OFFICtAL The Viorld Bank D LeA Tel 55 (61) 3329-1000 INTERNlriONAL BANK FOR RECONSTRUCTION;,ND DI:VELOPMENT Ed. Corporate Fingncial Center, 70 Andar Fax 55 (61) 3329-1010 70712-900 - Brasia - DF, BRASIL December 14, 2012 MAr. Cezar Augusto Schirmer M4ayor Municipality of Santa Maria (iabinete do Prefeito Rua Venincio Aires. 1934 Santa Maria, RS CEP: 97010-004 Eicsimile: (55) 3217 4306 Re: BRAZIL: Loan No. 7648-BR (Rio Grande do Sul Integrated Municipal Development Program - Inte grated Municipal Infrastructure Project - Santa Maria) Se.ond A iendment to the Loan Agreement Dear Mayor Schirmer: We refer to the Loan Agreement for the above-captioned Project between the N unicipality of Santa Maria (th - "B )rrower") and the International Bank for Reconstruction and Development (the 'Bank"). with : guarantee from the Federative Republic of Brazil (the Guarantor), dated March 4, 201) ("Loan Agreement"), as amended. Please note that capitalized ti.rms used in this ltter (the "Amendment Letter") and not defined herein have the meaning ascribed to them in the Loan Agreement. We also refer to the letter f -om the Guarantor to the Bank dated August 28, 2012 and (OFIEX letter of Recommei idai ion No. 691 dated August 8, 2012, wherein a request is made to: (;i) modify the Project description by deleting some activities and incorporating others; (b) reallocate loan funds among he disb irsement Categories; and (c) extend the Project Closing date. We are pleased to inform you that thc Bank agrees to amend the Loan Agreement as follows: 1. Part I of Schedule I to he I oan Agreement is hereby amended to read in its entirety as follows: "Strengtheniag of th, B)rrower's capacity to more effectively and efficiently execute its procedures, implemeiat end mainstream the appraisal, fiduciary, environmental and social procedures of the PD MI including, inter alia: (a) development of ?L tra isport master plan for the Borrower; (b) carrying out of a municipal urban aero-photogrammetric survey to enhance the municipality capacitV to plan, to identify key land development constraints and to re-exaluate aiid mpr ve municipality taxation collection; (c) preparation if a mu iicipal water supply and sanitation master plan to comply with the Bra;z:ilien N, tional laws; and RCA 248d 23. E WUI 64145 Q FAX (202) 477-6391 -2- (d) preparation of an information technology master plan which includes identification cf he rdware, software and staff technology needs, uses and strategic den iands to improve the municipal government management capacity." 2. Part 11.1. (a) of Scledule 1 to the Loan Agreement is hereby amended to read in its entirety as follows: "1. Promotion o WNork anrd Income Alternatives (i) preparal ion of a strategy to implement solidarity microcredit; (ii) car rin& out of capacity building activities for promoting entr pre neur ship in key economic sectors; and (iii) impiovment of a community center building (Clube 21 de Abril) and acquisit on cf its operational equipments." 3. Part 11.1. (b) of Sche Iu h 1 tc the Loan Agreement is hereby deleted: "(b) Improvemen: of reci cling and solid waste management as an income generating activity, incl iding: (i) Provisicn o' technical assistance and equipment to the solid waste collceo-s Cluster on the organization of the process of collection, segrcgalion, stocking and selling of recycled materials in a cooperative form, ar d carrying out of citizen outreach activities on the importance of recyiling; ard (ii) Impi ovc ment of the Borrower's central warehouse facility." 4 Part 11.2 of Schedule I to the Loan Agreement is hereby amended to read in its entirety as follows: "Implementation of z te hnol ogical park to support business development and research." 5 Part 111.1. (a) (i) of Schcdulk 1 to the Loan Agreement is hereby amended to read in its entirety as follows: "(i) paving, rese ding, signaling and lighting of about 4 km of urban roads; and" 6. Part 111.1. (c) of Scl edule 1 to the Loan Agreement is hereby amended to read in its entirety as follows: "(c) New paving re ;eali ig and signalization of about 2 km of the Jodo Machado Soares street " 7 Part 111.2 of Scheduli I to the Loan Agreement is hereby amended to read in its entirety as follows: "Provision o- equipn eni for improving rural roads, and development of a rural mobility plan." -3- 8. Part 111.3 of Schedule 1 to tl e Loan Agreement is hereby amended to read in its entirety as follows: "(a) Improvement o the environmental quality and preservation of Vacacai-Mirim river micro-basin in Santa Maria; and improvement of socio-economic integration ind qua ity of life of local population in a selected neighborhood incl.ding paving, (onstruction of sewerage, drainage infrastructure, public facilities, and laidsciping; and (b) creale and implomer t urban parks and prepare management plans for municipal environmental 1y con iervation areas." 9. Section I.A.I. (a) of 3ch-dulo 2 to the Loan Agreement is hereby amended: "(a) maintain a p: oject cc ordination unit (UGP) within its Extraordinary Secretary for Strategic Pl nn ng ,nd Special Projects (PLANEPE) with the powers and responsibilities ,et fc rth in the Operational Manual; and" 1 :. Section I.C.(a) and (b) of Schedule 2 to the Loan Agreement is hereby deleted and the following new paragraph is added are hereby amended to read in its entirety as set forth: "The Borrower shall, prior to bidding for the technological park under Part 11.2 of the Project, furnish to thc 3,[nk f )r its approval the respective Business Plan." 11. The table in Section IV.A.2 :o Schedule 2 of the Loan Agreement is hereby amended to read in its en:irety as set fort in the Annex to this Amendment Letter. 1'. Section IV.B. I to Sc ied ale 2 of the Loan Agreement is amended and a new paragraph is incorporated to read n its en irety as follows: "Without limitations to the provision of Section B.1, no further withdrawals shall be made in respect of CAteporie!, 1, 2 (a) and 3." 11. Section IV.B.2 to Sch ediile 2 of the Loan Agreement is amended to read as follows: "The Closing Date iE December 31, 2013. The Bank will only grant an extension of the Closing Date after the Guarantor's Ministry of Finance has informed the Bank that it agrees with such extc usion." 14. The followina new dofinition is added to the Appendix of the Loan Agreement: "24. "PLANEPE" zr eans the Borrower's Extraordinary Secretary for Strategic Planning and Specia Projects, established pursuant to the Borrower's Executive Decree No. 149, dated December 9, 2010." Please confirm your igrmemenat with the foregoing amendment by signing and dating two oi-ginals of this Arnendme it 'etttr in the spaces provided below. Henceforward, all the provisions of the Loan Agr.enent except as amended through this Amendment Letter shall remain in full force and effec-. -4- Upon confirmation, plcase -eturn one fully executed original to us. The provisions set forth in this Amendment Lettr shall become effective as of the countersignature date upon riceipt by the Bank of one fi lly exec uted original of this Amendment Letter. Please also note thal the apj roved Restructuring Paper dated December 13, 2012 will be (isclosed on the Bank's exterma welsite. Very truly yours, INT RNATIONAL BANK FOR RECONST-AUCTION AND DEVELOPMENT Deborah L. Wetzel Director Brazil at n Ai erica and the Caribbean Region AGREED: MURNICIPALI F IVIAIHA Authorized Represer tative Tame:&Z416'(7 if7 Date: cc: Sr. Roberto B. Tan, Diiretcr Ex.cutivo para o Brasil, Banco Mundial Sr. Rogerio Studart, Di retor E) ecutivo Adjunto para o Brasil, Banco Mundial Sr. Carlos Augusto Vidott), SecretArio, SEAIN/MP - Fax: 2020-5047 Sr. Jodo Guilherme M ichEdo, :ecretArio-Adjunto, SEAIN/MP - Fax: 2020-5006 Sr. Nelson Henrique Barbosa f ilho, SecretArio-Executivo, MF - Fax: 3412-1824 Sr. Marcelo Estrela Fic he, Che Fe de Gabinete, MF - Fax: 3412-2525 Sra. Adriana Queiroz ce Carva[ho, Procuradora-Geral, PGFN/MF - Fax: 3412-1740 Sr. Arno Augustin Filho, SecretArio, STN/MF - Fax: 3412-1717 Sr. Carlos Mircio Bica Iho Coz ndey, Secretdrio, SAIN/MF - Fax: 3412-1727 Sra. Eva Maria Cella Eal Chia,on, SecretAria-Executiva, MP - Fax: 2020-5003 Sr. Carlos Bra;il Pippi Bri3ola, Secretirio do PLANEPE - Fax: (55) 3921-7255 Sr. Elisandro Roath do Caito, Coordenador da UGP - Fax: (55) 3921-7250 -5- ANNEX Amount of the Loan Percentage of Expenditures Allocated to be financed Categry (expressed in USD) (inclusive of Taxes) (1) Goods and non-consulta it s ,rvic es 1,942,783.60 100% for all Parts of tF.e Project oiher than Part 11.1 (b) (ii); Parts Ill. 1 (a) (ii); (b) (ii) and (c) (i ; aid PE rts III. 3 (a), (b), (c) (i) (B),i.nd (c) (ii) B thereof (1) (a) Goods and non-consti Itant 617,216.40 100% services for all Parts of t!ie Proje .t other than Parts [II. 1 (a) (ii, (b) (ii); (c); and Part 111.3 (ai thereof (2) (a) Works for Parts II an, 1I[.1 a: id 1,573,955.41 100% 2 of the Project other tha a P irt II, I (b) (ii), and Parts III. 1 (a1) (ii), (t) (ii) and (c) (i) thereof; ar d (3) (b) Works for Parts 111.3 (c) (i) (A) 0 100% and (ii) (A) of the Project (:) (c) Works for Parts II and Ill of 1he 7,962,644.59 100% Project other than Parts 111. I a) (ii), (b) (ii), (c); and Pa rt Ill.3 'a) thereof (1) Consultant Services, Trtining and 111,305.50 100% Operating Costs for Prts of 1he Project other than Part I ..1 b) ( i); Parts 111.1 (a) (ii); (b) (ii) ind c) (i); Parts III. 3 (a), (b), (c) (i) (B) and (c) (ii) (B) thereof (3) (a) Consultants Services, Training 1,707,219.50 100% and Operating C:sts for ill Parts of the Project other than Paits 111.1 'a) (ii); (b) (ii), (c); and Pait III. 3 Ia) thereof (1) Front-end Fee 34,875.00 Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07 (b) of the General Conditions (5) Premia for Inter.-st Rate C.ps a nd 0 Amount due under Section Interest Rate Collars 2.07 (c) of this Agreement TOTAL AMOUNT 13,950,000.00