RAW MATERIAL SUPPLY CONTRACT (RS-789/95)



 





EXHIBIT 10.31



CONTRACT RS-789/95, EXECUTED BY AND BETWEEN COPESUL — COMPANHIA PETROQUÍMICA DO
SUL AND POLIOLEFINAS S.A.



COPESUL — Companhia Petroquímica do Sul, established at BR-386, Tabai/Canoas
Roadway, Km. 419, Southern Petrochemical Pole, in Triunfo-RS — Zip Code
95853-000, enrolled in the General Registry of Taxpayers of the Ministry of
Finance under No. 88 948 492/0001-92, hereinafter named COPESUL, represented in
this act pursuant to its By-laws by its Directors ROGÉRIO AFFONSO DE OLIVEIRA
and REGIS LEMOS DE ABREU, and POLIOLEFINAS S.A., established at Rua Alexandre
Dumas No. 2016, Chácara Santo Antonio, in the city of São Paulo-SP, enrolled in
the General Registry of Taxpayers of the Ministry of Finance under No. 62 336
946/0001-80, and industrial plant at BR-386, Tabai/Canoas Roadway, Km. 419,
unit 27, Southern Petrochemical Pole, in Triunfo-RS, enrolled in the General
Registry of Taxpayers of the Ministry of Finance under No. 62 336 946/0007-76,
hereinafter named POLIOLEFINAS, legally represented in this act by its Director
LUIZ EDUARDO EMATNE and by its Proxy EDSON BARROS MAIA, have mutually agreed to
execute this contract of purchase and sale of raw materials.




FIRST CLAUSE — SUBJECT MATTER





	1.1.	 	The subject matter of this contract is the future supply and acquisition
of ethylene arising from COPESUL’s Expansion Project anticipated for the
second semester of 1998, whereby COPESUL obliges to sell to POLIOLEFINAS,
and the latter, to purchase.





SECOND CLAUSE — RISKS AND RESPONSIBILITIES





	2.1.	 	POLIOLEFINAS is fully knowledgeable that there are risks associated to
the utilization of ETHYLENE, subject matter of this contract, and agrees
that its personnel is aware of such risks, undertaking full responsibility
for advising, training and protecting its employees, contracted parties,
and customers, with respect to the risks to people and property, somehow
related to the products.
	 
	2.2.	 	COPESUL provides no warranty that the ETHYLENE supplied will be suitable
for any particular utilization, except as to the specification and supply
conditions set forth in the Fourth Clause — SUPPLY AND TRANSFER OF TITLE,
and in Enclosure I — QUALITY. POLIOLEFINAS further undertakes full
responsibility for the results of the utilization of the products in its
facilities, alone or combined with other products or substances and in any
manufacturing process whereby the product is utilized as component or raw
material.
	 
	2.3.	 	Upon compliance with the specification and supply conditions included in
the Fourth Clause — SUPPLY AND TRANSFER OF TITLE, and in Enclosure I -
QUALITY, POLIOLEFINAS obliges to maintain COPESUL free and safe from any
claims, damages and/or losses incurred by itself or caused to third
parties, resulting from the performance of this contract, attributed as
being the responsibility of POLIOLEFINAS and/or its agents, contracted
parties, third parties under its responsibility, or anyhow related
thereto.
	 
	2.4.	 	Considering the features of the interlinked system for distribution of
ETHYLENE, subject matter of this contract, POLIOLEFINAS will endeavor that
the consumption flow of the ETHYLENE be as uniform as possible, under the
technical-operational features of the processes utilized in its industrial
facilities, observing the physical conditions on POLIOLEFINAS’ battery
limit, set forth in Enclosure I — QUALITY.
	 
	2.5.	 	Up to October 30 of every year, POLIOLEFINAS will provide a forecast for
ETHYLENE’s consumption during the following calendar year, which should
comply with the annual consumption limits set forth in Enclosure II -
QUANTITIES.
	 
	2.6.	 	COPESUL and POLIOLEFINAS should always maintain the other party informed














 






	 	 	with respect to the dates anticipated for their scheduled maintenance stoppages
in excess of 5 (five) days, providing the ETHYLENE production/consumption
scheduling during them, in writing and at least 180 (one hundred and eighty)
days in advance.
	 
	2.7.	 	COPESUL will be responsible for the supply of ETHYLENE.






	2.7.1.	 	COPESUL shall maintain adequate inventory of ETHYLENE for, on or
about the time of general maintenance stoppages or any other
previously known significant event, ensuring the supply as set forth
in the Fifth Clause — STOPPAGES.





THIRD CLAUSE — TERM





	3.1.	 	This contract is valid for 15 (fifteen) years, as of the date of the
operational start-up under the expansion, renewable for consecutive
periods of 5 (five) years, by mutual agreement of the parties, and might
be terminated at any time in the event of institutional changes or any
force-majeure causes that significantly impact the productive capacity of
the other party, and the interested party should notify the other party,
in writing and at least 24 (twenty-four) months before the expiration of
the respective contractual periods, of its intent of not extending it.





FOURTH CLAUSE — SUPPLY AND TRANSFER OF TITLE





	4.1.	 	COPESUL warrants, on regular conditions of supply, the delivery of
ETHYLENE on continuous flow, according to the physical conditions and the
specification contained in Enclosure I — QUALITY, by a gasduct directly
interconnecting its and POLIOLEFINAS’ facilities.
	 
	4.2.	 	The title to the ETHYLENE supplied by COPESUL will be deemed to be
transferred to POLIOLEFINAS as of the point of delivery, so defined as the
point located immediately downstream the “Official Clocks”.
	 
	4.3.	 	All methods and procedures relating to metrics of the quantities
supplied, the installation and calibration of the clocks, the frequency of
measurements, and ways for reconciling any differences encountered on the
measurements taken, are defined in Enclosure III — METRICS, and in
Technical Rule COPESUL N-IS-001-93a, integral parts of this contract.
	 
	4.4.	 	The ETHYLENE supplied by COPESUL that does not meet the specification and
the conditions of supply defined in this clause and in Enclosure I -
QUALITY, might not be accepted by POLIOLEPINAS, in which case the
deliveries will be interrupted until COPESUL has available ETHYLENE in
conditions of supply. In such instances, COPESUL will keep POLIOLEFINAS
informed of its actions and expectations with respect to the prompt
restoration of the regular conditions of supply, endeavoring to provide
POLIOLEFINAS’ consumption requirements.






	4.4.1.	 	If POLIOLEFINAS, upon timely notice, formally accepts out of
specification ETHYLENE, COPESUL will be relieved of any liability
for direct, indirect or consequential damages incurred by
POLIOLEFINAS and/or other consumers supplied by the latter, arising
from the utilization of this product.
	 
	4.4.2.	 	The acceptance by POLIOLEFINAS of a certain amount of out of
specification ETHYLENE does not imply, under any circumstances, in
its obligation to accept other quantities on such conditions.






	4.5.	 	If the ETHYLENE supplied by COPESUL is out of the specification warranted
under Enclosure I — QUALITY and this fact, for some internal problem of
COPESUL, is not timely informed to POLIOLEFINAS, COPESUL obliges to review
the claims relating to POLIOLEFINAS’ contaminated end product, and
provided that such claims are technically proven and recognized by both
parties, to negotiate a manner of reimbursement.














 











FIFTH CLAUSE — STOPPAGES





	5.1.	 	At the time of the scheduled maintenance stoppages, pursuant to item 2.6
in this contract, the following will apply:






	5.1.1.	 	COPESUL and POLIOLEFINAS are relieved of complying with the
provisions in item II.1 of Enclosure II — QUANTITIES, during the
corresponding period.
	 
	5.1.2.	 	COPESUL will distribute the ETHYLENE proportionally to the maximum
annual quantity contracted with each user of its Raw Materials
Center, and based on its availability, informing 30 (thirty) days in
advance the quantity available to POLIOLEFINAS.






	5.2.	 	COPESUL and POLIOLEFINAS will keep the other party informed of any events
that might jeopardize the regular supply of ETHYLENE, and endeavor all
efforts for promptly restoring regular supplies.
	 
	5.3.	 	If there is a reduction caused by COPESUL, in the supply of any utilities
required for POLIOLEFINAS’ production process, which would imply in the
reduction in consumption of the quantities of ETHYLENE defined in
Enclosure II — QUANTITIES, POLIOLEFINAS is relieved of complying with the
minimum quantities for the corresponding period.





SIXTH CLAUSE — TERMINATION





	6.1.	 	COPESUL and POLIOLEFINAS might, unilaterally and in full right, terminate
this contract, irrespective or judicial or extra judicial action, without
entitling the other party to any claim and/or indemnity, in the following
instances:






	6.1.1.	 	Breach of any contractual clause or condition;
	 
	6.1.2.	 	bankruptcy, dissolution, judicial or extra judicial liquidation or
settlement with creditors, by either party, requested, confirmed or
declared;
	 
	6.1.3.	 	partial or total transfer of this contract to third parties, with
no consent by the other party.






	6.2.	 	Except for force-majeure or incidental reasons, which relieve the
parties’ responsibility, COPESUL and/or POLIOLEFINAS might terminate this
contract at any time and at the exclusive discretion of the interested
party, however, the practice of this option should be communicated, in
writing, to the other contracting party, at least 12 (twelve) months in
advance, and the party who thus terminates the contract obliges to pay the
other party an amount equivalent to the ETHYLENE’s value of supply
corresponding to the contractual minimum of 6 (six) months, to be paid
during the twelfth month of the notice period and based on the prices in
force in the first day of that month.





SEVENTH CLAUSE — GENERAL PROVISIONS





	7.1.	 	COPESUL and POLIOLEFINAS might not, without previous and explicit
authorization by the other party:






	7.1.1.	 	assign or pledge, at any title, totally or partially, credits of
any nature whatsoever, resulting or arising from this contract;
	 
	7.1.2.	 	transfer this contract, totally or partially;
	 
	7.1.3.	 	utilize, mention or quote the other party’s name, or equivalent
expression, in advertising or publicity message, at any title
whatsoever.






	7.2.	 	Neither party will be liable for non complying with a contractual clause
or condition, if it is evidenced an unexpected interference in its
productive process, caused by fire, explosion, obstruction or damage to
machines and equipment in its industrial plant, jeopardizing its
operation.














 






	7.3.	 	When required, COPESUL and POLIOLEFINAS might, by mutual agreement,
reappraise Enclosure I — QUALITY, Enclosure III — METRICS, Enclosure IV -
PRICES AND ADJUSTMENTS, Enclosure V — TERMS OF PAYMENT and Enclosure VI -
TECHNICAL RULE COPESUL N-IS-001-93a in this contract, fitting them to the
new existing conditions.






	7.4.	 	The return to COPESUL of possible petrochemical effluents from
POLIOLEFINAS’ industrial plant will be governed by specific contractual
instrument.
	 
	7.5.	 	The documents listed below are attached to this instrument, fully
integrating it, to wit:






	 	 	 
	 
	 	 	ENCLOSURE I — QUALITY;

ENCLOSURE II — QUANTITIES;

ENCLOSURE Ill — METRICS;

ENCLOSURE IV — PRICES AND ADJUSTMENT;

ENCLOSURE V —  TERMS OF PAYMENT;

ENCLOSURE VI — TECHNICAL RULE COPESUL N-IS-001-93a.





EIGHTH CLAUSE — FORUM





	8.1.	 	It is elected the Forum in the city of Triunfo, State of Rio Grande do
Sul, as having jurisdiction for settling any questions arising from this
contract or its performance, formally resigning to any other, whatever
more privileged it might be.




And being thus agreed and engaged, the parties sign this contract on 2 (two)
copies of equal content and configuration, for the same single effect, with 5
(five) pages, in the presence of the witnesses undersigned, for all legal
purposes.




Triunfo, August 30, 1995.




	 	 	 
	
 

	 	
 
	(Signed by)

ROGÉRIO AFFONSO DE OLIVEIRA,

Director

	 	(Signed by)

REGIS LEMOS DE ABREU,

Director







COPESUL — COMPANHIA PETROQUÍMICA DO SUL




	 	 	 
	
 

	 	
 
	(Signed by)

LUIZ EDUARDO EMATNE,

Director

	 	(Signed by)

EDSON BARROS MAIA,

Proxy







POLIOLEFINAS S.A.




	 	 	 
	Witnesses:
	 	 
	
 

	 	
 
	(illegible signature)

Name: Bruno Albuquerque Piovesan

CPF: 228 982 800-97

	 	(illegible signature)

Name: Cláudio Fernandez Reinert

CPF: 262 722 100-00

















 






LIST OF ENCLOSURES TO CONTRACT RS-789/95



The enclosures to this contract, referred to below by their names, are duly
authenticated by the following representatives of the contracting parties:





	 	 	By COPESUL — Companhia Petroquímica do Sul

Name: Bruno Albuquerque Piovesan

Initials:                       
	 
	 	 	By POLIOLEFINAS S.A.

Name: Cláudio Fernandes Reinert

Initials:                        
	 
	 	 	ENCLOSURE I — QUALITY;

ENCLOSURE II — QUANTITIES;

ENCLOSURE Ill — METRICS;

ENCLOSURE IV — PRICES AND ADJUSTMENT;

ENCLOSURE V —  TERMS OF PAYMENT;

ENCLOSURE VI — TECHNICAL RULE COPESUL N-IS-001-93a.





	 	 	 
	
 

	 	
 
	(Signed by)

ROGÉRIO AFFONSO DE OLIVEIRA,

Director

	 	(Signed by)

REGIS LEMOS DE ABREU,

Director







COPESUL — COMPANHIA PETROQUÍMICA DO SUL




	 	 	 
	
 

	 	
 
	(Signed by)

LUIZ EDUARDO EMATNE,

Director

	 	(Signed by)

EDSON BARROS MAIA,

Proxy







POLIOLEFINAS S.A.















 





CONTRACT RS-789/95 -
ENCLOSURE I - QUALITY





	I.1.	 	During the delivery of the product, daily, on hours defined by the
parties, COPESUL will collect at its plant, for quality control purposes,
3 (three) samples of ETHYLENE, keeping 2 (two) as evidence for the period
of 3 (three) days.






	 	I.1.1.	 	For comparison purposes, if required by POLIOLEFINAS, COPESUL
obliges to sample the product received at the battery limit of
POLIOLEFINAS, on the same hours set forth in item I.1 above.
	 
	 	I.1.2.	 	The result of the ETHYLENE’s total analysis should be ready as of
12 (twelve) hours after the sampling time, and will be sent to
POLIOLEFINAS.
	 
	 	I.1.3.	 	In addition to the analyses mentioned in I.1 and I.1.1, COPESUL
will make available to POLIOLEFINAS the results of the routine
analyses performed on the ETHYLENE.






	I.2	 	COPESUL will endeavor, by a Quality Plan, to assure the ETHYLENE’s
quality, utilizing methods for control and monitoring of the process,
which evidence its stability and capability, so as to ensure that the
results of the analyses set out in item I.1 be extended throughout the
daily production period.
	 
	I.3.	 	If POLIOLEFINAS detects the existence of contaminants or inobservance of
minimum purity, which are disturbing its productive process, it will
notify COPESUL to this effect. COPESUL obliges to promptly collect sample
and perform analysis for confirmation and quantification of such fact, and
if confirmed that the ETHYLENE is out of specification, will take the
corrective actions required for restoring the supply in accordance with
the specification warranted. This sampling and analysis should continue at
proper intervals, until the purity or the contaminants are once more
within the contractual limits defined in item I.5 of this enclosure
(Ethylene’s Technical Specification table).






	 	I.3.1.	 	if the ETHYLENE is out of specification due to inobservance of the
minimum purity specified in this Enclosure, the prices will be
reduced so as to maintain the same unit price on terms of product
content, during the period in which the specification is not met.
	 
	 	I.3.2.	 	If the ETHYLENE is out of specification due to the tenor of
maximum contaminants defined in this Enclosure, there should be a
reduction of up to 20% (twenty percent) in the sale price of the
quantities that might be accepted by POLIOLEFINAS, by a factor
calculated according to the following equation, during the period in
which the specification is not met, and applying the greatest
reducing factor, in the event of contamination by multiple
components:





	 	 	 	 	 
	Factor (%) =
	10  ́	(NVC)2
	 	, where:
	
	 	
 	 	 
	
	 	CG	 	 







	 	 	 
	CG =

	 	contaminant’s severity rate, defined in the
“severity” column of the Ethylene’s Technical Specification
table, which is included in this Enclosure;
	 
	NVC =

	 	number of times by which the contaminant’s
limit is exceeded, calculated according to the following
formula:







	 	 	 	 	 
	NVC =
	 	(AR - EG)
	 	, where:
	
	 	
 	 	 
	
	 	EG	 	 







	 	 	 
	AR =

	 	Analysis representative of the out of specification product;
	 
	EG =

	 	Warranted specification, defined in item. I.5 in this Enclosure;







 









 







	I.4.	 	If a discrepancy occurs as to the quality of the ETHYLENE, POLIOLEFINAS should inform COPESUL, within the period defined
in item I.1, and the latter will analyze one of the evidence samples and trail the process variables, subsidizing a joint
decision by the companies.






	 	I.4.1.	 	If the quality deficiency of the ETHYLENE is demonstrated, the
provisions in items I.3.1 and/or I.3.2. in this enclosure will
apply, as the case may be.






	I.5.	 	The technical specification for the supply of ETHYLENE, dealt with in
this contract, as well as the respective methods of analysis to be
performed by COPESUL, are set forth in the Ethylene’s Technical
Specification table, included in this Enclosure.






	 	I.5.1.	 	Any change in the methodology should be previously informed to
POLIOLEFINAS, for acknowledgement of such revision.
	 
	 	I.5.2.	 	The ASTM E-29 method will be utilized as rounding-off criterion
and limit of acceptance of the analyses’ results.






	I.6.	 	The conditions for supply of ETHYLENE warranted by COPESUL at
POLIOLEFINAS’ battery limit are defined below:





	 	 	 	 	 	 	 
	Variables
	 	Temperature
	 	ETHYLENE

	Pressure

	 	kg/cm2 abs./minimum
	 	 	37	 
	 
	 	 	 	 	 	 
	Pressure

	 	kg/cm2 abs./maximum
	 	 	43	 
	 
	 	 	 	 	 	 
	Temperature

	 	Celsius/maximum
	 	 	45	 
	 
	 	 	 	 	 	 
	Temperature

	 	Celsius/minimum
	 	 	05	 








	I.7.	 	COPESUL and POLIOLEFINAS should reach an agreement as to what information
is required by POLIOLEFINAS from time to time, for obtaining and
maintaining the Certification of the Product’s Quality.





TECHNICAL SPECIFICATION ETHYLENE




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	COPESUL	 	 	 	 
	ANALYSIS
	 	UNIT
	 	SPECIFICATION
	 	SEVERITY
	 	ANALYTICAL METHOD

	Ethylene

	 	% mol
	 	min. 99.9
	 	 	-	 	 	Capillary gaseous chrom. (1)
	 
	 	 	 	 	 	 	 	 	 	 
	Ethane (1)

	 	ppm mol
	 	max. 900
	 	inactive
	 	Capillary gaseous chrom. (1)
	 
	 	 	 	 	 	 	 	 	 	 
	Methane (1)

	 	ppm mol
	 	max. 300
	 	inactive
	 	Capillary gaseous chrom. (1)
	 
	 	 	 	 	 	 	 	 	 	 
	Nitrogen (1)

	 	ppm mol
	 	max. 20
	 	inactive
	 	Gaseous Chrom.(1)
	 
	 	 	 	 	 	 	 	 	 	 
	Other Olefines

	 	ppm mol
	 	max. 10
	 	inactive
	 	Capillary gaseous chrom. (1)
	 
	 	 	 	 	 	 	 	 	 	 
	Acetylene (2)

	 	ppm mol
	 	max. 5
	 	 	2	 	 	Capillary gaseous chrom. (1)
	 
	 	 	 	 	 	 	 	 	 	 
	Total S

	 	ppm mas.
	 	max. 2
	 	 	3	 	 	ASTM D-4468
	 
	 	 	 	 	 	 	 	 	 	 
	H2S

	 	ppm mas.
	 	max. 2
	 	 	3	 	 	Calculation or Gaseous chromat.
FPD (2)
	 
	 	 	 	 	 	 	 	 	 	 
	Hydrogen

	 	ppm mol
	 	max. 20
	 	inactive
	 	ASTM D-2504
	 
	 	 	 	 	 	 	 	 	 	 
	C02 (2)

	 	ppm mol
	 	max. 3
	 	 	2	 	 	ISO 6381
	 
	 	 	 	 	 	 	 	 	 	 
	CO (2)

	 	ppm mol
	 	max. 2
	 	 	2	 	 	ISO 6381
	 
	 	 	 	 	 	 	 	 	 	 
	O2

	 	ppm mol
	 	max. 3
	 	 	2	 	 	Electrochemical Teledyne
	 
	 	 	 	 	 	 	 	 	 	 
	Ammonium hydroxide

	 	ppm mas.
	 	max. 2
	 	 	3	 	 	Calculation or Acid absorption (3)







 









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	COPESUL	 	 	 	 
	ANALYSIS
	 	UNIT
	 	SPECIFICATION
	 	SEVERITY
	 	ANALYTICAL METHOD

	Acetone

	 	ppm mas.
	 	max. 2
	 	 	3	 	 	Gaseous chrom. (1)
	 
	 	 	 	 	 	 	 	 	 	 
	NOx

	 	ppm mas.
	 	max. 2
	 	 	3	 	 	ASTM D-1607 (4)
	 
	 	 	 	 	 	 	 	 	 	 
	Alcohols (3)

	 	ppm mas.
	 	max. 2
	 	 	2	 	 	Gaseous chrom. (1)
	 
	 	 	 	 	 	 	 	 	 	 
	Water

	 	ppm mas.
	 	max. 3
	 	 	2	 	 	Automatic Dew Point Meter-Shaw







REMARKS




ANALYSIS:





	(1)	 	The total of ethane + methane + nitrogen might not exceed 1000 ppm mol. COPESUL will endeavor to maintain the ethane’s
specification, at most, at 500 ppm mol and in a constant manner.
	 
	(2)	 	The CO’s specification should be reappraised by COPESUL, by a work plan to be detailed by both companies.
	 
	(3)	 	Total of alcohols, such as, methanol, ethanol and isopropanol.





ANALYTICAL METHOD:





	(1)	 	According to table 2 of ASTM D-5234;
	 
	(2)	 	H2S will be analyzed per FPD, if Total Sulfur, converted stechiometrically, is greater than H2S’ specification;
	 
	(3)	 	Ammonium hydroxide will be analyzed by acid absorption, if Total Nitrogen is greater than NOx or Ammonium hydroxide’s
specification, according to table 2 of ASTM D-5234;
	 
	(4)	 	Method to be implemented NFQ018, based on ASTM D-4629.




The following are deemed to be contaminants in the ETHYLENE: acetylene, total sulfur, hydrogen sulfide, carbon monoxide,
carbon dioxide, oxygen, ammonium hydroxide, acetone, nitrogen oxides, alcohols and water.


The following are deemed to be inactive in the ETHYLENE: ethane, methane, nitrogen, other olefines and hydrogen.




 









 








CONTRACT RS-789/95 -
ENCLOSURE II - QUANTITIES





	II.1.	 	The contracted quantities of ETHYLENE, except for the provisions in the
Fifth Clause - STOPPAGES, are the following:





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CONSUMPTION IN TONS

	 	 	ANNUAL
	 	MONTHLY
	 	HOURLY LOW

	ETHYLENE
	 	MINIMUM
	 	MAXIMUM
	 	AVERAGE
	 	MAXIMUM
	 	AVERAGE
	 	MAXIMUM

	 
	 	 	120,000	 	 	 	200,000	 	 	 	16,667	 	 	 	17,762	 	 	 	22.83	 	 	 	24.36	 







	 	 	The calculation base for establishing the monthly average, is the maximum annual
consumption divided by the number of months in the year; and for the hourly average
flow, it is the maximum annual consumption divided by 365 days and by 24 hours.









	 	II.1.1.	 	COPESUL does not oblige to supply ETHYLENE quantities in excess
of the maximum annual consumption, the average monthly consumption,
and the average hourly flow, set forth in item II.1 in this
enclosure. The average hourly flow and the average monthly
consumption might only be exceeded by POLIOLEFINAS if COPESUL agrees
to the quantities indicated on POLIOLEFINAS’ monthly schedule.






	 	 	II.1.1.1.	The instrument for implementing the settlement is
POLIOLEFINAS’ monthly schedule, according to item II.2 in this
enclosure, where should be indicated the days in which it will
require the utilization of the maximum hourly flow and the
respective quantities.






	 	II.1.2.	 	The quantities supplied and consumed of ETHYLENE should, as much
as possible, be constant. Since the flows of supply and consumption
depend on the operating conditions of COPESUL’s and POLIOLEFINAS’
plants, the parties will endeavor their best efforts to coordinate
their operations, aiming at equalizing the supply flows.
	 
	 	II.1.3.	 	The scale bottom consumption will be ascertained, multiplying the
value of the measuring instrument’s scale bottom by the number of
hours that the flow was maintained in such condition.






	 	 	II.1.3.1.	This consumption will only be calculated if the supply
conditions comply with the provisions in item I.6, in
Enclosure I - QUALITY.






	II.2.	 	POLIOLEFINAS should provide, on or before the 20th (twentieth)
calendar day of every month, its consumption requirements, on hourly
basis, for the subsequent 3 (three) months.
	 
	II.3.	 	On or before the 25th (twenty-fifth) calendar day of every month,
COPESUL should confirm its possibility of ETHYLENE supply for the
subsequent month.
	 
	II.4.	 	COPESUL and POLIOLEFINAS should promptly inform to the other party
any significant change in the production/consumption level of
ETHYLENE that occurred as a result of accidents and/or damages, and
at least 6 (six) hours in advance, any event of reduction in the
supply/consumption, determined for other reasons.






	 	II.4.1.	 	If reductions in the supply take place, COPESUL will distribute
the ETHYLENE proportionally to the maximum contracted quantity, on
an annual basis, with each user of its raw materials Center. At such
time, COPESUL will communicate to POLIOLEFINAS the maximum quantity
available, on an hourly basis, and the respective period.






	II.5.	 	If, for reasons other than those defined in items 4.4 and 7.2 in the
contract, or




 









 






	 	 	ETHYLENE supply reductions, POLIOLEFINAS does neither receive nor accept to
purchase the minimum quantities set forth in item II.1, in this Enclosure, at
the end of every calendar year, COPESUL will collect from POLIOLEFINAS the
difference between the minimum annual consumption and the actual consumption of
the ETHYLENE, at a unit price calculated at 40% (forty percent) of the
ETHYLENE’s sale price in force on December 01 (one) of the respective calendar
year.
	 
	II.6.	 	If, for reasons other than those defined in item 7.2
in the contract, or by POLIOLEFINAS’ fault, COPESUL
is unable to supply the minimum quantities of
ETHYLENE set forth in item Il.1, in this Enclosure,
for each calendar year, COPESUL will incur a penalty
calculated by applying the unit price, calculated at
40% (forty percent) of the sales price for the Resin
produced by POLIOLEFINAS on December 01 (one), to the
quantities not delivered.
	 
	II.7.	 	COPESUL will endeavor its best efforts to sell to
other consumers the quantities of ETHYLENE not picked
up by POLIOLEFINAS. In this specific condition, for
purposes of application of item II.5, it will be
collected from POLIOLEFINAS the effective amount of
the loss ascertained by COPESUL.




 









 











CONTRACT RS-789/95 -
ENCLOSURE III - METRICS





	 	III.1.	 For measuring and recording the quantities of ETHYLENE supplied to
POLIOLEFINAS, for billing purposes, COPESLIL will utilize flow measuring,
recording and totalizing instruments, named “Official Clocks”, all of
brands and models established by the Technical Rule COPESUL N-IS-001-93a.






	 	III.1.1.	 	Such clocks and ancillary equipment, required for their
operation, are COPESUL’s property, installed at the Metrics Station
located on POLIOLEFINE’s ground. COPESUL will be entitled to free
access to such clocks, observing POLIOLEFINES’ rules and procedures,
for any purposes. POLIOLEFINAS obliges to provide, continuously and
with high priority, all utilities required for the operation of said
station.






	III.2.	 	In addition to the “Official Clocks”, POLIOLEFINAS will maintain at the
Metrics Station the “User Clocks”, of brands and models necessarily equal
to those of the “Official Clocks”.






	 	III.2.1.	 	The range of the “Official Clocks” and the “User Clocks” should
be established by the parties in consideration of the flows agreed
upon.






	III.3.	 	The verification of the quantities of ETHYLENE supplied will be effected
daily by COPESUL and by POLIOLEFINAS at their respective Metrics Stations.
COPESUL and POLIOLEFINAS will exchange information with respect to the
quantities ascertained, still in the same day of the reading, except for
weekends and holidays, so as to follow daily any discrepancy between the
metrics systems.






	 	III.3.1.	 	The hours for the clocks’ reading will be agreed to by the
parties.
	 
	 	III.3.2.	 	The daily metrics bulletin and the graphic records of the
quantities of EHYLENE supplied, ascertained by the “Official Clocks”
and by the “User Clocks” should be available to the parties for any
verification, up to 90 (ninety) days after the due date of the
respective invoices.






	III.4.	 	In the event of maintenance of the “Official Clocks”, the ascertainment
will be performed by POLIOLEFINAS’ clocks, provided that the provisions in
the Technical Rule COPESUL N- IS-001-93a are complied with.






	 	III.4.1.	 	If the utilization of the “User Clocks” is not possible, COPESUL
will adopt, for billing purposes, by mutual agreement with
POLIOLEFINAS, one of the following methods:






	 	a)	 	by COPESUL’s or POLIOLEFINAS’ internal clocks
that comply with the Technical Rule COPESUL N-IS-001-93a;
	 
	 	b)	 	average hourly consumption between the last two
readings deemed to be satisfactory, multiplied by the number
of hours of the period in which the instruments remained
inoperative or presented problems.






	III.5.	 	A schedule for maintenance, checking and calibration of the “Official
Clocks” and the “User Clocks” should be prepared by the contracting
parties, anticipating their routine verification for a period of time not
exceeding 90 (ninety) days.






	 	III.5.1.	 	It is established that, if the testing of the instruments
indicate differences of individual calibration up to the limits
established in the Technical Rule COPESUL N-IS-001-93a, they will be
deemed to be commercially accurate for purposes of measuring the
quantities of ETHYLENE.






	III.6.	 	The maintenance and checking of the “Official” and/or the “User” clocks
will always be performed upon written notice to the other party, at least
2 (two) working days in advance, so as to allow that other party to send
representatives for following the services. COPESUL and POLIOLEFINAS
might, at any time, request the checking




 









 






	 	 	     and calibration of the other party’s clocks.






	 	III.6.1.	 	In the absence of a representative of the other party, the
services will be performed, without entitling the absent party to
any claim whatsoever.
	 
	 	III.6.2.	 	COPESUL and POLIOLEFINAS will provide copies of the calibration
reports of their respective instruments, whenever requested by the
contracting parties.
	 
	 	III.6.3.	 	If the checking and calibration of the instruments are requested
by either party and the instruments are found to be accurate, the
resulting costs will be paid by the requesting company.






	III.7.	 	The “Official Clocks” and the “User Clocks” will be deemed to be
suspect, and should be promptly checked and calibrated, whenever the daily
differences between them show values in excess of 1% (one percent) in
mass, observing the provisions in item Ill.5.1.






	 	III.7.1.	 	Until evidence that the “Official Clocks” are not properly
calibrated, the readings provided thereby will be adopted.
	 
	 	III.7.2.	 	If the “Official Clocks” are deemed to be out of gauge, COPESUL
will consider the reading of the “User Clocks”, provided that upon
calibration of both clocks (official and user’s), the relative
difference is less than 1% (one percent) in mass.
	 
	 	III.7.3.	 	If the percentile limit in item III.7 is not verified upon
calibration of both clocks, the quantities for billing purposes
should be established by mutual agreement between the parties. This
condition will last until the difference anticipated is obtained, at
which time the quantities billed will be settled.






	III.8.	 	It is deemed to be POLIOLEFINAS’ responsibility, the control of the
consumption flows of ETHYLENE so as to prevent, by any possible means,
that the devices utilized in the metrics systems work beyond the limits of
their rated ranges, taking into consideration the supply conditions
(pressure and temperature) defined in Enclosure I - QUALITY.
	 
	III.9.	 	If, in the future, COPESUL installs the intelligent metrics system,
which will perform the tele-measuring of the ETHYLESE supplied to
POLIOLEFINAS, complementing the conventional system for billing purposes,
the parties will agree upon a new text for this enclosure.




 









 











CONTRACT RS-789/95 - ENCLOSURE IV - PRICES AND ADJUSTMENT





	IV.1.	 	The prices to be practiced will be defined as of the price policy
presently in force, approved by COPESUL’s Management Board .
	 
	IV.2.	 	The base for establishing the ETHYLENE price will be the
apportionment of the excess margin to the total costs of the
productive chain COPESUL-Second Generation Companies.
	 
	IV.3.	 	The establishment of the PETROCHEMICAL prices will be made on a
monthly basis, for validity during the course of the month, provided
that no changes occur in the price of COPESUL’s raw materials.





CONTRACT RS-789/95 - ENCLOSURE V - TERMS OF PAYMENT





	V.1.	 	COPESUL will issue, daily, the billing documents (shippers-invoices)
based on the quantities ascertained according to Enclosure IV -
PRICES AND ADJUSTMENT.
	 
	V.2 -	 	POLIOLEFINAS will make the payments due by operation of this
contract, on the same term practiced on COPESUL’s purchase of the
petrochemical naphtha, or on the term agreed between the parties
plus the financial charges.
	 
	V.3.	 	On the last day of every month, the quantities dealt with in item
II.1.3. will be multiplied by 2.0 (two point zero) and added to the
billing of the last day of the month defined in V.1.
	 
	V.4.	 	Payments effected after the due date will subject POLIOLEFINAS to a
daily fee calculated over the amount of the invoice, at a rate that
is the average of the market’s applicable rates, plus moratorium
interest.
	 
	V.5.	 	Save previous negotiation, the non payment of the collection
documents corresponding to the billings for 1 (one) month, will
entitle COPESUL to interrupt the supply of ETHYLENE, irrespective of
any notice to POLIOLEFINAS and without prejudice to the provisions
in the Sixth Clause, up to the accomplishment of the corresponding
obligation.




 









 











CONTRACT RS-789/95 - ENCLOSURE VI




COPESUL - COMPANHIA PETROQUÍMICA DO SUL




TECHNICAL RULE




N-IS-001-93a



General rule for measuring COPESUL,’s petrochemical products and utilities,
with the industrial units of the Southern Petrochemical Pole, in Triunfo - RS.




3rd ISSUE




1993




COMMITTEE’ S MEMBERS :



Luiz Antonio Silveira Braghirolli - CREA No. 50 792

Nestor Augusto Schaedler - CREA No. 35 936

Paulo Barbosa Biancamano - CREA No. 27 235



Describer(s):




Metrics, Utility, Petrochemical Product