to the Bank, together with: (i) evidence of approval of the Subproject consisting of Technical Assistance by the Steering Committee; (ii) a copy of CETESB's proposal to the Steering Committee justifying such Sub-project; and (iii) such other information as the Bank shall reasonably request. BADESP shall furnish to BNDE copy of all the aforesaid. (d) Whenever a Sub-project includes a substantial change in the technological or productive processes of any plant of the Investment Enterprise in question, in addition to the information listed in paragraph (a) or paragraph (b) of this Section, as applicable, the sub-loan approval application in respect of, or the request for authorization to make withdrawals from the Loan Account in respect of a free-limit sub-loan for, such Sub-project shall include either an analysis of an alternative direct treatment or pre-treatment solution of the pollution control problems faced by such plant (hereinafter called the alternative), if any, together with a determination of the hypothetical investment cost of such solution, both to be prepared by CETESB, or a statement from CETESB to the effect that there is no lower investment cost alternative for the Sub-project in question. (e) The provisions of Section 2.04 of the Loan Agreement shall apply to this Section. Section (a) The State shall, upon withdrawal of the proceeds of the Loan by BNDE from the Loan Account and relending by BNDE to the State, in accordance with the Subsidiary Loan Agreement, of the proceeds so withdrawn, credit PROCOP with the equivalent amount in cruzeiros of such proceeds.

5 -4- (b) The State shall, in addition to the amounts specified in paragraph (a) of this Section and in paragraph (c) of Section 6.01 of the Loan Agreement, credit PROCOP, as and when needed for purposes of the Project, with the equivalent of $66,200,000 which, unless the Bank and the State shall otherwise agree, shall not be used for making grants, and with such other amounts as shall be required to finance Sub-projects. (c) The State shall, in addition to the amounts specified in paragraphs (a) and (b) of this Section, credit PROCOP as and when needed for purposes of the Project, with the proceeds of the loan to be made by Banco Nacional da Habitago to the State under the contract referred to in Section 6.01 (e) of the Loan Agreement. Section The State shall, in addition to its obligations under Section 2.03 of this Agreement, timely provide CETESB with,inds, in an amount of not less than $4,000,000 equivalent, for purposes of assisting CETESB in the financing of Sub-projects consisting of Technical Assistance (including the purchase of equipment related thereto); provided, however, that the aforesaid funds shall be provided to CETESB as follows: at least $1,200,000 equivalent in each of the twelve-month periods ending March 31, 1981, March 31, 1982 and March 31, 1983, and the remainder prior to March 31, Section BADESP shall: (a) administer PROCOP in accordance with sound financial standards and practices, with qualified management and personnel and in accordance with the provisions of Decrees No , dated March 4, 1980, and No , dated March 4, 1980, and the By-laws; (b) credit PROCOP, promptly after each respective payment, with such amounts as shall be paid by Investment Enterprises to BADESP, as administrator of PROCOP, on account of the repayment of the principal of sub-loans and the payment of interest thereon; and (c) keep at all times separate accounts for PROCOP and for other sub-accounts of FESB and take all such action as shall be necessary in order to prevent that monies which should be credited to PROCOP be credited to any of such other sub-accounts. Section (a) Except as the Bank shall otherwise agree, loans financed out of funds credited to PROCOP (including sub-

6 - 5 - loans) shall be denominated in cruzeiros, be repayable over a period of not less than 10 years, including a grace period of not less than 3 years, and bear interest (i) at a rate of at least 2% per annum on the outstanding principal amount which shall be adjusted to reflect 100% of the variations of ORTN, or (ii) in the case of sub-loans made to Small or Medium Investment Enterprises and subject to paragraph (b) of this Section, at a rate of at least 2% per annum on the outstanding principal amount which shall be adjusted to reflect 65% of the variations of ORTN. (b) From time to time, starting not later than March 31, 1981 or on the date on which the aggregate of sub-loans authorized or approved by the Bank reaches an amount to be financed out of the proceeds of the Loan of $18,000,000 equivalent, whichever is earlier, and on following occasions which, unless the Bank and the State shall otherwise agree, shall take place not less than once in each year, the Bank and the State shall review the adequacy of the on-lending conditions for Small and Medium Investment Enterprises in order to propose, in light of such review, the method to be utilized, from the earlier of the dates referred to in Section 2.03 (a),of the Loan Agreement and thereafter to adjust the outstanding principal of sub-loans to be made to Small and Medium Investment Enterprises, the period within which such method shall be in effect and the date of the next review. (c) If, with respect to the first of the reviews referred to in paragraph (b) of this Section, by June 30, 1981 or the date in which the aggregate of sub-loans authorized or approved by the Bank reaches an amount to be financed out of the proceeds of the Loan of $22,500,000 equivalent, whichever is earlier, or, with respect to each of the following reviews referred to in such paragraph (b), sixty days from the initiation of such review, the Bank and the State shall not have reached an agreement on the method of adjustment of principal to be utilized for purposes of paragraph (a) (ii) of this Section, on the period within which such method shall be in effect and on the date on which the next review for purposes of paragraph (b) of this Section shall take place, the State agrees that the Bank shall have the right not to approve any sub-loan or, in the case of free-limit sub-loans, not to authorize any withdrawal from the Loan Account, for purposes of financing Sub-projects carried out, or to be carried out, by Small or Medium Investment Enterprises. Section (a) BADESP undertakes that, unless the Bank shall otherwise agree, each sub-loan will be made on terms whereby

7 -6- BADESP shall obtain, by written contract with the Investment Enterprise or by other appropriate legal means, rights adequate to protect the interests of the Borrower, the Bank, the State, BNDE and BADESP, including the right of BADESP, as administrator of PROCOP, to: (i) require the Investment Enterprise to carry out and operate the Sub-project with due diligence and efficiency and in accordance with sound technical, financial and managerial standards and to maintain adequate records; (ii) require that: (1) the goods and services to be financed out of the proceeds of the Loan relent under the Subsidiary Loan Agreement shall be purchased at a reasonable price, account being taken also of other relevant factors such as time of delivery and efficiency and reliability of the goods and availability of maintenance facilities and spare parts therefor, and, in the case of services, of their quality and the competence of the parties rendering them and (2) such goods and services shall be used exclusively in the carrying out of the Sub-project; (iii) inspect, by themselves or jointly with representatives of CETESB or SABESP, or the Bank if the Bank shall so request, such goods and the sites, works, plants and construction included in the Sub-project, the operation thereof, and any relevant records and documents; (iv) require that: (1) the Investment Enterprise shall take out and maintain with responsible insurers such insurance, against such risks and in such amounts, as shall be consistent with sound business practice; and (2) without any limitation upon the foregoing, such insurance shall cover hazards incident to the acquisition, transportation and delivery of goods financed out of the proceeds of the Loan relent under the Subsidiary Loan Agreement to the place of use or installation, any indemnity thereunder to be made payable in a currency freely usable by the Investment Enterprise to replace or repair 'such goods; (v) obtain all such information as the Borrower, or the Bank, or BADESP, or CETESB, or SABESP shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the Investment Enterprise; and (vi) suspend or terminate the right of the Investment Enterprise to the use of the proceeds of the Loan relent under the Subsidiary Loan Agreement upon failure by such Investment Enterprise to perform its obligations under any contract with BADESP in its role as administrator of PROCOP. (b) BADESP, as administrator of PROCOP, shall exercise its rights in relation to each Sub-project in such manner as to: (i) protect the interests of the Borrower, the Bank, the State, BNDE, CETESH and SABESP; (ii) comply with its obligations under this Agreement; and (iii) achieve the purposes of the Project.

8 - 7 - Section (a) The State, BADESP, CETESB and SABESP shall furnish to the Bank all such information as the Bank shall reasonably request concerning the expenditure of the proceeds of the Loan relent under the Subsidiary Loan Agreement, the Project, the Investment Enterprises, the Sub-projects, and the sub-loans and the grants. (b) The State, BADESP, CETESB and SABESP shall, at the request of the Bank, exchange views with the Bank with regard to the progress of the Project, the performance of its obligations under this Agreement, and under the Subsidiary Loan Agreement, the obligations of BNDE and BADESP under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Loan. (c) The State, BADESP, CETESB and SABESP shall promptly inform the Bank of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the purposes of the Loan, or the performance by the State, BADESP, CETESB and SABESP of its obligations under this Agreement and the State', BNDE or BADESP under the Subsidiary Loan Agreement. Section (a) BADESP and CETESB shall enter into contractual arrangements, satisfactory to the Bank, for purposes of coordinating their respective functions in the carrying out of the Project. (b) CETESB and SABESP shall enter into contractual arrangements, satisfactory to the Bank, for purposes of coordinating their respective functions in the carrying out of the Project and establishing their respective responsibilities in respect of water pollution control in the State of Sgo Paulo. Section Within six months following the last withdrawal from the Loan Account or by such later date as the Bank shall request, BADESP, CETESB, and SABESP shall prepare and furnish to the Bank a report, of such scope and in such detail as the Bank shall reasonably request, on the execution and initial operation of the Sub-projects, their costs and the benefits derived and to be derived from them, the performance by BADESP, CETESB, SABESP and the Bank of their respective obligations under this Agreement, the performance by BNDE and BADESP of its obligations under the Subsidiary Loan Agreement, and the accomplishment of the purposes of the Loan.

9 -8- Section The State and BADESP, the latter as financial agent (agente financeiro) of the State, shall duly perform all of its respective obligations under the Subsidiary Loan Agreement. Except as the Bank shall otherwise agree, neither the State nor BADESP shall take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. ARTICLE III Additional Covenants of the State Section The State shall pay: (a) BNDE a fee, payable in semiannual installments, equivalent to 0.50% per annum pro-rata tempore of the principal amount of the Subsidiary Loan outstanding; (b) BADESP, out of the resources of PROCOP, a quarterly fee equivalent to 0.375% of the aggregate outstanding principal amount of loans financed out of the proceeds of PROCOP at the end of each quarter; and (c) CETESB, out of the resources of PROCOP, a quarterly fee equivalent to 0.125% of the aggregate outstanding principal amount of loans financed out of the proceeds of PROCOP at the end of each quarter. Section The State shall, for purposes of Section 2.02 (b) and 2.03 of this Agreement and not later than December 31 in each year until the Loan has been fully disbursed, make the necessary appropriations in its budget on the basis of the Project budgets to be prepared in accordance with Sections 4.04 and 5.04 of this Agreement. Section The State shall cause its agencies not to take any action which would prevent CETESB from applying the sanctions provided for in the State Follution Control Legislation (including, but not limited to, the suspension of operations of a plant), and shall take, or cause to be taken, all reasonable action necessary or appropriate to enable CETESB to apply such sanctions and to furnish to the Bank all such information on the subject as the Bank shall reasonably request. Section The State shall, as and when requested by CETESB pursuant to Section 5.06 (b) of this Agreement: (i) file a

10 - 9 - petition with the Borrower's Ministry of the Interior requesting the Borrower to take all such action as shall be required on the Borrower's part for purposes of the Federal Pollution Control Legislation; (ii) inform the Bank of any such petition; and (iii) furnish to the Bank all such information in respect of any such petition as the Bank shall reasonably request, Section The State shall, by January 31, 1981, amend the State's Decree No so as to make possible the achievement of the purposes of the Project in a manner satisfactory to the Bank. ARTICLE IV Additional Covenants of BADESP Section BADESP shall maintain records adequate to record the progress of the Project and of each Sub-project (including the cost thereof) and to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of BADESP as administrator of PROCOP. Section BADESP shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) and PROCOP's accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited in accordance with sound auditing principles 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 four months after the end of each such year, (A) certified copies of its financial statements and of the financial statements of PROCOP for such year as so audited and (B) the report of such audits 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 BADESP, FESB, PROCOP, its other accounts and financial statements and the audit thereof as the Bank shall from time to time reasonably request. Section BADESP shall enable the Bank's representatives to inspect the records referred to in Section 4.01 of this Agreement and any relevant documents. Section BADESP shall, not later than July 31 in each year, until the Loan has been fully disbursed, prepare and furnish to the Bank through the Steering Committee and the State's Secretaries of Finance, and Economy and Planning a Project budget for the immediately succeeding year.

11 ARTICLE V Additional covenants of CETESB Section (a) CETESB shall carry out each Sub-project consisting of Technical Assistance (including the purchase of equipment related thereto) with due diligence and efficiency and in conformity with appropriate practices; and provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Whenever CETESB shall, for purposes of paragraph (a) above, hire the services of an institution, such institution and the terms and conditions of the contract providing for such services shall be satisfactory to the Bank. Section CETESB shall: (a) complete by September 30, 1981, a study, the terms of reference of which shall be mutually agreed between the Bank, the State's Secretaries of Economy and Planning, and Finance, and CETESB, on the adequacy of CETESB's river pollution monitoring network including an assessment of its needs for additional or more sophisticated river pollution monitoring equipment; (b) furnish to the Bank the recommendations of such study upon its completion, and afford the Bank a reasonable opportunity to comment thereon; and (c) take such action as shall be appropriate in light of such recommendations and comments. Section CETESB shall: (a) ensure that all Sub-projects for water pollution control include, whenever appropriate, the installation of appropriate tamper-proof monitoring equipment to register the flow of liquid discharges and at least one key water pollution parameter; and (b) at least annually, adequately test sources of emission of particulate matter in each Investment Enterprise which is carrying out or has carried out a Sub-project for air pollution control. Section CETESB shall assist BADESP in the preparation of the Project budgets referred to in Section 4.04 of this Agreement.

12 Section CETESB shall, contemporaneously with the execution of SANEGRAN during the years 1980 and 1981, carry out a detailed survey throughout GSPA in order to progressively and systematically identify industrial water polluters and assess the industrial sector needs for water pollution control financing. Section CETESB shall: (a) exercise its powers and fulfill its responsibilities under Article 6 of the State's Decree No. 8468, as such Decree may be amended for purposes of Section 6.01 (f) of the Loan Agreement and of paragraph (f) (iii) and (iv) of Section 2.02 of the Loan Agreement, and in accordance with the Air Pollution Control Strategy and with the Water Pollution Control Strategy; and (b) whenever CETESB shall have determined the need of closing a plant of an industry referred to in the Federal Pollution Control Legislation: (i) request the State to file a petition with the Borrower for purposes of such Federal Pollution Control Legislation; (ii) inform the Bank of any such request; and (iii) furnish the Bank with all such information in respect of any such request or petition as the Bank shall reasonably request. Section CETESB shall, before approving each of the Sub-projects for water pollution control to be carried out in the area covered by SANEGRAN, seek SABESP's technical opinion, in connection with such Sub-project in respect of the matters referred to in (i) and (ii) of Section 6.02 of this Agreement. Section CETESB shall take all necessary steps to encourage the participation in training courses and seminars, to be included in Sub-projects for Technical Assistance, of members of the staff of agencies and administrative subdivisions of each of the States of the Borrower who are involved in the control of environmental pollution. ARTICLE VI Additional Covenants of SABESP Section SABESP shall, as and when needed for purposes of the Project, provide technical assistance to CETESB. Section SABESP shall, when so required by CETESB pursuant to Section 5.07 of this Agreement, furnish CETESB with

13 SABESP's technical opinion concerning: (i) the timing of any investment to be made under the Sub-project in question in view of the timetable for on-going and future works under SANEGRAN; and (ii) the definition of parameters to be applied under such Subproject for the discharge of pre-treated effluents in the SANEGRAN system. ARTICLE VII Effective Date; Termination; Cancellation and Suspension Section This Agreement shall come into force and effect on the date upon which the Loan Agreement becomes effective. Section This Agreement and all obligations of the Bank and of the State, BADESP, CETESB and SABESP thereunder shall terminate on the date on which the Loan Agreement shall terminate in accordance with its terms, and the Bank shall promptly so notify the State, BADESP, CETESB and SABESP thereof. Section All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE VIII Miscellaneous Provisions Section Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by chis Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C United States of America

14 Cable address: INTBAFRAD Washington, D.C. Telex: (ITT) (RCA) or (WUI) For the State: Governador do Estado de São Paulo Palacio dos Bandeirantes São Paulo Brasil Telex: For BADESP: (011) Avenida Paulista, Andar São Paulo 'Brasil Cable address: For CETESB: Telex: DESENVOLVIMENTO (011) São Paulo, Brasil Avenida Prof. Frederico Hermann Jr. 345 CEP So Paulo Brasil For SABESP: Rua Costa Carvalho, 300 CEP São Paulo Brasil Telex: Telex: (011) (011) 21089

15 Section (a) Any action required or permitted to be taken, and any documents required or permitted to be executed, pursuant to this Agreement, on behalf of the State, may be taken or executed by the Governor of the State or such other person or persons as he shall designate in writing. Any modification or amplification of the provisions of this Agreement may be agreed to on behalf of the State by written instrument executed on behalf of the State by such Governor or any person thereunto authorized in writing by him; provided that, in the opinion of such representative, such modification or amplification is reasonable under the circumstances and will not substantially increase the obligations of the State under this Agreement. The Bank may accept the execution by such Governor or other person of any such instrument as conclusive evidence that in the opinion of such representative any modification or amplification of the provisions of this Agreement effected by such 1instrument is reasonable in the circumstances and will not substantially increase the obligations of the State hereunder. (b) Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of BADESP may be taken or executed by its President or such other person or persons as such President shall designate in writing, and BADESP shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. (c) Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of CETESB may be taken or executed by its President or such other person or persons as such President shall designate in writing, and CETESB shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. (d) Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of SABESP may be taken or executed by its President or such person or persons as such President shall designate in writing, and SABESP shall furnish to the Bank sufficient evidence of the authority and the authenticated specimen signature of each such person. Section This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument.

16 IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreemqnt to be signed in their respective names in the City of, Federative Republic of Brazil, as of the day and year f rst above written. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By/ Regional Vice President Latin America and the Caribbean STATE OF SAO PAULO Authorized Repres ntative BANCO DE DESENVOLVIMENTO DO ESTADO DE SAO PAULO S.A. - BADESP By /S/ ( Z4T-4 4 Authorized Representative CETESB - COMPANHIA DE TECNOLOGIA DE SANEAMENTO AMBIENTAL Authorized Representative COMPANHIA DE SANEAMENTO BASICO DO ESTADO DE SA0 PAULO - SAESP By B Authorized Representative

17 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Bank for Reconstruction and Development. In witness whereof I have signed this Certificate and affixed the Seal of the Bank thereunto this / L day of AL, 19*_. FOR SECRETARY