1
Exhibit 10.17
Natural Gas Purchase and Sale Agreement
Cogeneration
Companhia de Gás de São Paulo — Comgás
X
Corn Products Brasil — Ingredientes Industriais Ltda.
January / 2006

 

--------------------------------------------------------------------------------

 

2
Natural Gas Purchase and Sale Agreement
Corn Products Brasil and Companhia de Gás de São Paulo — Comgás
TABLE OF CONTENTS

         
ARTICLE ONE — DEFINITIONS AND INTERPRETATION OF TERMS
    4  
ARTICLE TWO — PURPOSE
    12  
ARTICLE THREE – COMMERCIAL SUPPLY
    12  
ARTICLE FOUR – DAILY CONTRACTED AMOUNT
    12  
ARTICLE FIVE — QUALITY
    13  
ARTICLE SIX — DELIVERY POINT AND PROPERTY TRANSFER
    16  
ARTICLE SEVEN – TERMS FOR DELIVERY OF GAS
    16  
ARTICLE EIGHT – PRICE
    17  
ARTICLE NINE — SCHEDULING OF AMOUNTS TO BE TAKEN, COMMITMENTS AND PENALTIES FOR
DEFAULT
    18  
ARTICLE TEN — COMMITMENT OF PRIORITY OF PURCHASE OF DAILY CONTRACTED AMOUNT
(DCA) OF THE AGREEMENT AND GAS USAGE RESTRICTION
    28  
ARTICLE ELEVEN – INVOICING, PAYMENT MANNER AND GUARANTEE
    30  
ARTICLE TWELVE – MEASUREMENT
    36  
ARTICLE THIRTEEN — EFFECTIVENESS AND EXTENSION
    39  
ARTICLE FOURTEEN — FORTUITOUS CASE OR FORCE MAJEURE
    39  
ARTICLE FIFTEEN- ASSIGNMENT AND ENCUMBRANCE OF RIGHTS AND OBLIGATIONS
    43  
ARTICLE SIXTEEN – NOVATION AND FORBEARANCE
    44  
ARTICLE SEVENTEEN — DEFAULT AND TERMINATION
    44  
ARTICLE EIGHTEEN — NOTICES
    49  
ARTICLE NINETEEN — DISPUTES RESOLUTION
    50  
ARTICLE TWENTY- GENERAL LIMIT OF LIABILITY
    59  
ARTICLE TWENTY-ONE – AMENDMENT
    60  
ARTICLE TWENTY-TWO — ANNEXES
    60  
ARTICLE TWENTY-THREE – CONTRACTUAL AMOUNT
    60  
ARTICLE TWENTY-FOUR – AGREEMENT OF THE PARTIES
    60  

 

--------------------------------------------------------------------------------

 

3

     
 
  NATURAL GAS PURCHASE AND SALE AGREEMENT ENTERED INTO BY AND BETWEEN, COMPANHIA
DE GÁS DE SÃO PAULO - COMGÁS AND, ON THE OTHER SIDE, CORN PRODUCTS BRASIL -
INGREDIENTES INDUSTRIAIS LTDA:

By this private instrument of piped natural gas purchase and sale agreement, the
parties hereof, on the one side, COMPANHIA DE GÁS DE SÃO PAULO — COMGÁS,
concessionaire of piped gas distribution services in the State of São Paulo, a
corporation of authorized capital, headquartered in the City of São Paulo, at
Rua das Olimpíadas, 205, 10° andar, enrolled with the National Register of Legal
Entities of the Ministry of Finance (CNPJ) under No. 61.856.571/0001-17,
hereinafter referred to as COMGÁS, herein represented as per its by-laws, and,
on the other side
CORN PRODUCTS BRASIL — INGREDIENTES INDUSTRIAIS LTDA., a private limited
company, headquartered in the City of São Paulo, State of São Paulo, at Av. do
Café, 277, Torre B, 2° andar, enrolled with the National Register of Legal
Entities of the Ministry of Finance (CNPJ) under No. 01.730.520/0001-12,
hereinafter referred to as the User, herein properly represented, by virtue of
the mutual promises and covenants herein contained, agree to be bound as
follows:
WHEREAS:

•   the decision of the Federal Government to increase the participation of
natural gas in the national energetic matrix;   •   Law No. 9,478/97, which
establishes provisions on the National Energetic Policy, has as one of its
purposes the development, in economic bases, of the use of natural gas;   •  
Decree No. 3,371, of February 24, 2000, which established, within the competency
of the Ministry of Mines and Energy, the Priority Program of Thermoelectricity,
and MME Ordinance No. 551, of December 6, 2000, which ruled the program of
incentive to cogeneration, stimulated entrepreneurs and investors to submit
proposals for the implementation of Cogeneration Thermoelectric Projects;

 

--------------------------------------------------------------------------------

 

4

•   the Cogeneration Plant was included in said Priority Program of
Thermoelectricity by means of GCE Resolution No. 127 of April 16, 2002;   •   as
provided for in paragraph 2 of Article 25 of the Constitution of the Republic —
with the wording ascribed to it by the Constitutional Amendment No. 5 of
August 15, 1995 — , it is incumbent upon the States to exploit directly, or by
means of a concession, the piped Gas services pursuant to the law;   •   as per
the concession agreement entered into with the State of São Paulo, Comgás is the
exclusive concessionaire of public services of piped Gas distribution in the
State of São Paulo, covering the location area of the Cogeneration Plant;   •  
Comgás entered into the Comgás-Supplier Agreement with the Supplier;   •  
Comgás intends to provide to the User and the latter intends to purchase from
Comgás, according to the rules and conditions of this Agreement, the Natural Gas
to be used exclusively as fuel at the Cogeneration Plant;   •   the last
generating unit of the Cogeneration Plant started commercial operation on
June 26, 2004, in accordance with ANEEL Decision No. 490 of June 25, 2004; and  
•   On December, 29, 2004, Comgás and the User executed a gas supply agreement,
within the context of the Priority Program of Thermoelectricity, for the supply
of Gas by Comgás to be used exclusively as fuel in the Cogeneration Plant, which
was amended on March, 30, 2005, on May 31, 2005 and on July 20, 2005, on
November 20, 2005 and on December 20, 2005 (“Short-Term Agreement”), pursuant to
which Comgás and the User agreed to execute, a natural gas supply agreement to
be used as fuel in the Cogeneration Plant, also under the conditions of the
Priority Program of Thermoelectricity, with term of up to 20 years;

do hereby agree to establish that this Natural Gas Purchase and Sale Agreement
shall be ruled by the following clauses and conditions:
ARTICLE ONE — DEFINITIONS AND INTERPRETATION OF TERMS

1.1   In this Agreement, whenever they are written in upper case, the terms
below will have the definitions that are assigned to them in this article:

Year – shall mean a period of time that:

  a)   for the first Year, shall begin on the Commercial Supply Start-up Day and
shall end the last Day of the corresponding year;

 

--------------------------------------------------------------------------------

 

5

  b)   for each Year succeeding the Year referred to in item (a) above, except
for the last Year of effectiveness of the Agreement, shall begin on the first
Day of the corresponding year and shall end on the last Day of the corresponding
year;     c)   for the last Year of effectiveness of the Agreement, shall begin
on the first Day of the corresponding year and shall end on the last Day of
effectiveness of the Agreement;

provided, however, that the term ”year”, where not written in upper case, shall
mean a calendar year.
Arbitration - is defined in item 19.1.2.
Arbitrator (First Arbitrator, Second Arbitrator, Third Arbitrator) - shall mean
each member of the Arbitration Tribunal appointed pursuant to item 19.2.3.
Calorie – shall mean the quantity of heat required to increase the temperature
from one gram (1g) of pure water from fourteen point five Celsius degrees
(14.5ºC) up to fifteen point five Celsius degrees (15.5ºC) at the absolute
pressure of 0.101325MPa.
Fortuitous Case or Force Majeure - is defined in Article Fourteen.
Cogeneration Plant - shall mean all the equipment of the cogeneration plant
called Corn Mogi Co-Generator Central, driven by natural gas, located in the
Municipality of Mogi Guaçu, State of São Paulo, which will receive the Gas for
purposes of Cogeneration, inserted into the Priority Program of
Thermoelectricity.
Cogeneration - corresponds to the process of combined production of useful heat
and mechanical energy, usually converted totally or partially into electric
energy from the chemical energy made available by one or more fuels, pursuant to
Article 3 of ANEEL Resolution No. 21 of January 20, 2000 or in any other Law
that amends or replaces it.
Reference Conditions - shall mean a temperature of twenty degrees Celsius (20oC)
and absolute pressure of 0.101325MPa and the Superior Calorific Power (SCP) for
the Gas equal to the Reference Calorific Power.
Base Conditions - shall mean a temperature of twenty degrees Celsius (20oC) and
absolute pressure of 0,101325Mpa.

 

--------------------------------------------------------------------------------

 

7
Regulation and Measurement Set (CRM) - Set of equipment owned by Comgás intended
to regulate the pressure and measure and record the volumes, pressures and
temperature of Gas that will supply the Cogeneration Plant, installed at a place
to be assigned by User, close to its boundary, as agreed upon between the
Parties. This station is the one responsible for officially measuring the
Natural Gas supply subject of this Agreement.
Agreement — shall mean this Natural Gas Purchase and Sale Agreement, its annex,
as well as any amendments and changes agreed upon and signed by the Parties.
Supplier-Comgás Agreement - shall mean a natural gas purchase and sale agreement
entered into between the Supplier and Comgás, having as its purpose the
purchase, by Comgás, and the sale, by Supplier of the Natural Gas subject of
this Agreement, to be used exclusively as fuel at the Cogeneration Plant.
Short-Term Agreement – shall mean the agreement specified in the last whereas.
Day - shall mean a period of time that will start at 6:00 a.m. (six o’ clock) of
each day and will end at 6:00 a.m. (six o’ clock) of the following day; and the
term “day” when not written in upper case shall mean a period of twenty-four
(24) hours that will start at 0:00 (midnight) of each day and will end at
midnight (0:00) of the same day.
Collection Document - shall mean every invoice, trade bill, debt note or
document issued by one Party for collection of any amount to be paid, under the
Agreement, by the other Party.
Dollar or US$ - shall mean the legal currency of the United States of America.
Affiliate Company – shall mean any company (i) controlled by one of the Parties,
(ii) the controlling company of one of the Parties or (iii) under the common
control of the controlling company of one of the Parties.
Failure in Supply (FF) - is any situation characterized by the occurrence, on
any given Day, at the Delivery Point, of any one of the following events:
a. lack of availability of Gas in accordance with the Daily Requested Amount;

 

--------------------------------------------------------------------------------

 

7

  b.   non-acceptance of the Daily Requested Amount (DRA) by Comgás, except
under the terms of item 9.9.1.1 or item 17.1;     c.   restriction or
interruption in the supply of Gas as a result of an operating fact not
attributable to the User;     d.   non-conformity in relation to the
specifications of Gas defined in item 5.1;     e.   subject to the provisions of
items 7.3 and 7.4, failure to comply with any of the Gas delivery conditions
defined in items 7.2 and 7.5;

except for any of the following events — when there will be no Failure in
Supply:

  i.   the fact being attributed to an Fortuitous Case or Force Majeure;     ii.
  for a fact attributable to the User;     iii.   upon the previous agreement by
the User in receiving the Gas out of specification or in nonconformity with the
provisions of item 5.1, or the receipt of the Gas by the User out of
specification or in nonconformity with the provisions of item 5.1, under the
terms of item 5.2 (v);     iv.   Comgás’ refusal to accept a Daily requested
amount (DRA) incompatible with the situations of Comgás’ Scheduled Interruptions
and/or of Supplier’s Scheduled Interruptions .

Provider — is the party with which the Supplier has entered into or may enter
into a natural gas purchase agreement for the supply of Gas subject of this
Agreement.
Commercial Supply- shall mean the supply of Natural Gas made by Comgás to the
User at the Cogeneration Plant under the conditions set forth in this Agreement.
Guarantee – is the guarantee to be delivered by the User to Comgás, in the terms
of item 11.9 and its subitems.
Natural Gas or Gas — is the natural gas subject of this Agreement, consisting of
a mixture of hydrocarbons that are essentially comprised of methane, other
hydrocarbons and non-fuel gases, which are extracted from natural reservoirs and
which are found in the gaseous state under the Base Conditions. When not written
in upper case, the terms “gas” and “natural gas” refer to the generality of the
product, and not necessarily to this Agreement.

 

--------------------------------------------------------------------------------

 

8
Commercial Supply Start-up- shall mean the date, defined under the terms of
Article Three, on which the Commercial Supply shall start.
Law - shall mean any law, code, decree, regulation, resolution, ordinance,
deliberation, judgment, order, directive, political directions, agreements or
any other requirements or restrictions enacted by any Public Body, provided that
these latter two be regulated.
Distribution Margin – is defined in items 8.1.2 and 8.1.2.1.
Month — shall mean a period of time that:

  a)   with respect to the first Month, will start on the Commercial Supply
Start-up Day and will end on the last Day of the relevant month;     b)   with
respect to each Month of effectiveness of the Agreement following the first
Month, except for the last Month of effectiveness of the Agreement, will start
on the first Day of the month and end on the last Day of the relevant month;    
c)   with respect to the last Month of effectiveness of the Agreement, will
start on the first Day of the relevant month and end on the last Day of
effectiveness of the Agreement.

provided, however, that, when not written in upper case, the term “month” shall
mean a calendar month.
Cubic Meter (m3) - is the volume of Gas that, under the Base Conditions,
occupies the volume of one (1) cubic meter.
Change in Law - shall mean the occurrence, after the execution date of this
Agreement, of any of the following events which demonstrably affects the
performance of the obligations undertaken by the Parties, under the terms of
this instrument:

  i.   enactment, commencement of effectiveness, change, suspension or
revocation of any Law;     ii.   change in the interpretation or application of
any Law.

Notice - shall mean any communication in writing sent by one Party to the other,
required or allowed under the terms of this Agreement.
Public Body - shall mean a body, agency, entity or public law legal entity that
has jurisdiction over either Party or the transactions provided for in this
Agreement.

 

--------------------------------------------------------------------------------

 

9
Scheduled Interruptions - are transitory situations foreseen and informed by
means of a Notice with, at least, ninety (90) days in advance, which demand the
restriction or interruption in the supply or receipt of Gas, for purposes of
maintenance or repair, technically recommended, in pipelines, in the
Cogeneration Plant or in related ducts:

  •   to the supply of Gas by the Carrier to the Supplier or by the Supplier to
Comgás (Supplier’s Scheduled Interruptions);     •   to the supply of Gas by
Comgás to the User (Comgás’ Scheduled Interruptions); and     •   to the receipt
of Gas by the User, for maintenance of equipment of the Cogeneration Plant or of
the User’s plant (User’s Scheduled Interruptions),

which, for the rightful reasons provided for in this Agreement, shall fit the
following rules or principles:

  i.   for the User, the total number of days of Scheduled Interruptions,
cumulatively, may not exceed, in each five (5)-Year period, the average of
twenty (20) Days per Year, provided that, in each Year, the number of days of
interruption shall not exceed sixty (60) Days, Comgás being allowed to
coordinate its Scheduled Interruptions within such period, jointly with the
User;     ii.   for Comgás or its Supplier, the total time of Scheduled
Interruptions may not exceed, in each three (3)-Year period, the total of
fifteen (15) Days;

the Parties shall use their efforts in order to cause the coincidence of their
respective Days of Scheduled Interruptions.
Party(ies) — shall mean, in the singular, Comgás or the User, as per the
context; and in the plural, shall mean Comgás and the User, concomitantly.
Affected Party- shall mean the Party invoking the occurrence of an Fortuitous
Case or Force Majeure, in order to be released from the compliance with any of
its obligations under this Agreement.
Expert Proceeding- shall mean the procedure for dispute resolution provided for
in item 19.3.
Expert - shall mean the qualified technician pursuant to item 19.3.3 who is
appointed for purposes of dispute resolution through Expert Proceeding.

 

--------------------------------------------------------------------------------

 

10
Reference Calorific Value (RCV) — shall mean the SCV of nine thousand four
hundred Kilocalories per Cubic Meter (9,400 kcal/m3).
Superior Calorific Value (SCV) — shall mean the quantity of heat produced by
combustion, under constant pressure, of a mass of gas occupying a volume of one
cubic meter (1m3) at the temperature of twenty degrees Celsius (20oC) and under
absolute pressure of 0.101325MPa, with total condensation of the combustion
water vapor. Its measurement unit shall be kcal/m3.
Delivery Point — shall mean the location where the Gas shall be made available
to the User, as set forth in Article Six.
Price of Gas Sale - is defined in item 8.1, its subitems related thereto.
Gas Price - is defined in item 8.1.1, its subitems and annex(es) related
thereto.
Priority Program of Thermoelectricity (PPT) - shall mean the program for
implementation of thermoelectric plants established by the Federal Government
under the authority of the Ministry of Mines and Energy, in accordance with
Decree No. 3,371 of February 24, 2000.
Amount of Gas or Amount of Natural Gas — shall mean any volume of Natural Gas
subject of this Agreement, expressed in Cubic Meters under the Reference
Conditions.
Daily Contracted Amount (DCA) - is the Amount of Gas subject of this Agreement
as defined in Article Four.
Scheduled Daily Amount (SDA) — is the Amount of Gas subject of this Agreement,
which the User, in its schedule of amounts to be taken, in accordance with the
provisions established in item 9.2, has requested Comgás to made available at
the Delivery Point on the corresponding Day and which has been accepted by
Comgás.
Daily Taken Amount (DTA) - is defined in item 9.4.
Daily Requested Amount (DRA) - is the Amount of Gas that, in accordance with the
rules of this Agreement and subject to the limit of the Daily Contracted Amount,
the User requests that Comgás make available to the User, on any given day, at
the Delivery Point.
Missing Amount (QF) – corresponds, on each Day, to the shortfall between the
Daily Requested Amount and the Amount of Gas actually made available to the User
by Comgás at the Delivery Point on that same Day.

 

--------------------------------------------------------------------------------

 

11
Measured Amount (QM) - is the Amount of Gas that, in accordance with the
ascertainment made by the Measurement Systems of the CRM, has been delivered at
the CRM on the Day, corrected for the Reference Conditions on the Day. For
purposes of correction of the Measured Amount, the factor resulting from the
division of the average daily SCP of Gas on the Day – as determined at the point
closest to the CRM where the Gas is sampled for laboratorial analysis – by PCR,
with rounding up of the fourth decimal place shall be applied to the measured
volume.
Amount Not Taken (ANT) - corresponds, in any given Year or Month of Gas supply,
to an Amount of Gas that the User has taken below its Take or Pay commitment.
Amount Paid and Not Taken (APNT) - corresponds to the accrued balance, in Amount
of Gas, by the User before Comgás as a result of payments made to Comgás of the
Amounts Not Taken (ANT), and it may be recovered by the User within the term and
under the conditions provided for in this Agreement.
Amount Paid and Not Taken of the Year (APNTY) – is the specific Amount Paid and
Not Taken (APNT) of a determined Year, according to item 9.5.2.
Amount Recovered by User (ARU) - is an Amount of Gas that on any given Day or in
a given period, in accordance with the rules set forth in Article Nine, is
recovered by the User and deducted from its balance of Amount Paid and Not Taken
(APNT).
Kilocalorie (kcal) - shall mean one thousand (1,000) Calories.
Real or R$ - shall mean the legal currency in Brazil.
Amounts Taken in Excess of Schedule — are defined in item 9.6.
Amounts Taken Below Schedule - are defined in item 9.7.
Arbitration Award - shall mean the final award (as per items 19.2.5 and 19.2.6)
to be presented by the Arbitration Tribunal to the Parties in procedures for
disputes resolution.

 

--------------------------------------------------------------------------------

 

12
Ship or Pay - is defined in item 9.8.
Measurement System - shall mean the set of primary and secondary elements of
flow, temperature and pressure measurement and, if any, converters,
transmitters, flow computers, integrators and recorders.
Supplier – shall mean Petróleo Brasileiro S.A – Petrobras, as supplier of
Natural Gas to Comgás, under the terms of Supplier-Comgás Agreement or any other
that may replace it.
Take or Pay — is defined in item 9.3, items “b” and “c”.
Distribution Take or Pay – is defined in item 9.8.2 (ii).
Exchange Rate - means the average rate for sale of Dollar defined as the
effective rate on the respective date of conversion disclosed by the Brazilian
Central Bank’s System (SISBACEN), identified as PTAX-800 transaction — Option 5
– Currency 220.
Carrier - shall mean any provider of natural gas transportation service through
pipelines, established in accordance with the applicable provisions of the
National Petroleum Agency (ANP) or an entity replacing it in the competence of
regulating and/or inspecting said activity.
Arbitration Tribunal – is defined in item 19.2.3.
Measured Volume – means any amount of GAS measured by the CRM measurement system
in cubic meters under the base conditions.
ARTICLE TWO — PURPOSE

2.1   The purpose of this Agreement is the sale and supply by Comgás, and the
purchase and receipt by the User, in the conditions set forth herein, of Natural
Gas, exclusively for serving the needs of the Cogeneration Plant

ARTICLE THREE – COMMERCIAL SUPPLY

3.1   For the purposes of this Agreement, it is established, as the date of
execution of this Agreement, the Commercial Supply Start-up date.

ARTICLE FOUR – DAILY CONTRACTED AMOUNT

4.1   The Daily Contracted Amount (DCA), at the Reference Conditions, shall be
of three hundred thousand Cubic Meters per day (300,000 m3/day).

 

--------------------------------------------------------------------------------

 

13

  4.1.1   After ten (10) years the User shall be entitled to increase, the Daily
Contracted Amount (DCA) in up to five percent (5%) upon notice to comgás sent at
least twelve (12) months before the new DCA becomes effective.

ARTICLE FIVE — QUALITY
5.1 The Gas to be delivered by Comgás to the User shall present characteristics
of quality that meet, at least, the specifications of Ordinance No. 104 of
July 8, 2002, issued by the National Petroleum Agency – ANP or those that may
replace it in view of a supervening Law.
5.2 Whenever Comgás is aware of the possibility of the Gas being supplied at the
Delivery Point, partially or totally, in nonconformity with the specifications
set forth in item 5.1, the following provisions shall apply:

  i.   Comgás shall notify, in writing, the User, as soon as possible, of the
expected non-conformity in the Gas to be supplied, indicating what would be the
probable non-conforming items and, precisely, the respective quality deviations;
    ii.   after the receipt of the Notice referred to in item above, the User
shall inform, as soon as possible, whether it accepts or not to receive the Gas
out of specification; it being henceforth expressly understood and accepted that
the User’s failure to inform its decision within the term stated in the Notice
will be considered as the User’s option not to receive the Gas out of
specification.     iii.   if it opts to receive the Gas out of specification,
the User shall be entitled to a ten percent (10%) discount on the portion of the
price pertaining to the Gas (commodity), except when the nonconformity is only
pertaining to a SCP greater than the specified;     iv.   if, however, the User
opts not to receive the Gas out of specification or fails to inform its decision
and, it actually does not take said Gas, the Failure in Supply for the
non-compliance with the DRA will deemed to have occurred, and Comgás shall bear
the payment of the penalties provided for in item 9.9.2;

 

--------------------------------------------------------------------------------

 

14

  v.   if the User has informed that it would reject the Gas out of
specification or fails to inform its decision, but, in spite of that, the Gas is
taken at the Delivery Point, the Failure in Supply will be not be deemed to have
occurred, and Comgás shall not be liable for any penalties and/or liability for
damages that may eventually be caused to the equipment and facilities of the
User, as well as to the Cogeneration Plant as a result of the informed
non-conformity; being preserved, however, the right of the User to the discount
referred to in subitem (iii) above.

5.2.1   If Comgás delivers the Gas out of the specification provided for in item
5.1, without giving prior Notice to the User of the existing non-conformity, the
following rules shall be applicable:

  a)   If, exclusively as a result of the nonconformity presented by the Gas and
the cause-effect relation being duly evidenced, the Cogeneration Plant suffers
any damages in its equipment, then, unless the nonconformity has occurred as a
result of an Fortuitous Case or Force Majeure, Comgás shall bear, always subject
to the limit provided for in Article Twenty, until the damages have been
repaired;     (i)   with the penalties applicable for the cases of Failure in
Supply, as provided for in item 9.9.2, subject to the limit established in item
9.9.3;     (ii)   the costs determined according the procedures set forth in
item 19.1.1, effectively incurred with the repair of the equipment of the
Cogeneration Plant that has evidently been damaged by the use of the Gas out of
specification, subject to the limit established in item 5.2.2 below.     b)   If
the supply of Gas out of specification does not cause any damages to the
equipment of the Cogeneration Plant or if the cause-effect relation referred to
in item (a) above has not been evidenced, the Failure in Supply shall be deemed
not to have occurred, and Comgás shall not be liable for any penalties and
indemnification for the repair of damages, being preserved, however, the right
of the User to the discount referred to in item 5.2 (iii) above — which
discount, however, is not enforceable if the non-conformity has resulted from an
Fortuitous Case or Force Majeure.

 

--------------------------------------------------------------------------------

 

15

  c)   In case of item (a) above, during the period required for repairing the
equipment of the Cogeneration Plant, the Take or Pay, Ship or Pay and
Distribution Take or Pay commitments will be suspended. Said commitments will
also be suspended during the period required for repairing the equipment of the
Cogeneration Plant in case the damage of such equipment has occurred as a result
of the occurrence of an Fortuitous Case or Force Majeure. The period required as
stated above will be determined as per the procedure provided for in item
19.1.1.

5.2.2   Subject to the provisions of Article Twenty, in any event, the total of
payments of Comgás set forth in item 5.2.1(a)(ii) shall exceed, during the whole
effectiveness of this Agreement, the maximum limit corresponding to five per
cent (5%) of the value of the Agreement, determined by the following formula:

     IL = K x 0.05 x DCA x N x GP, where:

      IL — is the maximum limit of payment by Comgás;         DCA — is the Daily
Contracted Amount;        
N — is the number of days of effectiveness of the Agreement, calculated as of
the execution date of the Agreement up to the final date set forth in item 13.1;
       
GP — is the Gas Price in force on the date of occurrence of the event set forth
in item 5.2.1(a)(ii) converted to Reais per Cubic Meter at the Reference
Conditions according to the Exchange Rate of the last business day of the Month
of payment of a certain indemnification.
       
K              is the percentage of use of the IL, which shall vary from 0 to 1,
and, on the execution date of this Agreement, shall correspond to 1. At each
payment made by Comgás under the terms of item 5.2.1(a)(ii), a new K factor
shall be determined by the reduction of (i) the percentage corresponding to such
payment in relation to the value 0.05 x DCA x N x GP from the (ii) previous K
factor.

5.3 Irrespectively of the analyses made by the User, Comgás shall verify the
quality of the Gas supplied, by means of analyses whose results shall be
forwarded to the User in a periodicity compatible with the frequency of
measurement set forth in Ordinance ANP No. 104.

  5.3.1   Upon the occurrence of a discrepancy between the results of quality
verifications made by the Parties, each of them shall grant free access to the
other Party in order to follow up the sampling and the analysis of the Gas,
aimed at establishing a solution for the pending matter.

 

--------------------------------------------------------------------------------

 

16

5.4   In case the dispute is not settled within ten (10) days as of the
occurrence of the discrepancy referred to in item 5.3.1, the dispute will be
submitted to an Expert Proceeding.

ARTICLE SIX — DELIVERY POINT AND PROPERTY TRANSFER

6.1   The Delivery Point will be located immediately downstream the outlet
flange of the Regulation and Measurement Set (CRM), which shall in turn be
located in the User’s Unit located at Rua Paula Bueno, 2935 – Mogi Guaçu, State
of São Paulo.   6.2   It is established as measurement point the Regulation and
Measurement Set (CRM) owned by Comgás, located at the User’s facilities.   6.3  
The transfer of ownership of the Gas from Comgás to the User will occur at the
Delivery Point.

  6.3.1   All risks and losses of Gas:

  •   Up to the Delivery Point shall be for the account of Comgás;     •   As
from the Delivery Point shall be for the account of the User.

ARTICLE SEVEN – TERMS FOR DELIVERY OF GAS

7.1   The Gas will be delivered by Comgás to the User at the Delivery Point in
conformity with the quality aspects set forth in Article Five.   7.2   The
supply control manometric pressure at the Delivery Point will be no more than
seventeen (17) kgf/cm2 and not less than twelve (12) kgf/cm2.

  7.2.1   In special situations, the Parties may define control pressures other
than that stated in item 7.2.

7.3   The average hourly flow shall be no more than one twenty-fourth (1/24) of
the Daily Contracted Amount — DCA, provided that an increase of up to ten
percent (10%) shall be allowed.   7.4   The instantaneous flow, in Cubic Meters
per hour, shall not be more than one twenty-fourth (1/24) of the Scheduled Daily
Amount — SDA,

 

--------------------------------------------------------------------------------

 

17

      provided that an increase, for periods not greater than fifteen
(15) minutes a Day, of up to ten percent (10%) shall be allowed.   7.5 The
maximum delivery temperature of the Gas shall be thirty-five degrees Celsius
(35ºC).

ARTICLE EIGHT – PRICE

8.1   The Price of Gas Sale (PS) at the Delivery Point to be charged by Comgás
for the exclusive purposes of Cogeneration will be comprised of the sum of two
portions: one related to the Gas Price (GP) and other related to the
Distribution Margin (DM), in accordance with their respective values at each
time, so that PS = GP + DM.

  8.1.1   The Gas Price (GP), in turn, is comprised of the sum of two portions:
one related to the commodity (PC) and the other related to Transportation (PT),
so that: GP = PC + PT and shall be determined and readjusted as per the
methodology stated in Annex 1.

  8.1.1.1   The Gas Price (GP) shall be added by the taxes levied on the
purchase of gas by Comgás in the Supplier-Comgás Agreement which are not
creditable in view of legal determination or determination of any competent
authority.

  8.1.2   The Distribution Margin (DM) shall be that set forth by the Commission
of Public Energy Services – CSPE for the cogeneration segment stated in
Ordinance CSPE No. 366, of May 30, 2005 or any other that may replace it.

  8.1.2.1   Pursuant to Annex 2 of CSPE Ordinance No. 366/05, the Distribution
Margin (DM) shall be calculated in cascade, i.e., progressively for each class
of consumption, considering the amount of Gas consumed by User in the month:

                              COGENERATION OF ELECTRIC ENERGY             FOR
SELF CONSUMPTION OR SALE TO             END CONSUMER (VARIABLE R$/m 3 with CLASS
  m 3/month   PIS and COFINS and without ICMS)
1
  Up to 100,000.00 m3     0.1661096  
2
  100,000.01 through 500,000.00 m3     0.1314942  
3
  500,000.01 through 2,000,000.00 m3     0.1291321  

 

--------------------------------------------------------------------------------

 

18

                              COGENERATION OF ELECTRIC ENERGY             FOR
SELF CONSUMPTION OR SALE TO             END CONSUMER (VARIABLE R$/m 3 with CLASS
  m 3/month   PIS and COFINS and without ICMS)
4
  2,000,000.01 through 4,000,000.00 m3     0.1168830  
5
  4,000,000.01 through 7,000,000.00m3     0.1022740  
6
  7,000,000.01 through 10,000,000.00 m3     0.0876628  
7
  ((OVER)) 10,000,000.00 m3     0.0727138  

8.2   The Price of Gas Sale (PS) shall be added by the Tax on Operations
Pertaining to the Movement of Merchandise and on Interstate and
Intermunicipality Transportation Service Provision and Communications – ICMS,
under the terms of the applicable legislation, as well as by any other federal,
state and municipal taxes (taxes, fees, rates, tax and para-tax contributions)
levied or that may be levied on the operation of this Agreement.

ARTICLE NINE — SCHEDULING OF AMOUNTS TO BE TAKEN, COMMITMENTS AND PENALTIES FOR
DEFAULT

9.1   Before the date of the first request of Gas, each Party shall inform to
the other, by means of Notice, a fax number to which the operating notices shall
be transmitted in relation to the performance of this Agreement.

9.2   Scheduling of Amounts of Gas to be Taken

      As of the Commercial Supply Start-up, the User shall send on a monthly
basis to Comgás, with twelve (12) days in advance from the beginning of the
Month of supply, a Notice with the schedule of the amount of Gas to be taken
referring to the current Month and to the two subsequent Months.

  9.2.1   The schedule referred to above shall detail the Daily Requested
Amounts (DRA) for the next Month, as well as, only for the sake of indication,
the total amounts for the two subsequent months, everything taking into account
the Scheduled Interruptions and subject to the limit of the Daily Contracted
Amount (DCA).     9.2.2   The schedule of the Month shall detail, for the sake
of indication, the portion of the Amount Paid and Not Taken (APNT) which will be
used on each Day of that Month — which will become, upon the use, the Amount
Recovered by User (ARU). Such amount may not exceed, on the daily average of
that Month, forty-four percent (44%) of the Daily Contracted Amount (DCA),
except after the end of this Agreement, when, subject to the provisions of item
9.5.3 (b), such amount shall be a hundred per cent (100%) of that would be the
old DCA.

 

--------------------------------------------------------------------------------

 

19

  9.2.3   The Daily Requested Amount (DRA) for any given day may be changed
(increased or decreased) by the User, subject to the limit of the DCA, upon
delivery of Notice to Comgás up to 8:00 a.m. (eight o’ clock) of the day
previous to the corresponding day of supply.     9.2.4   Until two o’ clock
(2:00 p.m.) of the day previous to the corresponding day of supply, Comgás,
through delivery of Notice to the User, shall confirm the acceptance of the
Daily Requested Amount, which will be considered as the Scheduled Daily Amount.
Comgás’ failure to make such confirmation within the term provided for above
shall be automatically considered as acceptance of the Daily Requested Amount
(DRA) by Comgás, and such DRA shall be automatically considered SDA.     9.2.5  
Exceptionally, upon the occurrence of any operating problems that restrict the
capacity of Gas delivery, the Parties may negotiate a reduction of the Scheduled
Daily Amount (SDA) for any given Day. Should the Parties agree on such
reduction, the Daily Contracted Amount (DCA), exclusively on that Day, will be
reduced to the amount of the new Scheduled Daily Amount (SDA), not
characterizing thus Failure in Supply.     9.2.6   If there is availability of
Gas and interest of Comgás and the User, the Scheduled Daily Amount (SDA) may be
increased during the Day, and the quantity so increased shall be then the
Scheduled Daily Amount (SDA) of said Day.

9.3   Commitments of Gas Receipt (Take or Pay)

      Except for the situations of non-delivery or non-receipt of Gas for
Failure in Supply, Scheduled Interruptions or Fortuitous Case or Force Majeure
of either Party, the User undertakes to:

  a)   purchase and take, on a daily basis, from Comgás no more than one hundred
and ten percent (110%) of the Scheduled Daily Amount (SDA), limited to one
hundred and ten percent (110%) of the Daily Contracted Amount (DCA), and not
less than eighty percent (80%) of the Scheduled Daily Amount (SDA) of Gas for
the corresponding Day, subject, in case of the noncompliance, to the penalties
provided for in items 9.6 and 9.7 and respective subitems;     b)   at every
Month of the effectiveness of the Agreement, purchase and take from Comgás —
and, even if it does not take, pay– an Amount of Gas that, at the daily average
of the corresponding Month is either equal to or greater than fifty-six percent
(56%) of the Daily Contracted Amount in effect referred to by Article Four;

 

--------------------------------------------------------------------------------

 

20

  c)   at every Year of the effectiveness of the Agreement, purchase and take
from Comgás — and, even if it does not take, pay– an Amount of Gas that, at the
daily average of the corresponding Year is either equal to or greater than
eighty percent (80%) of the Daily Contracted Amount (DCA) in effect referred to
by Article Four;

  9.3.1   The percentages referred to in subitems (b) and (c) of item 9.3
correspond to the monthly and annual Take or Pay commitments, whose compliance
will be verified by taking into account only the Daily Taken Amount (DTA) such
as defined in item 9.4.

9.4   Daily Taken Amount (DTA)       The Daily Taken Amount (DTA) will be
determined by the formula:       DTA = QM – ARU       where :       DTA — Is the
Daily Taken Amount;       QM — Is the Measured Amount at CRM on the respective
Day; and       ARU — Is the Amount Recovered by the User on the respective Day.

  9.4.1   The sum, in the Month, of the Daily Taken Amounts (DTAs) will be used
as parameter for purposes of determination of the Amount Not Taken in the Month
(ANTM) and the Amount Not Taken of the Year (ANTy), pursuant to item 9.5.

9.5   Amounts Not Taken — Determination       The Amounts Not Taken (ANTs) of
Gas to be paid by the User to Comgás in view of the provisions of subitems
(b) and (c) of item 9.3 shall be calculated according to the following formulas:

  a)   amount to be paid in each Month:         (FORMULA) [c03166c0316600.gif]  
  b)   amount to be paid in each Year:         (FORMULA) [c03166c0316601.gif]

 

--------------------------------------------------------------------------------

 

21
where:

         
ANTM
  -   is the Amount of Gas not Taken in the Month, being zero if the calculation
result is negative;  
M
  -   is the number of Days of the Month of supply;  
PPM
  -   is the total number of days (or a fraction thereof) corresponding to
Scheduled Interruptions in the Month, at the proportion in which they have
affected the receipt or the regular supply of Gas at the Delivery Point  
PPPY
      is the total number of Days (or a fraction thereof) corresponding to
Scheduled Interruptions exclusively from Comgás in the Year, at the proportion
in which they have adversely affected the regular supply of the Gas at the
Delivery Point;  
DCA
  -   is the Daily Contracted Amount effective in the Month and/or Year of
supply, receptively for subitems (a) and (b) of this item;  
QNFFj
  -   is the portion of the Scheduled Daily Amount (SDA) which has not been
taken on day “j” for a reason of Failure in Supply;  
QNFMj
  -   is the portion of the Scheduled Daily Amount (SDA) which has not been
taken on day “j” due to an Act of God or a Force Majeure Event;  
DTAj
  -   is the Daily Taken Amount on day “j”;  
ANTY
  -   is the Amount Not Taken of Gas in the Year, being zero if the calculation
result is negative;  
Y
  -   is the number of the Days in the Year of supply.

  9.5.1   Payments for Amounts Not Taken

  The amount to be paid by the User to Comgás as Amount Not Taken (Take or Pay)
shall be:

  (a)   at every Month, the product of the ANTM (Amount Not Taken in the Month)
by the value of the portion pertaining to the commodity of the Gas Price in
effect at the end of the last day of the Month of supply, added by the taxes
due, as provided for in the applicable legislation.     (b)   at every Year, the
product of the ANTY (Amount Not Taken in the Year) by the value of the portion
pertaining to the commodity of the Gas Price in effect at the end of the last
day of the Year of supply, added by the taxes due, as provided for in the
applicable legislation.

 

--------------------------------------------------------------------------------

 

22

      The amounts referred to in item 9.5.1 shall be paid by the User within the
same term and according to the same rules and further conditions set forth in
Article Eleven for the payment of Gas invoices pertaining to the invoicing
period.

  9.5.2   Amount Paid and Not Taken (APNT)         Once the payment of each of
the amounts referred to in item 9.5.1 has been made, the corresponding Amount
Not Taken (ANT) will be added to the Amount Paid and Not Taken of the
corresponding Year (APNTy), being the total APNTy on the first moment of the
Year equal to zero.

  9.5.3   Recovery of Amounts Paid and Not Taken         The User may recover,
in whole or in part – upon Notice as per item 9.2.2, always for consumption at
the Cogeneration Plant, the remainder of the Amounts Paid and Not Taken (APNTs)
of Gas (commodity), as follows:

  a)   during the effectiveness of the Agreement, including any possible
extension pursuant to item 13.1:

  (i)   up to the last Month of the seventh (7th) Year subsequent to the Year of
verification of the Amount Paid and Not Taken of a certain Year (APNTy);    
(ii)   on the condition that it has already requested and taken, in the Month in
which there is the recovery, an Amount of Gas corresponding, at least, to the
monthly Take or Pay commitment;

  b)   after the end of the term established in the Article Thirteen, including
its eventual extension pursuant to Article Thirteen: except for the event of
termination caused by the User or for its fault:

  (i)   up to the limit of the DCA or to such limit that may be agreed by Comgás
and the User;     (ii)   up to the term of three hundred and sixty five (365)
days following the end of the Agreement, pursuant to item 13.1.1.

  9.5.3.1   The portion taken by the User of the remainder of Amounts Paid and
Not Taken (APNT’s) will be referred to as Amount Recovered by the User (ARU) and
will be, at the time of such recovery, deducted from the said remainder, by
order, from the oldest to the most recent APNTY.

 

--------------------------------------------------------------------------------

 

23

  9.5.3.2   For the Amount Recovered by the User (ARU), the User shall pay to
Comgás the portion corresponding to the taxes levied, under the terms of the
applicable legislation.     9.5.3.3   For the Amounts Recovered by the User
(ARU’s) in accordance with item 9.5.3(b), the User shall also pay to Comgás the
portion of the Gas Price pertaining to the transportation of the entire volume
recovered in the Month or ninety-five percent (95%) of what would be the Daily
Contracted Amount (DCA), whichever is higher, with all taxes levied thereon.    
9.5.3.4   After the deadlines referred to in subitems (a) and (b) of item 9.5.3
or after the termination of the Agreement by Comgás as a result of a default by
the User, the balance of the Amount Paid and Not Taken will be considered as
having been extinguished, whether there is a remainder or not, and the User will
not have any right of recovery. In case of termination of the Agreement by the
User for a default by Comgás or in case of termination under the terms of item
17.5(a), Comgás shall pay to the User the amounts provided for in item
17.4.1(ii).     9.5.3.5   In the event of termination of the Agreement under the
terms provided for in item 17.5(b):

  (a)   the remainder of the Amount Paid and Not Taken (APNT) of Gas will be
considered as being extinguished, whether there is a remainder or not, and the
User will not have any right of recovery, in case the termination of the
Agreement pursuant to said item 17.5(b) results from unilateral decision by the
User or from a default of the User;     (b)   the amount corresponding to the
possible residual amount of the Amount Paid and Not Taken (APNT) of Gas will be
paid by Comgás to the User, as provided for in item 17.4.1(ii), if the
termination of the Agreement pursuant to said item 17.5(b) results from
unilateral decision of Comgás or from a default of Comgás.

9.6   Penalty for Amount Taken in Excess of Schedule       If, on any given Day,
the User takes an Amount of Gas exceeding by more than ten percent (10%) the
Scheduled Daily Amount (SDA) for that Day, or ten percent (10%) of the Daily
Contracted Amount (DCA) in effect, whichever is lower, then it shall pay to
Comgás, unless if agreed upon between the Parties, in addition to the regular
invoicing:

 

--------------------------------------------------------------------------------

 

24

  i)   a penalty in the amount determined by the following formula:

             
PATES
  =   0.30 [(QM-QL) x PC + QT x PT], where:  
 
         
PATES
  -   Is the amount, on the Day, of the penalty for Amount Taken in Excess of
Schedule to be paid by the User to Comgás;  
 
         
QM
  -   is the Measured Amount on such Day;  
 
         
QL
  -   is the lowest Amount of Gas established below:  
 
         
 
      •  the SDA for that Day added by ten percent (10%) or  
 
         
 
      •  the DCA added by ten percent (10%);  
 
         
PC
  -   is the amount of the portion pertaining to the commodity in the Gas Price
in effect on the last Day of the Month in which the User has taken a quantity of
Gas higher than the Scheduled Daily Amount (SDA), already expressed in R$/m3,
considering the Exchange Rate of the last business day of the same Month;  
 
         
QT
  -   is an Amount of Gas expressed in m3, whose amount is:  
 
         
 
     
• equal to the difference between Measured Amount (QM) and the smallest Amount
of Gas among the following: 110% of the Scheduled Daily Amount (SDA) or 110% of
the Daily Contracted Amount (DCA), if 110% of the Scheduled Daily Amount
(SDA) of such Day is greater than 95% of the Daily Contracted Amount (DCA);
 
 
         
 
     
• equal to QM – 95% of the DCA, if 110% of the SDA of that Day is lower than 95%
of the DCA and QM is greater than 95% of the DCA;
   
 
      •  equal to zero, in the other events;  
 
         
PT
  -   is the amount of the portion pertaining to the transportation in the Gas
Price in effect on the last Day of the Month in which the User has taken Amounts
of Gas greater than the Scheduled Daily Amount (SDA), already expressed in
R$/m3, considering the Exchange Rate of the last business day of the same Month.

  9.6.1   Without prejudice to the provisions of item 9.6, if the User fails to
comply with the limits specified in said item, and that implies risk to the
operation of the distribution system, Comgás may limit the flow in the
Regulation and Measurement Set (CRM), upon prior notice to the User.     9.6.2  
The payment of the penalty referred to in item 9.6 will be made on the maturity
date of the invoices pertaining to the concerned Month as provided for in item
11.4 — and the User shall be subject, in case of non-payment within such term,
to the same additions and other rules applicable to the invoices paid in delay,
pursuant to Article Eleven.

 

--------------------------------------------------------------------------------

 

25
9.7 Penalty for Amount Taken Below Schedule

      If, on any given day, the User takes an Amount of Gas lower than eighty
percent (80%) of the Scheduled Daily Amount for that Day, it shall pay to
Comgás, as of the second event in any given Month, or as of the seventh event in
a certain Year, in addition to the regular invoicing, a penalty in the amount
determined by the following formula:

       
PATBS 
=  (0.80x SDA — QM) x B x PC, where:
 
   
Patbs
- is the limit amount, on the day, of the Penalty for Amount Taken Below
Schedule to be paid by the User to Comgás;
 
   
B
- the amount of B shall depend on the percentage of deviation to be produced
between the Scheduled Daily Amount (SDA) and the amount actually taken, as
follows:
 
   
 
  § If QM ³ (0.80 x SDA), then B = 0 ;
 
   
 
  § If QM < (0.80 x SDA) and QM ³ (0.75 x SDA), then B = 0.05;
 
   
 
  § If QM < (0.75 x SDA) and QM ³ (0.70 x SDA), then B = 0.10;
 
   
 
  § If QM < (0.70 x SDA), then B = 0.15
 
   
QM
- Is the Measured Amount on such Day;
 
   
SDA
- Is the Scheduled Daily Amount for that Day;
 
   
PC
- is the amount of the portion pertaining to the commodity in the Gas Price in
effect on the last day of the Month in which the User has taken the Amount of
Gas lower than the Scheduled Daily Amount (SDA), already expressed in R$/m3,
considering the Exchange Rate of the last business day of the month.

  9.7.1   The payment of the penalty referred to in item 9.7 will be made on the
maturity date of the invoices pertaining to the concerned Month as provided for
in item 11.4 – and the User shall be subject, in case of non-payment within such
term, to the same additions and other rules applicable to the invoices paid in
delay, pursuant to Article Eleven.

9.8 Payment Commitment of Firm Transportation and Distribution Margin

  9.8.1   On a monthly basis, the User shall pay to Comgás, within the term set
forth in item 11.4, the product of the portion pertaining to the

      transportation of the Gas Price (PT) by the greater amount between the
following (QT) added by the taxes levied, as provided for in the applicable
legislation:

 

--------------------------------------------------------------------------------

 

26

  i.   the sum, in the Month, of the Daily Taken Amount (DTA) plus the Amount
Recovered by the User (ARU).     ii.   the product of ninety-five percent (95%)
¾ Ship or Pay ¾ of the Daily Contracted Amount (DCA) by the number of Days of
the corresponding Month, deducted from this calculation the situations of
non-delivery or non-receipt of Gas for Failure in Supply, Fortuitous Case or
Force Majeure by either Party and/or Scheduled Interruption by Supplier and/or
Comgás, in the proportion that they have adversely affected the receipt or the
regular supply of Gas at the Delivery Point.

  9.8.2   On a monthly basis, the User shall pay to Comgás, within the term set
forth in item 11.4, the product of the portion pertaining to the Distribution
Margin by the greater among between the following (QT) added by the taxes
levied, as provided for in the applicable legislation:

  i.   the sum, in the Month, of the Daily Taken Amount (DTA) plus the Amount
Recovered by the User (ARU).     ii.   the product of eighty percent (80%) of
the Daily Contracted Amount (DCA) –the Distribution Take or Pay — by the number
of Days of the corresponding Month, deducted from this calculation the
situations of non-delivery or non-receipt of Gas for Failure in Supply,
Fortuitous Case or Force Majeure by either Party and/or Comgás’ Scheduled
Interruption or the Supplier’s Scheduled Interruptions, in the proportion it has
adversely affected the receipt or the regular supply of Gas at the Delivery
Point.

9.9 Gas Supply Commitment

  9.9.1   Comgás undertakes to accept the Daily Requested Amounts (DRA) as
Scheduled Daily Amounts (SDA), as well as to make available to the User, at the
Delivery Point, at every Day, an Amount of Gas equal to the Daily Requested
Amount (DRA) for the corresponding Day.

  9.9.1.1   Comgás is released from its obligation to accept, as Daily Requested
Amount (DRA), Daily Requested Amounts (DRA) that are incompatible with
situations of Comgás’ and/or Supplier’s Scheduled Interruptions.

 

--------------------------------------------------------------------------------

 

27

  9.9.2   In the event of proven Failure in Supply, Comgás shall pay to the
User, as the sole and enforceable compensation, the amount determined by the
following formula, always subject to the limit set forth in item 9.9.3 below:  
      Md = 0.15 x GP x QF         where:         Md — daily fine, in national
currency;         QF — Missing Amount on the Day on which there was a Failure in
Supply;         GP — Gas Price at the Delivery Point, pursuant to item 8.1.1 of
Article Eight, in effect in the Month.

  9.9.2.1   The payment of the penalty referred to by item 9.9.2 shall be made
on the maturity date of the invoices pertaining to the concerned Month as
provided for in item 11.4 — the User shall be subject, in case of non-payment
within such term, to the same additions and other rules applicable to the
invoices paid in delay, pursuant to Article Eleven.

  9.9.3   Under no circumstance, the total of payments by Comgás as a result of
Failure in Supply may exceed, in each Year, the non-cumulative limits specified
below, subject to the provisions of Article Twenty.

  (i)   in case the Failure in Supply is the result of a failure in supply by
the Supplier in the Supplier-Comgás Agreement: limit corresponding to 3,285,000
m 3 multiplied by the Gas Price in effect, converted to Reais per Cubic Meters,
calculated according to the following formula:

         
IL
  =   K x 3,285,000 x GP, where  
IL
  -   is the maximum limit of payment by Comgás in case of Failure in Supply
resulting from a failure in supply by the Supplier in the Supplier-Comgás
Agreement;  
GP
  -   is the Gas Price in force on the date of occurrence of each Failure in
Supply converted to Reais per Cubic Meter at the Reference Conditions according
to the Exchange Rate of the last business day of the Month of payment of an
indemnification.  
K
      is the percentage of use of the IL, which shall vary from 0 to 1, and, on
the execution date of this Agreement and on the beginning of each Year, shall
correspond to 1. At each payment made by Comgás for Failure in Supply, a new K
factor shall be determined by the reduction of (i) the percentage corresponding
to such payment in relation to the value 3,285,000 x GP from the (ii) previous K
factor.

 

--------------------------------------------------------------------------------

 

28

  (ii)   in case the Failure in Supply is exclusively attributable to Comgás:
limit corresponding to 3,285,000 m 3 multiplied by the Gas Price in effect,
converted to Reais per Cubic Meters, calculated according to the following
formula:

         
IL
  =   K x 3,285,000 x GP, where  
IL
  -   is the maximum limit of payment by Comgás in case of Failure in Supply
exclusively of Comgás;
 
       
GP
  -   is the Gas Price in force on the date of occurrence of each Failure in
Supply converted to Reais per Cubic Meter at the Reference Conditions according
to the Exchange Rate of the last business day of the Month of payment of an
indemnification.
 
       
K
      is the percentage of use of the IL, which shall vary from 0 to 1, and, on
the execution date of this Agreement and on the beginning of each Year, shall
correspond to 1. At each payment made by Comgás for Failure in Supply, a new K
factor shall be determined by the reduction of (i) the percentage corresponding
to such payment in relation to the value 3,285,000 x GP from the (ii) previous K
factor.

  9.9.3.1   The Parties agree that the indemnification limits provided for in
item 9.9.3 above are exclusively established for each Year and are not
cumulative with the limits of other Years. Therefore, any possible balance of
the indemnification limit of any given Year, which has not been used for such
Year, will not be added to the indemnification limits of the subsequent Year.

ARTICLE TEN — COMMITMENT OF PRIORITY OF PURCHASE OF DAILY CONTRACTED AMOUNT
(DCA) OF THE AGREEMENT AND GAS USAGE RESTRICTION

10.1   Priority of Acquisition of Daily Contracted Amount (DCA) of the Agreement

  10.1.1   The User agrees that the supply of Gas, subject of this Agreement,
will have priority in relation to any other supply of piped gas to the
Cogeneration Plant which it may possibly request to Comgás until the Daily
Contracted Amount (DCA) set forth in this Agreement is reached.     10.1.2   If
the User consumes gas from other agreement in violation with the provisions of
10.1.1 above, the User shall pay to Comgás, as penalty, the amount calculated by
the formula P = GP x QT, where:

 

--------------------------------------------------------------------------------

 

29

                  P      -   is the amount of the penalty pertaining to the Day;
 
                GP   -   is the total unit price of the Gas at the Delivery
Point in effect on the last day of the month of occurrence of the fact
generating the penalty, converted into Reais per Cubic Meter at the Reference
Conditions, according to the Exchange Rate of the day prior to the payment day
to Comgás.
 
                QT   -   is the Amount of Gas (expressed in Cubic Meters at the
Reference Conditions) taken on the Day by the User which is not the Gas subject
of this Agreement, limited to the difference [DCA — QR – QFF], in which:
 
               
 
      DCA   -   Is the Daily Contracted Amount;
 
               
 
      QR   -   Is the Amount of Gas subject of this Agreement which has been
used on that Day by the User;
 
               
 
      QFF   -   Is the Amount of Gas which, on that Day, has been subject of
proven Failure in Supply;

  10.1.3   The payment of the penalty referred to by item 10.1.2 shall be made
on the maturity date of the invoices pertaining to the supply of Gas of the
concerned Month – the User shall be subject, in case of non-payment within such
term, to the same additions and other rules applicable to the Gas supply
invoices paid in delay, pursuant to Article Eleven of this Agreement.     10.1.4
  The payment obligation of the penalty referred to in item 10.1.2 will be
irrespectively of all the other obligations under the Agreement, including the
Take or Pay, Ship or Pay and Distribution Take or Pay obligations and the
payment of the full price for any amount of Gas supplied at the Delivery Point.
      10.2   Gas Usage Restriction     10.2.1   The User agrees that all the Gas
subject of this Agreement shall be consumed at the Cogeneration Plant.    
10.2.2   If the User destines any Amount of Gas to any other use(s) in violation
with the provisions above, the User shall pay to Comgás, as a penalty, the
amount corresponding to the product of such Amount of Gas by seventy percent
(70%) of its total unit price (PS) at the Delivery Point in effect on the last
Day of the month of occurrence of the fact generating the penalty.

 

--------------------------------------------------------------------------------

 

30

  10.2.3   The payment of the penalty referred to by item 10.2.2 shall be made
on the maturity date of the invoices pertaining to the supply of Gas of the
concerned Month as provided for in item 11.4 – the User shall be subject, in
case of non-payment within such a term, to the same additions and other rules
applicable to the Gas supply invoices paid in delay, pursuant to Article Eleven
of this Agreement.     10.2.4   The payment obligation of the penalty referred
to in item 10.2.2 will be irrespectively of all the other penalties and
obligations of the Agreement, including the ones related to termination, Take or
Pay, Ship or Pay, Distribution Take or Pay and the obligation to pay the full
price of the totality of Gas supplied at the Delivery Point.

ARTICLE ELEVEN – INVOICING, PAYMENT MANNER AND GUARANTEE
11.1 Amounts to Be Invoiced

  11.1.1   Portion Pertaining to the Commodity:

      For the supply of Gas (commodity), the invoicing amount will be determined
by the application of the following formula:

(FORMULA) [c03166c0316602.gif]

      where:

         
FC
  -   is the amount of the invoicing of the commodity in each period of
invoicing to be paid by the User on the maturity date defined pursuant to item
11.4;  
 
     
DTAj
  -   is the Daily Taken Amount on day “j”;  
 
     
PC
  -   is the unit amount of the portion pertaining to the commodity added by the
taxes and converted into national currency per Cubic Meter at the Reference
Conditions in accordance with the Exchange Rate of the last business day of the
Month of supply;  
 
     
K
  -   is the first Day of Gas supply in the invoicing period;  
 
     
J
  -   is each one of the Days of Gas supply in the concerned invoicing period;  
 
     
N
  -   corresponds to the last Day of Gas supply in the concerned invoicing
period;  
 
     
DFc
  -   is the supplementary amount of the invoicing of the commodity pertaining
to the previous supply period, calculated by means of the difference between
(i) the amount ascertained in accordance with the Exchange Rate published on the
business days previous to the 25th day of the Month of supply and (ii) the
amount invoiced in the previous period being deducted therefrom the
supplementary amount of the DFc previously applied.

 

--------------------------------------------------------------------------------

 

31

  11.1.2   Portion Pertaining to the Transportation

      In relation to the Gas transportation, the invoicing amount will be
determined by means of the application of the following formula:

(FORMULA) [c03166c0316603.gif]
     where:

           
FT
-   is the invoicing amount pertaining to the transportation in each period of
invoicing, to be paid by the User on the maturity date as defined pursuant to
item 11.4;
 
         
QT
-   is the Amount of Gas defined pursuant to item 9.8
 
         
PT
-   is the amount of the portion pertaining to the transportation of the Gas
Price in force on the Month of supply and converted into national currency per
Cubic Meter at the Reference Conditions by the Exchange Rate of the last
business day of the Month of supply.
 
         
DFt
-   is the supplementary amount of the invoicing of the transportation
pertaining to the previous supply period, calculated by means of the difference
between (i) the amount ascertained in accordance with the Exchange Rate
published on the business day previous to the 25th day of the Month of supply
and (ii) the amount invoiced in the previous period being deducted therefrom the
supplementary amount of the DFt previously applied.

  11.1.3   Portion pertaining to the Distribution Margin         In relation to
Comgás’ Distribution Margin, the invoicing amount shall be as established
hereinafter:

(FORMULA) [c03166c0316604.gif] where:

           
Fm
-   is the invoicing amount pertaining to the Distribution Margin in each Month
of invoicing, to be paid by the User on the maturity date as defined pursuant to
item 11.4;
 
         
QMi
-   is the Amount Measured on Day i, in m3.
 
         
N
-   is the last Day of Gas supply in the Month or the considered supply period
 
         
Mg
-   is the Distribution Margin calculated as defined in items 8.1.2 and 8.1.2.1
 
         
I
-   is each one of the Days of Gas supply in the Month or period of invoicing
considered

 

--------------------------------------------------------------------------------

 

32

  11.1.4   Portion Pertaining to the Amount Not Taken         In relation to the
Amount Not Taken, the invoicing amount shall be determined by the application of
the formulas provided for in item 9.5.

11.2   - Periodicity of Invoicing and other Collections.       Invoicing shall
be made on a monthly basis, and each Month shall correspond to a Gas supply
period. The other Collection Documents shall be issued with the same
periodicity, without prejudice to the provisions of item 11.3.

11.3   Submission of Bill of Sales and Collection Documents       Comgás shall
submit to the User the bill of sales and the Collection Documents up to the
tenth (10th) day of the Month following the Month to which they refer and up to
the tenth (10th) day of the first Month of the subsequent Year for the invoicing
related to annual Take or Pay. The failure by Comgás to submit the Collection
Documents within the established term shall result in the extension of the
maturity date for a period equivalent to the delay.

11.4   Collection Documents – Maturity Dates       The amounts of the Collection
Documents shall be paid in the country legal currency, by way of credit into the
current account of Comgás (to be previously informed), up to the twenty-fifth
(25th) day of the month following the Month to which they refer, or, if such is
not a business day, on the first (1st ) subsequent business day.

  11.4.1   In case of delay in the delivery of the Collection Document, the
maturity date shall be extended for a term identical to the number of days of
delay, remaining applicable, however, the original dates set forth in items
11.1.1 and 11.1.2 for the determination of the Exchange Rate.     11.4.2   The
Collection Document(s) shall be issued by Comgás, in the name of:         Corn
Products Brasil – Ingredientes Industriais Ltda         Rua Paula Bueno, 2935  
      Mogi Guaçu – SP — CEP 13841-010     11.4.3   Comgás shall include into
each invoice the calculation of any penalties due by the User in accordance with
Article Nine.

 

--------------------------------------------------------------------------------

 

33

11.5   Compensation of Fines Imposed by the User to Comgás       In the event
Comgás has incurred in any fines properly notified and charged by way of a
Collection Document issued by the User, its amount, if acknowledged by Comgás,
may be used by the User to set-off its debt towards Comgás in the Month of
payment.

  11.5.1   In the event the total of fines referred to by item 11.5 is higher
than the debt of the User towards Comgás in any given Month, the difference in
favor of the User shall be credited by Comgás into a current account of the
User, to be timely informed, on the same maturity date of the invoice pertaining
to the Gas which has been supplied in the Month of occurrence of the fact
generating the fine.

11.6   Late Payment Charges       The payments made in delay shall be updated by
the accumulated variation of the IGP-M/FGV (General Index of Market Prices,
published by Fundação Getúlio Vargas) ¾ or any other index that may replace it —
and added by interest of one percent (1%) per month, everything on a pro rata
tempore basis, considering the period between the effective payment date and the
maturity date, in addition to a fine of two percent (2%) on the updated
principal amount. If the IGP-M/FGV is extinguished and not officially replaced
by any other index, the Parties shall agree, within the term of fifteen
(15) days, on a new index for the same purpose.

  11.6.1   If within the term of fifteen (15) days the Parties fail to reach an
agreement on the index to be used in replacement of the IGP-M/FGV, the dispute
shall be settled by an Expert.

11.7   Error in Collection Document.       In the event that an error is found
in the amount of a Collection Document, whether a shortfall or an excess, Comgás
shall make the appropriate correction for set-off in the next succeeding month.
In case of an error in the amount of a Collection Document, the User may notify
Comgás within three (3) days after the receipt of the Collection Document,
requiring Comgás to correct the error and reissue the Collection Document. If
the Collection Document is corrected in 3 days and delivered to the User within
such term, it shall be settled within the original term. If the corrected
Collection Document is delivered to the User after 3 days, it shall be settled
by the User within twenty (20) days as of the receipt of the corrected
Collection Document.

 

--------------------------------------------------------------------------------

 

34

11.8   Disputed Collections       In case any amount charged by one Party to the
other in any Collection Document is disputed, the following procedures shall be
applied:

  a)   The disputing Party ( “Disputing Party”) shall give notice of such
dispute to the other Party (“Non-Disputing Party”) on or before the due date of
the Collection Document, describing in detail the disputed amount, the reasons
for its disagreement, the alternative adopted in relation to the amount charged,
in addition to any other elements it deems important in order to settle the
dispute;     b)   The Non-Disputing Party shall make the payment of the total
amount charged on a timely basis, informing the portion subject to potential
refund.     c)   If the Non-Disputing Party agrees with the Disputing Party, the
Non-Disputing Party shall give notice to the Disputing Party of its agreement
and refund the latter, within the maximum term of fifteen (15) days, the
disputed amount, in case such amount was paid subject to potential refund.    
d)   If the Non-Disputing Party does not agree with the Disputing Party, then
the Non-Disputing Party shall give notice to the Disputing Party of its
disagreement and the dispute shall be immediately submitted to an Arbitration
Tribunal, unless the Parties decide to submit the dispute first to an Expert.

  11.8.1   If, at any time, a Party waives or reconsider its opinion with
respect to a dispute, such Party may, as the case may be:

  i.   refund to the other Party the amount paid subject to potential refund,
added by the charges provided for in item 11.8.1.2;     ii.   release any amount
paid “subject to potential refund” from such condition;     iii.   pay the costs
and expenses incurred so far with the procedures of Arbitration or Expert
Proceeding.

  11.8.1.1   Said waiver or review shall be formally notified to the other Party
and to the president of the Arbitration Tribunal or Expert, and the controversy
shall be extinguished.     11.8.1.2   The Party which, upon decision by the
Arbitration Tribunal or the Expert, shall be required to return the amount paid
subject to the potential refund, shall also pay to the other Party the
corresponding financial charges on the previously disputed amount, the total of
which shall be calculated in view of:

 

--------------------------------------------------------------------------------

 

35

     

  i.   the time elapsed from the maturity of the debt – or since its payment
subject to potential refund;     ii.   the monthly charge corresponding to the
variation of the IGPM-FGV, plus one percent (1%) per month.

11.9   Payment Guarantee       As guarantee to the fulfillment of all of its
obligations provided for in the Agreement, specially the payment obligations by
the User of any amount owed under this Agreement, the User shall deliver to
Comgás a Guarantee consisting in a bank letter of credit, in a form acceptable
to Comgás, issued by a financial institution acceptable to Comgás, in the amount
corresponding to 90 multiplied by the Daily Contracted Amount multiplied by the
Gas Sale Price. The guarantee shall be delivered by the User to Comgás in the
event of, in any Year, the sum of days in delay of payment by the User is equal
to more than 10 days or in the event there are more than 2 events of delay of
payment by the User. The User shall deliver the guarantee to Comgás within
thirty (30) days counted as of the date on which the obligation to deliver the
guarantee had been constituted, in the terms provided above.

  11.9.1   The Guarantee shall be valid and effective in its full amount until
the full compliance with all obligations of the User provided in this Agreement.

  11.9.1.1   In case the GUARANTY has a term of existence shorter than the date
of full compliance with all the USER’s payment obligations as set forth herein,
the USER shall renew the GUARANTY or deliver a new GUARANTY according to the
AGREEMENT, up to thirty (30) days before the end of its effectiveness. In case
the USER does not renew the GUARANTY or does not delivery a new GUARANTY to
COMGÁS within the above stated term, COMGÁS may enforce the existing GUARANTY to
cover any amounts due by the user and/ or suspend the supply of GAS to the USER
until the GUARANTY has been renewed, or until a new GUARANTY is delivered to
COMGÁS.

 

--------------------------------------------------------------------------------

 

36

  11.9.2   In case of change or adjustment in the Gas Sale Price, the User shall
(i) update the value of the Guarantee within the maximum term of thirty
(30) days counted as of the date on which the change or update had occurred and
(ii) deliver the updated version of the bank letter of credit to Comgás within
such term.     11.9.3   In case the Guarantee granted by the User is used by
Comgás, in the terms set forth in item 17.1, the User shall renew the Guarantee,
in the value and terms established in item 11.9, within the maximum term of
thirty (30) days counted as of the date of its use.

ARTICLE TWELVE – MEASUREMENT
12.1 Except as otherwise provided in this Agreement, the Parties agree to use
the measurement units of the International Unit System — SI.
12.2 The measurements of Gas delivered to the User shall be made in the
Measurement System integrating the CRM, as follows:

  i.   the volume unit shall be the Cubic Meter;     ii.   the local atmospheric
pressure value (for Campinas and Region, Patm = 0.93 kgf/cm 2) shall be assumed
as being constant during the effectiveness of the Agreement, if such an amount
is required for converting the volume into the Base Conditions;     iii.   the
calorific power shall be determined by calculation, based on ISO Rule 6976, as
from the composition of the Gas determined by chromatography based on ISO
Rule 6974;     iv.   the measured volumes shall be expressed at the Base
Conditions.

  12.2.1   The measurement signal, if any, shall be made available by Comgás if
requested by the User.

12.3   - The measurement of the total volume of Gas supplied to the User shall
be made by the instruments of the Measurement System installed at CRM at the
Delivery Point. Comgás shall be responsible for the operation, maintenance,
calibration and adjustments of the Measurement System installed at CRM.   12.4  
- The ascertainment of the total volume of Gas supplied to the User shall be
made by the Comgás, by applying the following procedures, depending on the type
of Measurement System that is installed at CRM:

 

--------------------------------------------------------------------------------

 

37

  i.   orifice meter: procedures described in API-MPMS 14.3 (“Natural Gas Fluids
Measurement — Concentric, Square-Edged Orifice Meters”);     ii.   turbine
meter: procedures described in INMETRO Ordinance No. 114, of 1997, or in ABNT
ISO Rule 9951;     iii.   ultra-sonic meter: procedures described in AGA Report
No. 9 (“Measurement of Gas by Multipath Ultrasonic Meters”);     iv.   other
meter: as agreed in advance by the Parties.

  12.4.1   For the Measurement Systems indicated in item 12.4, the
compressibility factor shall be calculated pursuant to ISO 12 213
(“Compressibility Factors of Natural Gas and Other Related Hydrocarbon Gases”).

12.5  
- The calibration and adjustments of CRM shall always be made by Comgás, Notice
given to the User no less than five (5) days  in advance, so as to allow the
User, if it so wishes, to send a representative in order to follow up the works.

  12.5.1  The User shall always provide access to Comgás or any third parties
accompanied by Comgás to CRM.

12.6   The period between two calibrations and successive ordinary adjustments
of the CRM’s Measurement System, as of the Commercial Supply Start-up, shall be
of 1 year. The other calibration procedures are to be agreed upon between the
Parties.   12.7   The User may, upon delivery of a Notice to Comgás, request an
extra calibration of any instrument integrating the CRM’s Measurement System, on
which case the corresponding costs shall be fully borne by the User, if the
instrument is considered adjusted, or by Comgás, if the instrument is considered
out of adjustment. Comgás undertakes to make the calibration within the lowest
possible term. The instruments of the CRM’s Measurement System that, after the
calibration, present measurement errors not greater than the value of one point
five percent (1.5%), either upwards or downwards, as a reference, shall be
considered adjusted.   12.8   In case, after the calibration of the CRM’s
Measurement System, such calibration indicates that the Measurement System was
not adjusted, i.e., it is evidenced that the Measurement System had a deviation
in the measured amount greater than 1.5%, either upwards or downwards, the
respective correction factor shall be technically determined by Comgás; and the
User shall be allowed to follow up the works.

  12.8.1   No correction shall be applicable in the cases in which the
measurement error of any given component of the CRM’s Measurement System is
lower than those stated in item 12.7 above.

 

--------------------------------------------------------------------------------

 

38

  12.8.2   Once the period in which the CRM’s Measurement System had presented
measurement errors above the ones permitted is perfectly defined, corrections of
value equal to the deviation verified shall be applied, either upwards or
downwards, on the amounts actually registered in that period by the Measurement
Systems.     12.8.3   If the period in which the CRM’s Measurement System was
out of calibration is unknown, the corrections referred to in item 12.8.2 shall
be applied on the amounts actually recorded by the Measurement Systems in the
past forty-five (45) Days of consumption or in the last half of the period of
time between the two latest calibrations of the Measurement System, whichever is
the lower period of time.

12.9   If, on any given day, there is a dispute as regards the Amounts of Gas
made available at the CRM or failure in the CRM, including removal of any of its
components for maintenance, without interruption in the supply of Gas — the
daily volume of Gas supplied in relation to such Day shall be determined as
follows, in order of preference:

  a)   in the measurement systems of gas of the Cogeneration Plant in the
period, if any, provided that access by Comgás and any third parties accompanied
by Comgás to the measurement instruments installed at the Cogeneration Plant, as
well as to the information referring to their calibration, is allowed. For
purposes of using such resource, Comgás shall previously inspect and approve,
based on the metrological legislation in effect and the technical rules
applicable, the use of such measurement instruments for that purpose.     b)  
based on the measurements made in any other Comgás’ Measurement Systems — by
difference, if, as from the difference, it is possible to calculate, on a safety
way, said volume of Gas taken by the User;     c)   indirectly calculated, if
possible, based on the electric energy and steam generated at the Cogeneration
Plant in the period, provided that access by Comgás and any third parties
accompanied by Comgás to the meters installed at the Cogeneration Plant, as well
to the information pertaining to their calibration, is allowed;     d)   in an
amount equal to the average of the Daily Taken Amounts (DTA’s) of the last
ninety (90) Days on which there was effective supply — subject to later
adjustments, upon agreement between the Parties.

12.10   All the other matters or disputes pertaining to this Article, whose
determinations in relation to their settlement have not been differently stated
in the previous items, shall be submitted to Expert Proceeding — with sharing in
equal portions between both Parties of the corresponding expenses and costs of
such procedure.

 

--------------------------------------------------------------------------------

 

39
ARTICLE THIRTEEN — EFFECTIVENESS AND EXTENSION

13.1   - This Agreement shall be valid on its execution date and its end shall
occur on 03/31/2023, which may be extended, by means of agreement by the
Parties, in writing, provided that such agreement is formalized with twenty four
(24) months in advance to the term initially agreed for its end.

  13.1.1   In the end, pursuant to the provisions of item 13.1, an additional
maximum period of three hundred and sixty five (365) days shall be added for
purposes of recovery by the User of its eventual remaining balance of the
Amounts Paid and Not Taken, being effective, in this period, all the provisions
of the Agreement related to and necessary for the recovery of such Amounts of
Gas. Exclusively during the additional period referred to in this item and for
the sole purpose of recovery of APNTs, the User shall be released from its Take
or Pay commitment, remaining effective, however, the Ship or Pay and
Distribution Take or Pay commitments.

          ARTICLE FOURTEEN - FORTUITOUS CASE OR FORCE MAJEURE

14.1   Generic Concept       Any event or circumstance which combines the
following requirements shall be considered an Fortuitous Case or Force
Majeure      , with strict observance of the provision pertaining to force
majeure contained in Article 393 and its sole paragraph of the Brazilian Civil
Code:

  i.   its occurrence takes place and continues beyond the control of the
Affected Party;     ii.   the Affected Party has not contributed, directly or
indirectly, for its occurrence, which includes the fact that it does not arise
from (i) default of any of the obligations of the Affected Party under the terms
of this Agreement; (ii) failure by the Affected Party to comply with the Law;or
(iii) negligence, error or omission of the Affected Party;     iii.   the action
taken by the Affected Party’s, albeit diligent and timely, is not sufficient to
prevent or mitigate the effects of its occurrence; and     iv.   its occurrence
has the effect of affecting or preventing performance by the Affected Party of
its obligations provided for in this Agreement.

14.2   Effects on the Agreement       Except as provided in item 14.3, upon the
occurrence of an Fortuitous Case or Force Majeure, the Affected Party shall be
relieved from performing its obligations hereunder, as well as it shall be
exempted from any liability resulting from delays or failure to perform its
obligations where directly attributable to such Fortuitous Case or Force
Majeure.

 

--------------------------------------------------------------------------------

 

40

14.3   Obligations Not Excluded       No Fortuitous Case or Force Majeure shall
relieve the Affected Party from performing any of its obligations arising or
accruing prior to the occurrence thereof, event though any such obligation may
become due during or following the Fortuitous Case or Force Majeure, especially
the obligations to pay sums of money contained herein.   14.4   Procedures in
Occurrences of Fortuitous Case or Force Majeure

  14.4.1   The Affected Party wishing to claim the occurrence of an Fortuitous
Case or Force Majeure for the purposes of item 14.2 above shall take the
following steps:

  a)   notify the other Party of the occurrence of the event or condition
constituting Fortuitous Case or Force Majeure — as soon as possible, but in no
event later than four (4) days from the date on which the Affected Party became
aware of the occurrence of such event of condition, indicating its estimated
duration and its likely impact on the performance of its obligations;     b)  
take the necessary actions to correct or mitigate the consequences of such
event, in order to resume its contractual obligations as soon as possible;    
c)   regularly inform the other Party about its actions and planned actions with
respect to item (b) above;     d)   promptly notify the other Party of the
cessation of the event and its consequences;     e)   grant to the other Party,
whenever possible, access to any facility affected by the event, for the purpose
of local inspection, which may be conducted at the expense and risk of such
other Party;     f)   substantiate all facts and actions with documentation or
available records;     g)   exercise its rights in good faith and with due
regard for the interests of the other Party with respect to the performance of
all contractual obligations affected by the occurrence of such Fortuitous Case
or Force Majeure.

 

--------------------------------------------------------------------------------

 

41

  14.4.2   In connection with item 14.4.1(b) above, the Affected Party shall not
be required, in the case of labor disputes, to act differently from what it may
deem appropriate in its sole judgment, to the extent that it acts in a manner
consistent with pas practices adopted in similar situations.     14.4.3   In the
event of dispute as to the characterization of the fact as an Fortuitous Case or
Force Majeure, the Parties shall submit the dispute to Arbitration, which shall
decide based on the provisions of the applicable article of this Agreement.
Until the dispute is decided by the Arbitration Tribunal, all obligations and
rights of the Parties provided for in the Agreement shall remain valid and
applicable.

14.5   Scope       Without limiting the generality of the concept of force
majeure contained in Article 393 and its sole paragraph of the Brazilian Civil
Code, an Fortuitous Case or Force Majeure may include the following events,
listed by way of illustration only:

  i.   acts of terrorism or public attacks, war whether declared or not,
threatened war, guerrilla, insurrection, civil commotion, revolution, riot,
rebellion, military insurrection, coup d’état, siege, declaration of state of
emergency or martial law, embargo or blockade or other situations not falling
within the exceptions referred to item 14.6;     ii.   acts of sabotage,
terrorism, vandalism or accidental destruction, even if partially, of facilities
of the Affected Party, as long as it has not contributed to such occurrence;    
iii.   cataclysms, lightning, earthquakes, tornadoes, storms that result in the
evacuation of the affected areas, floods, explosions and exceptional and
unpredictable weather events;     iv.   Change in Law (except for the extinction
of the tax benefits provided for in the Priority Program of Thermoelectricity)
that materially adversely affects the object of the Agreement, the
Supplier-Comgás Agreement or the Party claiming the occurrence of Fortuitous
Case or Force Majeure;     v.   expropriation, seizure, compulsory acquisition
or nationalization by any Public Body of all or a substantially all assets of
the Affected Party required for the performance of such Party’s obligations
under this Agreement.

 

--------------------------------------------------------------------------------

 

42

14.6   Excluded Events       The following events shall be excluded from the
scope of an Fortuitous Case or Force Majeure:

  i.   strike or any other disturbance of similar nature involving solely the
employees, agents, contractors or subcontractors of the Affected Party;     ii.
  change in the economic and financial situation of the Affected Party, as well
as changes in the market conditions for delivery of Gas, whether or not arising
by virtue of a drop in the demand for electric energy generated by the
Cogeneration Plant;     iii.   any accidental loss, damage or failure in any
part of the industry plant, facilities, machinery or equipment of the Affected
Party or the Cogeneration Plant, or any event related to their businesses,
except if resulting directly from the occurrence of an Fortuitous Case or Force
Majeure; and     iv.   delay in the performance of obligations undertaken by
contractors or subcontractors of the Affected Party which affects the
performance of any obligations undertaken by the Affected Party under this
Agreement, except where there is evidence that such delay on the part of the
contractors or subcontractors has resulted directly from the occurrence of an
Fortuitous Case or Force Majeure.

14.7   Fortuitous Case or Force Majeure Incorporated by Reference       For all
purposes of this Article, and to the extent that the requirements indicated in
this Article Fourteen are evidenced and met, there shall be also considered:

  (a)   Fortuitous Case or Force Majeure of Comgás: Fortuitous Case or Force
Majeure that affects: (i) the ability of the Carrier and/or the Supplier to
perform their respective obligations provided for in the agreements executed
with the Supplier that are required for the performance of the Supplier-Comgás
Agreement by the Supplier or (ii) the Supplier’s ability to perform its
respective obligations provided for in the Supplier-Comgás Agreement; and    
(b)   Fortuitous Case or Force Majeure of the User: Fortuitous Case or Force
Majeure that affects the ability of the User to receive the Gas in view of
damages at the Cogeneration Plant.

 

--------------------------------------------------------------------------------

 

43
ARTICLE FIFTEEN- ASSIGNMENT AND ENCUMBRANCE OF RIGHTS AND OBLIGATIONS

15.1   This Agreement, as well as the rights and obligations arising hereof, may
not be assigned, totally or partially, expect with the written agreement of the
other Party, which may not be unreasonably denied by the non-assigning Party,
provided that the requirements of item 15.1.1 are fulfilled.

  15.1.1   For the agreement referred to in item 15.1, it is an essential
requirement that the proposed assignee fulfill the conditions of technical
guarantee and satisfactory economic solvency to assume, in whole or in part, the
obligations arising from the assignment. Without such requirements, the other
party would incur in a commercial risk substantially greater than the one
assumed. The non-assigning party shall be incumbent upon determining, at its
sole criteria, if the assignee fulfill the necessary conditions to the
implementation of the proposed assignment, provided that, in case the
non-assigning party disagrees with the assignment, it shall be incumbent upon
evidencing the lack or insufficiency of the conditions presented against the
proposed assignee.

  15.1.1.1   Without prejudice to the provisions above and, if demanded, the
User shall obtain previously to the assignment of the Agreement, all and any
authorizations of the competent public bodies necessary for such assignment,
including authorization of the competent public body linked to the Priority
Program of Thermoelectricity.

  15.1.2   In case of an authorized assignment according to this Article, the
assigning party shall actually transfer to the assignee, in whole or in part,
the rights and obligations established in the Agreement.     15.1.3   Provided
that the requirements established in this Articles are fulfilled, the Parties
agree to formalize any and all agreement and other documents necessary for the
assignment, as requested, as well to give reasonable mutual assistance in the
formalization of any assignment.

15.2   In addition to the fulfillment of the terms of the legislation in force
and of the provisions of this Article, the Party that whishes to transfer its
rights and/or obligations under this Agreement shall express its intention by
means of delivery of Notice to the other Party.

  15.2.1   Within ninety (90) days following the date of receipt of the Notice
referred to in item 15.2, the non-assigning Party shall give its authorization
or justify its refusal.

 

--------------------------------------------------------------------------------

 

44

  15.2.1.1   The lack of formal unfavorable manifestation within the term set
forth in item 15.2.1 shall be considered as full agreement with the assignment
by the omitting Party.     15.2.1.2   In case of a refusal by the non-assigning
Party that is considered ungrounded by the assigning Party, the subject shall be
submitted to a decision of the Arbitration Tribunal.

15.3   This Agreement, as well as the rights and obligations arising hereof, may
not be pledged or in any other way encumbered by any of the Parties, except with
the written prior agreement of the other Party

ARTICLE SIXTEEN – NOVATION AND FORBEARANCE

16.1   The provisions set forth in this Agreement are limited to the supply of
Gas as contemplated herein, and shall not be deemed to constitute novation of
any arrangement, covenant or agreement of a similar nature already existing
between the Parties, which shall remain unchanged, except for the Short-Term
Agreement.   16.2   Any and all forbearance with respect to the observance by
the Parties of the terms and conditions set forth in this Agreement shall not
operate as change or novation of the provisions agreed upon.   16.3   Comgás and
the User decide to ratify the end of the term of the Short-Term Agreement in
view of the execution of this Agreement, considering that the Short-Term
Agreement set forth that its final term would occur on January 20, 2006 or on
the execution date of this Agreement, whichever occurs first.

ARTICLE SEVENTEEN — DEFAULT AND TERMINATION
A) Default

17.1   Default by the User       Subject to the provisions of subitem 17.1.1, if
the User, at any time, fails to (i) pay, in whole or in part, until its maturity
date, the amount corresponding to any Collection Document submitted to the User
by Comgás in view of this Agreement or, (ii) for disputed amounts, failed to
proceed in accordance with the provisions of item 11.8, (iii) establish, update,
reestablish and/or renew the Guarantee, according to the provisions and terms
contained in item 11.9 and its subitems, then, the default by the User shall be
deemed to have occurred on the maturity date of the respective Collection
Document. After ten (10) days counted as of the date of the default by the User,
Comgás may, at any time from such moment on, at its sole criteria, foreclose the
Guarantee in the amount corresponding to the

 

--------------------------------------------------------------------------------

 

45

    totality of the amount in delay on the date of foreclosure of the referred
Guarantee. After thirty (30) days counted as of the date of default by the User,
Comgás may suspend the delivery of Gas to the User, subject to the provisions of
item 17.1.5 below, until the amount not paid, added by the corresponding
financial charges (as provided for in item 11.6) is:

  i.   paid to Comgás on a final basis or     ii.   paid to Comgás subject to
potential refund.

  17.1.1   It shall not be considered a default by the User the non-payment of
any Collection Document issued by Comgás on the allegation of noncompliance with
a commitment of Take or Pay, Ship or Pay and Distribution Take or Pay and/or a
commitment of Article Ten, of which the User is released in the corresponding
period in accordance with items 17.2 (final part), 17.2.1 and 17.2.2.     17.1.2
  The suspension of the supply of Gas as provided for in item 17.1 shall not
release the User from any other obligation in relation to this Agreement and may
not be invoked by the User as a reason for the termination hereof and not even
for the suspension of the commitments of Take or Pay, Ship or Pay or
Distribution Take or Pay and the commitments of Article Ten.     17.1.3   Any
possible forbearance by Comgás in the term to start the suspension of delivery
of Gas referred to in item 17.1 shall not be deemed a waiver of right, and such
suspension may start at any time following that term, while said default
persists.     17.1.4   The suspension shall not be applicable to the Amounts
Paid and Not Taken (APNT) of Gas, which will continue being reintegrated in
accordance with the rules of item 9.5.3 and their subitems.     17.1.5   The
decision of suspending the supply of Gas in accordance with this item shall be
informed to the User within ten (10) days in advance.

17.2   Default by Comgás       Exception made to the events provided for in
subitem 17.2.1, if Comgás any time fails to: (i) pay, in whole or in part, until
its maturity date, the amount corresponding to any Collection Document submitted
to Comgás by the User in view of this Agreement or, (ii) for disputed amounts,
proceed in accordance with the provisions of item 11.8, then, the default by the
User shall be deemed to have occurred on the maturity date of the respective
Collection Document. After thirty (30) days counted as of the date of default by
Comgás, the User’s Take or Pay, Ship or Pay and

 

--------------------------------------------------------------------------------

 

46

    Distribution Take or Pay commitments and the commitments established in
Article Ten shall be suspended until the amount not paid – added by the
corresponding financial charges (as provided for in item 11.6) — is:

  i.   paid to the User on a final basis or     ii.   paid to the User subject
to potential refund.

  17.2.1   It shall not be considered a default by Comgás the non-payment of any
Collection Document issued by the User directly or indirectly as a result of the
suspension of the supply of Gas caused by a default of the User as provided for
in item 17.1 and its applicable subitems.     17.2.2   The suspension of the
commitments of Take or Pay, Ship or Pay and Distribution Take or Pay and those
provided for in Article Ten, in accordance with item 17.2 and/or subitem 17.2.1,
does not release Comgás from any obligation pertaining to this Agreement and may
not be invoked by Comgás as a reason for its termination.

B)   Termination   17.3   Termination for the User’s default       After thirty
(30) days have elapsed from any default by the User referred to by item 17.1
which has not been fully cured, Comgás may unilaterally terminate this
Agreement, by sending a Notice to that effect to the User.

  17.3.1   In the event of termination of the Agreement in accordance with item
17.3 ¾ the occurrence of default is evidenced, according to the Agreement, in
order to give cause to said termination ¾, the User:

  i.   shall be obliged to pay to Comgás, as the sole indemnification applicable
in such case, the amount of losses and direct damages incurred by Comgás,
excluding any indirect damages and/or loss of profits, resulting from such
termination for default, and the Parties agree and determine that the amounts of
the losses and direct damages incurred by Comgás will include the amount of the
indemnification payable by Comgás to the Supplier for termination of the
Supplier-Comgás Agreement in view of the termination of this Agreement; the
total amount of such payments shall be limited to the current amount of the
remainder of the Agreement calculated only based on the Gas Price - according to
the regular remaining effectiveness term or one hundred and twenty (120) months,
whichever is shorter, at the discount rate agreed by the Parties or defined in
Arbitration in case the Parties fail to reach an agreement on such rate, on a
pro rata die basis;

 

--------------------------------------------------------------------------------

 

47

  ii.   shall be responsible to pay all its pending debt toward Comgás under
this Agreement.

  17.3.1.1   The Parties agree that the indemnification set forth in item 17.3.1
(i) represents the totality of indemnification that may be demanded by Comgás,
even if it sustain greater losses, and nothing else shall be claimed in court or
out-of-court.

17.4 Termination for default by Comgás
The User may unilaterally terminate this Agreement, by sending a Notice to
Comgás, in any one of the following situations:

  i.   After thirty (30) days have elapsed from any default by Comgás referred
to in item 17.2 which has not been fully cured;     ii.   exception made to
Fortuitous Case or Force Majeure, if Comgás, without prejudice to the
obligations provided for in item 9.9, fails to comply with its obligation of
providing the User with the Gas subject of this Agreement for a term greater
than sixty (60) consecutive Days or ninety (90) alternate Days in each twelve
(12)-Month period.

  17.4.1   In the event of termination of the Agreement in accordance with item
17.4 — the occurrence of default is evidenced, according to the Agreement, in
order to give cause to said termination¾, Comgás:

  i.   shall be obliged to pay to the User, as the sole indemnification
applicable in such case, the amounts of losses and direct damages incurred by
the User, — excluding any indirect damages and/or loss of profits-, resulting
from such termination for default; the total amount of such payments shall be
limited to the current amount of the remainder of the Agreement calculated only
based on the Gas Price according to the regular remaining effectiveness term or
one hundred and twenty (120) months, whichever is shorter, at the discount rate
agreed by the Parties or defined in Arbitration in case the Parties fail to
reach an agreement on such rate, on a pro rata die basis;     ii.   shall remain
responsible to pay all its pending debt towards the User under this Agreement,
as well as the amount corresponding to any possible residual amount of Amount
Paid and Not Taken (APNT) of Gas, multiplied by the amount of the portion
pertaining to the commodity in the Gas Price (PC) in effect on the day of
termination multiplied by the latest Exchange Rate published before the original
maturity of the respective Collection Document provided for in item 11.4.

  17.4.1.1   The Parties agree that the indemnification set forth in item 17.4.1
(i) represents the totality of indemnification that may be demanded against
Comgás, even if the User sustain greater losses, and nothing else shall be
claimed in court or out of court.

 

--------------------------------------------------------------------------------

 

48
17.5 Other Events of Termination
In addition to the events provided for in items 17.3 and 17.4, this Agreement
may be terminated by either Party, by sending a Notice in writing to the other
Party, in the events below:

  a)   with no liability whatsoever of any Party towards the other Party:

  (i)   upon mutual agreement between the Parties; or     (ii)   by the
impossibility of consumption or supply of Gas under this Agreement or under the
Supplier-Comgás Agreement as a result of an Fortuitous Case or Force Majeure
lasting for a continued period longer than twelve (12) months;

  b)   with liability of the Party that causes the termination:

  i.   unilateral termination with no fault of the other Party;     ii.  
transfer, partially or totally, to any third parties of the rights and
obligations arising of this Agreement, in violation of the provisions of
Article Fifteen;     iii.   in view of a relevant violation of any contractual
provision that, under the terms of this Agreement, is not subject to payment by
means of a Collection Document and which has not been cured within the term of
ninety (90) days counted as of the receipt of Notice by the defaulting Party;  
  iv   in the event of termination of the Supplier-Comgás Agreement for any
reason (except for the reason provided for in item (a) (ii) above), including,
but not limited to, for default of either party in such agreement or by
unilateral termination by any of the parties. In this case, the liability for
the termination of this Agreement will be attributed to Comgás; or     v.  
application for bankruptcy by any of the Parties, if any of the Parties is
decreed bankrupt, application for court or out of court reorganization by any of
the Parties, if said applications are not abandoned, denied or lose their
efficacy, as applicable, within the time set forth in the law or within 60
(sixty) days after they are started, whichever occurs first; or     vi.   loss
of the applicable licenses by any of the Parties.     To these events,
analogously and as applicable, the provisions of items 17.3.1, 17.3.1.1, 17.4.1.
and 17.4.1.1 shall apply.

 

--------------------------------------------------------------------------------

 

49
17.6 Default in Other Agreements
The default by either Party in any other agreements will not be considered as
default of this Agreement nor will cause its termination, the application of
penalties of any kind or the suspension of any obligations provided for herein.

17.7   The User agrees and acknowledges that it is exclusively responsible for
the business relationship with EnergyWorks do Brasil Ltda. or any successor or
assigning party thereto, including for the gas supply and the gas quality.
Comgás may only be held liable for any default in this Agreement exclusively
before the User and subject to the limits of liability provided for herein. The
User shall hold Comgás harmless from any actions or claims filed by third
parties, including, without limitation, by EnergyWorks do Brasil Ltda., grounded
on the supply of Gas subject of this Agreement or of any sub-products resulting
from the supply of Gas subject of this Agreement. The User also undertakes to
compensate Comgás if it may be bound to pay any indemnification to any third
parties, including to EnergyWorks do Brasil Ltda., as a result of such actions
or claims. The amounts to be compensated by the User to Comgás shall include all
the indemnification possibly paid by Comgás, as well as all the costs incurred
by Comgás, including attorney’s fees.

ARTICLE EIGHTEEN — NOTICES

18.1   For all legal purposes arising of the Agreement, the Parties indicate
below their respective domiciles, the only places where all Notices to be made
in relation to the Agreement will be valid:

  i.   Companhia de gás de são paulo – Comgás
Rua das Olimpíadas, 205 – 10° andar
São Paulo — SP
CEP – 04551-000     ii.   Corn Products Brasil – Ingredientes Industriais Ltda
Rua Paula Bueno, 2935
Mogi Guaçu — SP
CEP 13841-010

18.2   Any of the Parties will be entitled to change its domicile upon Notice
sent to the other party with fifteen (15) days in advance of such change.   18.3
  Any Notice required or allowed, under the terms of this Agreement, will be
considered as received upon its delivery by facsimile transmission or by means
of e-mail, in both circumstances, provided that it is confirmed by means of
registered sending or, in case of personal delivery, at the time of its receipt.

 

--------------------------------------------------------------------------------

 

50
ARTICLE NINETEEN — DISPUTE RESOLUTION

  19.1   Disputes

  19.1.1   In the event of any disputes relating to the interpretation or
performance of this Agreement, prior to taking any other measure the Parties
shall seek a solution by consensus. To this end, either Party shall send Notice
to the other for the Parties to meet in order to pursue such solution by
consensus within no more than 30 days after receipt of Notice, which period may
be extended only by agreement between the Parties. Within such period, the
Parties shall also agree whether the dispute involves a technical issue that
should be submitted to an Expert Proceeding. If the Parties so agree or if it is
expressly set forth in the Agreement that the dispute must be submit to an
Expert Proceeding, prompt action shall be taken for designation of an Expert
pursuant to item 19.3.2.     19.1.2   If a consensus solution is not reached
during the period specified in subsection 19.1.1 above or if the Parties come to
a consensus that the dispute does not involve a technical issue requiring
submission to an Expert Proceeding, then the dispute in question shall be
resolved by an Arbitration Tribunal, which shall apply in the resolution of the
dispute the substantive laws of Brazil (“Arbitration”).

19.2 Arbitration

  19.2.1   An Arbitration shall be governed, in all its procedural aspects, by
the UNCITRAL Arbitration Rules and shall take place in the City of São Paulo.
The administration of the Arbitration shall be conducted by the Brazil-Canadá
Commerce Chamber (BCCC). Arbitration shall necessarily be based on law, and
judgment based on equity or on the general principles of law or on custom and
usage shall be prohibited. In the case of a conflict between the UNCITRAL Rules
and the rules contained in this Agreement, the latter shall prevail.     19.2.2
  The language utilized in the Arbitration and the decision handed down in
connection therewith shall be the Portuguese language.     19.2.3   The
Arbitration Tribunal shall be composed of three (3) members who (i) shall have
at least ten (10) years of experience in matters relating to the subject matter
of the Arbitration, and (ii) shall have no conflict of interest with the subject
matter of the Arbitration, provided further that the Parties shall observe the
following provisions:

  i.   the Party asserting the dispute (First Party) shall send Notice to the
other Party (Second Party), clearly stating the object of the dispute and
informing the name of the Arbitrator selected by it (First Arbitrator);

 

--------------------------------------------------------------------------------

 

51

  ii.   within thirty (30) days from receipt of the Notice mentioned above, the
Second Party shall inform to the First Party, also by Notice, the name of the
Arbitrator selected by it (Second Arbitrator). If the Second Party fails to act
within said time limit, the First Party may request that the President of the
BCCC appoint the Second Arbitrator;     iii   within fourteen (14) days from the
appointment of the Second Arbitrator, both Arbitrators shall appoint a Third
Arbitrator, who shall preside over the proceedings; and     iv.   if there is no
consensus as to the appointment of the Third Arbitrator, such appointment shall
be made by the President of the BCCC. The Third Arbitrator shall be proficient
in the Portuguese language.

  19.2.4   In the event that the UNCITRAL Rules are silent as to any procedural
aspects, such omissions shall be resolved by the arbitrators by reference, in
the following order, to:

  a)   to Law No. 9.307/96; and     b)   to the Brazilian Code of Civil
Procedure.

  19.2.5   Within ninety (90) Days from commencement of Arbitration, the
Arbitrators shall issue a well-reasoned award (Arbitration Award).     19.2.6  
The Arbitration Award shall indicate and describe in detail the liabilities of
the Parties, as well as the portion of legal fees and expenses and Arbitration
costs awarded to each Party. The Arbitration Award shall be in writing and shall
be binding on the Parties, which specifically waive any judicial review thereof.
    19.2.7   The Parties reserve the right to bring legal actions in the
Brazilian courts to (a) ensure institution of Arbitration, (b) seek temporary
injunctive relief for the protection of their rights prior to institution of
Arbitration, provided that any such action shall not be deemed a waiver of
Arbitration as the sole method for resolution of conflicts between the Parties
and (c) enforce any decision issued by the Arbitration Tribunal, including
without limitation the Arbitration Award. In any such event the courts mentioned
in item 19.5 shall be the courts of competent jurisdiction.

19.3 Expert Proceeding

 

--------------------------------------------------------------------------------

 

52

  19.3.1   Once the Parties have agreed that a dispute is to be submitted to an
Expert Proceeding under item 19.1.1 above or there is an express contractual
provision establishing that a dispute must be submitted to an Expert Proceeding,
the provisions listed in items 19.3.2 through 19.3.7.2 shall apply to such
Expert Proceeding.     19.3.2   Appointment of the Expert

The procedures for appointment of an Expert are as follows:

  (a)   a Party wishing to submit a dispute to an Expert shall give Notice of
such intent to the other Party, stating in detail the reasons for the dispute;  
  (b)   by mutual agreement, the Parties shall within twenty-one (21) days from
delivery of the Notice referred to in the preceding item appoint the Expert that
shall be responsible for reviewing the matters under dispute;     (c)   if
within the term specified in the preceding item the Parties are unable to reach
a consensus as to the Expert to be appointed, then the Party asserting the
dispute shall, within five (5) days, request in writing that the President of
the Institute of Technological Research (IPT) appoint an Expert. Such
appointment shall be made within thirty (30) days from receipt of written
request therefor;     (d)   either Party may object one time to the Expert
appointed by the President of IPT. In the case of such an objection, the
procedure described in letter (c) of item 19.3.2 above shall be repeated. After
each Party has exercised its right to object as aforesaid, the procedure
described in letter (c) of item 19.3.2 above shall be repeated once again and
the Expert appointed in this manner shall necessarily be accepted by the
Parties.     (e)   the terms of the instrument of appointment of the Expert
shall be agreed between the Expert and the Parties and shall be set forth in a
writing to be executed by the Expert and the Parties, provided further that the
Expert and the Parties shall cooperate in order to have such document finalized
as soon as reasonably possible;     (f)   in the event of impediment, refusal or
absence of response for a period of fourteen (14) days, a procedure for
appointment of another Expert, should this be the wish of the Parties:

 

--------------------------------------------------------------------------------

 

53

  (i)   shall resume at the phase where the last name was selected;     (ii)  
shall be repeated accordingly until an Expert that accepts and is able to assume
his/her functions is appointed or until the Parties decide to discontinue the
procedure for appointment or the submission of the dispute to an Expert;

  (g)   if there is a dispute between the Parties over the fees to be paid to
the Expert, such fees shall be determined by the President of IPT, and the
Parties shall necessarily abide by such determination and, except as otherwise
specifically provided for herein or in a separate agreement for such purpose,
the corresponding costs shall be borne equally by both Parties;     (h)   if new
facts arise or are disclosed that may cast a doubt on the impartiality or
qualification of the Expert with respect to the dispute, including his/her
omission regarding the provision of item 19.3.3, or if any Party finds that
there is a material risk of conflict of interests that may influence the
decision of the Expert, then either Party may within seven (7) days from the
date on which it became aware of such fact, disclosure or omission, request that
the President of IPT make a decision as to the removal of the Expert or not;    
(i)   in his/her decision the President of IPT shall take into account any
conditions which the requesting Party may wish to impose;     (j)   if the
President of IPT decides to remove the Expert, he/she shall appoint a
replacement. In such case the procedures specified in letters (d) to (f) above
shall also be applicable with respect to the confirmation and appointment of the
new Expert.

19.3.3 Qualifications of the Expert
The person to be appointed as the Expert:

  (i)   shall be qualified through technical education, experience and training
to issue an opinion regarding the dispute;     (ii)   shall not have a conflict
of interests, before or after accepting the appointment; and     (iii)   shall
not, at the time of appointment and during his activities as the Expert with
regard to such dispute, hold a position as officer, head of department,
employee, services provider, directly or through a third party, or consultant of
either Party or an Affiliate Company thereof, nor shall he/she have held or will
held any such position during the three (3) years preceding or following his/her
appointment as Expert.

 

--------------------------------------------------------------------------------

 

54

  19.3.4   Confidentiality

All information, data or documents submitted to the Expert by either Party shall
be deemed confidential and shall not be disclosed by the Expert to any person
whatsoever, except to his employees or professional consultants, provided,
however, that such disclosure shall always be subject to the provisions of item
19.3.4.1.

  19.3.4.1   The employees or professional consultants of the Expert shall prior
to receiving any information, data or documents referred to in item 19.3.4 above
specifically undertake in writing with the Expert to maintain them on a strictly
confidential basis.

  19.3.5   Obligations and Prerogatives of the Expert

The obligations of the Expert shall be set forth in the instrument of his
appointment, among which the following shall necessarily be included:

  (i)   impartially decide the dispute, based solely upon the facts and data
furnished by the PARTIES;     (ii)   decide the dispute within the time limit
assigned therefor, which shall not exceed sixty (60) days from the confirmation
of his appointment, excluding Days corresponding to delay in receiving
information requested or answers to queries or notices given to either Party;  
  (iii)   submit in writing to the Parties, prior to the expiration of the time
limit established in the preceding item, a draft of the document in which he/she
shall set forth his decision of the dispute, indicating the basis therefor;    
(iv)   keep and ensure the confidentiality referred to in item 19.3.4;     (v)  
give ten (10) days’ prior Notice to the other Party of any meeting he/she
intends to conduct with a Party, so as to enable such other Party to attend the
meeting;     (vi)   return to the submitting Party all documents (and copies
thereof) submitted in connection with his/her duties, once they are completed.

 

--------------------------------------------------------------------------------

 

55

  19.3.5.1   The Expert shall disregard all information submitted to him after a
period of thirty (30) days from his appointment, except for information
delivered to comply with a specific request, which information shall be
delivered within no more than ten (10) days from the request made by the Expert.
    19.3.5.2   The Expert shall be entitled, in addition to the rights contained
in the instrument of his appointment, to request the Parties to deliver any
additional information he/she deems necessary for the resolution of the dispute,
as well as to retain for such purpose any expert or independent consultant,
subject to the determination of its fees within the reasonable limits practiced
in the market.

  19.3.6   Obligations and Rights of the Parties

  19.3.6.1   Each Party shall have, with respect to the Expert and the other
Party, the following set of obligations in connection with submission of a
dispute to Expert Proceeding:

  (i)   send to the Expert, within thirty (30) days from his appointment,
documentation containing information necessary for the resolution of the
dispute;     (ii)   make available to the Expert, within ten (10) days from the
corresponding request, all additional specific information that the Expert may
deem necessary to conduct his activities;     (iii)   send concurrently to the
other Party copies of the documentation containing the information referred to
in the preceding two clauses;     (iv)   bear its costs for remittance of
information to the Expert and the other Party, as well as its expenses with
legal counsel, consultants, witnesses, employees and other persons involved in
the proceeding;     (v)   bear fifty percent (50%) of the common costs and
expenses of the Expert Proceeding, which shall include:

  •   the fees of the Expert;     •   the fees of any independent consultant
called by the Expert;     •   the costs of selection and appointment of the
Expert, if made with the intermediation of the President of IPT;

 

--------------------------------------------------------------------------------

 

56

  (vi)   abide by the final decision of the Expert, except in the event of fraud
or error with respect to the LAW or material facts or in the event of
demonstrable inadequacy in the consideration of such facts.

  19.3.6.2   The rights of each Party include:

  (i)   the right to take part in any meeting of the Expert with the other
Party, as long as it communicates to the Expert in writing that it intends to
participate in such meeting within five (5) Days from the receipt of the Notice
referred to in item 19.3.5(v);     (ii)   the right to comment upon or contest
information sent by the other Party to the Expert, as long as it does so in
writing within fourteen (14) Days from receipt of such information; and    
(iii)   specifically in respect of a dispute submitted to Expert Proceeding, the
right to commence Arbitration proceedings at any time before execution of the
instrument for appointment of Expert referred to in item 19.3.2(e).

  19.3.7   Other Provisions

Unless otherwise expressly agreed by the Parties, if within the time limit
assigned in item 19.3.5(ii) the Expert fails to submit his/her decision, then at
the request of either Party the Expert shall be promptly removed and another
Expert shall be appointed, whereupon the appointment procedure provided for in
item 19.3.2 shall apply anew.

  19.3.7.1   After a final decision is rendered, the prevailing Party shall be
reimbursed by the Party prevailed upon for all documented costs incurred by the
prevailing Party in connection with the Expert Proceeding.     19.3.7.2   Law
9,307 of September 22, 1996 shall apply on a supplementary basis to this section
to the extent that such Law does not conflict with this section.

19.4   Tripartite Arbitration

 

--------------------------------------------------------------------------------

 

57

  19.4.1   The Parties recognize that the resolution of certain claims, disputes
or controversies arising out of or relating to this Agreement may have
implications for the performance by Supplier of its obligations under the
Comgás-Supplier Agreement; likewise, the resolution of certain claims, disputes
or controversies arising out of or relating to the Comgás-Supplier Agreement may
have implications for the rights and obligations of the Parties under this
Agreement. Accordingly, in the event of commencement of arbitration proceedings
under this Agreement, whose outcome may have implications for the rights and/or
obligations of Supplier under the Comgás-Supplier Agreement, or in the event the
resolution of a dispute by arbitration under the Comgás-Supplier Agreement may
have implications for the rights and/or obligations of the Parties under this
Agreement, it is agreed that: (a) the Parties and/or Supplier may consolidate in
a single Tripartite Arbitration the disputes arising out of this Agreement and
the disputes arising out of the Comgás-Supplier Agreement, (b) the
Comgás-Supplier Agreement shall confer on the User the right to join any
arbitration conducted under the Comgás-Supplier Agreement that meets the
requirements in this item; (c) Supplier may join any Arbitration conducted under
this Agreement that meets the requirements in this item; and (d) Comgás may
require that the User join any arbitration conducted under the Comgás-Supplier
Agreement that meets the requirements in this item (each a “Tripartite
Arbitration”).

  19.4.2   In the event arbitration is commenced under the Comgás-Supplier
Agreement, Comgás shall give Notice of such fact to the User within no more than
5 days from such commencement. In such case or in the case of Arbitration
instituted under item 19.1.2 hereof, the Parties shall within no more than sixty
(60) days from request for Arbitration confirm institution of Tripartite
Arbitration. In the event the Parties decide to consolidate arbitrations and in
the event the Parties and Supplier join a Tripartite Arbitration, the Parties
shall abandon any separate arbitration then pending whose subject matter is
encompassed by such Tripartite Arbitration and shall assert any and all claims
and counterclaims with regard to their dispute(s) in such Tripartite
Arbitration, in keeping with the procedures established for such Tripartite
Arbitration.

 

--------------------------------------------------------------------------------

 

58

  19.4.3   In the event the Parties and Supplier are unable to come to a
consensus as to institution of Tripartite Arbitration within the period
mentioned in item 19.4.2 above, then the Parties and Supplier shall refer the
matter to BCCC. After five (5) days have elapsed from expiry of the period
mentioned in item 19.4.2 above, the Parties and Supplier shall submit in writing
to BCCC their defenses and answers, as the case may be, with respect to
institution of Tripartite Arbitration. Within five (5) days from receipt of the
defenses or answers of the Parties, BCCC shall appoint a sole Arbitrator to
resolve the dispute. Within three (3) days, the Parties and Supplier shall
confirm the appointment of the Arbitrator or shall repudiate such appointment
solely on the basis of item 19.2.3. Should a Party or Supplier so repudiate,
BCCC shall appoint a new Arbitrator that meets the requirements in subitem
19.2.3 within three (3) days from receipt of repudiation by such Party or
Supplier. Once appointment of the Arbitrator is confirmed, he or she shall
within no more than fifteen (15) days make a decision as to the conduct of
Tripartite Arbitration, which decision shall necessary cover the following
points: (i) whether the conflict involves common factual and legal matters or,
alternatively, whether Supplier holds information necessary for resolution of
the conflict or the solution to be adopted, (ii) in the case of Arbitration
requested or commenced under this Agreement, whether the conflict involves
contractual rights or obligations of Supplier warranting its joining the
proceedings or, alternatively, in the case of arbitration requested or commenced
under the Comgás-Supplier Agreement, whether the conflict involves contractual
rights or obligation of the User warranting its joining the proceedings,
(iii) whether a Party shall be adversely affected by institution of Tripartite
Arbitration, and (iv) if separation of the disputes may pose a risk that
conflicting decisions be rendered as regards this Agreement and the
Comgás-Supplier Agreement.     19.4.4   Tripartite Arbitration shall be
conducted by five (5) arbitrators, the User to appoint the first Arbitrator,
Comgás to appoint the second Arbitrator and Supplier to appoint the third
Arbitrator within thirty (30) Days after receipt of Notice confirming initiation
of Tripartite Arbitration. The two (2) remaining Arbitrators shall be appointed
by mutual agreement as among the Arbitrators appointed by the Parties and
Supplier. If a Party or Supplier fails to appoint its Arbitrator, such
appointment shall be made by BCCC in keeping with the criteria set forth in
subitem 19.2.3(iv).     19.4.5   Decisions rendered in Tripartite Arbitration
proceedings shall produce uniform effects on this Agreement and on the
Comgás-Supplier Agreement.     19.4.6   To the extent not inconsistent with the
terms of item 19.4 and its subitems, the terms and conditions set forth in
Item 19.2 shall apply to Tripartite Arbitration, including as regards applicable
rules and regulations, place of Arbitration and effects of the Arbitration
AWARD.

 

--------------------------------------------------------------------------------

 

59
19.5 Jurisdiction
The Parties elect the courts sitting in the City of São Paulo, State of São
Paulo, to settle any issues arising out of this Agreement that cannot be
resolved through Arbitration as a result of an express law provision, to the
exclusion of any other courts, no matter how privileged they may be.
19.6 Applicable Law
This Agreement will be ruled and construed under the laws of the Federative
Republic of Brazil.
ARTICLE TWENTY- GENERAL LIMIT OF LIABILITY
Except in the case provided in item 17.4.1, for which case there is a specific
liability limit, the Parties hereby agree that, in no event whatsoever, the
totality of payments to be made by Comgás to the User, as a result of penalties
and/or indemnification under the terms of this Agreement, shall exceed, during
the whole effectiveness of this Agreement, the total maximum limit corresponding
to six point five percent (6.5%) of the amount of the Agreement, determined by
the following formula:
IL= K x 0.065 x DCA x N x GP, where

         
IL
  -   is the maximum limit of payments to be made by Comgás;
 
       
DCA
  -   is the Daily Contracted Amount;
 
       
N
  -   is the number of days of effectiveness of the Agreement, calculated as of
the execution date of the Agreement up to the final date set forth in item 13.1;
 
       
GP
      is the Gas Price in force on the date of occurrence of each event of
payment converted to Reais per Cubic Meter at the Reference Conditions according
to the Exchange Rate of the last business day of the Month of payment of a
certain indemnification.
 
       
K
  -   Is the percentage of use of the IL, which shall vary from 0 to 1, and, on
the execution date of this Agreement, shall correspond to 1. At each payment
made by Comgás for penalties and/or indemnification, under the terms of this
Agreement, a new K factor shall be determined by the reduction of (i) the
percentage corresponding to such payment in relation to the value 0.065 x DCA x
N x GP from the (ii) previous K factor.

 

--------------------------------------------------------------------------------

 

60
ARTICLE TWENTY-ONE – AMENDMENT
This Agreement and the Annex hereto may not be amended unless by a written
instrument signed by both Parties
ARTICLE TWENTY-TWO — ANNEXES
The annex to this Agreement, which is an integral part hereof, is the following
document: Annex 1 – Gas Price.
ARTICLE TWENTY-THREE – CONTRACTUAL AMOUNT
This Agreement is ascribed the amount of R$ 560,060,513.77 (Five hundred and
sixty million, sixty thousand, five hundred and thirteen reais and seventy seven
cents), equivalent to US$ 231,803,532.04 (Two hundred and thirty one million,
eight hundred and three thousand, five hundred and thirty two dollars and four
cents) on June 16, 2005. Given the nature of this Agreement, the amount
indicated is estimate, not including the adjustments provided for contractually,
as well as taxes of any kind, nor it will be applicable to any provision of this
instrument.
ARTICLE TWENTY-FOUR – AGREEMENT OF THE PARTIES
The Parties express their agreement to the full contents of the Agreement,
binding themselves to faithfully and strictly comply with it. IN WITNESS
WHEREOF, they execute in the city of São Paulo, State of São Paulo, four
(4) counterparts of a single tenor and contents and for a single effect, on
January 21, 2006.
COMPANHIA DE GÁS DE SÃO PAULO — COMGÁS:

      (sgd.) Paulo César Nunes de Souza
Logistics and Human Resources Officer   (sgd.) André Lopes de Araújo
Industrial Market, VNG and Great
Commerce Officer

 

--------------------------------------------------------------------------------

 

61
CORN PRODUCTS BRASIL – INGREDIENTES INDUSTRIAIS LTDA.

      (sgd.) Gilberto Sabatini Affonso
Finance and Administration Officer   (sgd.) Alberto Yoshio Nakata
Attorney

§   WITNESSES:

      (sgd.) Carlos Edgard Montagna
Tax ID (CPF):070,846,528-50   (sgd.) José Wagner Rodrigues da Silva
Tax ID (CPF): 063,391,588-20

A N N E X 1
GAS PRICE
I) Definition and Composition
The Gas Price at the Delivery Point (GP) shall be comprised of the sum of two
portions: one pertaining to the Commodity (PC) and other pertaining to
Transportation (PT), according to their respective amounts at each time, so that
GP = PC + PT.
I.1) Base Price:
In relation to the month of April 2000, the amounts of the portion pertaining to
the Commodity (PCB) and the portion pertaining to Transportation (PTB) on cash
and with no taxes, are as follows:

  §   PCB — US$ 1.101/MMBTU     §   PTB — US$ 1.374/MMBTU,

So that the base Gas Price (GPB) amounts to US$ 2.475/MMBTU, to be converted
into Reais as per I.4.

 

--------------------------------------------------------------------------------

 

62
I.2) Price at Commercial Supply Start-up
At the Commercial Supply Start-up, the portions comprising the Gas Price ¾ for
effectiveness up to the last day of the month preceding the first anniversary of
the Commercial Supply Start-up ¾ shall be calculated by the application of the
following formula:

  §   PCi = PCB x   PPI1  i       PPI0           §   PTi = PTB x   PPI1  ,
where:       PPI0  

         
PCi
  -   Is the amount of the portion pertaining to the commodity at the Commercial
Supply Start-up;  
PTi
  -   Is the amount of the portion pertaining to Transportation at the
Commercial Supply Start-up;  
PPI1
  -   Is the Producer Price Index, Industrial Commodities published by the U.S.
Department of Labor, Bureau of Labor Statistics related to the month preceding
the month of the Commercial Supply Start-up;  
PPI0
  -   Is the Producer Price Index, Industrial Commodities published by the U.S.
Department of Labor, Bureau of Labor Statistics related to the month of March
2000.

I.3) Annual Readjustments
On an annual basis, on the first day of the month of anniversary of the
Commercial Supply Start-up, the portions comprising the Gas Price ¾ for
effectiveness for a period of twelve (12) months ¾ shall be readjusted as
follows:

  §   PCi = PCB x   PPIi  ,       PPI0           §   PTi = PTB x   PPIi  ,      
PPI0  

Where:

         
PCi
  -   Is the amount of the portion pertaining to the commodity adjusted and
applicable to each twelve (12)-month period;  
PTi
  -   Is the amount of the portion pertaining to Transportation adjusted and
applicable to each twelve (12)-month period

 

--------------------------------------------------------------------------------

 

63

             
PPIi
  -   Is the Producer Price Index, Industrial Commodities published by the U.S.
Department of Labor, Bureau of Labor Statistics related the month preceding the
adjustment month;  
PPI0
  -   Is the Producer Price Index, Industrial Commodities published by the U.S.
Department of Labor, Bureau of Labor Statistics related to the month of March
2000;

    I.4) The amounts of each portion previously defined shall be converted from
US$/MMBTU to R$/MMBTU through the Exchange Rate of the day preceding the
maturity day of the invoice pertaining to the gas supply.

II) Taxes, Contributions and Liens
Each portion previously defined shall be added by the taxes, contributions
(including PIS/PASEP and COFINS) and other liens on which they are levied or
shall be levied.
III) Criteria for Rounding up and Decimal Places
In the calculations of prices stated in this annex, four (04) decimal places
shall be used for all prices, portions and indexes participating in those
calculations. The rounding up criteria shall be the mathematics criteria, i.e.:
— If the fifth decimal place ranges from 0 through 4, the fourth place shall
maintain its value;
— If the fifth decimal place ranges from 5 through 9, the fourth place shall be
added a unit.