THE WORLD BANK IBRD*IDA I WORLD BANKGROUP OFFICIAL DOCUemg NTS Mr. Aldenir Paraguassfi Director-President Fundagdo Pr6-Natureza - FUNATURA SCLN 107, Bloco B, s/201 Asa Norte Brasilia - DF, 70743-520 Brazil Fax: (55-61) 3274-5324 Re: SCF-FIP Grant No TF0A6065 (P152285) Brazil Investment Plan Coordination Project. Excellency: In response to the request for financial assistance made on behalf of Fundagao Pr6- Natureza - FUNATURA("Recipient"), I am pleased to inform you that the International Bank for Reconstruction and Development ("World Bank"), acting as Implementing Entity of the Forest Investment Fund ("FIP") under the Strategic Climate Fund ("SCF"), proposes to extend to the Recipient, for the benefit of the Federative Republic of Brazil ("Member Country") a grant in an amount not to exceed one million United States Dollars (U.S.$ 1,000,000.00) ("Grant") on the terms and conditions set forth or referred to in this letter agreement ("Agreement"), which includes the attached Annex, to assist in the financing of the project described in the Annex ("Project"). This Grant is funded out of the abovementioned trust fund for which the World Bank receives periodic contributions from the SCF. In accordance with Section 3.02 of the Standard Conditions (as defined in the Annex to this Agreement), the World Bank's financial obligations in connection with this Agreement are limited to the amount of funds made available to it by the SCF under the abovementioned trust fund, and the Recipient's right to withdraw the Grant proceeds is subject to the availability of such funds. The Recipient represents, by confirming its agreement below, that it is authorized to enter into this Agreement and to carry out the Project in accordance with the terms and conditions set forth or referred to in this Agreement. Please confirm the Recipient's agreement to the foregoing by having an authorized official of the Recipient sign and date the enclosed copy of this Agreement, and returning it to the World Bank. This Agreement shall become effective upon receipt by the World Bank of the evidence that the conditions of effectiveness referred to in Article IV of the Annex to this Agreement have been fulfilled, provided, however, that the offer of this Agreement has not been terminated pursuant to paragraph 4.03 in Article IV of the Annex to this Agreement. Very truly yours, INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Martin Raiser Country Director - Brazil Latin America and the Caribbean Region AGREED: FUNDACAO PRO-NATUREZA - FUNATURA By - AuthorizedlRe r ntative Name ALDENIR HAV SP GUASSU Title Diretor Pres de te Date: 05/12/2017 Enclosures: (1) Standard Conditions for Grants Made by the World Bank Out of Various Funds, dated February 15, 2012 (2) Disbursement Letter of the same date as this Agreement, together with Disbursement Guidelines for Investment Project Financing, dated February 2017 (3) The World Bank Procurement Regulations for Borrowers under Investment Project Financing, dated July 1, 2016." (4) "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006, and revised in January 2011, and as of July 1, 2016 ("Anti-Corruption Guidelines") 2 cc: Mr. Otaviano Canuto, Executive Director for Brazil, The World Bank Ms. Diana Margarita Quintero Cuello, Alternate Executive Director for Brazil, The World Bank Mr. Eduardo Guardia, Executive Secretary, Ministry of Finance, gabinete.se.df@fazenda.gov.br Mr. Rog6rio Antonio Lucca, Chief of Staff, MF, gabinete.ministro@fazenda.gov.br Mr. Marcello Estevdo, Secretary, SAIN/MF, gabinete.df.sain@fazenda.gov.br Mr. Esteves Pedro Colnago Jiinior, Executive Secretary, MP, se@planejamento.gov.br Mr. Jorge Arbache, Secretary of International Affairs, SEAIN/MP, seain@planejamento.gov.br Mr. Welles Matias de Abreu, Miniostry of Environment, welles.abreu@mma.gov.br 3 SCF-FIP Grant No. TFA6065 ANNEX Article I Standard Conditions; Definitions 1.01. Standard Conditions. The Standard Conditions for Grants Made by the World Bank out of Various Funds dated February 15, 2012 ("Standard Conditions") constitute an integral part of this Agreement. 1.02. Definitions. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the Standard Conditions or in this Agreement and the following additional terms have the following meanings: (a) "Anti-Corruption Guidelines" means the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011 and as of July 1, 2016, which are applicable to Project activities financed out of the proceeds of the Grant. (b) "BIP" means Brazil investment plan as endorsed by the FIP Subcommittee on May18, 2012, aimed at promoting sustainable land use and forest management improvement in the Cerrado Biome to reduce pressure on remaining forests and greenhouse gas emissions and to increase carbon dioxide sequestration. (c) "Cerrado Biome" means the savannah and dry forest biome in the Brazilian Central Plateau of the Member Country's territory which covers an area equivalent to 2 million Km2. (d) "FIP" or "Forest Investment Program" means the program established under the Strategic Climate Fund in accordance with the Governance Framework adopted on November 18, 2008, by the Strategic Climate Fund. (e) "Fundagio Pr6-Natureza" or "FUNATURA" means the Recipient, a private non- profit organization established on July 30, 1986, and publicly registered in the Member Country on September 5, 1986, established to strengthen the role of the private sector in protecting the Member Country's rich biological diversity and the quality of human life. (f) "Technical Cooperation Agreement" means the agreement between FUNATURA and MMA referred to in Section 2.03 (a) and (b) of this Annex. 4 (g) "Investment Plan Management Unit" or "UGPI" means the unit established within SecEx, as published through Portaria Interministerial No. 110, dated March 26, 2014, pursuant to Section 2.03 (a) (iii) of this Annex. (h) "MMA" means Ministirio do Meio Ambiente, the Member Country's Ministry of Environment, or any successor thereto acceptable to the World Bank. (i) "SecEx" means the Executive Secretariat of the MMA. (j) "Procurement Regulations" means the "World Bank Procurement Regulations for Borrowers under Investment Project Financing", dated July 1, 2016." (k) "Procurement Plan" means the Recipient's procurement plan for the Project, dated October 16, 2017, as the same may be updated from time to time in agreement with the Bank." (1) "POA" means the Project Annual Operating Plan, contained in the POM and as set forth in Section 2.03(c) of this Agreement. (m)"Project Operational Manual" or "POM" means the manual for Project implementation, as set forth in Section 2.03 (c) of this Agreement. Article II Project Execution 2.01. Project Objectives and Description. The objective of the Project is to strengthen the Federative Republic of Brazil capacity in: (i) coordinating Brazil Investment Plan (BIP) projects; and (ii) supervising, planning, monitoring, evaluating, and reporting on BIP's implementation. The Project consists of the following parts: Part 1: Brazil Investment Plan Coordination. Strengthen MMA's capacity in coordinating BIP projects, including planning, monitoring, evaluation, communication and dissemination of BIP projects. Part 2: Project Management. The Recipient, in close coordination with MMA will be responsible for managing and administering the Project, including the carrying out of, financial management, and procurement under the Project. 2.02. Project Execution Generally. The Recipient declares its commitment to the objectives of the Project. To this end, the Recipient shall carry out the Project with the 5 technical collaboration and in close coordination with MMA, and in accordance with the provisions of: (a) Article II of the Standard Conditions; (b) the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011, and as of July 1, 2016 ("Anti-Corruption Guidelines"); (c) the Procurement Regulations; (d) this Article II; (e) the Operational Manual; and (f) the Technical Cooperation Agreement, all in a manner acceptable to the World Bank. 2.03. Institutional and Other Arrangements. Without limitation upon the provisions of paragraph 2.02 above, for the purpose of carrying out the Project, the Recipient shall: (a) enter into a Technical Cooperation Agreement (the Technical Cooperation Agreement) with MMA under terms and conditions satisfactory to the World Bank, therein setting forth the roles and responsibilities of each party in the implementation of the Project, including, inter alia, the following: (i) the parties' obligation to implement all joint actions and control mechanisms required for the carrying out of the Project in a coordinated manner, including holding regular meetings for operational planning, monitoring and adjustment of actions needed for the carrying out of the Project and appointing one staff each to be responsible for monitoring Project implementation on each party's behalf; (ii) the Recipient's obligation to: (A) implement, monitor and evaluate the Project, under the technical supervision of MMA, (B) carry out the overall financial and administration management of the Project, (C) hire consultants for project-related activities and make them available to MMA, and (D) prepare Annual Operational Plans, Procurement Plans, Progress Reports and Completion Report, in coordination with MMA; and (iii) the responsibility of MMA to: (A) maintain the Investment Plan Management Unit (the "UGPI - Unidade de Gestdo do Plano de Investimento") within SecEx at MMA,with staff in adequate numbers, and with terms of reference, qualifications and functions acceptable to the World Bank, responsible for, inter alia, carrying out and coordinating Project activities, communicating with selected stakeholder, liaising with the World Bank, supervising technical activities and coordinating actions with the Recipient to achieve the Project's objective, carrying out the planning, management, monitoring, evaluating and reporting under the Project, including tracking technical progress under the Project, the achievement of results, and the preparation of progress reports, all in close coordination with the Recipient, and (B) prepare and furnish to the Recipient in a timely manner, with the collaboration of the Recipient, the terms of reference for hiring the services of third parties (consultants), as well as set the technical specifications of goods needed by the Project. 6 (b) exercise its rights and carry out its obligations under the Technical Cooperation Agreement, in such manner as to protect the interests of the Recipient, MMA and the World Bank and to accomplish the purposes of the Grant and, except as the World Bank shall otherwise agree, the Recipient shall not assign, amend, abrogate, waive, terminate or fail to enforce the Technical Cooperation Agreement, or any of its provisions. In case of any conflict between the terms of the Technical Cooperation Agreement and those of this Agreement, the terms of this Agreement shall prevail. The Recipient shall promptly inform the World Bank of any condition which interferes or threatens to interfere with the performance of the Recipient respective obligations under such agreement; and (c) in coordination with MMA, prepare a Project Operational Manual (POM) to be adopted by the Recipient for the operation of the Project, on terms and conditions acceptable to the World Bank, including, inter alia, an annual operating plan ("POA") updated at least once a year during Project implementation, arrangements for recording Project impacts, outcomes, outputs and inputs required to assess progress toward the achievement of Project objectives, detailed procedures and guidelines for disbursements, payments, approvals, commitments, reporting, and procurement procedures, monitoring and evaluation strategy and guidance on overall Project implementation. The POM may be amended by MMA in coordination with the Recipient from time to time with the prior approval of the World Bank. In the event of any conflict between the terms of the POM and those of this Agreement, the terms of this Agreement shall prevail. 2.04. Project Monitoring, Reporting and Evaluation. (a) The Recipient in close collaboration with MMA shall monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions of Section 2.06 of the Standard Conditions and on the basis of the indicators to be agreed between MMA and the World Bank. Each Project Report shall cover the period of one calendar semester, and shall be furnished to the World Bank not later than one month after the end of the period covered by such report. (b) The Recipient shall prepare the Completion Report, in coordination with the MMA, in accordance with the provisions of Section 2.06 of the Standard Conditions. The Completion Report shall be furnished to the World Bank not later than six months after the Closing Date. 2.05. Financial Management. (a) The Recipient shall ensure that a financial management system is maintained in accordance with the provisions of Section 2.07 of the Standard Conditions. (b) The Recipient shall ensure that document and records are maintained in accordance with the provisions of Section 2.05 of the Standard Conditions. (c) The Recipient shall ensure that interim unaudited financial reports (IFRs) for the Project are prepared and furnished to the World Bank not later than 45 days after the end 7 of each calendar semester, covering the semester, in form and substance satisfactory to the World Bank. (d) The Recipient shall have the Financial Statements for the Project audited in accordance with the provisions of Section 2.07 (b) of the Standard Conditions. Each such audit of the Financial Statements shall cover the period of one fiscal year of the Recipient. The audited Financial Statements for each such period shall be furnished to the World Bank not later than six months after the end of such period. 2.06. Procurement All goods, works, non-consulting services and consulting services required for the Project, to be financed out of the proceeds of the Grant, shall be procured in accordance with the requirements set forth or referred to in the "World Bank Procurement Regulations for Borrowers under Investment Project Financing", dated July 1, 2016 (Procurement Regulations) and the provisions of the Procurement Plan. Article III Withdrawal of Grant Proceeds 3.01. Eligible Expenditures. The Recipient may withdraw the proceeds of the Grant in accordance with the provisions of: (a) the Standard Conditions; (b) this Section; and (c) such additional instructions as the World Bank may specify by notice to the Recipient (including the "Disbursement Guidelines for Investment Project Financing" dated February 2017, as revised from time to time by the World Bank and as made applicable to this Agreement pursuant to such instructions), to finance Eligible Expenditures as set forth in the following table. The table specifies the categories of Eligible Expenditures that may be financed out of the proceeds of the Grant ("Category"), the allocations of the amounts of the Grant to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category: 8 Category Amount of the Grant Percentage of Allocated Expenditures to be (expressed in USD) Financed (inclusive of Taxes) (1) Goods, non- 100% consulting 900,000 services, consultants' services, Training and Workshops (2) Operating Costs 100,000 100% TOTAL AMOUNT 1,000,000 For the purposes of this Section: (a) the term "Operating Costs" means the costs associated with the management and implementation of the Project, including: (i) vehicle operation and maintenance, repairs, fuel and spare parts; (ii) equipment and computer maintenance; (iii) shipment costs (whenever these costs are not included in the cost of goods); (iv) office supplies; (v) utilities; (vi) travel and per-diem costs for technical staff carrying out supervisory and quality-control activities; (vii) communication costs including advertisement for procurement purposes; and (viii) costs associated with audits. (b) the term "Training and Workshops" means expenditures (other than those for consultants' services) incurred in connection with the carrying out of training, seminars and workshops, including reasonable travel costs (e.g., accommodations, transportation costs and per diems) of trainees and trainers (if applicable), catering, rental of training facilities and equipment, logistics and printing services, as well as training materials and equipment under the Project. 3.02. Withdrawal Conditions. Notwithstanding the provisions of Section 3.01 of this Agreement, no withdrawal shall be made for payments made prior to the date of countersignature of this Agreement by the Recipient, except that withdrawals up to an aggregate amount not to exceed US$ 100,000.00 equivalent may be made for payments made during the 12 months immediately prior to the date of countersignature of this Agreement, for Eligible Expenditures. 3.03. Withdrawal Period. The Closing Date referred to in Section 3.06 (c) of the Standard Conditions is December 30, 2022. 9 Article IV Effectiveness; Termination 4.01. This Agreement shall not become effective until evidence satisfactory to the World Bank has been furnished that: (i) the Technical Cooperation Agreement has been duly signed; and (ii) the POM containing the first POA approved by the Bank. 4.02. Except as the Recipient and the World Bank shall otherwise agree, this Agreement shall enter into effect on the date upon which the World Bank dispatches to the Recipient notice of its acceptance of the evidence required pursuant to Section 4.01 ("Effective Date"). If, before the Effective Date, any event has occurred which would have entitled the World Bank to suspend the right of the Recipient to make withdrawals from the Grant Account if this Agreement had been effective, the World Bank may postpone the dispatch of the notice referred to in this Section until such event (or events) has (or have) ceased to exist. 4.03. Termination for Failure to Become Effective. This Agreement and all obligations of the parties under it shall terminate if it has not entered into effect by the date 90 days after the date of this Agreement, unless the World Bank, after consideration of the reasons for the delay, establishes a later date for the purpose of this Section. The World Bank shall promptly notify the Recipient of such later date. Article V Recipient's Representative; Addresses 5.01. Recipient's Representative. The Recipient's Representative referred to in Section 7.02 of the Standard Conditions is its Director-President. 5.02. Recipient's Address. The Recipient's Address referred to in Section 7.01 of the Standard Conditions is: Fundagdo Pr6-Natureza - FUNATURA SCLN 107, Bloco B, s/201 Asa Norte Brasilia - DF, 70743-520 Brazil Fax: (55-61) 3274-5324 With copies to: Minist6rio do Meio Ambiente - MMA Secretaria Executiva Esplanada dos Minist6rios - Bloco Bl. B - 6o andar 10 70068-900, Brasilia, DF Brazil Facsimile: (55-61) 2028-1770/2015 Secretaria de Assuntos Internacionais - SEAIN Minist6rio do Planejamento, Orgamento e Gestio, Esplanada dos Ministdrios, Bloco "K" - 50 andar 70040-906, Brasilia, DF Brazil Facsimile: (55-61) 2020-5006 5.03. World Bank's Address. The World Bank's Address referred to in Section 7.01 of the Standard Conditions is: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable: Telex: Facsimile: INTBAFRAD 248423 (MCI) or 1-202-477-6391 Washington, D.C. 64145 (MCI) 11