The World Bank 1818 H Street N.W. (202) 477-1234 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS CONFORMED COPY July 14, 2011 Mr. Philip Dimitrov Head of Delegation European Union Delegation to Georgia 38 Nino Chkheidze St. 0102 Tbilisi, Georgia Re.: Addendum No. 1 to the Administration Agreement for European Community Contributions, as Represented by the Commission, to Trust Funds (World Bank Group Trust Fund Number TF071324 for Emergency Rehabilitation and Construction) (European Commission Trust Fund Number (EC CRIS REF. No. ENPI/2010/242-716) Dear Mr. Ph. Dimitrov: We refer to the Administration Agreement between the European Community, represented by the Commission of the European Communities (the "Commission"), and the International Bank for Reconstruction and Development (“IBRD�), the International Development Association (“IDA� or “the World Bank Group Entity�), and the International Finance Corporation (“IFC�) (collectively, the World Bank Group) signed on June 30, 2010, related to the Trust Fund for Emergency Rehabilitation and Construction (TF071324) administered by IDA (the Administration Agreement). We also refer to the recent discussions between Commission and IDA relating to the extension of the end disbursement date and amendments in Annex I –Description of the Project and Annex III of the Administration Agreement – Indicative Budget for the Project. We are pleased to inform you that, after due consideration and mutual agreement between IDA and the EU Delegation, the Administration Agreement is amended as follows: 1. Section 2.03 of the Administration Agreement is amended to read as follows: “It is expected that the Contribution will be fully utilized in accordance with the provisions of this Administration Agreement by December 31, 2012 ("End Disbursement Date"). The End Disbursement Date can only be modified with the agreement of both Parties pursuant to Article 9 of the General Conditions.� -2- EC CRIS REF. No. ENPI/2010/242-716 WBG TF071324 2. Activity 4 under Project Components and Activities of Annex I to the Administration Agreement is amended to read as follows: “4. Improvement of durable housing conditions: Improvement of the physical conditions of walls, including thermal insulation of walls, floors and provision of entrance sheds and air ventilators in about 1263 houses in settlements No 1 to 9 referred to in Table 1 below.� 3. Annex III - Indicative Budget for the Project. The new version of Annex III – Indicative Budget for the Project is attached as Attachment to this Addendum. All the terms and conditions of the Administration Agreement that have not been amended hereby shall remain unchanged and in full force and effect. This Addendum is drawn up in three originals, two for the Commission and one for the World Bank Group entity. The addendum shall enter into force on the later date of signature by the Parties. For the European Union represented by For the International Development the Commission of the European Association Communities Name: Philip Dimitrov Name: Asad Alam Position: Head of European Union Position: Regional Director Delegation to Georgia South Caucasus Department Europe and Central Asia Region Signature: /s/ Philip Dimitrov Signature: /s/ Asad Alam Date: July 25, 2011 Date: July 25, 2011 -3- EC CRIS REF. No. ENPI/2010/242-716 WBG TF071324 Attachment ANNEX III OF THE ADMINISTRATION AGREEMENT INDICATIVE BUDGET FOR THE PROJECT 1. Improvement of the water supply system: Estimated Amount: EUR 210,846.92 2. Improvement of the drainage, pedestrian crossings and access road: Estimated Amount: EUR 742,033 3. Improvement of the solid-waste collection and disposal: Estimated Amount: EUR 280,000 4. Improvement of the durable housing conditions, including thermal insulation of walls: Estimated Amount: EUR 1,487,722 5. Consultants’ services: Estimated Amount: EUR 92,000 6. Communication and EU Visibility: Estimated Amount: EUR 10,221 7. IDA Indirect Costs: EUR 150,000 (*) 8. Set up fee: EUR 27,177.08 TOTAL BUDGET: EUR 3,000,000. * The Commission’s contribution includes funds to be used for defrayment of the costs of administration and other expenses incurred by the Bank in compliance with Article 3.03 of the Administration Agreement and with Article 14.04 of the Annex II.