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<SEC-DOCUMENT>0001292814-10-002337.txt : 20100713
<SEC-HEADER>0001292814-10-002337.hdr.sgml : 20100713
<ACCEPTANCE-DATETIME>20100713162013
ACCESSION NUMBER:		0001292814-10-002337
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20100930
FILED AS OF DATE:		20100713
DATE AS OF CHANGE:		20100713

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			COMPANHIA DE SANEAMENTO BASICO DO ESTADO DE SAO PAULO-SABESP
		CENTRAL INDEX KEY:			0001170858
		STANDARD INDUSTRIAL CLASSIFICATION:	WATER SUPPLY [4941]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			D5
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-31317
		FILM NUMBER:		10950504

	BUSINESS ADDRESS:	
		STREET 1:		RUA COSTA CARVALHO, 300
		STREET 2:		SAO PAULO
		CITY:			SP
		STATE:			D5
		ZIP:			05429-900
		BUSINESS PHONE:		011-55-11-3388-8000

	MAIL ADDRESS:	
		STREET 1:		RUA COSTA CARVALHO, 300
		STREET 2:		SAO PAULO
		CITY:			SP
		STATE:			D5
		ZIP:			05429-900
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>sbs20100707_6k1.htm
<DESCRIPTION>CONVENTION EXECUTED BETWEEN THE STATE OF SAO PAULO AND THE MUNICIPALITY OF SAO PAULO
<TEXT>

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<DIV>&nbsp;</DIV>
<DIV align=center><FONT face="Times New Roman" color=#000000 size=3><B>SECURITIES AND EXCHANGE COMMISSION </B></FONT></DIV>
<DIV align=center><FONT face="Times New Roman" color=#000000 size=3><B>Washington, DC 20549 </B></FONT></DIV>
<DIV>&nbsp;</DIV>
<HR align=center width="25%" color=#000000 noShade SIZE=1>
<DIV>&nbsp;</DIV>
<DIV align=center><FONT face="Times New Roman" color=#000000 size=3><B>FORM 6-K</B></FONT></DIV>
<DIV>&nbsp;</DIV>
<DIV align=center><FONT face="Times New Roman" color=#000000 size=3><B>REPORT OF FOREIGN ISSUER </B><BR>
<B>PURSUANT TO RULE 13a-16 OR 15d-16 OF THE</B></FONT></DIV>
<DIV align=center><FONT face="Times New Roman" color=#000000 size=3><B>SECURITIES EXCHANGE ACT OF 1934</B></FONT></DIV>
<DIV>&nbsp;</DIV>
<P></P>
<DIV align=center>
<DIV><FONT face="Times New Roman" color=#000000 size=2><B>For&nbsp;July 13, 2010</B></FONT></DIV>
<P></P>
<FONT face="Times New Roman" color=#000000 size=2><B>(Commission File No. 1-31317) </B></FONT></DIV>
<P></P>
<DIV>&nbsp;</DIV>
<HR align=center width="25%" color=#000000 noShade SIZE=1>
<DIV>&nbsp;</DIV>
<DIV align=center><FONT face="Times New Roman" color=#000000 size=3><B>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP </B></FONT></DIV>
<DIV align=center><FONT face="Times New Roman" color=#000000 size=2><I>(Exact name of registrant as specified in its charter) </I></FONT></DIV>
<DIV>&nbsp;</DIV>
<DIV align=center></DIV>
<DIV align=center><FONT face="Times New Roman" color=#000000 size=3><B>Basic Sanitation Company of the State of Sao Paulo - SABESP </B></FONT></DIV>
<DIV align=center><FONT face="Times New Roman" color=#000000 size=2><I>(Translation of Registrant's name into English) </I></FONT></DIV>
<DIV>&nbsp;</DIV>
<HR align=center width="25%" color=#000000 noShade SIZE=1>
<BR>
<DIV align=center><FONT face="Times New Roman" color=#000000 size=2><B>Rua Costa Carvalho, 300 <BR>
S&#227;o Paulo, S.P., 05429-900 <BR>
Federative Republic of Brazil </B></FONT></DIV>
<DIV align=center><FONT face="Times New Roman" color=#000000 size=2><I>(Address of Registrant's principal executive offices) </I></FONT></DIV><BR>
<HR align=center width="25%" color=#000000 noShade SIZE=1>
<BR>
<DIV align=center><FONT face="Times New Roman" color=#000000 size=2>Indicate by check mark whether the registrant files or will file <BR>
annual reports under cover Form 20-F or Form 40-F. <BR>
<BR>
Form 20-F ___X___ Form 40-F ______</FONT></DIV>
<DIV align=center><FONT face="Times New Roman" color=#000000 size=2>Indicate by check mark if the registrant is submitting the Form 6-K <BR>
in paper as permitted by Regulation S-T Rule 101(b)(1)__.</FONT></DIV>
<DIV align=center><FONT face="Times New Roman" color=#000000 size=2>Indicate by check mark if the registrant is submitting the Form 6-K <BR>
in paper as permitted by Regulation S-T Rule 101(b)(7)__.</FONT></DIV>
<P></P>
<P align=center><FONT face="'Times New Roman, Times, Serif'" size=2>Indicate by check mark whether the registrant by furnishing the <BR>
information contained in this Form is also thereby furnishing the <BR>
information to the Commission pursuant to Rule 12g3-2(b) under <BR>
the Securities Exchange Act of 1934. <BR>
<BR>
Yes ______ No ___X___</FONT></P>
<P></P>
<P></P>
<DIV align=center><FONT face="Times New Roman" color=#000000 size=2>If "Yes" is marked, indicated below the file number assigned to the<BR>
registrant in connection with Rule 12g3-2(b):</FONT>
<P></P>
</DIV>
<P></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>CONVENTION EXECUTED BETWEEN THE STATE OF S&#195;O PAULO AND THE MUNICIPALITY OF S&#195;O PAULO, WITH THE INTERVENTION AND CONSENT OF THE SABESP AND OF THE ARSESP, WITH THE PURPOSE OF SHARING RESPONSIBILITY FOR OFFERING WATER SUPPLY AND SEWAGE SERVICES </FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 12pt; TEXT-TRANSFORM: uppercase" face=Arial,sans-serif>in the CAPITAL</FONT></B></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify">&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify">&nbsp;</P>
<H1 style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center"><B><FONT style="FONT-SIZE: 12pt" face=Arial,sans-serif>CONTENTS</FONT></B></H1>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>
<TR>
     <TD><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>CHAPTER 1 &#150; PREAMBLE AND CONSIDERATIONS</FONT></U></TD>
     <TD align=right>
<A href="#_Toc265158842"><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>1</FONT></U></A></TD></TR>
<TR>
     <TD><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>CHAPTER 2 &#150; PURPOSE</FONT></U></TD>
     <TD align=right>
<A href="#_Toc265158843"><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>2</FONT></U></A></TD></TR>
<TR>
     <TD>
<A href="#_Toc265158844"><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>CHAPTER 3 &#150; PLANNING AND INVESTMENTS</FONT></U></A></TD>
     <TD align=right>
<A href="#_Toc265158844"><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>3</FONT></U></A></TD></TR>
<TR>
     <TD><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>CHAPTER 4 &#150; REGULATION OF THE SERVICES BY THE ARSESP</FONT></U></TD>
     <TD align=right>
<A href="#_Toc265158845"><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>5</FONT></U></A></TD></TR>
<TR>
     <TD><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>CHAPTER 5 &#150; EXECUTION OF THE SERVICES</FONT></U></TD>
     <TD align=right>
<A href="#_Toc265158846"><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>9</FONT></U></A></TD></TR>
<TR>
     <TD>
<A href="#_Toc265158847"><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>CHAPTER 6 &#150; OBLIGATIONS OF THE PARTIES</FONT></U></A></TD>
     <TD align=right>
<A href="#_Toc265158847"><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>12</FONT></U></A></TD></TR>
<TR>
     <TD>
<A href="#_Toc265158848"><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>CHAPTER 7 &#150; OBLIGATIONS OF THE SIGNATORIES</FONT></U></A></TD>
     <TD align=right>
<A href="#_Toc265158848"><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>13</FONT></U></A></TD></TR>
<TR>
     <TD><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>CHAPTER 8 &#150; CONFLICT RESOLUTION</FONT></U></TD>
     <TD align=right>
<A href="#_Toc265158849"><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>13</FONT></U></A></TD></TR>
<TR>
     <TD>
<A href="#_Toc265158850"><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>CHAPTER 9 &#150; DURATION AND EXTINCTION OF THE CONVENTION</FONT></U></A></TD>
     <TD align=right>
<A href="#_Toc265158850"><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>14</FONT></U></A></TD></TR>
<TR>
     <TD><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>CHAPTER 10 &#150; FORUM</FONT></U></TD>
     <TD align=right>
<A href="#_Toc265158851"><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>14</FONT></U></A></TD></TR>
<TR>
     <TD>
<A href="#_Toc265158852"><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>CHAPTER 11 &#150; MISCELLANEOUS</FONT></U></A></TD>
     <TD align=right>
<A href="#_Toc265158852"><U><FONT lang=EN-US face="'Times New Roman,serif'" color=#0000ff size=3>14</FONT></U></A></TD></TR></TABLE>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><B><I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>S&#195;O PAULO, JUNE 23, 2010</FONT></I></B></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify">&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt">&nbsp;</P>
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<H1 style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center">
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</DIV> <H1 style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center"><B><FONT style="FONT-SIZE: 12pt" face=Arial,sans-serif>CHAPTER 1 &#150; PREAMBLE AND CONSIDERATIONS</FONT></B></H1>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Through this instrument, the </FONT><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>STATE OF S&#195;O PAULO</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>, through its Governor, Alberto Goldman, hereinafter referred to as the </FONT><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>STATE</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>, and the </FONT><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>MUNICIPALITY OF S&#195;O PAULO</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>, in this act represented by its Mayor, Gilberto Kassab, hereinafter referred to as the </FONT><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>MUNICIPALITY</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>, together referred to as the Parties, with the int
ervention and consent of the </FONT><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>COMPANHIA DE SANEAMENTO B&#193;SICO DO ESTADO DE S&#195;O PAULO</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>, in this act represented by its Chief Executive Officer, Metropolitan Officer, Chief Financial Officer and Investor Relations Officer, hereinafter referred to as the </FONT><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>SABESP,</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> and of the </FONT><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>AG&#202;NCIA REGULADORA DE SANEAMENTO E ENERGIA DO ESTADO DE S&#195;O PAULO</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>, here represented by its Director-President, hereinafter referred to as the </FONT><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>ARSESP</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif
>; </FONT></P>
<P style="MARGIN: 0in 0in 0pt 70.9pt; TEXT-INDENT: -70.9pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 70.9pt; TEXT-INDENT: -70.9pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Whereas: </FONT></P>
<P style="MARGIN: 0in 0in 0pt 70.9pt; TEXT-INDENT: -70.9pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">a)&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the water supply and sewage services for the Capital were created and have been managed by State of S&#227;o Paulo, currently through the SABESP;</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">b)&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the State and the Municipality have divergent claims with respect to the state and/or municipal powers to provide the services in the Capital;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">c)&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>there is a need to assure the adequate provision of these services to current and future generations;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">d)&nbsp;&nbsp;&nbsp;</FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>there is effective need to share the responsibilities to make it possible to universalize appropriate water supply and sewage services in a reasonable period, as well as the need to protect the environment;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">e)&nbsp;&nbsp;&nbsp;</FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>there is a need to integrate local, metropolitan and state policies related to basic sanitation;</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">f)&nbsp;&nbsp;&nbsp;</FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the establishment of an agreement between the STATE, the MUNICIPALITY and the SABESP with respect to the provision of water supply and sewage services will minimize the risks and uncertainties that generate undesirable economic-financial impacts on the Parties, the SABESP and, mainly, the citizen-users;</FONT></P>
<P style="MARGIN: 0in 0in 0in 35.4pt"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">g)&nbsp;&nbsp;&nbsp;</FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the tariff structure and the tariffs established by the ARSESP should be sufficient and necessary to the economic-financial balance of SABESP&#146;s operations in the municipalities in which it operates in the S&#227;o Paulo Metropolitan Region; </FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">h)&nbsp;&nbsp;&nbsp;</FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the ARSESP was created with the objective of controlling and monitoring the services of piped gas and basic sanitation owned by the state and municipalities, subject to, with respect to these latter, the conventions that are executed;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">i)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the MUNICIPALITY is authorized by Law n&#186;. 14.934/09 to execute contracts, conventions or any other type of agreement necessary, including conventions of cooperation and program contracts, with the STATE, the ARSESP and the SABESP;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">j)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the consensus of the Parties is that the ARSESP should exercise the regulation, control and monitoring of the services;</FONT></P>
<P style="MARGIN: 0in 0in 0in 35.4pt"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">k)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the decision of the Parties is that the SABESP should provide the basic sanitation services and that Parties should decide, together, regarding the planning and the investments necessary for the services;</FONT></P>
<P style="MARGIN: 0in 0in 0in 35.4pt"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">l)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>there is a need to formalize the provision of the water supply and sewage services in the Capital, regardless of the public entity that is declared the owner of the services;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">m)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>there is a need link basic sanitation services to urban development, drainage, housing, poverty reduction, environmental protection and health policies;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">n)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the MUNICIPALITY recognizes the importance of hearing the considerations and suggestions of the SABESP and of the Management Committee provided for in Clause III, in establishing the application of the resources in the </FONT><I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Fundo Municipal de Saneamento Ambiental e Infrastrutura</FONT></I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>; and</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">o)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the STATE and the MUNICIPALITY recognize the importance of hearing the considerations and suggestions of the SABESP regarding the activities undertaken by the&nbsp; Management Committee as provided in Clause III.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The Parties and the Consenting Intervening Parties resolve, as provided in applicable law, to execute this CONVENTION, which shall be governed by the following clauses and conditions:</FONT></P>
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<A name="_Toc265158843"></A><B><FONT style="FONT-SIZE: 12pt" face=Arial,sans-serif>CHAPTER 2 &#150; PURPOSE</FONT></B></H1>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause I</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Through this convention, the STATE and the MUNICIPALITY agree to implement coordinated actions in order to offer universal and appropriate water supply and sewage services in the Capital, for the next 30 (thirty) years, extendible for an equal period, through the following measures: </FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">a)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>creating mechanisms to manage the activities of planning and investment;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">b)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>granting to the SABESP exclusivity in the provision of the services;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">c)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>establishing the ARSESP as responsible for the functions of regulation, including of tariffs, control and monitoring of the services.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Paragraph 1</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> - the Parties and the Consenting Intervening Parties, in common accord, define the strategic goals of this Convention and of the Contract to be executed as:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>a)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the universalization of the water supply and sewage services in the Capital;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>b)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the maintenance of the universalization of such services until the end of the Contract; and</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>c)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the continuous improvement in the quality of the services provided, especially in the area of environmental health, as established in the Contract.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Paragraph 2</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> &#150; The execution of this Convention does not entail recognition or admission by the Parties, under any circumstance, of the pretensions of the State and Municipality that are contested in court, but rather only seeks to attend promptly to the interests of the users of the public services addressed herein.</FONT></P>
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<A name="_Toc265158844"></A><B><FONT style="FONT-SIZE: 12pt" face=Arial,sans-serif>CHAPTER 3 &#150; PLANNING AND INVESTMENTS</FONT></B></H1>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause II</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The STATE and the MUNICIPALITY agree to jointly manage the activities of planning and investment of the basic sanitation system of the Capital, especially in relation to the following aspects:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">a)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>development and creation of planning processes apt to permit the coordination and complementarity of the activities and programs provided for in the basic sanitation plans;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">b)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>periodic combined deliberation with respect to the investments to be realized directly by the SABESP to benefit the services provided in the Capital;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">c)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>direct SABESP resources for the benefit of the </FONT><I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Fundo Municipal de Saneamento Ambiental e Infrastrutura</FONT></I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>, for costs of: </FONT></P>
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<P style="MARGIN: 0in 0in 0pt 1.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>1.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>interventions in areas of influence or that are predominantly occupied by low income populations, in seeking the urban and land regularization of precarious settlements and irregular parceling of land; </FONT></P>
<P style="MARGIN: 0in 0in 0pt 1.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>2.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>cleaning, clearing and channeling streams; </FONT></P>
<P style="MARGIN: 0in 0in 0pt 1.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>3.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>opening or improving the main and secondary roads, alleyways, stairways and the like, in areas of influence or that are predominantly occupied by low income populations, in seeking the urban and land regularization of precarious settlements and irregular parceling of land; </FONT></P>
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<P style="MARGIN: 0in 0in 0pt 1.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>4.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>providing housing for families in areas of influence or that are predominantly occupied by low income populations, in seeking the urban and land regularization of precarious settlements and irregular parceling of land; </FONT></P>
<P style="MARGIN: 0in 0in 0pt 1.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>5.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>deploying parks and other conservation units necessary to protect natural conditions and produce water in the Municipality, reservoirs for catching floodwaters, sporting grounds, landscaping and leisure areas; </FONT></P>
<P style="MARGIN: 0in 0in 0pt 1.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>6.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>draining, containing slopes and eliminating risks of landslides; and</FONT></P>
<P style="MARGIN: 0in 0in 0pt 1.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>7.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>expropriation of areas for deployment of actions within the responsibility of the Fund;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">d)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>creation of spaces apt to make it feasible to coordinate the respective planning instruments that affect the sanitation services of the Capital.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Sole paragraph. </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The</FONT><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>MUNICIPALITY commits itself to include in the internal rules of the </FONT><I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Fundo Municipal de Saneamento Ambiental e Infrastrutura,</FONT></I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> rules that assure featured disclosure, including over the internet, with respect to the application of the resources passed along by the SABESP.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause III</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The Management Committee, which shall be formed of 3 (three) members indicated by the STATE and another 3 (three) by the MUNICIPALITY, in each case for a mandate of 2 (two) years, shall meet at least once a month and shall have, in addition to any others provided for in this Convention, the following attributes:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">a)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>propose processes to coordinate the basic sanitation plans, both with respect to preparation and execution;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">b)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>deliberate, prior to each quadrennial revision, the investments to be made by the SABESP in the subsequent period, and authorize modification of existing approved planning;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">c)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>opine on the state and municipal policies related to basic sanitation that are submitted to it; </FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">d)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>prepare and approve its internal rules, within 30 (thirty) days of the appointment of the members of the Management Committee;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">e)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>elect, from among its members, its president; </FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">f)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>establish institutional relations with the CONESAN &#150; </FONT><I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Conselho Estadual de Saneamento</FONT></I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>, to fully integrate local and metropolitan interests with respect to the provision of basic sanitation services; and</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">g)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>prepare, approve and disclose an annual report on the actions taken and the basic sanitation conditions in the Capital.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Sole paragraph.&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The</FONT><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>MANAGEMENT COMMITTEE shall give total transparency to its manifestations and deliberations, by publication in the official press and disclosure over the internet</FONT><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>.</FONT></B></P>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause IV</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The mandate of the president of the Committee shall be 2 (two) years; immediate reelection is not permitted and the election in each period shall alternate between a representative of the STATE and a representative of the MUNICIPALITY, starting with a presidency by a representative of the STATE.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause V</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The Management Committee may only decide matters through an absolute majority of its members. </FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Paragraph 1. </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>If the Management Committee does not reach an absolute majority to decide about investments, the tie-breaking vote shall fall to its President.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Paragraph 2.</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> The President of the Management Committee, to break any tie as provided in the previous paragraph, not may compromise the schedule for universalizing the services to supply water and collect and treat sewage in the other municipalities in the metropolitan region.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Paragraph 3.</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> The SABESP shall have the right to participate in its meetings and to manifest itself regarding the agenda and decisions of the Committee, as provided in the internal rules, without the right to vote.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause VI</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>It shall fall to the STATE or to the MUNICIPALITY, in accordance with the SABESP&#146;s request:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">a)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>to declare fixed assets to be of public utility, as a matter of urgency, for purposes of expropriation or institution of an administrative easement, and shall also be responsible for permitting the SABESP to take the administrative or administrative actions necessary to effect the expropriations or easements; and</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">b)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>&nbsp;establish administrative limitations and authorize temporary occupation of real assets, to assure performance of the services and work, as well as the conservation of the entailed assets for the provision of the water supply and sewage services.</FONT></P>
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<A name="_Toc265158845"></A><B><FONT style="FONT-SIZE: 12pt" face=Arial,sans-serif>CHAPTER 4 &#150; REGULATION OF THE SERVICES BY THE ARSESP</FONT></B></H1>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause VII</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The STATE and the MUNICIPALITY agree that it shall exclusively fall to the ARSESP to regulate, including tariff regulation, control and monitor the services, including the powers necessary to:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>a)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>set the tariffs and proceed to readjust and revise them;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>b)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>exercise in full the functions of regulation, control and monitoring of the service, independent of whether these are within the purview of the STATE or the MUNICIPALITY;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>c)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>establish cooperation with organs or entities of the State or of the Municipality for the appropriate exercise of their competencies;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>d)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>execute, within its sphere of attributions, sectoral policies and standards;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>e)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>establish technical standards, recommendations and/or procedures for the provision of the services;</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>f)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>regulate the service provision contracts between the SABESP and the users;</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>g)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>standardize the accounting plan to be observed to by the SABESP in the bookkeeping for its accounts;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>h)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>comply and cause compliance with the legislation, other conventions and/or contracts signed between the Parties;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>i)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>set the criteria, indicators, formulas, standards and parameters for quality of the services and performance of the SABESP, ensuring their observance and stimulating constant improvement of quality, productivity and efficiency, as well as the preservation, conservation and recuperation of the environment;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>j)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>monitor the services, its access to the data relating to the administration, the accounting and the technical, economic and financial resources the SABESP being guaranteed;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>k)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>apply the sanctions provided by contract, in legislation and in pertinent regulations;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>l)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>to receive, investigate and send solutions to the complaints of the users and of the SABESP, which shall be notified of the arrangements made;</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>m)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>protect the interests and rights of the users and prevent any discrimination among them, while respecting the rights of the STATE, the MUNICIPALITY and the SABESP;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>n)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>curb abusive practices that affect the regulated services;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>o)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>communicate to the competent organs the facts that may involve infractions, whether economic, environmental, or of the rights of the consumer;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>p)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>coordinate, including through joint committees, with organs and entities competent in matters of energy, water resources, environment, public health, urban development, defense of the consumer and defense of <FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>competition, pursuing the efficient interchange of information and the better performance of its objectives;</FONT></FONT>

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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>q)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>settle, in the administrative sphere, the disagreements between the agents in the sector, as well as between these and the users, with the support, as may be the case, of specifically designated experts; </FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>r)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>send to the Secretary of State or of the Municipality the Folder with the processes relating to the declaration of public utility for instituting an administrative easement or expropriation;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>s)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>collaborate with the maintenance and institution of information systems regarding the basic sanitation services provided for the benefit of the MUNICIPALITY;</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>t)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>apply the revenues from the fee for regulation, control and monitoring to the activities established in this Convention;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>u)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>disclose annually a detailed report on the activities realized and of the situation of Basic Sanitation in the Capital, indicating the objectives and results attained;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>v)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>comply and cause to comply with the guidelines of national, state and municipal legislation for basic sanitation;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>w)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>verify compliance with the goals and sanitation plans by the SABESP.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause VIII</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The SABESP shall be remunerated by the collection of tariffs and other prices, as well as, if applicable, by obtaining other revenues, in accordance with the Contract. </FONT></P>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause IX</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>There shall be no tax subsidy to the tariff, it falling to the ARSESP to set tariffs that assure the economic-financial balance in the terms of the Contract, independent of the allocation of budgetary resources of the MUNICIPALITY or of the STATE.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause X</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Setting, readjusting and revising the tariffs shall be subject to the tariff guidelines established in state legislation, this Convention and in the Contract that will be executed, in order to assure both the economic-financial balance under the terms of the Contract, and the reasonableness of the tariff, through mechanisms that induce efficiency and efficacy of the services and that permit social appropriation of the gains in productivity, subject to the limits of the Contract.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XI</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The agents of the ARSESP shall be authorized to examine the installations forming part of the services and the SABESP&#146;s technical, economic, accounting and financial <FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>data, among others it believes relevant to the exercise of its competencies.</FONT></FONT>

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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XII</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Without prejudice to the other competencies and attributions of the ARSESP, including those cited in Clause VII, the activities of regulation and monitoring consist of the following acts:</FONT></P>
<P style="MARGIN: 0in 0in 0pt 35.45pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">a)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>issuing technical regulations with regard to the provision and fruition of the services, after an obligatory public consultation, with a minimum period of 15 (fifteen) days;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">b)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>monitoring the plans and goals;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">c)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>constituting technical groups responsible for monitoring and supervising the services;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">d)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>setting the routines for monitoring the services;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">e)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>monitoring the progress of the SABESP&#146;s performance indicators;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">f)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>verifying compliance with the minimum coverage levels of the supply of water and the collection and treatment of sewage;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">g)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>applying sanctions for infractions committed by the SABESP, as provided by law or in the Contract;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">h)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>preventing and restraining infractions of the rights of the users, under the terms of applicable law and the Contract;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">i)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>monitoring the progress of the economic-financial situation of the Contract to be formalized among the STATE, the MUNICIPALITY and the SABESP;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">j)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>establishing and executing the tariff policy for water supply and sewage services, through setting, controlling, revising and readjusting the tariffs for the various classes of services and users, while respecting the terms of this Convention and of the Contract to be executed by the SABESP with the STATE and the MUNICIPALITY, in order to assure the efficiency, equity, rational use of the natural resources and the economic-financial balance of the SABESP;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">k)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>approving the model contracts for water supply and sewage services to be executed with the users;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">l)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>resolving administratively the disagreements between the SABESP and the users;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">m)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>systematizing and publicizing basic information about the service and its progress.</FONT></P>
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<A name="_Toc265158846"></A><B><FONT style="FONT-SIZE: 12pt" face=Arial,sans-serif>CHAPTER 5 &#150; EXECUTION OF THE SERVICES </FONT></B></H1>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XIII</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The STATE and the MUNICIPALITY shall guarantee to the SABESP, under the terms of the Contract that is executed between them, exclusivity in the execution of the services of supplying water and sewage services in the Capital, whether these are owned by the Municipality, the State, or are shared.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Sole paragraph.</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> &nbsp; The guarantee of exclusivity mentioned in this clause is not conditional and shall not be affected by any eventual determination, by any organ or tribunal, of the controversies of the Parties with respect to the competencies and ownership of the basic sanitation services for the Capital.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XIV</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The purpose of the Contract shall cover, at least, the following activities:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">a)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the protection of watersheds, in coordination with the other organs of the STATE and of the MUNICIPALITY;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">b)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the capture, adduction and treatment of untreated water; </FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">c)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the adduction, reservation and distribution of treated water; </FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">d)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the collection, transport, treatment and final disposal of sewage; </FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">e)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the adoption of other actions of basic and environmental sanitation.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XV</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The Contract to be executed by the STATE and by the MUNICIPALITY with the SABESP shall provide:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">a)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>a period for universalization of the water supply and sewage services in the Capital;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">b)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the obligation of the SABESP to invest during the period of the Contract, at least, the equivalent of 13% (thirteen percent) of the gross revenue obtained in the Capital, in actions of basic and environmental sanitation of interest to the MUNICIPALITY, and without prejudice to this percentage being revised, up or down, with a periodicity of not more than 4 years, in order to maintain the economic-financial balance; </FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">c)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the obligation of the SABESP to earmark, quarterly, 7.5% (seven and a half percent) of the gross revenue obtained in the Capital for the </FONT><I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Fundo Municipal de Saneamento Ambiental e Infrastrutura</FONT></I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>, to be applied in accordance with the provisions of Clause II;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">d)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>that any amounts due and not paid by the organs of the direct administration, foundations and instrumentalities of the MUNICIPALITY <FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>shall be deducted from the amount to be transferred to the </FONT><I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Fundo Municipal de Saneamento Ambiental e Infrastrutura</FONT></I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>; </FONT></FONT>

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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">e)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>that the SABESP shall provide, quarterly, the composition of the gross revenue and the deductions referred to in the sole paragraph of this clause, in a format that can be independently audited, so that any compensation, up or down, shall be realized in subsequent quarters. </FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Sole paragraph.</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>&nbsp;&nbsp; For purposes of application of parts (b) and (c) of this clause, gross revenue shall not include (</FONT><I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>i.e.</FONT></I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>, there shall be a deduction of) amounts relating to </FONT><I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Contribui&#231;&#245;es para o Financiamento da Seguridade Social</FONT></I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> &#150; COFINS and the </FONT><I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Programa de Forma&#231;&#227;o do Patrim&#244;nio do Servidor P&#250;blico</FONT></I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> &#150; PASEP, as well as the taxes that may 
replace them.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XVI</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The SABESP shall implement all the Goals for Service Provision and Quality of the Services to be established in the Contract, in consonance with the basic sanitation plans, in order to universalize the services, improve their quality and develop environmental health in the MUNICIPALITY.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XVII</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The assets entailed in the public service that is the object of this Convention shall revert in favor of the STATE and/or of the MUNICIPALITY, in accordance with the decision of the Supreme Federal Tribunal or eventual Amendments to the Constitution of the Federative Republic of Brazil regarding the ownership of the water supply and sewage services in metropolitan regions.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Sole paragraph.</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> &nbsp; Regardless of the form in which the disagreements between the STATE and MUNICIPALITY are resolved with respect to the competencies and ownership of the service(s) that are the subject of this Convention, the investments provided for in the Contract shall be amortized through the end of the agreement, except for the investments of an extraordinary nature realized in the course of implementing the contract.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XVIII</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The SABESP shall be remunerated in accordance with the payment, by the users, of the tariffs and of the public prices charged for the water supply and sewage services.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Paragraph 1.</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The tariff structure provided in State Decree n&#186; 41.446/96 or in standards that come to replace it shall be applied, subject to the provisions of Federal Law n&#186; 11.445/07.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Paragraph 2.</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The SABESP shall offer to the entities of the Direct Administration, Instrumentalities and Foundations of the MUNICIPALITY, as well as to the Convened Entities or that act in partnership with it in the areas of health, education and social assistance, the </FONT><I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Programa de uso racional</FONT></I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> of water (PURA), as well as differentiated tariffs and prices, under the terms and conditions to be established in the Contract to be executed with the STATE and the MUNICIPALITY.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Paragraph 3.</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The SABESP shall make available to municipal public companies and public-private partnerships the differentiated tariff relating to firm demand contracts, through the formalization of contracts with such entities, individually or in conjunction, so long as they comply with requirements established in the SABESP&#146;s internal standards.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Paragraph 4.</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The new connections of the Direct and Indirect Administration of the MUNICIPALITY shall observe the provisions of this Clause and the Contract. </FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Paragraph 5.</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; While this Convention and the Contract to which it gives rise are in force, the existence of pending financial matters of the Direct Administration, Instrumentalities and Foundations of the MUNICIPALITY, shall not impede adhesion to the </FONT><I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Programa de Uso Racional da &#193;gua</FONT></I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> (PURA).</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Paragraph 6.</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The tariffs and the prices of the public water supply and sewage services shall be sufficient to guarantee the universalization of access to basic sanitation, especially for low income populations and locations, for which there shall be a differentiated tariff.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XIX</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The Parties shall be assured of the economic-financial balance under the terms of the Contract that comes to be executed.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Paragraph 1.</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; For the purpose of maintaining the economic-financial balance, the SABESP&#146;s revenue from the tariffs and prices collected from the users shall be sufficient, at least, to cover expenses pertaining to:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 25.1pt; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">a)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the general and administrative expenses;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 25.1pt; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">b)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the direct tax charges;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 25.1pt; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">c)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the costs and expenses relating to the operation and maintenance of the water supply and sewage system of the Capital;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 25.1pt; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">d)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the universalization of access to basic sanitation, especially with respect to the investments and disbursements mentioned in the parts (b) and (c) of Clause XV;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 25.1pt; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">e)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the fee for regulation, control and monitoring owed to the ARSESP; </FONT></P>
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<P style="MARGIN: 0in 0in 0pt 25.1pt; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">f)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the subsidies offered, whether existing or that come to be created, including for low income populations and locations; </FONT></P>
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<P style="MARGIN: 0in 0in 0pt 25.1pt; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">g)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the remuneration of the unamortized existing assets;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 25.1pt; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">h)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the remuneration of capital of its own and of third parties employed by the SABESP.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Paragraph 2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Without prejudice to any necessary extraordinary revisions, the ordinary contractual mechanism to revise tariffs and the investments shall observe the following rules, among others:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">a)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the revision shall be realized with a periodicity of not more than 4 (four) years;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">b)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the provision in paragraph 1 of this clause.</FONT></P>
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<P style="MARGIN: 0in 0in 12pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Paragraph 3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Without prejudice to the provision in Clause VIII,</FONT><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>the</FONT><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>economic-financial balance shall be maintained, through the following modalities:</FONT></P>
<P style="MARGIN: 0in 0in 12pt 14.2pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>a)&nbsp; revision of tariffs and prices collected from the users;</FONT></P>
<P style="MARGIN: 0in 0in 12pt 14.2pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>b)&nbsp; extension or reduction of the contractual period;</FONT></P>
<P style="MARGIN: 0in 0in 12pt 14.2pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>c)&nbsp; indemnification;</FONT></P>
<P style="MARGIN: 0in 0in 12pt 14.2pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>d) a combination of the above alternatives;</FONT></P>
<P style="MARGIN: 0in 0in 12pt 14.2pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>e)&nbsp; other forms as agreed by the PARTIES.</FONT></P>
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<A name="_Toc265158847"></A><B><FONT style="FONT-SIZE: 12pt" face=Arial,sans-serif>CHAPTER 6 &#150; </FONT></B><B><FONT style="FONT-SIZE: 12pt" face=Arial,sans-serif color=black>OBLIGATIONS OF THE PARTIES</FONT></B><B><FONT style="FONT-SIZE: 12pt" face=Arial,sans-serif> </FONT></B></H1>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XX</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The following shall constitute obligations of the STATE and the MUNICIPALITY:</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">a)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>execute, under the terms of CHAPTER 3 &#150; PLANNING AND INVESTMENTS of this Convention, the activities of planning and investment indicated therein, in strict collaboration with the ARSESP and the SABESP;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">b)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>establish the goals required in the context of the Contract to be formalized with the SABESP, with obedience to the basic sanitation plans, as well as verify compliance with the same;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">c)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>make available institutional, technical and financial resources necessary to the development of the activities provided for in this Convention;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">d)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>make available the available information and data regarding the planning of the services in the state, metropolitan and municipal spheres;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">e)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>promote the necessary coordination of actions related to the planning of the services with those linked to the sectors for housing, water resources, and protection of the environment, public health and the consumer;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">f)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>execute and respect the Contract to be executed with the SABESP;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: right" align=right><FONT lang=PT-BR style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">12</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">g)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>respect the authority of the ARSESP with respect to the regulation and monitoring of the Contract, subject to the terms of this Convention;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">h)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>communicate to the SABESP and to the ARSESP the complaints received from the users.</FONT></P>
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<A name="_Toc265158848"></A><B><FONT style="FONT-SIZE: 12pt" face=Arial,sans-serif>CHAPTER 7 &#150; OBLIGATIONS OF THE SIGNATORIES</FONT></B></H1>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XXI</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The following are obligations common to the Parties and the consenting intervening parties:</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">a)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>employ their best efforts to attain the objectives of this Convention;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">b)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>obey all applicable law, as well as all the provisions contained in this Convention and in the Contract that comes to be executed with the SABESP;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">c)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>ensure the good quality of the water supply and sewage services, stimulating the increase in its efficiency, while seeking to attain universalization of the services;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">d)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>develop actions that value the rational use of water and raise the consciousness of the population about the importance of connecting and channeling sewage to the public collection network, in order to make viable policies to preserve water resources, public health and the environment, including the imposition of sanctions where so provided;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">e)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>maintain in their files all the information and documents relating to the networks, installations and equipment utilized in the provision of the services;</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">f)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>promote measures and coordination programs between sanitation regulators and the organs that deal with housing, water resources, protection of the environment and public health and urban planning;</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">g)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>develop, discuss and approve, together, a plan of preventive and emergency actions for situations of risks to public health arising from contamination of the water or that compromise supplying the population;</FONT></P>
<P style="MARGIN: 0in 0in 0pt 0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 0.5in; TEXT-INDENT: -0.25in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">h)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>publicize the activities realized, maintaining transparency in the information and assuring public monitoring of the actions arising from this Convention.</FONT></P>
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<A name="_Toc265158849"></A><B><FONT style="FONT-SIZE: 12pt" face=Arial,sans-serif>CHAPTER 8 &#150; CONFLICT RESOLUTION</FONT></B></H1>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT></B>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XXII</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The Parties commit themselves to use their best efforts to amicably resolve any dispute or controversy between the Parties arising from this Convention or its execution, including and especially those relating to the competencies and ownership of the service(s), regardless of whether the <FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>dispute or controversy exists or arises during the duration of this Convention.</FONT></FONT>

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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XXIII</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Any dispute or controversy shall be communicated, in writing, by one of the Parties to the legal representatives of the other.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XXIV</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>If an amicable solution is reached, it shall be incorporated into this Convention by means of execution of an amendment. </FONT></P>
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<A name="_Toc265158850"></A><B><FONT style="FONT-SIZE: 12pt" face=Arial,sans-serif>CHAPTER 9 &#150; DURATION AND EXTINCTION OF THE CONVENTION</FONT></B></H1>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XXV</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>This Convention shall remain in force for a period of 30 (thirty) years, extendible for an equal period, by means of an agreement between the Parties or, automatically, as long as there is an extension of the Contract executed with the SABESP.</FONT></P>
<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Sole paragraph.</FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> This Convention</FONT><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>shall be extinguished before the end of its term when agreed to by the Parties.</FONT></P>
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<A name="_Toc265158851"></A><B><FONT style="FONT-SIZE: 12pt" face=Arial,sans-serif>CHAPTER 10 &#150; FORUM</FONT></B></H1>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XXVI</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The forum of the </FONT><I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Fazenda P&#250;blica da Comarca do Capital do Estado de S&#227;o Paulo</FONT></I><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif> is elected, with express waiver of any other, however more privileged it may be, to resolve the matters arising from this Convention that could not be resolved amicably.</FONT></P>
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<A name="_Toc265158852"></A><B><FONT style="FONT-SIZE: 12pt" face=Arial,sans-serif>CHAPTER 11 &#150; MISCELLANEOUS</FONT></B></H1>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XXVII</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>This Convention obligates the Parties, consenting intervening parties and any successors of both.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XXVIII</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The rights and obligations arising from this Convention are personal, and may not be transferred to third parties. </FONT></P>
<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XXIX</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The Parties and the consenting intervening parties shall bear their own respective liabilities, especially labor, tax, consumer, commercial or those arising from the violation of rights of third parties, subject to the provisions agreed to herein, and no responsibility arises from this Convention for any Party for acts, facts or situations involving the other Party. </FONT></P>
<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XXX</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Any changes shall only be recognized by the Parties if formalized by an amendment executed by the same.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XXXI</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Upon commencement of the earmarking provided in clause XIV(c), the SABESP and the MUNICIPALITY will make a <FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>pact, in a separate instrument, to end the convention currently existing between them, which was executed on November 14, 2007.</FONT></FONT>

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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XXXII</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>The STATE and the MUNICIPALITY each commit themselves to indicate, within 30 (thirty) days of the execution hereof, 3 (three) representatives each to compose the Management Committee referred to in Clause III. </FONT></P>
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<P style="MARGIN: 0in 0in 0pt 99pt; TEXT-INDENT: -99pt; TEXT-ALIGN: justify"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'">Clause XXXIII</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></B><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Even if it is established that the ownership of the basic sanitation services in the Capital belongs wholly to the MUNICIPALITY or to the STATE, they commit themselves to observe the provisions of this Convention, as well as those in the Contract that comes to be executed with the SABESP, until the extinction of these instruments at the end of their term.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>Being fair and agreed, they sign 4 (four) copies of this instrument, of equal form and substance, in the presence of the witnesses, who also sign it.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 12pt" face=Arial,sans-serif>S&#227;o Paulo, June 23, 2010.</FONT></P>
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<DIV align=center><FONT face="Times New Roman" color=#000000 size=3><B><U>SIGNATURE </U></B></FONT><FONT size=1>&nbsp;</FONT></DIV>
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<DIV align=justify><FONT face="Times New Roman" color=#000000 size=3>Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city S&#227;o Paulo, Brazil. </FONT></DIV>
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<DIV align=justify><FONT face="Times New Roman" color=#000000 size=3>Date:&nbsp;July 13, 2010</FONT></DIV>
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<DIV align=left><FONT face="Times New Roman" color=#000000 size=3><B>Companhia de Saneamento B&#225;sico do Estado de S&#227;o Paulo - SABESP </B></FONT></DIV></TD></TR>
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     <TD vAlign=top align=left><FONT face="Times New Roman" color=#000000 size=2>By:</FONT></TD>
     <TD vAlign=bottom align=left>&nbsp; /s/ Rui de Britto &#193;lvares Affonso
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<DIV align=left><FONT face="Times New Roman" color=#000000 size=2>Name: Rui de Britto &#193;lvares Affonso </FONT></DIV>
<DIV align=left><FONT face="Times New Roman" color=#000000 size=2>Title: Chief Financial Officer and Investor Relations Officer </FONT></DIV></TD>
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<DIV align=center><FONT face="Times New Roman" color=#000000 size=3><B>FORWARD-LOOKING STATEMENTS </B></FONT></DIV>
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<P align=justify><FONT face="'Times New Roman, Times, Serif'" size=2>This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends o
r results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations. </FONT></P>
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