Exhibit
10.1


I, the undersigned,
Sworn Public Translator and Commercial Interpreter in and for the City and
State of Rio de Janeiro, Federative Republic of Brazil, duly registered under
No 147 at JUCERJA, on February 7th 2001, CERTIFY and ATTEST that a document
written in PORTUGUESE was presented to me for translation into ENGLISH, which I
have duly performed by reason of my official capacity, as follows:


TRANSLATION
No. 12.044/06


[Logos] CESP & SCHWEITZER-MAUDUIT DO
BRASIL


ELECTRIC
POWER PURCHASE AND SALES AGREEMENT ENTERED INTO BETWEEN SCHWEITZER-MAUDUIT DO
BRASIL S/A AND CESP – COMPANHIA ENERGÉTICA DE SÃO PAULO


Bt the current
instrument, on one hand CESP – COMPANHIA
ENERGÉTICA DE SÃO PAULO, a power generating public service
concessionaire, with head offices in the city of São Paulo, the State of São
Paulo, at Avenida Nossa Senhora do Sabará, No. 5,312, enrolled at the National
Register of Legal Persons of the Ministry of Finance [CNPJ] under the number
60.933.603/0001-78, in this act represented in the terms of its articles of
association, hereinafter named SELLER; and on the other, SCHWEITZER-MAUDUIT DO BRASIL S/A, with head
offices in the city of Piraí, The State of Rio de Janeiro, at Avenida Darcy
Vargas No. 325, Santanésia enrolled at the National Register of Legal Persons
of the Ministry of Finance [CNPJ] under the number 33.073.008/0001-37, with
State Enrollment under the number 80.446.527, in this act represented in the
terms of its articles of association, hereinafter named BUYER, any of them
treated indistinctly as a PARTY, and when together named PARTIES,


WHEREAS


a) the legislation
applicable to the Brazilian electrical sector, in particular the one contained
in Law 9,074, dated July 7th, 1995, in
Law 10,438, dated April 26th, 2002, in
Law 10,848, dated March 15th, 2004, in
Decree 2,655, dated July 2nd, 1998,
Decree 5,163, dated July 30th, 2004 and
in the ANEEL resolutions;


b) Law 10,438, dated
April 26th, 2002, that
set forth, among others, that the electric power from the public service
generating concessionaires under corporate control of the States is
commercialized on a manner that ensures publicity, transparency and equality of
access to the interested parties;


c) the BUYER held a
Public Offer by means of action No. 001/2006, in accordance with the conditions
published in the ED – LE 063/06 dated 04/10/2006;


d) the SELLER
participated and was chosen as the Winner of the Public Offer;


Confidential
material appearing in this document has been omitted and filed separately with
the Securities and Exchange Commission in accordance with Rule 24b-2,
promulgated under the Securities and Exchange Act of 1934, as amended.  Omitted information has been replaced with
asterisks.









 



e) the BUYER is
characterized as a FREE CONSUMER, in the form of the law, which assures it the
exercise of choosing to purchase electric power to attend his needs in full or
in part;


have decided to enter
into the current Electric Power Purchase and Sales Agreement, hereinafter named
“AGREEMENT”, which will be governed by the following ARTICLES and conditions:


TITLE I


DEFINITIONS
AND PREMISES APPLICABLE TO THE AGREEMENT


ARTICLE
1
– Seeking the perfect understanding and accuracy of the terminology employed in
this AGREEMENT and its attachments, from this moment on the concept of the following
terms and expressions is agreed between the PARTIES


a) “ANEEL”: Agência
Nacional de Energia Elétrica [The National
Electric Power Agency], a normative and inspection agency of
electric power services, established by Law No. 9,427, dated December 26th, 1996, regulated by Decree No. 2,335, dated December 3rd, 1997;


b) “COMPETENT AUTHORITY”:
any governmental agency that is competent to intervene in this AGREEMENT or in
the activities of the PARTIES;


c) “CCEE” : Câmara de
Comercialização de Energia Elétrica [The
Chamber of Commerce for Electric Power], a private law non-profit
legal entity, under authorization from the Assignor Power and regulation and
inspection from the Agência Nacional de Energia Elétrica – ANEEL, which
creation was authorized in the terms of clause 4 of Law No. 10,848, dated March
15th, 2004 and Decree No. 5,177, dated August
12th, 2004, for the purpose of making the
commercialization of electric power viable in the NATIONAL INTERCONNECTED
SYSTEM – SIN [Sistema Interligado Nacional],
which is the successor of the MAE, in the terms of clause 5 of Law No.
10,848/2004;


d) “CENTER OF GRAVITY”:
A virtual point defined in the RULES OF COMMERCIALIZATION, where the symbolic
delivery of CONTRACTED POWER will be carried out and where the total generation
is equal to the total consumption from that SUBMARKET;


e) “FREE CONSUMER”: a
consumer who can choose to hire its supply, in all or in part, with any
concessionaire, permittee, or authorized party of the NATIONAL INTERCONNECTED
SYSTEM as 









 



 


determined by clauses 15
and 16 of Law 9,074, dated July 07th, 1995, and
specific rules from the ANEEL;


f) “CONVENTION FOR
COMMERCIALIZATION”: a judicial instrument established by the ANEEL Resolution
No. 109, October 26th, 2004, in
the terms of law No. 10.848, dated March 15th, 2004,
which set forth the working structure and form for the CCEE;


g) “AGREEMENT FOR
CONNECTION TO THE TRANSMISSION SYSTEM”: an agreement entered into between the
users and the transmission concessionaires, which sets forth the terms and conditions
for connection of the users to the BASIC NETWORK;


h) “AGREEMENT FOR
CONNECTION TO THE DISTRIBUTION SYSTEM”: an agreement entered into between the
users and the transmission concessionaires, which sets forth the terms and
conditions for connection of the users to the distribution network from the
local concessionaire or permittee;


i) “AGREEMENT FOR
UTILIZATION OF THE DISTRIBUTION SYSTEM”: an agreement that sets forth the terms
and conditions for using the distribution network from a local concessionaire
or permittee by a user;


j) “AGREEMENT FOR
UTILIZATION OF THE TRANSMISSION SYSTEM”: an agreement that sets forth the terms
and conditions for using the BASIC NETWORK by a user, including the rendering
of transmission services by the transmission concessionaires, by means of
control and supervision by the ONS, and the rendering by the ONS, of the
control and coordination services for the interconnected electrical systems, in
accordance with a model approved by the ANEEL;


k) “POWER”: is the
amount of electric power that is active during any period of time, expressed in
Watt-hour (Wh) or its multiples;


l) “CONTRACTED POWER”:
is the amount, in average MW, contracted by the BUYER, in the contracted period
and in any commercialization period, and placed at its disposal in the CENTER
OF GRAVITY in the SUBMARKET;


m) “MONTHLY CONTRACTED
POWER”: is the amount of power, in MWh, resulting from the seasonalization
process of the CONTRACTED POWER;


n) “IGPM”: the General
Index of Market Prices, calculate by the (foundation) Fundação Getúlio Vargas –
FGV);









 



[Note: no item “o)” in the original document]


p) “NOTIFICATION OF
CONTROVERSIES”: is a formal document intended to communicate the PARTIES about
controversies that deal with the provisions of this AGREEMENT and/or related to
them;


q) “ONS”: it is the
Operador Nacional do Sistema Elétrico [The
National Electric Power System Operator], created by Law No.
9,648/98 and regulated by Decree No. 5,081, dated May 14th, 2004;


r) “GENERATION FARM”: it
is the power generation farm of the SELLER, in accordance with Attachment I of
this AGREEMENT;


s) “PERIOD OF SUPPLY”:
it is the period in which the SELLER will make available and will sell the
CONTRACTED POWER to the BUYER, in the terms of article 4 of this AGREEMENT;


t) “COMMERCIALIZATION
PROCEDURES”: it is the set of operational rules approved by the ANEEL that will
define the conditions, requirements, events and terms relative to the
commercialization of electric power, necessary to the development of the
attributions from the CCEE;


u) “NETWORK PROCEDURES”:
it is the document prepared by the ONS, with the participation of the agents
and approved by the ANEEL, by means of which the procedures and technical
requirements are set forth for the planning, implantation, or utilization and operation
of the transmission systems, the penalties for the non-compliance with the
commitments undertaken by the various agents of the transmission system, as
well as the responsibilities of the ONS and all its users;


v) NATIONAL
INTERCONNECTED SYSTEM – SIN [Sistema
Interligado Nacional]: comprises the power generation, transmission
and distribution facilities connected by the BASIC NETWORK for Transmission,
including their respective facilities;


y) “SUBMARKET”: the
market subdivisions, corresponding to certain areas of the NATIONAL
INTERCONNECTED SYSTEM, for which specific prices are established, in accordance
with the RULES OF COMMERCIALIZATION; and


z) “TRIBUTES”: are all
the taxes, fees, contributions and charges from the electric sector incurring
on the object of this AGREEMENT, excluding any other in existence or that may
come to be created on the 









 



financial movement, the
net profit or the result from either of the PARTIES, being understood that the
excluded tributes, in this definition, can not be attributed from one PARTY to
the other. Such exclusion comprises, not being limited to the legal entity
income tax, the social contribution on the net profit and taxes or
contributions on financial movements.


Sole
Paragraph – All the terms defined above, when used in the singular
form, in the scope of this AGREEMENT and its attachments will mean its plural
form and vice versa.


TITLE
II


OBJECT
AND PERIOD OF VALIDITY


Chapter
I – Object


ARTICLE
2
– The object of the current AGREEMENT is to establish the terms and conditions
for the purchase and sale of the CONTRACTED POWER carried out between the BUYER
and the SELLER, as a result from the auction that took place on 04/10/2006, in
accordance with the amounts indicated in the table from ARTICLE 6, to be made
available by the SELLER to the BUYER at the CENTER OF GRAVITY in the Southeast
/ Center-West SUBMARKET and is based on the provision in the specific
legislation, in Resolutions from the ANEEL in the COMMERCIALIZATION PROCEDURES
and the NETWORK PROCEDURES, by virtue of which the BUYER has its electric power
supply assured by the NATIONAL INTERCONNECTED SYSTEM – SIN, through the local
concessionaire.


Paragraph
One – The PARTIES agree that it will be the full responsibility
of the SELLER to bear all the risks, obligations, TRIBUTES, tariffs,
transmission, distribution and connection charges, and transmission losses
perchance due and/or verified in view of the availability of the CONTRACTED
POWER up to the CENTER OF GRAVITY.


Paragraph
Two – The PARTIES agree, further, that it will be the full
responsibility of the BUYER to bear all the risks, obligations, TRIBUTES,
tariffs, transmission, distribution and connection charges, and transmission
losses perchance due and/or verified after the availability of the CONTRACTED POWER
at the CENTER OF GRAVITY.


Paragraph
Three – The delivery of the POWER to the BUYER at the point of
delivery by the 









 



NATIONAL INTERCONNECTED
SYSTEM – SIN, will depend on the fulfillment of the following conditions:


a) the signing by the
BUYER, if applicable, of the AGREEMENT FOR CONNECTION TO THE TRANSMISSION
SYSTEM with the transmitter involved;


b) the signing by the
BUYER, if applicable, of the AGREEMENT FOR CONNECTION TO THE TRANSMISSION
SYSTEM with the distributor or permittee involved;


c) the signing by the
BUYER, if applicable, of the AGREEMENT FOR UTILIZATION OF THE TRANSMISSION
SYSTEM, with the ONS and transmitters; and


d) the signing by the
BUYER, if applicable, of the AGREEMENT FOR UTILIZATION OF THE TRANSMISSION
SYSTEM, with the distributor or permittee involved;


Paragraph
Four – The BUYER acknowledges that the quality of the electric
power supply is governed by the agreements mentioned in Paragraph Three of this
ARTICLE, not being an object of this AGREEMENT;


Paragraph
Five – The non-fulfillment of the conditions foreseen in
Paragraph Three of this ARTICLE does not exempt the BUYER from fulfilling the
obligations foreseen in this AGREEMENT.


Paragraph
Six – The BUYER must bear all the costs resulting from the
formalization of the agreements for connection and utilization of the
transmission or distribution system, according to the case.


Paragraph
Seven – The PARTIES acknowledge that the physical supply will be
fully subordinated to the technical determination from the ONS and the ANEEL,
also in the even of decreeing by the Awarding Power of an electric power
rationing in the NATIONAL INTERCONNECTED SYSTEM.


Chapter
II – Period of Validity


ARTICLE
3
– The current AGREEMENT comes into effect at its signing date and will be in
force up to the actual fulfillment of the entire contractual obligation,
including the payment of the invoice relative to the last month of delivery of
the amounts of the MONTHLY CONTRACTED POWER;


ARTICLE
4
– The obligation of the SELLER as to the delivery of the MONTHLY CONTRACTED
POWER will begin at 00:00 hours on the day 05/01/2006 and end at 24:00 hours of
the day 12/31/2010.









 



ARTICLE
5
– The effectiveness and the execution of the obligations and commitments being
disciplined in this AGREEMENT will depend on the registration of this purchase
and sale at the CCEE, which must be carried out by the SELLER and validated by
the BUYER, in agreement with the dimensions foreseen in the RULES OF
COMMERCIALIZATION and in the COMMERCIALIZATION PROCEDURES.


TITLE
III


AMOUNTS
AND PRICES


Chapter
I – Amounts


ARTICLE
6
– The amounts of CONTRACTED POWER sold on a monthly basis by the SELLER and
acquired by the BUYER represent the following quantities:


	
  PERIOD

  	
   

  	
  POWER

  (Average MW)

  	
   

  	
  ASSOCIATED

  POWER (MW)

  	
   

  
	
  05/01/2006 to
  12/31/2006

  	
   

  	
  8.8

  	
   

  	
  10.61

  	
   

  
	
  01/01/2007 to
  12/31/2010

  	
   

  	
  9.0

  	
   

  	
  10.61

  	
   

  



 


Sole
Paragraph – Respecting the eventual restrictions of the electric
system, observing the RULES OF COMMERCIALIZATION, the COMMERCIALIZATION
PROCEDURES and the NETWORK PROCEDURES, the BUYER can request an increase or
reduction of the amount of CONTRACTED POWER for each year in up to 10% (ten
percent), as long as the request is made 6 (six) months in advance. The altered
amounts will remain unaltered until the end of said year.


ARTICLE
7
– In agreement with the RULES OF COMMERCIALIZATION and in accordance with the
terms set forth in the COMMERCIALIZATION PROCEDURES, from the beginning of the
PERIOD OF SUPPLY, the SELLER will record, on behalf of the BUYER, the
CONTRACTED POWER in each commercialization period, and the BUYER or its
representative at the CCEE will validate the respective records that were made,
as long as such records are compatible with the provision in ARTICLE 6 and in
ARTICLE 10.


Sole
Paragraph – During the first two months of this AGREEMENT, the SELLER
will represent the BUYER at the CCEE, with no burden and no change of the
contracted flexibilities. [**************************************************************************************









 



******]] inserted in
the SINERCOM. This representation can be altered at any moment at the
discretion of the BUYER, by means of a previous notice 30 (thirty) days in
advance.


ARTICLE
8
– If, by its action or omission, the BUYER or its representative at the CCEE
refrains from validating the record of the CONTRACTED POWER as described in
ARTICLE 7, it must carry out the full payment of the CONTRACTED POWER to its
SELLER, in the form of ARTICLE 13 and ARTICLE 14.


ARTICLE
9
– If, by its action or omission, the BUYER refrains from carrying out the
registration of the CONTRACTED POWER as described in ARTICLE 7, it is obliged
to compensate the BUYER for its exposure at the CCEE, as well as penalties
applicable to it insufficiency of substance and/or insufficiency of
contracting, set forth in the COMMERCIALIZATION PROCEDURES.


ARTICLE
10
– The conditions for the record and accounting at the CCEE relative to the
purchase and the sale object of this AGREEMENT are disciplined in the RULES OF
COMMERCIALIZATION and in the COMMERCIALIZATION PROCEDURES.


Paragraph
One – The monthly seasonalization of the amount of CONTRACTED
POWER, for the purpose of establishing the MONTHLY CONTRACTED POWER, in MWh,
will be obtained by multiplying the CONTRACTED POWER (average MW) by the number
of hours of each CONTRACTUAL MONTH.


Paragraph
Two – MONTHLY CONTRACTED POWER, in MWh, can be reduced in up to
10% (ten percent) or increased in up to 5% (5 percent) in each CONTRACTUAL
MONTH, at the discretion of the BUYER, comprising the result of in the Billable
Monthly Power (EMF) [Energia Mensal Faturável], which must be communicated by
the BUYER to the SELLER, as stipulated in ARTICLE 12.


Paragraph
Three – In each year of the PERIOD OF SUPPLY, the BUYER will be
allowed to request reductions of the amount of contracted power due to eventual
scheduled and/or unscheduled shutdowns of its production unit, which total sum
of duration of both is limited to 240 (two hundred and forty). Scheduled
shutdowns must be informed to the SELLER 60 (sixty) days in advance and
unscheduled shutdowns must be informed in the day subsequent to its start. In
the CONTRACTUAL MONTHS in which the reductions take place, the amounts of the
MONTHLY CONTRACTED POWER will be obtained as follows:


	
  EMC in the month of
  reduction

  	
  = (1 –

  	
  Sum of hours
  shutdown

  	
  ) x EMC

  
	
   

  	
   

  	
  Total of hours in the month of reduction

  



 









 



Paragraph
Four – Each month, the BUYER will be entitled, in agreement with
the COMMERCIALIZATION PROCEDURES referent to this theme, to the modulation of
the Billable Monthly Power for each load level and for each accounting period
of one hour (duration presently established) or in agreement with another
duration that comes to be defined, with variations limited to more or less 10%
(ten percent) in relation to the monthly billable equivalent in average MW,
respecting the limit of ASSOCIATED POWER.


Paragraph
Five – The modulation must be informed to the SELLER until the
third working day of the month subsequent to the CONTRACTUAL MONTH. If the
modulation is informed out of the period or does not comply with the criteria
set forth in the previous paragraph, the SELLER will make the registration at
the CCEE considering in all the accounting periods a single power level, equal
to the monthly equivalent in average MW.


Chapter
II – Price


ARTICLE
11
– [*****************************************************************************************]


Paragraph
Two – If the legislation comes to allow a readjustment with a
term of less than 1 (one) year, the PARTIES will negotiate a new periodicity
for readjustment, carrying out necessary changes for adequacy to the previous
Paragraph, formalizing them by means of a contractual amendment.


Paragraph
Three – If the IGPM is extinct, or is no longer published or its
utilization is prohibited, with no designation of an index to replace it, the
PARTIES will agree, within the term of 30 (thirty) days from the moment of
becoming aware of any of these events, on another index or parameter that
adequately reflects the inflation upon the market prices on a manner similar to
said index, or a manner as close as possible to such an index. In the event the
Parties can not reach an agreement in the foreseen term, the ARTICLES 









 



present in TITLE X -
RESOLUTION OF DISPUTES of this INSTRUMENT will apply.


Paragraph
Four – All the obligation and liabilities relative to the
existing sector charges, risks and specific costs of the electrical sector,
referent to the activity of the SELLER as a Generation Public Service
Concessionaire are included in the Price for Contracted Power (PEC).


Paragraph
Five – The creation, change or extinction of TRIBUTES and charges
for the Electrical Sector after the signing of this AGREEMENT, when its impact
upon the Price for Contracted Power (PEC) is proven, will implicate in the PEC
being reviewed, for more or less, by means of a formalization of a contractual
amendment. In the event the Parties can not reach an agreement, the ARTICLES
present in TITLE X - RESOLUTION OF DISPUTES of this INSTRUMENT will apply.


Paragraph
Six – The collection of the State Goods and Services Tax (ICMS)
[Imposto the Circulação de Mercadorias e
Serviços] and other tributes eventually falling upon the invoice not
included in the PRICE FOR POWER (PEC) and calculated in the form of the
specific legislation, they must be made by the BUYER, the SELLER remaining
exempt from any obligation, also for the payment of fines and other charges.


Paragraph
Seven – For the compliance with the provision in the previous
paragraph, the SELLER obliges itself to forward to the BUYER, beforehand, up to
the 4th (fourth) working day of month following the
CONTRACTUAL MONTH, considering that the collection of the tribute will be made
until the 9th day of said month, in accordance with the
legislation from the State of Rio de Janeiro, a copy of the invoice, observing
the provision in CLAUSE 12.


TITLE
IV


INVOICING,
PAYMENT AND CULPABLE DELAY


Chapter
I – Invoicing


ARTICLE
12
– The buyer must inform the SELLER the Billable Monthly Power (EMF), obtained
in the form of ARTICLES 6 and 10, until the 3rd (third) working day of the month subsequent
the CONTRACTUAL MONTH.


ARTICLE
13
– The invoicing will be the object of an Electric Power Formal Bill of Sale /
Invoice, in each 















 


CONTRACTUAL MONTH, at:


Invoicing
= EMF x PEC


Where:


EMF = Billable Monthly
Power, obtained in the form of ARTICLES 6 and 10.


PEC = Price of
Contracted Energy, define in ARTICLE 11.


Chapter
II Payment


ARTICLE
14
– The BUYER must carry out the payment of the Electric Power Formal Bill of
Sale / Invoice until the 25th day of the month subsequent to the CONTRACTUAL
MONTH, being that the SELLER must forward the collection document until the 15th day of said month.


Paragraph
One – The SELLER will forward the BUYER, if necessary, a
document attached to the Electric Power Formal Bill of Sale / Invoice
containing the detailing of the calculations and the corresponding invoiced
amounts, so that the BUYER can verify them.


Paragraph
Two – The BUYER will accept the sending of the copy of the
original collection document by means of fac-simile or any safe electronic
media agreed upon between the PARTIES and, as long as it is received in a full
and legible manner confirmed by the BUYER, will then serve to comply with the term
foreseen in the “caput” of this ARTICLE, the SELLER having to forward the
original document until the date of maturity of the invoice.


Paragraph
Three – If the original collection document is presented at a date
later than the one set forth in the previous Paragraph by a motive not
imputable to the BUYER, the date of maturity of the installed affected by the
delay, relative to this collection document, will be automatically extended by
the same number of days of delay that is verified.


Paragraph
Four – The payment will be made in a checking account maintained
in a banking institution defined by the SELLER in the collection document.


Paragraph
Five – If there is no banking business day in the municipality of
the BUYER on the date of maturity, the payment can be made on the first
subsequent working day.


Paragraph
Six – All the payments due by the BUYER must be made free of any
burdens or deductions not 









 



expressly foreseen in
this AGREEMENT, as long as not resulting from legal and/or regulatory
determination.


Paragraph
Seven – The SELLER must discriminate in the Electric Power Formal
Bill of Sale / Invoice, in addition to the value referent to the power
installment, the value of the ICMS tax, which is the responsibility of the
CONTRACTOR, if due, in the form of the specific legislation.


ARTICLE
15
– The deviations eventually pointed out in the POWER purchase and sales invoice
will not affect the term for paying the invoice, the difference, if any, having
to be compensated in a complementary invoice, being allowed, by mutual
agreement between the PARTIES, to be compensated on the following month.


Paragraph
One – If, in any invoice, net and accuracy amounts and amounts
exists in relation to which the BUYER has questioned the respective accuracy
and liquidity, the BUYER, regardless of the questioning presented to the SELLER
in writing must, on the date corresponding to the maturity of the invoice,
carry the payment of the invoice in full, for which the SELLER will give an
automatic settlement. The non-payment will characterize the BUYER as being in
default.


Paragraph
Two – On any contested amount, representing credits for the
BUYER, which may later come to be agreed on or defined as being due by the
SELLER, the provision in ARTICLE 17 will apply, with the exception of the fine.
The interests and the monetary updating will incur from the date of maturity of
the contested installment up to the date it is settled.


Paragraph
Three – Existing the persistence of controversies in relation to
the invoiced amounts, the PARTIES agree in proceeding in accordance with the
provision in the ARTICLES from TITLE X - RESOLUTION OF DISPUTES.


Chapter
III – Culpable Delay in Payment and Its Effects


ARTICLE
16
– Culpable delay is characterized when the BUYER refrains from settling any payments
up to its date of maturity.


ARTICLE
17
– In the event of delay in the payment by the buyer of any Electric Power
Formal Bill of Sale / Invoice issued based on the current AGREEMENT, the
amounts due must be monetarily updated pro 









 



rata
die by the variation of the IGPM index from the (foundation)
Fundação Getúlio Vargas, or from any other index that comes to be agreed on
between the PARTIES, and the following moratory additions will incur upon the
corrected amounts:


a) a fine of 2% (two
percent) applied on the debt amount;


b) interests on arrears
calculated on the amount of the invoice, which will be equivalent to 1% (one
percent) a month calculated pro rata die,
for the period comprised between the date of default and the effective payment,
including.


Paragraph
One – The monetary updating of the debt amount, referent to the
delays that took place within the month of maturity, will be calculated by the
variation accumulated pro rata die
of the IGPM index, of the second month prior to the maturity up to the first
month prior to the maturity, disregarding the negative variations in the
period.


Paragraph
Two – For the payments carried out after the month of maturity,
the debt amount will be monetarily updated solely by the variation accumulated pro rata die of the IGPM index, of the
month prior to the maturity, disregarding the negative variations in the
period.


Paragraph
Three – If the IGPM index is extinct, the provision in Paragraph
Three of ARTICLE 11 will apply.


TITLE V


CONTRACTUAL
GUARANTEES


ARTICLE
18
– To ensure the true compliance with the obligations foreseen in this
AGREEMENT, the buyer must establish, in up to 30 (thirty) days after the date
of starting the supply indicated in ARTICLE 4, a guarantee in one of the
options listed next that, after analysis regarding quality, whichever is its
form of constitution, will be accepted at the discretion of the SELLER.


a) Bank Letter of
Guarantee, Deposit in Federal Public Bonds, Deposit in Brazilian Reais,
Promissory Note (attachment II), and/or Bank Deposit Certificates, in the
amount equivalent to 3 (three) months of invoicing of the electric power supply
foreseen in this AGREEMENT;


b) Guaranteed Account,
represented by the establishment of a guarantor bank, which commits itself to 









 



honor the payment of the
amount of the monthly invoicing for the electric power supply foreseen in this
AGREEMENT in the event of default by the BUYER;


c) Guarantee Insurance,
established on behalf of the SELLER; and


d) Other form of
guarantee, at the convenience of the BUYER.


TITLE
VI


ACT OF
GOD OR FORCE MAJEURE


ARTICLE
19
– If any of the PARTIES can not fulfill any of its obligations, by motive of
Act of God or Force Majeure, in the terms of the provision in Article 393 of
the Brazilian Civil Code, the current AGREEMENT will remain in force, but the
PARTY affected by the event will not answer for the consequences of the
non-fulfillment of the obligations during the time of duration of the event and
proportionally to its effects.


Paragraph
One – No event of Act of God or Force Majeure will exempt the
affected PARTY of any of its obligations due before the occurrence of the
respective event.


Paragraph
Two – The affected PARTY that whishes to invoke the occurrence
of an Act of God or Force Majeure must adopt the following measures:


(i) notify the other
PARTY of the occurrence of the the Act of God or Force Majeure event, as soon
as possible, but in no circumstance on a term above five days counting from the
date in which it became aware of its occurrence, providing a description of the
nature of the event, an estimate of its duration and the impact in the
performance of its contractual obligations;


(ii) adopt the suitable
measures to remedy or attenuate the consequences of such event, seeking to
resume its contractual obligations as briefly as possible;


(iii) inform the other
PARTY on a regular basis about its actions and its plan of action to remedy
and/or minimize such consequences;


(iv) promptly alert the
other PARTY of the end of the Act of God or Force Majeure event and its consequences;


(v) back all the facts
and actions with documentation or record available.









 



Paragraph
Three – Without limiting the generalness of the provision in the
sole paragraph of article 393 of the Civil Code, it will be considered as an
Act of God or Force Majeure any event outside the control of the PARTIES, which
occurrence or which consequences the PARTIES could not foresee on the date of
entering into this AGREEMENT and that makes the punctual and true fulfillment
of one or more of its obligations resulting from the current AGREEMENT fully or
partially impossible for the affected PARTY.


Paragraph
Four – Under no circumstance, for the purpose of this AGREEMENT,
the occurrence of any of the situations below that affects an obligation of any
of the PARTIES will be configured as an Act of God or Force Majeure:


(i) problems and/or
difficulties of economic-financial order of either of the PARTIES;


(ii) insolvency,
liquidation, bankruptcy, reorganization, termination or similar event, of a
PARTY, its related parties or from third parties;


(iii) loss of market of
the BUYER or the impossibility of the BUYER to use or resell the CONTRACTED
POWER on an economic manner;


(iv) the possibility
that presents itself to the SELLER or to the BUYER of, respectively, selling or
buying the CONTRACTED POWER in the market at prices more favorable than the
ones provided in this AGREEMENT; or


(v) any default or
anticipated termination of the electric power purchase and sales agreement of
the SELLER, which perchance exist.


Paragraph
Five – The undue allegation, by either of the PARTIES, of the
occurrence of any of the events above mentioned seeking the non-fulfillment of
an obligation in the terms of this AGREEMENT, will entitle the other PARTY to
promote the termination of this AGREEMENT, the PARTY that gives cause for the
termination bearing the penalties foreseen in CLAUSE 14 of this AGREEMENT.


Paragraph
Six – The PARTIES acknowledge and accept that his AGREEMENT can
be terminated by prior written notice sent by one PARTY to the other, in the
event of one PARTY refraining from fulfilling its contractual obligations for a
period greater than 180 (one hundred and eighty) consecutive days due to an Act
of God or Force Majeure event, exempting the PARTY in default from indemnifying
the other 









 



PARTY in the manner
foreseen in this AGREEMENT.


Paragraph
Seven – The occurrence of disturbances in the generation,
transmission or distribution system does not configure event of Act of God or
Force Majeure, for the effect of this agreement, save if expressly acknowledged
as such by the ONS and/or by the ANEEL.


ARTICLE
20
– On the occurrence of a rationing being decreed, during the effectiveness of
this AGREEMENT, by the Awarding Power in the Southeast / Center-West SUBMARKET,
the obligations from the PARTIES in the terms of this AGREEMENT will be
governed by the applicable legislation. In the omission of the Awarding Power
in defining the rule to be applied, and in the inexistence of provisions on the
theme in the RULES OF COMMERCIALIZATION, this AGREEMENT will undergo a
reduction in the amounts of supply and payments in the exact proportion of the
consumption reduction goal decree by the Awarding Power for the Southeast /
Center-West SUBMARKET.


TITLE
VII


IRREVOCABILITY


ARTICLE
21
– The current AGREEMENT is entered into in an irrevocable and irretractable
nature for the term of its effectiveness defined in ARTICLES 3 and 4, with the
exception of the events of termination held in ARTICLE 22.


TITLE
VIII


TERMINATION,
LIABILITY AND INDEMNIFICATION


Chapter
I – Termination


ARTICLE
22
– Notwithstanding the irrevocable and irretractable nature of the AGREEMENT, it
can be terminated by operation of law, by the PARTY in full compliance, in the
occurrence of any of the following events:


I. In the event of full
or partial non-fulfillment of any obligation in this AGREEMENT, as long as it
is not remedied by the PARTY in default in a term of up to 15 (fifteen) days
after notification in writing by the PARTY in full compliance;


II. In the event of
bankruptcy, dissolution or judicial or non-judicial liquidation is decreed or
the 









 



extrajudicial recovery
plan of the other PARTY is homologated, regardless of warning or notification;


III. In the event the
other PARTY comes to have revoked its legal, governmental or regulatory
authorization, indispensable to the fulfillment of the activities and
obligations foreseen in this AGREEMENT, including but not limited to, the
public service concession, term of permission or authorization, or has any of
its rights as a member of the CCEE suspended.


First
Paragraph – The occurrence of the termination must be formal and
expressly communicated in writing to the CCEE to the competent regulatory
entities which will leave the SELLER promptly released from any liability
relative to the supply object of this AGREEMENT, with no loss of the
obligations set forth previously to the above mentioned termination and
communication.


Paragraph
Two – Occurring the termination of this Agreement, the PARTY in
default, obliges itself to maintain the PARTY in full compliance free from any
obligations and liabilities in the terms of this AGREEMENT, also in the scope
of the CCEE, being responsible also for the payment of any burdens resulting
from such termination.


Paragraph
Three – Either of the PARTIES will notify the CCEE, in the event
of termination and it, in turn, will take the applicable measures for canceling
the registration of this AGREEMENT;


Paragraph
Four –The PARTIES agree that, in the event the current AGREEMENT
can not be fulfilled by reason of some legal impediment occurring in the
operationalization of the transaction, as long as such an impediment is not a
consequence of an action or omission of either of the PARTIES, the AGREEMENT
will be terminated and the PARTIES will not remain subject to the ascertaining
of responsibilities.


Chapter
II – Liability and Indemnification


ARTICLE
23
– The PARTY that, by its action or omission, gives cause to the termination of
the current AGREEMENT by incurring in the events treated in the previous
ARTICLE, will be obliged to pay to the other PARTY a fine for termination
equivalent to 20% (twenty percent) of the result of the multiplication of the
Prices for Contracted Power (PEC), stipulated in ARTICLE 11, by the respective
remaining amounts, in agreement with ARTICLE 6, of the MONTHLY CONTRACTED
POWER, expressed in MWh, until the end of the PERIOD OF SUPPLY, corresponding
to the contracted prices and amounts in 









 



force at the time of
termination.


ARTICLE
24
– Neither of the PARTIES will undertake any obligation of indemnifying the
other for any indirect damages, including loss of profits, consequential
damages, moral damages or any other mode of indemnification of the same nature.


TITLE
IX


OBLIGATIONS
OF THE PARTIES


ARTICLE
25
– The end of the period of effectiveness of this AGREEMENT will not affect any
rights or obligations prior to such an event and nor obligations or rights of
either of the PARTIES, even if the exercise or fulfillment takes place after
termination of the AGREEMENT.


ARTICLE
26
– With no loss of the other obligations foreseen herein, the PARTIES oblige
themselves to:


a) Strictly observe and
comply with all the legislation applicable to its company business and/or
activities to be performed in the terms of the current AGREEMENT;


b) Obtain and maintain
valid and in effect, during the entire period of effectiveness, all the
licenses and authorizations referent to their operational activities and/or to
the fulfillment of the obligations undertaken in the current AGREEMENT; and


c) Inform the other
PARTY, in a maximum period of 48 (forty-eight) hours, counting from the date of
becoming aware of the event, about any other events, of any nature, that may
represent a threat to the full and punctual fulfillment of the obligations
undertaken in this AGREEMENT.


Sole
Paragraph – Each Party will bear its respective obligations of a
tributary nature, as well as emoluments, burdens or charges, of any nature,
resulting from entering into this AGREEMENT.


TITLE X


RESOLUTION
OF DISPUTES


ARTICLE
27
– A dispute begins with a NOTICE OF DISPUTE from one party to the other.


ARTICLE
28
– If disputes occur stemming from this AGREEMENT, the PARTIES will seek to
resolve the dispute amicably in the term of up to 15 (fifteen) counting from
the NOTICE OF DISPUTE and to that purpose, each must appoint only a single
representative, who must meet as often as necessary in the above 









 



mentioned term.


ARTICLE
29
– In the event the dispute has not been resolved by any of the mechanisms
foreseen in the previous ARTICLES and either of the PARTIES has delivered a
notice that it intends to resolve the dispute by arbitration, as soon as the
party has received said notice of arbitrage, it makes a commitment, for the
purpose of the applicable legislation, to accept the arbitral decision as final
and applicable to said dispute, in the form of the law, in articles 267, item
VII; 301, item IX; 520, item VI and 584, item VI, of the Civil Process Code.


Paragraph
One – The arbitration will be headquartered in the City and
State of São Paulo-SP in agreement with the rules of the FGV Chamber of
Conciliation and Arbitration in force at the signing date of this AGREEMENT.


Paragraph
Two – In the event of intervention of the Judiciary Power
becoming necessary for each of the measures foreseen in the applicable legislation,
the PARTIES accept as the central jurisdiction of the District Court of São
Paulo as the only one competent, with the express waiver of any other, no
matter how privileged.


Paragraph Three – The PARTY that, for whichever
reason, defeats or prevents the instauration of the arbitration court, whether
by not adopting the necessary measures in the due term, or forcing the other
PARTY to adopt the measures foreseen in article 7 of Law No. 9,307/96, or,
further, that does not comply with all the terms of the arbitral sentence, will
bear the non-compensatory fine equivalent to 0.33% of the amount corresponding
to the invoicing of 1 (one) CONTRACTUAL MONTH, in force at the date of
effective formalization of the NOTICE OF DISPUTE in agreement with CLAUSE 27,
per day of delay in the instauration of the arbitration court or the
fulfillment of the provisions of the arbitration sentence, according to the
case, duly updated up to the date of its payment by the variation of the IGPM
index in the period, with no loss to the determination and penalties which are
present in such sentence.


TITLE
XI


GENERAL
PROVISIONS


ARTICLE
30
– In the event of corporate restructuring (split-up, merger, incorporation,
creation of an 









 



affiliated company,
alienation, privatization) or the creation of a new company belonging to the
same economic group of either of the PARTIES, as long as authorized by the
COMPETENT AUTHORITY, the sub-rogation of the rights and obligations resulting
from this AGREEMENT is previously and expressly authorized, by the company (or
companies) resulting from the restructuring process, in the proportions of
POWER to be allocated to the new company (or companies), if such is the case,
respecting all the conditions agreed on in the present, notably the terms and the
price of the CONTRACTED POWER.


ARTICLE
31
– The assignment of rights and obligations contained in this AGREEMENT, by one
of the PARTIES, must be preceded by the express consent from the other PARTY.


ARTICLE
32
– This AGREEMENT can not be changed, nor have waivers to its provisions, except
by means of written amendment signed by the PARTIES, observing the provision in
the applicable legislation.


ARTICLE
33
– No delay or tolerance, by either of the PARTIES, relative to the exercise of
any right, power, privilege or recourse contained in this AGREEMENT, will be
held as liable to impair such a right, power, privilege or recourse, nor will
be construed as a waiver of the same or renewal of the obligation(s).


ARTICLE
34
– Any notice or other communication from one PARTY to the other regarding this
AGREEMENT will be made in writing, in the Portuguese language, and can be
delivered or sent by registered mail, fax or electronic media formally agreed
on between the PARTIES, in any event with formal evidence of its receipt, to
the address and care of the representatives, namely:


To the SELLER: CESP –
COMPANHIA ENERGÉTICA DE SÃO PAULO


C/O: Sérvio Ishida


Tel.: (11) 5612-4970


Fax: (11): 5613-3786


E-mail:
sergio.ishida@cesp.com.br


To the BUYER:
SCHWEITZER-MAUDUIT DO BRASIL S/A


C/O – Antônio Carlos
Vilela


Tel.: (24) 2447-5200


Fax: (24) 2447-5235


E-mail:
vilela@swmb.com.br















 


ARTICLE
35
– In the event that any of the provisions foreseen in this AGREEMENT comes to
be declared illegal, invalid or unfeasible, the remaining provisions will not
be affected will not be effected, remaining in full force and application. On
the occurrence of the event foreseen herein, the PARTIES oblige themselves,
from this moment on, to search for a provision that replaces it and that
fulfills the objects of the provision considered illegal, invalid or
unfeasible, and that maintain inasmuch as possible, in all circumstances, the
balance of the commercial interests of the PARTIES.


ARTICLE
36
– This AGREEMENT contains or makes express reference to the entireness of the
understanding between the PARTIES in respect to its object and comprises all
the agreements and prior understandings between the PARTIES in respect to its
object. Each of the PARTIES acknowledges and confirms that it does not enter
into this AGREEMENT based on any statement, guarantee or other commitment from
the other PARTY that is fully reflected in the provisions of this AGREEMENT.


ARTICLE
37
– This AGREEMENT is acknowledged by the PARTIES as an execution instrument, in
the form of Articles 583 and 585, item II, of the Brazilian Civil Process Code,
for the effect collecting due values.


ARTICLE
38
– In the event of change of ownership of the concession, authorization or
permission from the SELLER, and respecting the conditions agreed on in the
current AGREEMENT, the sub-rogation is previously and expressly assured of the
rights and obligations resulting from this instrument.


ARTICLE
39
– With no loss to the other obligations foreseen in this AGREEMENT, the PARTIES
obliges themselves to:


I. strictly observe and
comply in full all the applicable legislation applicable to its corporate
business and to the activities to be performed in the terms of the current
AGREEMENT;


II. obtain and maintain
valid and in effect, during the entire period of effectiveness of the
AGREEMENT, all the licenses and authorizations referent to their
corporate/activities and/or to the fulfillment of the obligations, also in
respect to the concession agreement, authorization or permission, undertaken in
the AGREEMENT, except if such situation is modified by a COMPETENT AUTHORITY
and, in this case, 









 



the PARTIES oblige themselves
to adopt a contractual alternative that preserves the economic-financial
effects of the AGREEMENT in agreement with what was originally agreed upon; and


III. inform the other
PARTY, in a maximum period of 7 (seven) days, counting from the date of becoming
aware of the event, about any other events, of any nature, that may represent a
threat to the full and punctual fulfillment of the obligations undertaken in
this AGREEMENT.


ARTICLE
40
– All the time, during the term of this AGREEMENT, and for a period of 36
(thirty-six) months and after its end or termination, for any reason, the
SELLER and BUYER, are obliged for themselves, for their representatives and
employees, to maintain the confidentiality and the secrecy of all the
information and documents exchange or made available between themselves,
relative to the other PARTY, to which they have access as a consequence of the
purchase and sales object of this AGREEMENT, also as to the terms and
conditions of the current AGREEMENT, not being allowed to reveal or transmit
them to third parties, without the prior and express authorization in writing
from the other PARTY, with the exception of:


a) the situations
foreseen in the LAW, in the RULES OF COMMERCIALIZATION and in the
COMMERCIALIZATION PROCEDURES;


b) the information that
becomes public domain at the time it is received by the PARTY;


c) the information that
becomes public domain after being received by the PARTY, except if by means of
breach of this AGREEMENT or unlawful act of the PARTY, its officers or
employees; or


d) the information that
is lawfully obtained by one of the PARTIES in relation to the other, from third
parties, with no breach of this AGREEMENT or of any other obligations of
confidentiality in relation to the other PARTY.


ARTICLE
41
– The PARTIES will only use the information for the attainment of the ends and
objects of this AGREEMENT, and will not use them for other ends and objects
without the previous and express authorization in writing from the other PARTY.
The non-observance of the provision in this ARTICLE, subjects the PARTY that
gives cause to having to indemnify direct damages effective proven, including,
but without being limited to lawyerly fees ad judicial costs.









 



ARTICLE
42
– The current agreement will be registered at ANEEL, as well as the eventual
amendment or changes.


ARTICLE
43
– This agreement will be governed and construed, in all its aspects, in
accordance with the laws of Brazil.


AND IN WITNESS THEREOF,
THE PARTIES ENTER INTO THE CURRENT INSTRUMENT IN 03 (THREE) COUNTERPARTS, IN
THE PRESENCE OF THE BELOW SIGNED WITNESSES.


[Stamp & Initial] “Juliana França
Lourenço / Schweitzer-Mauduit do Brasil / Legal Supervisor”


São Paulo, 01 de May
of 2006.


SELLER:


CESP –
COMPANHIA ENERGÉTICA DE SÃO PAULO


[Signed] Guilherme
Augusto Cirne de Toledo


President


[Signed] Silvio Roberto
Areco Gomes


West Generation Director


BUYER:


	
  SCHWEITZER-MAUDUIT DO BRASIL S/A

  
	
   

  
	
   

  	
   

  	
   

  



 


Witnesses


[Signed] Name:  OSVALDO
PENA DE MENEZES JR


ID: 7.842.225-5









 



ATTACHMENT
I


CESP
GENERATING FARM


HYDROELECTRIC POWER PLANT


	
  POWER PLANT

  	
   

  	
  RIO

  	
   

  	
  POWER (MW)

  	
   

  
	
  UHE ILHA
  SOLTEIRA

  	
   

  	
  Paraná

  	
   

  	
  3,444.0

  	
   

  
	
  UHE JUPIÁ (ENG.
  SOUZA DIAS)

  	
   

  	
  Paraná

  	
   

  	
  1,551.2

  	
   

  
	
  UHE PORTO
  PRIMAVERA (ENG SÉRGIO MOTTA)

  	
   

  	
  Paraná

  	
   

  	
  1,540.0

  	
   

  
	
  UHE TRÊS IRMÃOS

  	
   

  	
  Tietê

  	
   

  	
  807.5

  	
   

  
	
  UHE JAGUARI

  	
   

  	
  Jaguari

  	
   

  	
  27.0

  	
   

  
	
  UHE PARAIBUNA

  	
   

  	
  Paraibuna

  	
   

  	
  85.0

  	
   

  



 


[Note: UHE – Usina Hidroelétrica
– Hydroelectric power plant]


MODEL


ATTACHMENT
II


MODEL
OF PROMISSORY NOTE


PROMISSORY NOTE                                                                                                                          Maturity:
“CASH”


Promissory Note given in
assurance of the true compliance of the obligations foreseen in the Electric
Power Purchase and Sales Agreement, entered into between SCHWEITZER-MAUDUIT DO BRASIL S/A, a
joint-stock company duly organized with head offices at Avenida Darcy Vargas
No. 325, Santanésia – Piraí – RJ, ZIP CODE: 27195-000, enrolled at the National
Register of Legal Persons of the Ministry of Finance [C.N.P.J./MF] under the
number 33.073.008/0001-37 and State Enrollment under the number 80.446.527 and
the CESP – COMPANHIA ENERGÉTICA DE SÃO PAULO
[The São Paulo Power Company], on
the            of                 
of 2006, in agreement with Article 18 of said agreement.









 



AMOUNT = R$                      


We hereby state that we
will pay, by this single copy of PROMISSORY
NOTE to CESP – COMPANHIA
ENERGÉTICA DE SÃO PAULO, with head offices in the city of São Paulo,
the State of São Paulo, at Avenida Nossa Senhora do Sabará, No. 5,312, region
of Pedreira, enrolled at the National Register of Legal Persons of the Ministry
of Finance [C.N.P.J./MF] under the number 60.933.603/0001-78, or at its order,
the above amount of R$                   
(                      
Brazilian reais), in the Country’s domestic currency, said Promissory Note
being liable to be foreclosed by the CESP –
COMPANHIA ENERGÉTICA DE SÃO PAULO only in the event of default by
non-compliance with Article(s) 14 and 17 of the Electric Power Purchase and
Sales Agreement entered into between the parties on the           
of                 
of 2006.


Payable in the market of
São Paulo – SP


Drawer: SCHWEITZER-MAUDUIT 
DO BRASIL S/A, Avenida Darcy Vargas No. 325, Santanésia –
Piraí – The State of Rio de Janeiro, enrolled at the National Register of Legal
Persons of the Ministry of Finance [C.N.P.J./MF] under the number 33.073.008/0001-37
in this act represented by its legal below signed legal representatives.


São Paulo,       
of                     
of             .


Acknowledgement of
Signatures:


[Stamp & Initial] LEGAL DEPARTMENT –
PJC / CESP


[03 Initials]