RESERVE POWER AND ELECTRICITY SUPPLY CONTRACT



 









Exhibit 10.09





	 
	CONTRACT OF POTENCY RESERVE AND SUPPLY OF ELECTRIC

	POWER, ENTERED BY COMPANHIA HIDRO ELÉTRICA DO SÃO

	FRANCISCO — CHESF, AND TRIKEM S/A, PURSUANT TO THE

	HORO-SEASONAL TARIFF STRUCTURE.








COMPANHIA HIDRO ELÉTRICA DO SÃO FRANCISCO, operator of electric power public
services, established in the City of Recife, State of Pernambuco, at Rua
Delmiro Gouveia number 333, District of Bongi, enrolled in the Taxpayers’
General Registry of the Ministry of Finance under number 33 541 368/0001-16 and
in the Fiscal Registry of the State of Pernambuco under number 18 1 001
0005584-6, hereinafter referred to as CHESF, and TRIKEM S/A, with its
industrial facilities in the Municipality of Maceió, State of Alagoas, enrolled
in the Taxpayers’ General Registry of the Ministry of Finance under number 13
558 226/0013-98 and in the Fiscal Registry of the State of Alagoas under number
240 07111-5, hereinafter referred to as CONSUMER, the parties being represented
by their Directors who signed “in-fine”, have mutually adjusted this CONTRACT
OF POTENCY RESERVE AND SUPPLY OF ELECTRIC POWER, upon the following clauses:



TITLE 1




TECHNICAL TERMS





	1st CLAUSE 	 	For perfect understanding and greater precision of the technical
terminology utilized in this instrument and in the relating regulation
provisions, it is hereby agreed by the parties the meaning of the
following words and terms:






	 	a)	 	Potency — Electric power related to the time unit
and denominated in kilowatts (KW);
	 
	 	b)	 	Demand — Average potency measured by integrative
device during any 15 (fifteen) minute interval, or any other
time interval to be established by the Granting Authority,
denominated in KW;
	 
	 	c)	 	Maximum Demand — Greatest demand over a defined
period of time;
	 
	 	d)	 	Recorded Demand — The maximum of the simultaneous
demands, recorded at 15 (fifteen) minute intervals, during as
supply period;
	 
	 	e)	 	Contracted Demand — Maximum demand to be
necessarily provided at the delivery point by CHESF at any
time during the period of validity of this CONTRACT, to be
necessarily paid under the contractual terms, irrespective of
its being utilized by the CONSUMER;
	 
	 	f)	 	Demand to be Billed — Demand defined by
legislation, per horo-seasonal segment, to be billed, being
the greater value between the potency demanded, verified by
metrics, completed in the 15 (fifteen) minute interval, during
the period of supply, or the contracted demand, without
prejudice to the provisions in subsequent legislation;
	 
	 	g)	 	Potency Reserve — contracted demands
chronologically related to a given period;
	 
	 	h)	 	Peak hours — Period consisting of 3 (three) daily
consecutive hours, in the interval included daily from 5:30
P.M. to 8:30 P.M., except for Saturdays and Sundays. The daily
interval of three consecutive hours might be redefined, within
the period from 5:00 P.M. to 10:00 P.M., agreed upon by CHESF
and the CONSUMER, considering the features of its electric




 









 






	 	 	 	system.
	 
	 	i)	 	Out of Peak Hours — Will be the group of
complementary hours to the Peak Hours, plus total hours for
Saturdays and Sundays.
	 
	 	j)	 	Dry Period — Period of seven consecutive months,
including the supplies from readings in May through November
of every year.
	 
	 	l)	 	Wet Period — Period of five consecutive months,
including the supplies from readings in December of one year
through April of the following year.





TITLE II




SUBJECT MATTER, VALIDITY, INTERRUPTION AND TERMINATION





	2nd CLAUSE 	 	This CONTRACT serves to determine the terms for the Potency
Reserve and Supply of Electric Power, which CHESF and the CONSUMER hereby
agree to, for utilization and the industrial facilities of TRIKEM S/A.,
located in the Municipality of Maceió, State of Alagoas, measured at 230
KV, and intended for the industrial production of Chlorine and Chlorine
Soda, and other products that might be manufactured at this consuming
unit, in the quantities and for the periods set forth below, according to
the conditions to be observed for the supply of electric power with
differentiated prices, pursuant to the periods in the year and the hours
of power utilization, following the horo-seasonal tariff structure.
	 
	3rd CLAUSE 	 	This CONTRACT will be in force for the period of 5 (five) years,
as of the first day of the month established for the beginning of supply
(Table Enclosure I), conditionally assured the renewal, but might be
terminated:






	 	a)	 	By either party, if there is a relevant cause and
provided that it notifies the other party, in writing, in
advance, at least 18 (eighteen) months, of the termination of
the respective period of supply in course at the time of the
notification “ whether dry or wet as indicated on the Table
enclosure I or its revisions;
	 
	 	b)	 	At any time, upon unilateral declaration by the
harmed party, in the event of breach of a rule governing the
general conditions for supply/utilization of the electrical
power service, or non compliance with this CONTRACT, except if
featured a force-majeure or incidental event (article 1058,
sole paragraph, of the Brazilian Civil Code).






	 	 	FIRST PARAGRAPH — Whenever the parties agree upon a change in the
Table of Potency Reserves (enclosure I), for expanding or
restricting the contracted supply, the contractual validity period
will be automatically modified, prevailing for the resolution of
this adjustment the conditions set out in the caput of this clause.
	 
	 	 	SECOND PARAGRAPH — On instances where this CONTRACT or the official
regulation on electric power supply allow it, the rescission will
be replaced by a temporary and conditional interruption of the
supply, until the reason determining the suspension measure has
been overcome.
	 
	 	 	THIRD PARAGRAPH — In the events of rescission included in items “a”
or “b” of the caput, no reimbursement or compensation will apply to
either party, save for the payment of the supply performed and its
pertinent complements; under the termination circumstances
specified in item “c”, the harmed party will be entitled to refund
of its losses and damages.




 









 











TITLE III




POTENCY RESERVE





	4th CLAUSE 	 	For the purposes anticipated in the 2nd CLAUSE in this instrument,
CHESF warrants the supply, for the periods and in the quantities set forth
in the Table Enclosure I.






	 	 	FIRST PARAGRAPH — The dates for the beginning of validity of the
reserved potencies, for all purposes in this CONTRACT, will be
counted every month as of the last day in the preceding month, as
per reading calendar, of the supply period considered in Table
Enclosure I.
	 
	 	 	SECOND PARAGRAPH — The reserved demand for the out of peak hours in
each period, dry or wet, might not be lower than the reserved
demand for the peak hours in the same period, as specified in
Enclosure I.
	 
	 	 	THIRD PARAGRAPH -The reserved demands for the peak and out of peak
hours in the wet period might not be lower than the greatest
reserved demands for the respective hours of the preceding dry
period.
	 
	 	 	FOURTH PARAGRAPH — The changes in originally reserved demands will
be subject to the provisions in this Clause, as well as to the
provisions in legislation and subsequent regulating rules.
	 
	 	 	FIFTH PARAGRAPH — The CONSUMER will inform, in writing, to CHESF,
its forecast for potency reserve, up to June thirty of every year,
at least for the five subsequent years, conditioned to:
	 
		 	1 - reductions in the load already reserved for the contractual
period might only be requested by the CONSUMER, up to a 20% limit,
to be effective as of January of the first subsequent year, or at a
free percentage to be effective as of January of the second
subsequent year.
	 
		 	2 - increases in the load reserved for the contractual period,
desired by the CONSUMER, will always be subject to previous consent
by CHESF, for verification and/or adjustment of provision.
	 
	 	 	SIXTH PARAGRAPH — Any load increases or reductions requested by the
CONSUMER, out of the periods and conditions anticipated in the
fifth paragraph of this Clause, will always be subject to previous
consent by CHESF, expressed in writing, for verification and/or
adjustment of provision.
	 
	 	 	SEVENTH PARAGRAPH — Reductions in load already reserved for the
contractual period might only be requested by CHESF up to June
thirty of every year, to become effective as of the second
subsequent year.
	 
	 	 	Reductions in load already reserved, requested by CHESF, out of the
periods and conditions anticipated in this paragraph, respected the
instances of force-majeure events and supervenient legislation,
will always be subject to the CONSUMER’s previous consent,
expressed in writing.
	 
	5th CLAUSE 	 	Annually, up to December thirty-first, a Contractual Addendum will
be executed, so as to include at least five years, as of the following
year, expressing the new reserved demands.
	 
	6th CLAUSE 	 	In the event of tacit extension of this CONTRACT, with no explicit
change in the potency reserves, the potencies contracted for the latest
dry and wet period,




 









 






	 	 	included in the Table Enclosure l, or its revisions, will prevail
for all subsequent periods during the validity of the contract, for
all contractual purposes.
	 
	 	 	SOLE PARAGRAPH — In the event that the parties decide to enter a
new contract, it is clear and understood that the demands
contracted for the out of peak segments might not be lower than
those for the latest dry and wet periods, contracted in this
instrument.





TITLE IV




MINIMUM DEMAND — BILLING AND PAYMENT — PENALTY FOR DELAY





	7th CLAUSE 	 	The demands equivalent to the Potency Reserves anticipated in the
4th CLAUSE, will constitute minimum values for billing purposes, even if
there is no corresponding consumption in the supply periods included in
the Table of contracted demands, in said CLAUSE.
	 
	 	 	SOLE PARAGRAPH — The changes that might be agreed by the parties,
in the quantities and dates of beginning of validity of the
contracted demands, will become the minimum values for billing
purposes.
	 
	8th CLAUSE 	 	The demand to be billed monthly to the CONSUMER, for each
horo-seasonal segment, will be the greater of the values defined below:
	 
		 	1 - The greatest demand, verified by total measuring in the 15
(fifteen) minute interval, of each horo-seasonal segment, during
the monthly supply period the billing corresponds to;
	 
		 	2 - The contracted demand for the period of supply.
	 
	 	 	FIRST PARAGRAPH — The portion of the totally measured demand,
referring to each horo-seasonal segment, which is in excess of the
value of the demand reserved by the CONSUMER for that segment, will
be calculated at the excess tariff in force. If the excess demand
portion is within the tolerance limit established by the Granting
Authority, presently of up to 5% (five percent) of the reserved
demand, the excess tariff will not be applied, but rather the
respective horo-seasonal tariff.
	 
	 	 	SECOND PARAGRAPH — The billing corresponding to the reactive power
and to the reactive potency demand, verified through appropriate
measuring, in excess of the quantities allowed by the reference
potency factor established by the Granting authority, will be
calculated pursuant to the criteria provided in the legislation in
force.
	 
	9th CLAUSE 	 	The readings and the billings for the supply contracted hereby,
will be performed at intervals of approximately 30 (thirty) days. The due
date of each monthly bill will be indicated thereon, observing the minimum
period anticipated in regulation. The place for payment is the treasury at
CHESFs headquarters, and CHESF might elect collection/receipt by bank.
	 
	 	 	FIRST PARAGRAPH — Delay in the payment of the bill will imply in
the enforceability of the increments established in the regulation
relating to the electric power service, without prejudice to the
updating of the monetary value of the balance due, according to the
applicable legislation.
	 
	 	 	SECOND PARAGRAPH — If the consumer fails to pay the monthly bills
within the period of up to five days after receiving the invoices,
upon elapsing an additional period of 10 subsequent days and if the
invoice has still not been discharged, it




 









 






	 	 	will be featured the consumer’s breach, and as of that time will be
applicable the provisions in directive ANEEL 466, article 76,
paragraph 2nd, or legislation that supersedes it, entitling CHESF
to issue a “notice of disconnection” and relieves it of the
obligation of maintaining the potency reserve, subject matter of
this contract, and continuing the supply hereby established, under
the 3rd CLAUSE and its 2nd and 3rd paragraphs. Only after the
payment of the total indebtedness incurred, accrued with taxes,
moratorium fees, additional charges and other legal penalties, the
supply will be resumed for the periods and as of the date that the
parties will set out in writing, such adjustment operating as an
addendum to this CONTRACT, in the event of suspension, or as a new
contract, if it has been rescinded.
	 
	 	 	THIRD PARAGRAPH — The levels of the tariffs, the levels of the
adjusted tariffs, the revisions in the levels of the tariffs, and
the billing of the power and the demands, are established under the
criteria of the specific legislation contained in Decree 774 of
03/18/93, and Laws 8631 of 03/04/93, 9069 of 06/29/95 and 9074 of
07/07/95, and regulation issued on the subject.





TITLE V




DELIVERY POINT AND TECHNICAL FEATURES OF THE SUPPLY





	CLAUSE 10 	 	The electric power, subject matter of this CONTRACT, will be
delivered on the last structure of CHESFs 230 KV transmission
line, intended for interconnecting the CONSUMER’s sub-station to
CHESFs System, which structure is located at the limits of the
CONSUMER’s property.
	 
	CLAUSE 11 	 	CHESF will provide the electric power supply to the CONSUMER on
three-phase, alternate current, at the frequency of 60 Hertz,
230 KV nominal tension between phases.
	 
	CLAUSE 12 	 	The electric power to be supplies by CHESF should be utilized by
the CONSUMER in such a way that will not cause tension unbalance
and thus prevent appearing reverse sequence tension.






	 	 	Under any circumstances, the reverse tension levels arising from
the CONSUMER’s industrial operation at the 230 KV dike of CHESFs
Rio Largo II Sub-station feeding the CONSUMER’s Sub-station, should
be maintained according to the relation (V2/V1) equal to or below
2% (two percent), where V1 is the direct sequence tension and V2,
the reverse sequence tension, which limit is to be observed
considering the totality of loads and consumers connected to said
dike.






	CLAUSE 13 	 	The metrics of the active and reactive energies, as well as the
demand, will be performed by CHESF, by appropriate clocks, of an accuracy
class equal to or below 1% (one percent). Any checking of the clocks that
would indicate a difference greater than 1% (one percent), will imply in a
mandatory correction of the preceding inaccurate billings, up to the
maximum of the 6 (six) latest invoices, crediting or charging the CONSUMER
for the respective differences found.






	 	 	FIRST PARAGRAPH — The CONSUMER might, if he so desires, be present
at the measuring and checking, as well as verify the respective
calculations.






	 	 	SECOND PARAGRAPH — The metrics intended for CHESFs billings will be
located at the CONSUMER’s sub-station, under the latter’s keep and
responsibility.





 









 





	 	 	THIRD PARAGRAPH — It will be incumbent to the CONSUMER designing
and installing, for its own cost and responsibility, the corrective
equipment required for improving the potency factor.





TITLE VI




PROJECT AND FACILITIES FOR THE CONSUMING SUB-STATION — MODIFICATION





	CLAUSE 14 	 	It is the CONSUMER’s formal commitment to comply with all
requirements established in the Instructions for Presentation of Project
and Criteria for Inspection and Release of Consumers Connection on 230
kVn, set forth by CHESF, which contents the CONSUMER states being fully
knowledgeable of, as well as to comply with all technical requirements
contained in the mentioned Instructions. CHESF is ensured the right of, at
any time, subject the CONSUMER’s facilities to inspections and testing,
including as condition for being energized.






	 	 	FIRST PARAGRAPH — Any requirement for modifying the project
approved by CHESF should be previously communicated and justified
to it, for appreciation and decision, observing the third paragraph
in this CLAUSE.
	 
	 	 	SECOND PARAGRAPH — Whenever there is a modification of the project,
the CONSUMER should present to CHESF an updated listing of its
industrial equipment, indicating the basic features of electric and
mechanical operation thereof.
	 
	 	 	THIRD PARAGRAPH — For analysis and discussion of any project, CHESF
will be allowed the period of 3 (three) months as of its receipt.





TITLE VII




SUPPLY AND UTILIZATION OF ELECTRIC POWER





	CLAUSE 15 	 	The supply of electric power, subject matter of this CONTRACT,
will be governed by the legislation in force and its changes
that might be established by the Public Authorities, by the
governing and regulatory provisions applicable, and by the
conditions set forth in this instrument and its addenda.
	 
	CLAUSE 16 	 	It is forbidden the utilization of said energy for supply to the
CONSUMER’s Workers Villages, or any kind of assignment or
transfer to third parties.
	 
	CLAUSE 17 	 	CHESF will endeavor to perform the supply to the CONSUMER on
satisfactory commercial conditions, trying to maintain as low as
possible the interruptions and disturbances in the supply.
	 
	 	 	SOLE PARAGRAPH — No liability shall be attributed to CHESF for
losses resulting from said interruptions or disturbances in the
supply, unless there is satisfactory evidence of its exclusive
deceit as to the materialization of such abnormalities.
	 
	CLAUSE 18 	 	Once evidenced the appearance of harmonics, CHESF reserves the
right to demand, at any time and upon agreements with the
CONSUMER, that the latter installs, within a reasonable period
to be established by agreement, equipment intended to protect
CHESFs System from the influence of harmonics at harmful
levels, originating from the CONSUMER’s facilities, or to
reduce tension and frequency fluctuations due to sudden
oscillations in the load, or any other harmful disturbances
arising from the consuming facilities, all corresponding
actions and costs being the CONSUMER’s straight and exclusive
responsibility.





 









 





	CLAUSE 19 	 	The operation of the CONSUMER’s own generators in parallel with
the CHESF System will depend on previous understanding between
the parties, in writing, as well as the preparation operation
routines and programs between them.
	 
	CLAUSE 20 	 	If CHESF has to interrupt the supply of electric power for
performing repairs, changes or replacements of equipment and
materials, or for performing preventive maintenance of its
system, it will coordinate with the CONSUMER the dates and
hours of the service interruptions, whenever possible, at least
7 (seven) days in advance. If supply interruptions take place
for emergency causes, CHESF will endeavor its best efforts to
inform the CONSUMER.
	 
	 	 	SOLE PARAGRAPH — The CONSUMER should also inform CHESF, with
identical anticipation, the scheduled stoppages of its industrial
system, in order to allow, as much as possible, to concile the
bilateral interests as to supply interruptions.
	 
	CLAUSE 21 	 	The operators of the CONSUMER’s sub-station will comply with the
technical directives issued by the body in charge of CHESFs Load
Dispatch, with respect to any operating conditions and
contingencies of the System.
	 
	CLAUSE 22 	 	The parties commit to execute a Rule for Operational
Relationship, which will define attributions, responsibilities,
and will establish procedures required for the operational
relationship between CHESF and TRIKEM S/A.
	 
	 	 	SOLE PARAGRAPH — This Rule will be revised whenever the System’s
conditions of operation should require it.





TITLE VIII




GENERAL CONDITIONS





	CLAUSE 23 	 	For legal purposes, the value of this Contract amounts to
R$ 207,414,565.00 (two hundred and seven million, four hundred
and fourteen thousand, five hundred and sixty-five reais).
	 
	CLAUSE 24 	 	This CONTRACT will be subject to the supervenient legislation.
	 
	CLAUSE 25 	 	This CONTRACT cancels and supersedes in-totum the Contract of
Potency Reserve and Electric Power Supply, executed by and
between CHESF and SALGEMA INDÚSTRIAS QUÍMICAS S/A., On November
29, 1985, the latter presently with the new social denomination
TRIKEM S/A., according to the Minutes of the Extraordinary
General Meeting held in the State of Bahia, on December 12,
1996, Filed with the Trade Board of the State of Bahia on
12/12/96 under No. 96062619, as well their Addenda Nos. 01 to
07;
Said Contract is already void for all legal purposes.
	 
	CLAUSE 26 	 	The rights and obligations set forth in this CONTRACT are
binding to the successors and assignees of the parties.
	 
	CLAUSE 27 	 	Any changes in the clauses and conditions contained in this
CONTRACT will only be performed upon issue of contractual
addenda.
	 
	CLAUSE 28 	 	It is elected the Forum of the District of Recife, Capital of
the State of Pernambuco, has having jurisdiction for settling
any doubts or questions relating to this CONTRACT, which are not
resolved extra judicially, with express resignation to any other
whatever more privileged it might be.




Thus being adjusted, the parties sign this instrument on 3 (three) copies of
equal content and


 









 






configuration, read and found conforming, jointly to the witnesses below, who
were present at everything.




Recife, June 02,1998.




COMPANHIA HIDRO ELÉTRICA DO SÃO FRANCISCO — CHESF




	 	 	 
	
 

	 	
 
	(Signed by)

	 	(Signed by)
	Mozart de Siqueira Campos Araujo,

	 	Paulo de Tarso da Costa,
	Director President

	 	Operations Director







TRIKEM S/A.




	 	 	 
	
 

	 	
 
	(Signed by)

	 	(Signed by)
	Luiz Eduardo Emainé,

	 	Carlos Francisco Almeida,
	Manufacturing Vice-President

	 	Controller







	 	 	 
	WITNESSES:
	 	 
	 
	 	 
	
 

	 	
 
	(Signed by) Hélcio Dene Colodete,

	 	(Signed by) Ana Regina Tavares Cavalcanti,
	Regional Superintendent

	 	SOC Assistant