þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 22-3514823 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer | |
Identification No.) | ||
5 Westbrook Corporate Center, Westchester, Illinois | 60154 | |
(Address of Principal Executive Offices) | (Zip Code) | |
Registrants telephone number, including area code (708) 551-2600 |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, $.01 par value per share
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New York Stock Exchange | |
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Preferred Stock Purchase Rights
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New York Stock Exchange | |
(currently traded with Common Stock)
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Securities registered pursuant to Section 12(g) of the Act:
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Large accelerated filer
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Accelerated filer o | Non-accelerated filer o |
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Name | Age | All positions and offices with the Company | ||||
Samuel C. Scott III
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61 | Chairman and Chief Executive Officer since February 2001 and President since 1997. Mr. Scott also served as Chief Operating Officer from 1997 through January 2001. Prior thereto, he served as President of the worldwide Corn Refining Business of CPC International, Inc; now Unilever Bestfoods (CPC), from 1995 to 1997 and was President of CPCs North American Corn Refining Business from 1989 to 1997. He was elected a Vice President of CPC in 1991. Mr. Scott is a director of Motorola, Inc., The Bank of New York, ACCION U.S.A. and Inroads Chicago. He is also a Trustee of the Chicago Symphony Orchestra and the Conference Board. | ||||
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Cheryl K. Beebe
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50 | Vice President and Chief Financial Officer since February 2004. Ms. Beebe previously served as Vice President, Finance from July 2002 to February 2004, as Vice President from 1999 to 2002 and as Treasurer from 1997 to February 2004. Prior thereto, she served as Director of Finance and Planning for the CPC Corn Refining Business worldwide from 1995 to 1997 and as Director of Financial Analysis and Planning for Corn Products North America from 1993. Ms. Beebe joined CPC in 1980 and served in various financial positions in CPCs US consumer food business, North American audit group and worldwide corporate treasury function. She is a member of the Board of Trustees for Farleigh Dickinson University. | ||||
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Marcia E. Doane
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64 | Vice President, General Counsel and Corporate Secretary since 1997. Ms. Doane served as Vice President, Legal and Regulatory Affairs of the Corn Products Division of CPC from 1996 to 1997. Prior thereto, she served as Counsel to the Corn Products Division from 1994 to 1996. Ms. Doane joined CPCs Legal Department in 1989 as Operations Attorney for the Corn Products Division. |
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Name | Age | All positions and offices with the Company | ||||
Jorge L. Fiamenghi
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50 | Vice President and President of the South America Division since 1999. Mr. Fiamenghi served as Acting President, US/Canadian Region from August 2001 to February 2002. Mr. Fiamenghi served as President and General Manager, Corn Products Brazil from 1996 to 1999. Mr. Fiamenghi was General Manager for the CPC Corn Refining affiliate in Argentina beginning in 1991. Prior thereto, he was Financial and Planning Director for the CPC South American Corn Refining Division from 1989 to 1991, and served as Financial and Administrative Manager for the CPC Corn Refining Division in Mexico beginning in 1987. Mr. Fiamenghi joined CPC in 1971 and served in various financial and planning positions in CPC. | ||||
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Jack C. Fortnum
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49 | Vice President since 1999 and President of North America Division since May 2004. Mr. Fortnum previously served as President, US/Canadian Region from July 2003 to May 2004, and as President, US Business from February 2002 until July 2003. Prior to that, Mr. Fortnum served as Executive Vice President, US/Canadian Region from August 2001 until February 2002, as the Controller from 1997 to 2001, as the Vice President of Finance for Refineries de Maiz, CPCs Argentine subsidiary, from 1995 to 1997, as the Director of Finance and Planning for CPCs Latin America Corn Refining Division from 1993 to 1995, and as the Vice President and Comptroller of Canada Starch Operating Company Inc., the Canadian subsidiary of CPC, and as the Vice President of Finance of the Canadian Corn Refining Business from 1989. | ||||
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Jeffrey B. Hebble
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50 | Vice President since 2000 and President of the Asia/Africa Division since February 2001. Prior thereto, Mr. Hebble served as Vice President of the Asia/Africa Division since 1998. Mr. Hebble joined CPC in 1986 and served in various positions in the Corn Products Division and in Stamford Food Industries Sdn. Berhad, a Corn Products subsidiary in Malaysia. |
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Name | Age | All positions and offices with the Company | ||||
James J. Hirchak
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52 | Vice President Human Resources since 1997. Mr. Hirchak joined CPC in 1976 and held various Human Resources positions in CPC until 1984, when he joined the CPC Corn Products Division. In 1987, Mr. Hirchak was appointed Director, Human Resources for Corn Products North American Operations and he served as Vice President, Human Resources for the Corn Products Division of CPC from 1992 to 1997. | ||||
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Kimberly A. Hunter
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44 | Corporate Treasurer since February 2004. Ms. Hunter previously served as Director of Corporate Treasury from September 2001 to February 2004. Prior to that, she served as Managing Director, Investment Grade Securities at Bank One Corporation, a financial institution, from 1997 to 2000 and as Vice President, Capital Markets from 1992 to 1997. | ||||
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Robin A. Kornmeyer
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57 | Vice President since September 2002 and Controller since January 2002. Prior to that, Mr. Kornmeyer served as Corporate Controller at Foster Wheeler Ltd., a worldwide engineering and construction company, from 2000 to 2002 and as its Director of Corporate Audit Services from 1997 to 2000. | ||||
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James W. Ripley
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62 | Senior Vice President, Planning, Information Technology and Compliance since February 2004. Mr. Ripley previously served as Vice President and Chief Financial Officer since 1997 and Vice President, Finance from 1997 to July 2002. Prior thereto, he served as Comptroller of CPC from 1995 to 1997 and as Vice President of Finance for CPCs North American Corn Refining Division from 1984 to 1995. Mr. Ripley joined CPC in 1968 as Chief International Accountant and subsequently served as CPCs Assistant Corporate Comptroller, Corporate General Audit Coordinator and Assistant Comptroller for CPCs European Consumer Foods Division. |
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North America | South America | Asia/Africa | ||
Cardinal, Ontario, Canada
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Baradero, Argentina | Shouguang, China | ||
London, Ontario, Canada
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Chacabuco, Argentina | Eldoret, Kenya | ||
Port Colborne, Ontario, Canada
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Balsa Nova, Brazil | Cornwala, Pakistan | ||
San Juan del Rio, Queretaro, Mexico
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Cabo, Brazil | Faisalabad, Pakistan | ||
Guadalajara, Jalisco, Mexico
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Conchal, Brazil | Ichon, South Korea | ||
Mexico City, Edo. de Mexico
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Jundiai, Brazil | Inchon, South Korea | ||
Stockton, California, U.S.
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Mogi-Guacu, Brazil | Sikhiu, Thailand | ||
Bedford Park, Illinois, U.S.
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Llay-Llay, Chile | |||
Winston-Salem, North Carolina, U.S.
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Barranquilla, Colombia | |||
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Cali, Colombia | |||
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Guayaquil, Ecuador |
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ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
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Maximum Number | ||||||||||||||||
(or Approximate | ||||||||||||||||
Total Number of | Dollar Value) of | |||||||||||||||
Total | Average | Shares Purchased as | Shares that may yet | |||||||||||||
Number | Price | part of Publicly | be Purchased Under | |||||||||||||
of Shares | Paid | Announced Plans or | the Plans or | |||||||||||||
(shares in thousands) | Purchased | Per Share | Programs | Programs | ||||||||||||
Oct. 1 Oct. 31, 2005
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| | | 2,311 shares | ||||||||||||
Nov. 1 Nov. 30, 2005
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| | | 2,311 shares | ||||||||||||
Dec. 1 Dec. 31, 2005
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Total
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ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
2005 | 2004 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
(in millions) | value | value | value | value | ||||||||||||
8.25% senior notes, due 2007
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$ | 254 | $ | 266 | $ | 254 | $ | 280 | ||||||||
8.45% senior notes, due 2009
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199 | 219 | 199 | 233 | ||||||||||||
Korean loans
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28 | 28 | 27 | 27 | ||||||||||||
Total
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$ | 481 | $ | 513 | $ | 480 | $ | 540 | ||||||||
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ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. | CONTROLS AND PROCEDURES |
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1. | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company. | ||
2. | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in conformity with accounting principles generally accepted in the United States, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company. | ||
3. | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys assets that could have a material effect on the financial statements. |
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Corn Products International, Inc.:
Chicago, Illinois
March 8, 2006
Table of Contents
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
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CORN PRODUCTS INTERNATIONAL, INC.
By:
/s/ Samuel C. Scott III
Chairman, President and Chief Executive Officer
Signature
Title
/s/ Samuel C. Scott III
Chairman, President and Chief Executive Officer
/s/ Cheryl K. Beebe
Chief Financial Officer
/s/ Robin A. Kornmeyer
Controller
*Richard J. Almeida
Director
*Luis Aranguren
Director
*Guenther E. Greiner
Director
*Ronald M. Gross
Director
*Karen L. Hendricks
Director
*Bernard H. Kastory
Director
Table of Contents
Signature
Title
*Gregory B. Kenny
Director
*Barbara A. Klein
Director
*William S. Norman
Director
*James M. Ringler
Director
*By: /s/ Marcia E. Doane
Attorney-in-fact
Table of Contents
Exhibit No.
Description
Amended and Restated Certificate of Incorporation of the
Company, filed as Exhibit 3.1 to the Companys
Registration Statement on Form 10, File No. 1-13397
Amended By-Laws of the Company, filed as Exhibit 3.i to
the Companys report on Form 8-K dated February 3, 2006,
File No. 1-13397
Rights Agreement dated as of November 19, 1997 (Amended
and Restated as of September 9, 2002), between the
Company and The Bank of New York, filed as Exhibit 4 to
the Companys quarterly report on Form 10-Q for the
quarter ended September 30, 2002, File No. 1-13397
Certificate of Designation for the Companys Series A
Junior Participating Preferred Stock, filed as Exhibit 1
to the Companys Registration Statement on Form 8-Al2B,
File No. 1-13397
Five year Revolving Credit Agreement dated as of
September 2, 2004 among the Company and the agents and
banks named therein filed as Exhibit 10 to the Companys
report on Form 10-Q for the quarter ended September 30,
2004
First Amendment to Revolving Credit Agreement dated
October 8, 2004, filed as Exhibit 4.4 to the Companys
annual report on Form 10-K for the year ended December
31, 2004, File No. 1-13397
Indenture Agreement dated as of August 18, 1999 between
the Company and The Bank of New York, as Trustee, filed
on August 27, 1999 as Exhibit 4.1 to the Companys
current report on Form 8-K, File No. 1-13397, as amended
by First Supplemental Indenture filed on July 8, 2002 as
Exhibit 99.4 to the Companys current report on Form 8-K,
File No. 1-13397, and by Second Supplemental Indenture
filed on November 18, 2002 as Exhibit 4 to the Companys
current report on Form 8-K, File No. 1-13397
First Supplemental Indenture dated July 8, 2002 between
the Company and The Bank of New York, as Trustee, filed
on July 8, 2002 as Exhibit 99.4 to the Companys current
report on Form 8-K, File No. 1-13397
Second Supplemental Indenture dated November 18, 2002
between the Company and The Bank of New York, as Trustee,
filed on November 18, 2002 as Exhibit 4 to the Companys
current report on Form 8-K, File No. 1-13397
The Corn Products International, Inc. Stock Incentive
Plan, included as Appendix B to the Companys Proxy
Statement filed on Schedule 14A on March 29, 2005, File
No. 1-13397
Deferred Stock Unit Plan of the Company
Form of Severance Agreement entered into by each of the
Named Executive Officers
Table of Contents
10.4*
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Form of Amendment to Executive Severance Agreement entered into by each of the Named Executive Officers, filed as Exhibit 10.10 to the Companys annual report on Form 10-K for the year ended December 31, 2000, File No. 1-13397 | |
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10.5**
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Form of Indemnification Agreement entered into by each of the members of the Companys Board of Directors and the Named Executive Officers | |
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10.6*
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Deferred Compensation Plan for Outside Directors of the Company (Amended and Restated as of September 19, 2001), filed as Exhibit 4(d) to the Companys Registration Statement on Form S-8, File No. 333-75844, as amended by Amendment No. 1 dated December 1, 2004, filed as Exhibit 10.5 to the Companys annual report on Form 10-K for the year ended December 31, 2004, File No. 1-13397 | |
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10.7*
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Supplemental Executive Retirement Plan (Amended and Restated as of January 1, 2001), filed as Exhibit 10 to the Companys quarterly report on Form 10-Q/A for the quarter ended March 31, 2002, File No. 1-13397 | |
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10.8**
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Executive Life Insurance Plan | |
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10.9**
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Deferred Compensation Plan, as amended by Amendment No. 1 filed as Exhibit 10.21 to the Companys annual report on Form 10-K/A for the year ended December 31, 2001, File No. 1-13397 | |
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10.10*
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Annual Incentive Plan, included as Appendix C to the Companys Proxy Statement filed on Schedule 14A on March 29, 2005, File No. 1-13397 | |
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10.11*
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Performance Plan, filed as Exhibit 10.19 to the Companys annual report on Form 10-K for the year ended December 31, 1999, File No. 1-13397 | |
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10.12**
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Tax Sharing Agreement dated December 1, 1997 between the Company and Bestfoods | |
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10.13*
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Employee Benefits Agreement dated December 1, 1997 between the Company and Bestfoods, filed as Exhibit 4.E to the Companys Registration Statement on Form S-8, File No. 333-43525 | |
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10.14*
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Executive Life Insurance Plan, Compensation Committee Summary, filed as Exhibit 10.14 to the Companys annual report on Form 10-K for the year ended December 31, 2004, File No. 1-13397 | |
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10.15*
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Form of Executive Life Insurance Plan Participation Agreement and Collateral Assignment entered into by the Named Executive Officers with the exception of Jorge Fiamenghi, filed as Exhibit 10.15 to the Companys annual report on Form 10-K for the year ended December 31, 2004, File No. 1-13397 | |
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10.16*
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Form of Performance Share Award, filed as Exhibit 10.1 to the Companys report on Form 8-K dated January 31, 2006, File No. 1-13397 | |
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10.17
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Natural Gas Purchase and Sale Agreement between Corn Products Brasil-Ingredientes Industrias Ltda. and Companhia de Ga de Sao Paulo-Comgas |
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11.1
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Earnings Per Share Computation | |
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12.1
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Computation of Ratio of Earnings to Fixed Charges | |
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13.1
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Managements Discussion and Analysis of Financial Condition and Results of Operations and Consolidated Financial Statements and Notes | |
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18.1*
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Preferability letter from KPMG, filed as Exhibit 18.1 to the Companys annual report on Form 10-K for the year ended December 31, 2000, File No. 1-13397 | |
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21.1
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Subsidiaries of the Registrant | |
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23.1
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Consent of Independent Registered Public Accounting Firm | |
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24.1
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Power of Attorney | |
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31.1
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CEO Section 302 Certification Pursuant to the Sarbanes-Oxley Act of 2002 | |
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31.2
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CFO Section 302 Certification Pursuant to the Sarbanes-Oxley Act of 2002 | |
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32.1
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CEO Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code as created by the Sarbanes-Oxley Act of 2002 | |
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32.2
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CFO Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code as created by the Sarbanes-Oxley Act of 2002 |
* |
Incorporated herein by reference as indicated in the exhibit description.
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** | Incorporated herein by reference to the exhibits filed with the Companys Annual Report on Form 10-K for the year ended December 31, 1997. |
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ARTICLE ONE DEFINITIONS AND INTERPRETATION OF TERMS
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4 | |||
ARTICLE TWO PURPOSE
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12 | |||
ARTICLE THREE COMMERCIAL SUPPLY
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12 | |||
ARTICLE FOUR DAILY CONTRACTED AMOUNT
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12 | |||
ARTICLE FIVE QUALITY
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13 | |||
ARTICLE SIX DELIVERY POINT AND PROPERTY TRANSFER
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16 | |||
ARTICLE SEVEN TERMS FOR DELIVERY OF GAS
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16 | |||
ARTICLE EIGHT PRICE
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17 | |||
ARTICLE NINE SCHEDULING OF AMOUNTS TO BE TAKEN, COMMITMENTS
AND PENALTIES FOR DEFAULT
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18 | |||
ARTICLE TEN COMMITMENT OF PRIORITY OF PURCHASE OF DAILY
CONTRACTED AMOUNT (DCA) OF THE AGREEMENT AND GAS USAGE RESTRICTION
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ARTICLE ELEVEN INVOICING, PAYMENT MANNER AND GUARANTEE
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30 | |||
ARTICLE TWELVE MEASUREMENT
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36 | |||
ARTICLE THIRTEEN EFFECTIVENESS AND EXTENSION
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39 | |||
ARTICLE FOURTEEN FORTUITOUS CASE OR FORCE MAJEURE
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39 | |||
ARTICLE FIFTEEN- ASSIGNMENT AND ENCUMBRANCE OF RIGHTS AND OBLIGATIONS
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43 | |||
ARTICLE SIXTEEN NOVATION AND FORBEARANCE
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44 | |||
ARTICLE SEVENTEEN DEFAULT AND TERMINATION
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44 | |||
ARTICLE EIGHTEEN NOTICES
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49 | |||
ARTICLE NINETEEN DISPUTES RESOLUTION
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50 | |||
ARTICLE TWENTY- GENERAL LIMIT OF LIABILITY
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59 | |||
ARTICLE TWENTY-ONE AMENDMENT
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60 | |||
ARTICLE TWENTY-TWO ANNEXES
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60 | |||
ARTICLE TWENTY-THREE CONTRACTUAL AMOUNT
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60 | |||
ARTICLE TWENTY-FOUR AGREEMENT OF THE PARTIES
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60 |
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NATURAL GAS PURCHASE AND SALE AGREEMENT ENTERED INTO BY AND BETWEEN, COMPANHIA DE GÁS DE SÃO PAULO - COMGÁS AND, ON THE OTHER SIDE, CORN PRODUCTS BRASIL - INGREDIENTES INDUSTRIAIS LTDA: |
| the decision of the Federal Government to increase the participation of natural gas in the national energetic matrix; | |
| Law No. 9,478/97, which establishes provisions on the National Energetic Policy, has as one of its purposes the development, in economic bases, of the use of natural gas; | |
| Decree No. 3,371, of February 24, 2000, which established, within the competency of the Ministry of Mines and Energy, the Priority Program of Thermoelectricity, and MME Ordinance No. 551, of December 6, 2000, which ruled the program of incentive to cogeneration, stimulated entrepreneurs and investors to submit proposals for the implementation of Cogeneration Thermoelectric Projects; |
| the Cogeneration Plant was included in said Priority Program of Thermoelectricity by means of GCE Resolution No. 127 of April 16, 2002; | |
| as provided for in paragraph 2 of Article 25 of the Constitution of the Republic with the wording ascribed to it by the Constitutional Amendment No. 5 of August 15, 1995 , it is incumbent upon the States to exploit directly, or by means of a concession, the piped Gas services pursuant to the law; | |
| as per the concession agreement entered into with the State of São Paulo, Comgás is the exclusive concessionaire of public services of piped Gas distribution in the State of São Paulo, covering the location area of the Cogeneration Plant ; | |
| Comgás entered into the Comgás-Supplier Agreement with the Supplier; | |
| Comgás intends to provide to the User and the latter intends to purchase from Comgás , according to the rules and conditions of this Agreement , the Natural Gas to be used exclusively as fuel at the Cogeneration Plant; | |
| the last generating unit of the Cogeneration Plant started commercial operation on June 26, 2004, in accordance with ANEEL Decision No. 490 of June 25, 2004; and | |
| On December , 29, 2004, Comgás and the User executed a gas supply agreement, within the context of the Priority Program of Thermoelectricity, for the supply of Gas by Comgás to be used exclusively as fuel in the Cogeneration Plant, which was amended on March , 30, 2005, on May 31, 2005 and on July 20, 2005, on November 20, 2005 and on December 20, 2005 ( Short-Term Agreement ), pursuant to which Comgás and the User agreed to execute, a natural gas supply agreement to be used as fuel in the Cogeneration Plant , also under the conditions of the Priority Program of Thermoelectricity, with term of up to 20 years; |
1.1 | In this Agreement, whenever they are written in upper case, the terms below will have the definitions that are assigned to them in this article: |
a) | for the first Year , shall begin on the Commercial Supply Start-up Day and shall end the last Day of the corresponding year; |
b) | for each Year succeeding the Year referred to in item (a) above, except for the last Year of effectiveness of the Agreement , shall begin on the first Day of the corresponding year and shall end on the last Day of the corresponding year; | ||
c) | for the last Year of effectiveness of the Agreement , shall begin on the first Day of the corresponding year and shall end on the last Day of effectiveness of the Agreement ; |
b. | non-acceptance of the Daily Requested Amount (DRA) by Comgás, except under the terms of item 9.9.1.1 or item 17.1 ; | ||
c. | restriction or interruption in the supply of Gas as a result of an operating fact not attributable to the User ; | ||
d. | non-conformity in relation to the specifications of Gas defined in item 5.1; | ||
e. | subject to the provisions of items 7.3 and 7.4, failure to comply with any of the Gas delivery conditions defined in items 7.2 and 7.5; |
i. | the fact being attributed to an Fortuitous Case or Force Majeure; | ||
ii. | for a fact attributable to the User ; | ||
iii. | upon the previous agreement by the User in receiving the Gas out of specification or in nonconformity with the provisions of item 5.1, or the receipt of the Gas by the User out of specification or in nonconformity with the provisions of item 5.1, under the terms of item 5.2 (v); | ||
iv. | Comgás refusal to accept a Daily requested amount (DRA) incompatible with the situations of Comgás Scheduled Interruptions and/or of Suppliers Scheduled Interruptions . |
a) | with respect to the first Month , will start on the Commercial Supply Start-up Day and will end on the last Day of the relevant month; | ||
b) | with respect to each Month of effectiveness of the Agreement following the first Month , except for the last Month of effectiveness of the Agreement , will start on the first Day of the month and end on the last Day of the relevant month; | ||
c) | with respect to the last Month of effectiveness of the Agreement , will start on the first Day of the relevant month and end on the last Day of effectiveness of the Agreement . |
i. | enactment, commencement of effectiveness, change, suspension or revocation of any Law ; | ||
ii. | change in the interpretation or application of any Law . |
| to the supply of Gas by the Carrier to the Supplier or by the Supplier to Comgás ( Suppliers Scheduled Interruptions ); | ||
| to the supply of Gas by Comgás to the User ( Comgás Scheduled Interruptions ); and | ||
| to the receipt of G as by the User , for maintenance of equipment of the Cogeneration Plant or of the User s plant ( User s Scheduled Interruptions), |
i. | for the User, the total number of days of Scheduled Interruptions, cumulatively, may not exceed, in each five (5)- Year period, the average of twenty (20) Days per Year , provided that, in each Year , the number of days of interruption shall not exceed sixty (60) Days , Comgás being allowed to coordinate its Scheduled Interruptions within such period, jointly with the User ; | ||
ii. | for Comgás or its Supplier , the total time of Scheduled Interruptions may not exceed, in each three (3)- Year period, the total of fifteen (15) Days; |
2.1 | The purpose of this Agreement is the sale and supply by Comgás , and the purchase and receipt by the User , in the conditions set forth herein, of Natural Gas , exclusively for serving the needs of the Cogeneration Plant |
3.1 | For the purposes of this Agreement , it is established, as the date of execution of this Agreement, the Commercial Supply Start-up date . |
4.1 | The Daily Contracted Amount (DCA), at the Reference Conditions, shall be of three hundred thousand Cubic Meters per day ( 300,000 m 3 /day). |
4.1.1 | After ten (10) years the User shall be entitled to increase, the Daily Contracted Amount (DCA) in up to five percent (5%) upon notice to comgás sent at least twelve (12) months before the new DCA becomes effective. |
i. | Comgás shall notify, in writing, the User , as soon as possible, of the expected non-conformity in the Gas to be supplied, indicating what would be the probable non-conforming items and, precisely, the respective quality deviations; | ||
ii. | after the receipt of the Notice referred to in item above, the User shall inform, as soon as possible, whether it accepts or not to receive the Gas out of specification; it being henceforth expressly understood and accepted that the User s failure to inform its decision within the term stated in the Notice will be considered as the User s option not to receive the Gas out of specification. | ||
iii. | if it opts to receive the Gas out of specification, the User shall be entitled to a ten percent (10%) discount on the portion of the price pertaining to the Gas (commodity), except when the nonconformity is only pertaining to a SCP greater than the specified; | ||
iv. | if, however, the User opts not to receive the Gas out of specification or fails to inform its decision and, it actually does not take said Gas , the Failure in Supply for the non-compliance with the DRA will deemed to have occurred, and Comgás shall bear the payment of the penalties provided for in item 9.9.2; |
v. | if the User has informed that it would reject the Gas out of specification or fails to inform its decision, but, in spite of that, the Gas is taken at the Delivery Point , the Failure in Supply will be not be deemed to have occurred, and Comgás shall not be liable for any penalties and/or liability for damages that may eventually be caused to the equipment and facilities of the User, as well as to the Cogeneration Plant as a result of the informed non-conformity; being preserved, however, the right of the User to the discount referred to in subitem (iii) above. |
5.2.1 | If Comgás delivers the Gas out of the specification provided for in item 5.1, without giving prior Notice to the User of the existing non-conformity, the following rules shall be applicable: |
a) | If, exclusively as a result of the nonconformity presented by the Gas and the cause-effect relation being duly evidenced, the Cogeneration Plant suffers any damages in its equipment, then, unless the nonconformity has occurred as a result of an Fortuitous Case or Force Majeure, Comgás shall bear , always subject to the limit provided for in Article Twenty, until the damages have been repaired; | ||
(i) | with the penalties applicable for the cases of Failure in Supply , as provided for in item 9.9.2, subject to the limit established in item 9.9.3; | ||
(ii) | the costs determined according the procedures set forth in item 19.1.1, effectively incurred with the repair of the equipment of the Cogeneration Plant that has evidently been damaged by the use of the Gas out of specification, subject to the limit established in item 5.2.2 below. | ||
b) | If the supply of Gas out of specification does not cause any damages to the equipment of the Cogeneration Plant or if the cause-effect relation referred to in item (a) above has not been evidenced, the Failure in Supply shall be deemed not to have occurred, and Comgás shall not be liable for any penalties and indemnification for the repair of damages, being preserved, however, the right of the User to the discount referred to in item 5.2 (iii) above which discount, however, is not enforceable if the non-conformity has resulted from an Fortuitous Case or Force Majeure. |
c) | In case of item (a) above, during the period required for repairing the equipment of the Cogeneration Plant , the Take or Pay, Ship or Pay and Distribution Take or Pay commitments will be suspended. Said commitments will also be suspended during the period required for repairing the equipment of the Cogeneration Plant in case the damage of such equipment has occurred as a result of the occurrence of an Fortuitous Case or Force Majeure. The period required as stated above will be determined as per the procedure provided for in item 19.1.1. |
5.2.2 | Subject to the provisions of Article Twenty, in any event, the total of payments of Comgás set forth in item 5.2.1(a)(ii) shall exceed, during the whole effectiveness of this Agreement , the maximum limit corresponding to five per cent (5%) of the value of the Agreement , determined by the following formula: |
IL is the maximum limit of payment by Comgás ; | |||
DCA is the Daily Contracted Amount; | |||
N is the number of days of effectiveness of the
Agreement,
calculated as of the execution
date of the
Agreement
up to the final
date set forth in item 13.1;
|
|||
GP is the
Gas Price
in force on the date of
occurrence of the event set forth in item
5.2.1(a)(ii) converted to
Reais
per
Cubic Meter
at the
Reference
Conditions
according to the
Exchange Rate
of the last business day of the
Month
of payment of a certain
indemnification.
|
|||
K is the percentage of use of the IL, which shall
vary from 0 to 1, and, on the execution date of
this
Agreement
, shall correspond to 1. At
each payment made by
Comgás
under the
terms of item 5.2.1(a)(ii), a new K factor shall
be determined by the reduction of (i) the
percentage corresponding to such payment in
relation to the value 0.05 x DCA x N x GP from the
(ii) previous K factor.
|
5.3.1 | Upon the occurrence of a discrepancy between the results of quality verifications made by the Parties , each of them shall grant free access to the other Party in order to follow up the sampling and the analysis of the Gas , aimed at establishing a solution for the pending matter. |
5.4 | In case the dispute is not settled within ten (10) days as of the occurrence of the discrepancy referred to in item 5.3.1, the dispute will be submitted to an Expert Proceeding . |
6.1 | The Delivery Point will be located immediately downstream the outlet flange of the Regulation and Measurement Set (CRM), which shall in turn be located in the User s Unit located at Rua Paula Bueno, 2935 Mogi Guaçu, State of São Paulo. | |
6.2 | It is established as measurement point the Regulation and Measurement Set (CRM) owned by Comgás , located at the Users facilities. | |
6.3 | The transfer of ownership of the Gas from Comgás to the User will occur at the Delivery Point . |
6.3.1 | All risks and losses of Gas: |
| Up to the Delivery Point shall be for the account of Comgás; | ||
| As from the Delivery Point shall be for the account of the User . |
7.1 | The Gas will be delivered by Comgás to the User at the Delivery Point in conformity with the quality aspects set forth in Article Five. | |
7.2 | The supply control manometric pressure at the Delivery Point will be no more than seventeen (17) kgf/cm 2 and not less than twelve (12) kgf/cm 2 . |
7.2.1 | In special situations, the Parties may define control pressures other than that stated in item 7.2. |
7.3 | The average hourly flow shall be no more than one twenty-fourth (1/24) of the Daily Contracted Amount DCA , provided that an increase of up to ten percent (10%) shall be allowed. | |
7.4 | The instantaneous flow, in Cubic Meters per hour, shall not be more than one twenty-fourth (1/24) of the Scheduled Daily Amount SDA, |
provided that an increase, for periods not greater than fifteen (15) minutes a Day, of up to ten percent (10%) shall be allowed. | |||
7.5 | The maximum delivery temperature of the Gas shall be thirty-five degrees Celsius (35ºC). |
8.1 | The Price of Gas Sale (PS) at the Delivery Point to be charged by Comgás for the exclusive purposes of Cogeneration will be comprised of the sum of two portions: one related to the Gas Price (GP) and other related to the Distribution Margin (DM), in accordance with their respective values at each time, so that PS = GP + DM. |
8.1.1 | The Gas Price (GP), in turn, is comprised of the sum of two portions: one related to the commodity (PC) and the other related to Transportation (PT), so that: GP = PC + PT and shall be determined and readjusted as per the methodology stated in Annex 1. |
8.1.1.1 | The Gas Price (GP) shall be added by the taxes levied on the purchase of gas by Comgás in the Supplier-Comgás Agreement which are not creditable in view of legal determination or determination of any competent authority. |
8.1.2 | The Distribution Margin (DM) shall be that set forth by the Commission of Public Energy Services CSPE for the cogeneration segment stated in Ordinance CSPE No. 366, of May 30, 2005 or any other that may replace it. |
8.1.2.1 | Pursuant to Annex 2 of CSPE Ordinance No. 366/05, the Distribution Margin (DM) shall be calculated in cascade, i.e., progressively for each class of consumption, considering the amount of Gas consumed by User in the month: |
COGENERATION OF ELECTRIC ENERGY | ||||||||
FOR SELF CONSUMPTION OR SALE TO | ||||||||
END CONSUMER (VARIABLE R$/m 3 with | ||||||||
CLASS | m 3 /month | PIS and COFINS and without ICMS) | ||||||
1
|
Up to 100,000.00 m3 | 0.1661096 | ||||||
2
|
100,000.01 through 500,000.00 m3 | 0.1314942 | ||||||
3
|
500,000.01 through 2,000,000.00 m3 | 0.1291321 |
COGENERATION OF ELECTRIC ENERGY | ||||||||
FOR SELF CONSUMPTION OR SALE TO | ||||||||
END CONSUMER (VARIABLE R$/m 3 with | ||||||||
CLASS | m 3 /month | PIS and COFINS and without ICMS) | ||||||
4
|
2,000,000.01 through 4,000,000.00 m3 | 0.1168830 | ||||||
5
|
4,000,000.01 through 7,000,000.00m3 | 0.1022740 | ||||||
6
|
7,000,000.01 through 10,000,000.00 m3 | 0.0876628 | ||||||
7
|
((OVER)) 10,000,000.00 m3 | 0.0727138 |
8.2 | The Price of Gas Sale (PS) shall be added by the Tax on Operations Pertaining to the Movement of Merchandise and on Interstate and Intermunicipality Transportation Service Provision and Communications ICMS, under the terms of the applicable legislation, as well as by any other federal, state and municipal taxes (taxes, fees, rates, tax and para-tax contributions) levied or that may be levied on the operation of this Agreement . |
9.1 | Before the date of the first request of Gas , each Party shall inform to the other, by means of Notice , a fax number to which the operating notices shall be transmitted in relation to the performance of this Agreement. |
9.2 | Scheduling of Amounts of Gas to be Taken |
As of the Commercial Supply Start-up , the User shall send on a monthly basis to Comgás , with twelve (12) days in advance from the beginning of the Month of supply, a Notice with the schedule of the amount of Gas to be taken referring to the current Month and to the two subsequent Months . |
9.2.1 | The schedule referred to above shall detail the Daily Requested Amounts (DRA) for the next Month, as well as, only for the sake of indication, the total amounts for the two subsequent months, everything taking into account the Scheduled Interruptions and subject to the limit of the Daily Contracted Amount (DCA). | ||
9.2.2 | The schedule of the Month shall detail, for the sake of indication, the portion of the Amount Paid and Not Taken (APNT) which will be used on each Day of that Month which will become, upon the use, the Amount Recovered by User (ARU ). Such amount may not exceed, on the daily average of that Month, forty-four percent (44%) of the Daily Contracted Amount (DCA), except after the end of this Agreement , when, subject to the provisions of item 9.5.3 (b), such amount shall be a hundred per cent (100%) of that would be the old DCA. |
9.2.3 | The Daily Requested Amount ( DRA ) for any given day may be changed (increased or decreased) by the User , subject to the limit of the DCA, upon delivery of Notice to Comgás up to 8:00 a.m. (eight o clock) of the day previous to the corresponding day of supply. | ||
9.2.4 | Until two o clock (2:00 p.m.) of the day previous to the corresponding day of supply, Comgás , through delivery of Notice to the User, shall confirm the acceptance of the Daily Requested Amount, which will be considered as the Scheduled Daily Amount. Comgás failure to make such confirmation within the term provided for above shall be automatically considered as acceptance of the Daily Requested Amount (DRA) by Comgás , and such DRA shall be automatically considered SDA. | ||
9.2.5 | Exceptionally, upon the occurrence of any operating problems that restrict the capacity of Gas delivery, the Parties may negotiate a reduction of the Scheduled Daily Amount ( SDA ) for any given Day . Should the Parties agree on such reduction, the Daily Contracted Amount ( DCA ), exclusively on that Day, will be reduced to the amount of the new Scheduled Daily Amount ( SDA ), not characterizing thus Failure in Supply . | ||
9.2.6 | If there is availability of Gas and interest of Comgás and the User , the Scheduled Daily Amount (SDA ) may be increased during the Day , and the quantity so increased shall be then the Scheduled Daily Amount (SDA) of said Day . |
9.3 | Commitments of Gas Receipt ( Take or Pay ) |
Except for the situations of non-delivery or non-receipt of Gas for Failure in Supply , Scheduled Interruptions or Fortuitous Case or Force Majeure of either Party, the User undertakes to: |
a) | purchase and take, on a daily basis, from Comgás no more than one hundred and ten percent (110%) of the Scheduled Daily Amount (SDA) , limited to one hundred and ten percent (110%) of the Daily Contracted Amount (DCA), and not less than eighty percent (80%) of the Scheduled Daily Amount (SDA) of Gas for the corresponding Day , subject, in case of the noncompliance, to the penalties provided for in items 9.6 and 9.7 and respective subitems; | ||
b) | at every Month of the effectiveness of the Agreement, purchase and take from Comgás and, even if it does not take, pay an Amount of Gas that, at the daily average of the corresponding Month is either equal to or greater than fifty-six percent (56%) of the Daily Contracted Amount in effect referred to by Article Four; |
c) | at every Year of the effectiveness of the Agreement , purchase and take from Comgás and, even if it does not take, pay an Amount of Gas that, at the daily average of the corresponding Year is either equal to or greater than eighty percent (80%) of the Daily Contracted Amount (DCA) in effect referred to by Article Four; |
9.3.1 | The percentages referred to in subitems (b) and (c) of item 9.3 correspond to the monthly and annual Take or Pay commitments, whose compliance will be verified by taking into account only the Daily Taken Amount ( DTA ) such as defined in item 9.4. |
9.4 | Daily Taken Amount ( DTA ) | |
The Daily Taken Amount ( DTA ) will be determined by the formula: | ||
DTA = QM ARU | ||
where : | ||
DTA Is the Daily Taken Amount; | ||
QM Is the Measured Amount at CRM on the respective Day; and | ||
ARU Is the Amount Recovered by the User on the respective Day. |
9.4.1 | The sum, in the Month , of the Daily Taken Amounts ( DTA s) will be used as parameter for purposes of determination of the Amount Not Taken in the Month (ANT M ) and the Amount Not Taken of the Year (ANTy), pursuant to item 9.5. |
9.5 | Amounts Not Taken Determination | |
The Amounts Not Taken (ANTs) of Gas to be paid by the User to Comgás in view of the provisions of subitems (b) and (c) of item 9.3 shall be calculated according to the following formulas: |
a) | amount to be paid in each Month : | ||
b) | amount to be paid in each Year : | ||
ANT
M
|
- | is the Amount of Gas not Taken in the Month , being zero if the calculation result is negative; | ||
M
|
- | is the number of Day s of the Month of supply; | ||
PP
M
|
- | is the total number of days (or a fraction thereof) corresponding to Scheduled Interruptions in the Month , at the proportion in which they have affected the receipt or the regular supply of Gas at the Delivery Point | ||
PPP
Y
|
is the total number of Days (or a fraction thereof) corresponding to Scheduled Interruptions exclusively from Comgás in the Year , at the proportion in which they have adversely affected the regular supply of the Gas at the Delivery Point ; | |||
DCA
|
- | is the Daily Contracted Amount effective in the Month and/or Year of supply, receptively for subitems (a) and (b) of this item; | ||
QN
FFj
|
- | is the portion of the Scheduled Daily Amount (SDA) which has not been taken on day j for a reason of Failure in Supply ; | ||
QN
FMj
|
- | is the portion of the Scheduled Daily Amount (SDA) which has not been taken on day j due to an Act of God or a Force Majeure Event; | ||
DTA
j
|
- | is the Daily Taken Amount on day j; | ||
ANT
Y
|
- | is the Amount Not Taken of Gas in the Year , being zero if the calculation result is negative; | ||
Y
|
- | is the number of the Days in the Year of supply. |
9.5.1 | Payments for Amounts Not Taken |
The amount to be paid by the User to Comgás as Amount Not Taken ( Take or Pay ) shall be: |
(a) | at every Month , the product of the ANT M ( Amount Not Taken in the Month ) by the value of the portion pertaining to the commodity of the Gas Price in effect at the end of the last day of the Month of supply, added by the taxes due, as provided for in the applicable legislation. | ||
(b) | at every Year , the product of the ANT Y ( Amount Not Taken in the Year ) by the value of the portion pertaining to the commodity of the Gas Price in effect at the end of the last day of the Year of supply, added by the taxes due, as provided for in the applicable legislation. |
The amounts referred to in item 9.5.1 shall be paid by the User within the same term and according to the same rules and further conditions set forth in Article Eleven for the payment of Gas invoices pertaining to the invoicing period. |
9.5.2 | Amount Paid and Not Taken ( APNT ) | ||
Once the payment of each of the amounts referred to in item 9.5.1 has been made, the corresponding Amount Not Taken (ANT) will be added to the Amount Paid and Not Taken of the corresponding Year (APNTy), being the total APNTy on the first moment of the Year equal to zero . |
9.5.3 | Recovery of Amounts Paid and Not Taken | ||
The User may recover, in whole or in part upon Notice as per item 9.2.2, always for consumption at the Cogeneration Plant , the remainder of the Amounts Paid and Not Taken ( APNT s) of Gas ( commodity ), as follows: |
a) | during the effectiveness of the Agreement , including any possible extension pursuant to item 13.1 : |
(i) | up to the last Month of the seventh (7 th ) Year subsequent to the Year of verification of the Amount Paid and Not Taken of a certain Year (APNTy); | ||
(ii) | on the condition that it has already requested and taken, in the Month in which there is the recovery, an Amount of Gas corresponding, at least, to the monthly Take or Pay commitment; |
b) | after the end of the term established in the Article Thirteen, including its eventual extension pursuant to Article Thirteen : except for the event of termination caused by the User or for its fault: |
(i) | up to the limit of the DCA or to such limit that may be agreed by Comgás and the User; | ||
(ii) | up to the term of three hundred and sixty five (365) days following the end of the Agreement , pursuant to item 13.1.1. |
9.5.3.1 | The portion taken by the User of the remainder of Amounts Paid and Not Taken (APNTs) will be referred to as Amount Recovered by the User (ARU) and will be, at the time of such recovery, deducted from the said remainder, by order, from the oldest to the most recent APNT Y . |
9.5.3.2 | For the Amount Recovered by the User (ARU), the User shall pay to Comgás the portion corresponding to the taxes levied, under the terms of the applicable legislation. | ||
9.5.3.3 | For the Amounts Recovered by the User (ARUs) in accordance with item 9.5.3(b), the User shall also pay to Comgás the portion of the Gas Price pertaining to the transportation of the entire volume recovered in the Month or ninety-five percent (95%) of what would be the Daily Contracted Amount (DCA), whichever is higher, with all taxes levied thereon. | ||
9.5.3.4 | After the deadlines referred to in subitems (a) and (b) of item 9.5.3 or after the termination of the Agreement by Comgás as a result of a default by the User , the balance of the Amount Paid and Not Taken will be considered as having been extinguished, whether there is a remainder or not, and the User will not have any right of recovery. In case of termination of the Agreement by the User for a default by Comgás or in case of termination under the terms of item 17.5(a), Comgás shall pay to the User the amounts provided for in item 17.4.1(ii). | ||
9.5.3.5 | In the event of termination of the Agreement under the terms provided for in item 17.5(b): |
(a) | the remainder of the Amount Paid and Not Taken (APNT) of Gas will be considered as being extinguished, whether there is a remainder or not, and the User will not have any right of recovery, in case the termination of the Agreement pursuant to said item 17.5(b) results from unilateral decision by the User or from a default of the User ; | ||
(b) | the amount corresponding to the possible residual amount of the Amount Paid and Not Taken (APNT) of Gas will be paid by Comgás to the User, as provided for in item 17.4.1(ii), if the termination of the Agreement pursuant to said item 17.5(b) results from unilateral decision of Comgás or from a default of Comgás . |
9.6 | Penalty for Amount Taken in Excess of Schedule | |
If, on any given Day, the User takes an Amount of Gas exceeding by more than ten percent (10%) the Scheduled Daily Amount (SDA) for that Day , or ten percent (10%) of the Daily Contracted Amount (DCA) in effect, whichever is lower, then it shall pay to Comgás , unless if agreed upon between the Parties , in addition to the regular invoicing: |
i) | a penalty in the amount determined by the following formula: |
9.6.1 | Without prejudice to the provisions of item 9.6, if the User fails to comply with the limits specified in said item, and that implies risk to the operation of the distribution system, Comgás may limit the flow in the Regulation and Measurement Set (CRM), upon prior notice to the User . | ||
9.6.2 | The payment of the penalty referred to in item 9.6 will be made on the maturity date of the invoices pertaining to the concerned Month as provided for in item 11.4 and the User shall be subject, in case of non-payment within such term, to the same additions and other rules applicable to the invoices paid in delay, pursuant to Article Eleven. |
If, on any given day, the User takes an Amount of Gas lower than eighty percent (80%) of the Scheduled Daily Amount for that Day , it shall pay to Comgás , as of the second event in any given Month, or as of the seventh event in a certain Year , in addition to the regular invoicing, a penalty in the amount determined by the following formula: |
9.7.1 | The payment of the penalty referred to in item 9.7 will be made on the maturity date of the invoices pertaining to the concerned Month as provided for in item 11.4 and the User shall be subject, in case of non-payment within such term, to the same additions and other rules applicable to the invoices paid in delay, pursuant to Article Eleven. |
9.8.1 | On a monthly basis, the User shall pay to Comgás , within the term set forth in item 11.4, the product of the portion pertaining to the |
transportation of the Gas Price (PT) by the greater amount between the following (QT) added by the taxes levied, as provided for in the applicable legislation: |
i. | the sum, in the Month, of the Daily Taken Amount (DTA) plus the Amount Recovered by the User (ARU) . | ||
ii. | the product of ninety-five percent (95%) ¾ Ship or Pay ¾ of the Daily Contracted Amount (DCA) by the number of Day s of the corresponding Month, deducted from this calculation the situations of non-delivery or non-receipt of Gas for Failure in Supply , Fortuitous Case or Force Majeure by either Party and/or Scheduled Interruption by Supplier and/or Comgás , in the proportion that they have adversely affected the receipt or the regular supply of Gas at the Delivery Point . |
9.8.2 | On a monthly basis, the User shall pay to Comgás , within the term set forth in item 11.4, the product of the portion pertaining to the Distribution Margin by the greater among between the following (QT) added by the taxes levied, as provided for in the applicable legislation: |
i. | the sum, in the Month, of the Daily Taken Amount (DTA) plus the Amount Recovered by the User (ARU) . | ||
ii. | the product of eighty percent (80%) of the Daily Contracted Amount (DCA) the Distribution Take or Pay by the number of Day s of the corresponding Month, deducted from this calculation the situations of non-delivery or non-receipt of Gas for Failure in Supply , Fortuitous Case or Force Majeure by either Party and/or Comgás Scheduled Interruption or the Suppliers Scheduled Interruptions , in the proportion it has adversely affected the receipt or the regular supply of Gas at the Delivery Point . |
9.9.1 | Comgás undertakes to accept the Daily Requested Amounts (DRA) as Scheduled Daily Amounts (SDA), as well as to make available to the User , at the Delivery Point , at every Day , an Amount of Gas equal to the Daily Requested Amount (DRA) for the corresponding Day. |
9.9.1.1 | Comgás is released from its obligation to accept, as Daily Requested Amount (DRA), Daily Requested Amounts (DRA) that are incompatible with situations of Comgás and/or Supplier s Scheduled Interruptions . |
9.9.2 | In the event of proven Failure in Supply, Comgás shall pay to the User , as the sole and enforceable compensation, the amount determined by the following formula, always subject to the limit set forth in item 9.9.3 below: | ||
Md = 0.15 x GP x QF | |||
where: | |||
Md daily fine, in national currency; | |||
QF Missing Amount on the Day on which there was a Failure in Supply ; | |||
GP Gas Price at the Delivery Point, pursuant to item 8.1.1 of Article Eight, in effect in the Month . |
9.9.2.1 | The payment of the penalty referred to by item 9.9.2 shall be made on the maturity date of the invoices pertaining to the concerned Month as provided for in item 11.4 the User shall be subject, in case of non-payment within such term, to the same additions and other rules applicable to the invoices paid in delay, pursuant to Article Eleven. |
9.9.3 | Under no circumstance, the total of payments by Comgás as a result of Failure in Supply may exceed, in each Year , the non-cumulative limits specified below, subject to the provisions of Article Twenty. |
(i) | in case the Failure in Supply is the result of a failure in supply by the Supplier in the Supplier-Comgás Agreement : limit corresponding to 3,285,000 m 3 multiplied by the Gas Price in effect, converted to Reais per Cubic Meters, calculated according to the following formula: |
IL
|
= | K x 3,285,000 x GP, where | ||
IL
|
- | is the maximum limit of payment by Comgás in case of Failure in Supply resulting from a failure in supply by the Supplier in the Supplier-Comgás Agreement ; | ||
GP
|
- | is the Gas Price in force on the date of occurrence of each Failure in Supply converted to Reais per Cubic Meter at the Reference Conditions according to the Exchange Rate of the last business day of the Month of payment of an indemnification. | ||
K
|
is the percentage of use of the IL, which shall vary from 0 to 1, and, on the execution date of this Agreement and on the beginning of each Year , shall correspond to 1. At each payment made by Comgás for Failure in Supply , a new K factor shall be determined by the reduction of (i) the percentage corresponding to such payment in relation to the value 3,285,000 x GP from the (ii) previous K factor. |
(ii) | in case the Failure in Supply is exclusively attributable to Comgás : limit corresponding to 3,285,000 m 3 multiplied by the Gas Price in effect, converted to Reais per Cubic Meters , calculated according to the following formula: |
IL
|
= | K x 3,285,000 x GP, where | ||
IL
|
- | is the maximum limit of payment by Comgás in case of Failure in Supply exclusively of Comgás ; | ||
|
||||
GP
|
- | is the Gas Price in force on the date of occurrence of each Failure in Supply converted to Reais per Cubic Meter at the Reference Conditions according to the Exchange Rate of the last business day of the Month of payment of an indemnification. | ||
|
||||
K
|
is the percentage of use of the IL, which shall vary from 0 to 1, and, on the execution date of this Agreement and on the beginning of each Year , shall correspond to 1. At each payment made by Comgás for Failure in Supply , a new K factor shall be determined by the reduction of (i) the percentage corresponding to such payment in relation to the value 3,285,000 x GP from the (ii) previous K factor. |
9.9.3.1 | The Parties agree that the indemnification limits provided for in item 9.9.3 above are exclusively established for each Year and are not cumulative with the limits of other Years. Therefore, any possible balance of the indemnification limit of any given Year , which has not been used for such Year, will not be added to the indemnification limits of the subsequent Year . |
10.1 | Priority of Acquisition of Daily Contracted Amount (DCA) of the Agreement |
10.1.1 | The User agrees that the supply of Gas , subject of this Agreement , will have priority in relation to any other supply of piped gas to the Cogeneration Plant which it may possibly request to Comgás until the Daily Contracted Amount (DCA) set forth in this Agreement is reached . | ||
10.1.2 | If the User consumes gas from other agreement in violation with the provisions of 10.1.1 above, the User shall pay to Comgás , as penalty, the amount calculated by the formula P = GP x QT , where: |
P | - | is the amount of the penalty pertaining to the Day ; | ||||||
|
||||||||
GP | - | is the total unit price of the Gas at the Delivery Point in effect on the last day of the month of occurrence of the fact generating the penalty, converted into Reais per Cubic Meter at the Reference Conditions, according to the Exchange Rate of the day prior to the payment day to Comgás. | ||||||
|
||||||||
QT | - | is the Amount of Gas (expressed in Cubic Meters at the Reference Conditions) taken on the Day by the User which is not the Gas subject of this Agreement , limited to the difference [DCA QR QFF] , in which: | ||||||
|
||||||||
|
DCA | - | Is the Daily Contracted Amount; | |||||
|
||||||||
|
QR | - | Is the Amount of Gas subject of this Agreement which has been used on that Day by the User; | |||||
|
||||||||
|
QFF | - | Is the Amount of Gas which, on that Day , has been subject of proven Failure in Supply; |
10.1.3 | The payment of the penalty referred to by item 10.1.2 shall be made on the maturity date of the invoices pertaining to the supply of Gas of the concerned Month the User shall be subject, in case of non-payment within such term, to the same additions and other rules applicable to the Gas supply invoices paid in delay, pursuant to Article Eleven of this Agreement . | ||
10.1.4 | The payment obligation of the penalty referred to in item 10.1.2 will be irrespectively of all the other obligations under the Agreement , including the Take or Pay , Ship or Pay and Distribution Take or Pay obligations and the payment of the full price for any amount of Gas supplied at the Delivery Point . | ||
10.2 | Gas Usage Restriction | ||
10.2.1 | The User agrees that all the Gas subject of this Agreement shall be consumed at the Cogeneration Plant. | ||
10.2.2 | If the User destines any Amount of Gas to any other use(s) in violation with the provisions above, the User shall pay to Comgás , as a penalty, the amount corresponding to the product of such Amount of Gas by seventy percent (70%) of its total unit price (PS) at the Delivery Point in effect on the last Day of the month of occurrence of the fact generating the penalty. |
10.2.3 | The payment of the penalty referred to by item 10.2.2 shall be made on the maturity date of the invoices pertaining to the supply of Gas of the concerned Month as provided for in item 11.4 the User shall be subject, in case of non-payment within such a term, to the same additions and other rules applicable to the Gas supply invoices paid in delay, pursuant to Article Eleven of this Agreement. | ||
10.2.4 | The payment obligation of the penalty referred to in item 10.2.2 will be irrespectively of all the other penalties and obligations of the Agreement , including the ones related to termination , Take or Pay , Ship or Pay, Distribution Take or Pay and the obligation to pay the full price of the totality of Gas supplied at the Delivery Point . |
11.1.1 | Portion Pertaining to the Commodity : |
For the supply of Gas (commodity), the invoicing amount will be determined by the application of the following formula: |
where: |
F
C
|
- | is the amount of the invoicing of the commodity in each period of invoicing to be paid by the User on the maturity date defined pursuant to item 11.4; | |
|
|||
DTA
j
|
- | is the Daily Taken Amount on day j; | |
|
|||
PC
|
- | is the unit amount of the portion pertaining to the c ommodity added by the taxes and converted into national currency per Cubic Meter at the Reference Conditions in accordance with the Exchange Rate of the last business day of the Month of supply ; | |
|
|||
K
|
- | is the first Day of Gas supply in the invoicing period; | |
|
|||
J
|
- | is each one of the Days of Gas supply in the concerned invoicing period; | |
|
|||
N
|
- | corresponds to the last Day of Gas supply in the concerned invoicing period; | |
|
|||
D
Fc
|
- | is the supplementary amount of the invoicing of the commodity pertaining to the previous supply period, calculated by means of the difference between (i) the amount ascertained in accordance with the Exchange Rate published on the business days previous to the 25 th day of the Month of supply and (ii) the amount invoiced in the previous period being deducted therefrom the supplementary amount of the D Fc previously applied. |
11.1.2 | Portion Pertaining to the Transportation |
In relation to the Gas transportation, the invoicing amount will be determined by means of the application of the following formula: |
F
T
|
- | is the invoicing amount pertaining to the transportation in each period of invoicing, to be paid by the User on the maturity date as defined pursuant to item 11.4; | ||
|
||||
Q
T
|
- | is the Amount of Gas defined pursuant to item 9.8 | ||
|
||||
PT
|
- | is the amount of the portion pertaining to the transportation of the Gas Price in force on the Month of supply and converted into national currency per Cubic Meter at the Reference Conditions by the Exchange Rate of the last business day of the Month of supply. | ||
|
||||
D
F
t
|
- | is the supplementary amount of the invoicing of the transportation pertaining to the previous supply period, calculated by means of the difference between (i) the amount ascertained in accordance with the Exchange Rate published on the business day previous to the 25 th day of the Month of supply and (ii) the amount invoiced in the previous period being deducted therefrom the supplementary amount of the D Ft previously applied. |
11.1.3 | Portion pertaining to the Distribution Margin | ||
In relation to Comgás Distribution Margin, the invoicing amount shall be as established hereinafter: |
Fm
|
- | is the invoicing amount pertaining to the Distribution Margin in each Month of invoicing, to be paid by the User on the maturity date as defined pursuant to item 11.4; | ||
|
||||
QM
i
|
- | is the Amount Measured on Day i, in m 3 . | ||
|
||||
N
|
- | is the last Day of Gas supply in the Month or the considered supply period | ||
|
||||
Mg
|
- | is the Distribution Margin calculated as defined in items 8.1.2 and 8.1.2.1 | ||
|
||||
I
|
- | is each one of the Days of Gas supply in the Month or period of invoicing considered |
11.1.4
Portion Pertaining to the
Amount Not Taken
In relation to the
Amount Not Taken,
the invoicing amount shall be
determined by the application of the formulas provided for in item 9.5.
11.2
-
Periodicity of Invoicing and other Collections.
Invoicing shall be made on a monthly basis, and each
Month
shall correspond to a
Gas
supply period. The other
Collection Documents
shall be issued with
the
same periodicity, without prejudice to the provisions of item 11.3
.
11.3
Submission of
Bill of Sales and
Collection Documents
Comgás
shall submit to the
User
the bill of sales and the
Collection
Documents
up to the tenth (10
th
) day of the
Month
following the
Month
to which they refer and up to the tenth (10
th
) day of the first
Month
of the subsequent
Year
for the invoicing related to annual
Take
or Pay
. The failure by
Comgás
to submit the
Collection Documents
within the established term shall result in the extension of the maturity date for a
period equivalent to the delay
.
11.4
Collection Documents
Maturity Dates
The amounts of the
Collection Documents
shall be paid in the country legal currency,
by way of credit into the current account of
Comgás
(to be previously informed), up
to the twenty-fifth (25
th
) day of the month following the
Month
to which
they refer, or, if such is not a business day, on the first (1
st
) subsequent
business day.
11.4.1
In case of delay in the delivery of the
Collection Document,
the maturity date
shall be extended for a term identical to the number of days of delay, remaining
applicable, however, the original dates set forth in items 11.1.1 and 11.1.2 for the
determination of the
Exchange Rate
.
11.4.2
The
Collection Document
(s) shall be issued by
Comgás
, in the name of:
Corn Products Brasil Ingredientes Industriais Ltda
Rua Paula Bueno, 2935
Mogi Guaçu SP CEP 13841-010
11.4.3
Comgás
shall include into each invoice the calculation of any penalties due by
the
User
in accordance with Article Nine.
11.5
Compensation of Fines Imposed by the
User
to
Comgás
In the event
Comgás
has incurred in any fines properly notified and charged by way
of a
Collection Document
issued by the
User
, its amount, if acknowledged by
Comgás
, may be used by the
User
to set-off its debt towards
Comgás
in the
Month
of payment.
11.5.1
In the event the total of fines referred to by item 11.5 is higher than the debt of the
User
towards
Comgás
in any given
Month
, the difference in favor
of the
User
shall be credited by
Comgás
into a current account of the
User
, to be timely informed, on the same maturity date of the invoice pertaining
to the
Gas
which has been supplied in the
Month
of occurrence of the
fact generating the fine.
11.6
Late Payment Charges
The payments made in delay shall be updated by the accumulated variation of the IGP-M/FGV
(General Index of Market Prices, published by Fundação Getúlio Vargas)
¾
or any other
index that may replace it and added by interest of one percent (1%) per month, everything
on a
pro rata tempore
basis
,
considering the period between the effective payment date and
the maturity date, in addition to a fine of two percent (2%) on the updated principal amount.
If the IGP-M/FGV is extinguished and not officially replaced by any other index, the
Parties
shall agree, within the term of fifteen (15) days, on a new index for the
same purpose.
11.6.1
If within the term of fifteen (15) days the
Parties
fail to reach an agreement
on the index to be used in replacement of the IGP-M/FGV, the dispute shall be settled by
an
Expert
.
11.7
Error in
Collection Document.
In the event that an error is found in the amount of a
Collection Document,
whether a shortfall or an excess,
Comgás
shall make the appropriate
correction for set-off in the next succeeding month. In case of an error in the amount of a
Collection Document
, the
User
may notify
Comgás
within three (3)
days after the receipt of the
Collection Document
, requiring
Comgás
to
correct the error and reissue the
Collection Document
. If the
Collection
Document
is corrected in 3 days and delivered to the
User
within such term,
it shall be settled within the original term. If the corrected
Collection Document
is delivered
to the
User
after 3 days, it shall be settled by the
User
within twenty (20) days as of the receipt of the corrected
Collection
Document
.
11.8
Disputed Collections
In case any amount charged by one
Party
to the other in any
Collection
Document
is disputed, the following procedures shall be applied:
a)
The disputing
Party
(
Disputing Party
) shall give notice
of such dispute to the other
Party (Non-Disputing Party
) on or before the
due date of the
Collection Document
, describing in detail the disputed
amount, the reasons for its disagreement, the alternative adopted in relation to the
amount charged, in addition to any other elements it deems important in order to
settle the dispute;
b)
The
Non-Disputing Party
shall make the payment of the total amount
charged on a timely basis, informing the portion subject to potential refund.
c)
If the
Non-Disputing Party
agrees with the
Disputing Party
,
the
Non-Disputing Party
shall give notice to the
Disputing Party
of
its agreement and refund the latter, within the maximum term of fifteen (15) days, the
disputed amount, in case such amount was paid subject to potential refund.
d)
If the
Non-Disputing Party
does not agree with the
Disputing
Party
, then the
Non-Disputing Party
shall give notice to the
Disputing Party
of its disagreement and the dispute shall be immediately
submitted to an
Arbitration Tribunal
, unless the
Parties
decide to
submit the dispute first to an
Expert
.
11.8.1
If, at any time, a
Party
waives or reconsider its opinion with respect to a
dispute, such
Party
may, as the case may be:
i.
refund to the other
Party
the amount paid subject to
potential refund, added by the charges provided for in item 11.8.1.2;
ii.
release any amount paid subject to potential refund from such
condition;
iii.
pay the costs and expenses incurred so far with the procedures of
Arbitration
or
Expert Proceeding
.
11.8.1.1
Said waiver or review shall be formally notified to the other
Party
and
to the president of the
Arbitration Tribunal
or
Expert,
and the
controversy shall be extinguished.
11.8.1.2
The
Party
which, upon decision by the
Arbitration Tribunal
or
the
Expert
, shall be required to return the amount paid subject to the
potential refund, shall also pay to the other
Party
the corresponding financial charges on the previously disputed amount, the total of
which shall be calculated in view of:
i. | the time elapsed from the maturity of the debt or since its payment subject to potential refund; | ||
ii. | the monthly charge corresponding to the variation of the IGPM-FGV, plus one percent (1%) per month. |
11.9 | Payment Guarantee | |
As guarantee to the fulfillment of all of its obligations provided for in the Agreement , specially the payment obligations by the User of any amount owed under this Agreement , the User shall deliver to Comgás a Guarantee consisting in a bank letter of credit, in a form acceptable to Comgás , issued by a financial institution acceptable to Comgás , in the amount corresponding to 90 multiplied by the Daily Contracted Amount multiplied by the Gas Sale Price . The guarantee shall be delivered by the User to Comgás in the event of, in any Year , the sum of days in delay of payment by the User is equal to more than 10 days or in the event there are more than 2 events of delay of payment by the User . The User shall deliver the guarantee to Comgás within thirty (30) days counted as of the date on which the obligation to deliver the guarantee had been constituted, in the terms provided above. |
11.9.1 | The Guarantee shall be valid and effective in its full amount until the full compliance with all obligations of the User provided in this Agreement . |
11.9.1.1 | In case the GUARANTY has a term of existence shorter than the date of full compliance with all the USERs payment obligations as set forth herein, the USER shall renew the GUARANTY or deliver a new GUARANTY according to the AGREEMENT, up to thirty (30) days before the end of its effectiveness. In case the USER does not renew the GUARANTY or does not delivery a new GUARANTY to COMGÁS within the above stated term, COMGÁS may enforce the existing GUARANTY to cover any amounts due by the user and/ or suspend the supply of GAS to the USER until the GUARANTY has been renewed, or until a new GUARANTY is delivered to COMGÁS. |
11.9.2 | In case of change or adjustment in the Gas Sale Price , the User shall (i) update the value of the Guarantee within the maximum term of thirty (30) days counted as of the date on which the change or update had occurred and (ii) deliver the updated version of the bank letter of credit to Comgás within such term. | ||
11.9.3 | In case the Guarantee granted by the User is used by Comgás , in the terms set forth in item 17.1, the User shall renew the Guarantee , in the value and terms established in item 11.9, within the maximum term of thirty (30) days counted as of the date of its use. |
i. | the volume unit shall be the Cubic Meter; | ||
ii. | the local atmospheric pressure value (for Campinas and Region, Patm = 0.93 kgf/cm 2 ) shall be assumed as being constant during the effectiveness of the Agreement , if such an amount is required for converting the volume into the Base Conditions ; | ||
iii. | the calorific power shall be determined by calculation, based on ISO Rule 6976, as from the composition of the Gas determined by chromatography based on ISO Rule 6974; | ||
iv. | the measured volumes shall be expressed at the Base Conditions . |
12.2.1 | The measurement signal, if any, shall be made available by Comgás if requested by the User . |
12.3 | - The measurement of the total volume of Gas supplied to the User shall be made by the instruments of the Measurement System installed at CRM at the Delivery Point . Comgás shall be responsible for the operation, maintenance, calibration and adjustments of the Measurement System installed at CRM. | |
12.4 | - The ascertainment of the total volume of Gas supplied to the User shall be made by the Comgás, by applying the following procedures, depending on the type of Measurement System that is installed at CRM: |
i. | orifice meter : procedures described in API-MPMS 14.3 ( Natural Gas Fluids Measurement Concentric, Square-Edged Orifice Meters ); | ||
ii. | turbine meter : procedures described in INMETRO Ordinance No. 114, of 1997, or in ABNT ISO Rule 9951; | ||
iii. | ultra-sonic meter : procedures described in AGA Report No. 9 ( Measurement of Gas by Multipath Ultrasonic Meters ); | ||
iv. | other meter : as agreed in advance by the Parties . |
12.4.1 | For the Measurement Systems indicated in item 12.4, the compressibility factor shall be calculated pursuant to ISO 12 213 ( Compressibility Factors of Natural Gas and Other Related Hydrocarbon Gases ). |
12.5 |
- The calibration and adjustments of CRM shall always be made by
Comgás
,
Notice
given to the
User
no less than five (5) days in advance
,
so
as to allow the
User
, if it so wishes, to send a representative in order to
follow up the works.
|
12.5.1 | The User shall always provide access to Comgás or any third parties accompanied by Comgás to CRM. |
12.6 | The period between two calibrations and successive ordinary adjustments of the CRMs Measurement System , as of the Commercial Supply Start-up, shall be of 1 year. The other calibration procedures are to be agreed upon between the Parties. | |
12.7 | The User may, upon delivery of a Notice to Comgás , request an extra calibration of any instrument integrating the CRMs Measurement System, on which case the corresponding costs shall be fully borne by the User , if the instrument is considered adjusted, or by Comgás , if the instrument is considered out of adjustment. Comgás undertakes to make the calibration within the lowest possible term. The instruments of the CRMs Measurement System that, after the calibration, present measurement errors not greater than the value of one point five percent (1.5%), either upwards or downwards, as a reference, shall be considered adjusted. | |
12.8 | In case, after the calibration of the CRMs Measurement System, such calibration indicates that the Measurement System was not adjusted, i.e., it is evidenced that the Measurement System had a deviation in the measured amount greater than 1.5%, either upwards or downwards, the respective correction factor shall be technically determined by Comgás ; and the User shall be allowed to follow up the works. |
12.8.1 | No correction shall be applicable in the cases in which the measurement error of any given component of the CRMs Measurement System is lower than those stated in item 12.7 above. |
12.8.2
Once the period in which the CRMs
Measurement System
had presented measurement
errors above the ones permitted is perfectly defined, corrections of value equal to the
deviation verified shall be applied, either upwards or downwards, on the amounts actually
registered in that period by the
Measurement Systems.
12.8.3
If the period in which the CRMs
Measurement System
was out of calibration is
unknown, the corrections referred to in item 12.8.2 shall be applied on the amounts
actually recorded by the
Measurement Systems
in the past forty-five (45)
Days
of consumption or in the last half of the period of time between the two latest
calibrations of the
Measurement System,
whichever is the lower period of time.
12.9
If, on any given day, there is a dispute as regards the
Amounts of Gas
made
available at the
CRM
or failure in the CRM,
including removal of any of its
components for maintenance, without interruption in the supply of
Gas
the daily
volume of
Gas
supplied in relation to
such
Day
shall be determined
as follows, in order of preference:
a)
in the measurement systems of gas of the
Cogeneration Plant
in the period,
if any, provided that access by
Comgás
and any third parties accompanied by
Comgás
to the measurement instruments installed at the
Cogeneration
Plant
, as well as to the information referring to their calibration, is allowed.
For purposes of using such resource,
Comgás
shall previously inspect and
approve, based on the metrological legislation in effect and the technical rules
applicable, the use of such measurement instruments for that purpose.
b)
based on the measurements made in any other
Comgás
Measurement
Systems
by difference, if, as from the difference, it is possible to calculate,
on a safety way, said volume of
Gas
taken by the
User
;
c)
indirectly calculated, if possible, based on the electric energy and steam
generated at the
Cogeneration Plant
in the period, provided that access by
Comgás
and any third parties accompanied by
Comgás
to the meters
installed at the
Cogeneration Plant
, as well to the information pertaining to
their calibration, is allowed;
d)
in an amount equal to the average of the
Daily Taken Amounts
(
DTA
s) of the last ninety (90)
Days
on which there was effective
supply subject to later adjustments, upon agreement between the
Parties
.
12.10
All the other matters or disputes pertaining to this Article, whose determinations in
relation to their settlement have not been differently stated in the previous items, shall be
submitted to
Expert Proceeding
with sharing in equal portions between both
Parties
of the corresponding expenses and costs of such procedure.
13.1 | - This Agreement shall be valid on its execution date and its end shall occur on 03/31/2023, which may be extended, by means of agreement by the Parties , in writing, provided that such agreement is formalized with twenty four (24) months in advance to the term initially agreed for its end. |
13.1.1 | In the end, pursuant to the provisions of item 13.1, an additional maximum period of three hundred and sixty five (365) days shall be added for purposes of recovery by the User of its eventual remaining balance of the Amounts Paid and Not Taken , being effective, in this period, all the provisions of the Agreement related to and necessary for the recovery of such Amounts of Gas. Exclusively during the additional period referred to in this item and for the sole purpose of recovery of APNTs, the User shall be released from its Take or Pay commitment, remaining effective, however, the Ship or Pay and Distribution Take or Pay commitments. |
ARTICLE FOURTEEN - FORTUITOUS CASE OR FORCE MAJEURE |
14.1 | Generic Concept | |
Any event or circumstance which combines the following requirements shall be considered an Fortuitous Case or Force Majeure , with strict observance of the provision pertaining to force majeure contained in Article 393 and its sole paragraph of the Brazilian Civil Code: |
i. | its occurrence takes place and continues beyond the control of the Affected Party; | ||
ii. | the Affected Party has not contributed, directly or indirectly, for its occurrence, which includes the fact that it does not arise from (i) default of any of the obligations of the Affected Party under the terms of this Agreement ; (ii) failure by the Affected Party to comply with the Law;or (iii) negligence, error or omission of the Affected Party; | ||
iii. | the action taken by the Affected Partys , albeit diligent and timely, is not sufficient to prevent or mitigate the effects of its occurrence; and | ||
iv. | its occurrence has the effect of affecting or preventing performance by the Affected Party of its obligations provided for in this Agreement. |
14.2 | Effects on the Agreement | |
Except as provided in item 14.3, upon the occurrence of an Fortuitous Case or Force Majeure, the Affected Party shall be relieved from performing its obligations hereunder , as well as it shall be exempted from any liability resulting from delays or failure to perform its obligations where directly attributable to such Fortuitous Case or Force Majeure. |
14.3
Obligations Not Excluded
No
Fortuitous Case or Force Majeure
shall relieve the
Affected Party
from performing any of its obligations arising or accruing prior to the occurrence
thereof, event though any such obligation may become due during or following the
Fortuitous Case or Force Majeure,
especially the obligations to pay sums of money
contained herein
.
14.4
Procedures in Occurrences of
Fortuitous Case or Force Majeure
14.4.1
The
Affected Party
wishing to claim the occurrence of an
Fortuitous Case or
Force Majeure
for the purposes of item 14.2 above shall take the following steps:
a)
notify the other
Party
of the occurrence of the event or
condition constituting
Fortuitous Case or Force Majeure
as soon as
possible, but in no event later than four (4) days from the date on which the
Affected Party
became aware of the occurrence of such event of condition,
indicating its estimated duration and its likely impact on the performance of its
obligations;
b)
take the necessary actions to correct or mitigate the consequences of
such event, in order to resume its contractual obligations as soon as possible;
c)
regularly inform the other
Party
about its actions and
planned actions with respect to item (b) above;
d)
promptly notify the other
Party
of the cessation of the
event and its consequences;
e)
grant to the other
Party
, whenever possible, access to any
facility affected by the event, for the purpose of local inspection, which may be
conducted at the expense and risk of such other
Party
;
f)
substantiate all facts and actions with documentation or available
records;
g)
exercise its rights in good faith and with due regard for the
interests of the other
Party
with respect to the performance of all
contractual obligations affected by the occurrence of such
Fortuitous Case or
Force Majeure.
14.4.2 | In connection with item 14.4.1(b) above, the Affected Party shall not be required, in the case of labor disputes, to act differently from what it may deem appropriate in its sole judgment, to the extent that it acts in a manner consistent with pas practices adopted in similar situations. | ||
14.4.3 | In the event of dispute as to the characterization of the fact as an Fortuitous Case or Force Majeure, the Parties shall submit the dispute to Arbitration , which shall decide based on the provisions of the applicable article of this Agreement . Until the dispute is decided by the Arbitration Tribunal , all obligations and rights of the Parties provided for in the Agreement shall remain valid and applicable . |
14.5 | Scope | |
Without limiting the generality of the concept of force majeure contained in Article 393 and its sole paragraph of the Brazilian Civil Code, an Fortuitous Case or Force Majeure may include the following events, listed by way of illustration only: |
i. | acts of terrorism or public attacks, war whether declared or not, threatened war, guerrilla, insurrection, civil commotion, revolution, riot, rebellion, military insurrection, coup détat, siege, declaration of state of emergency or martial law, embargo or blockade or other situations not falling within the exceptions referred to item 14.6; | ||
ii. | acts of sabotage, terrorism, vandalism or accidental destruction, even if partially, of facilities of the Affected Party , as long as it has not contributed to such occurrence; | ||
iii. | cataclysms, lightning, earthquakes, tornadoes, storms that result in the evacuation of the affected areas, floods, explosions and exceptional and unpredictable weather events; | ||
iv. | Change in Law (except for the extinction of the tax benefits provided for in the Priority Program of Thermoelectricity ) that materially adversely affects the object of the Agreement , the Supplier-Comgás Agreement or the Party claiming the occurrence of Fortuitous Case or Force Majeure ; | ||
v. | expropriation, seizure, compulsory acquisition or nationalization by any Public Body of all or a substantially all assets of the Affected Party required for the performance of such Party s obligations under this Agreement . |
14.6
Excluded Events
The following events shall be excluded from the scope of an
Fortuitous Case or Force
Majeure
:
i.
strike or any other disturbance of similar nature involving solely the
employees, agents, contractors or subcontractors of the
Affected
Party
;
ii.
change in the economic and financial situation of the
Affected
Party
, as well as changes in the market conditions for delivery of
Gas
, whether or not arising by virtue of a drop in the demand for electric
energy generated by the
Cogeneration Plant
;
iii.
any accidental loss, damage or failure in any part of the industry plant,
facilities, machinery or equipment of the
Affected
Party
or the
Cogeneration Plant
, or any event related to their businesses, except if
resulting directly from the occurrence of an
Fortuitous Case or Force Majeure;
and
iv.
delay in the performance of obligations undertaken by contractors or
subcontractors of the
Affected
Party
which affects the performance
of any obligations undertaken by the
Affected
Party
under this
Agreement
, except where there is evidence that such delay on the part of the
contractors or subcontractors has resulted directly from the occurrence of an
Fortuitous Case or Force Majeure.
14.7
Fortuitous Case or Force Majeure
Incorporated by Reference
For all purposes of this Article, and to the extent that the requirements indicated in this
Article Fourteen are evidenced and met, there shall be also considered:
(a)
Fortuitous Case or Force Majeure
of
Comgás
:
Fortuitous Case or Force Majeure
that affects: (i) the ability of the
Carrier
and/or the
Supplier
to perform their respective obligations provided for
in the agreements executed with the
Supplier
that are required for the
performance of the
Supplier-Comgás Agreement
by the
Supplier
or (ii)
the
Supplier
s ability to perform its respective obligations provided for in
the
Supplier-Comgás Agreement
; and
(b)
Fortuitous Case or Force Majeure
of
the
User
:
Fortuitous Case or Force Majeure
that affects the ability
of the
User
to receive the
Gas
in view of damages at the
Cogeneration Plant.
15.1 | This Agreement , as well as the rights and obligations arising hereof, may not be assigned, totally or partially, expect with the written agreement of the other Party , which may not be unreasonably denied by the non-assigning Party, provided that the requirements of item 15.1.1 are fulfilled. |
15.1.1 | For the agreement referred to in item 15.1, it is an essential requirement that the proposed assignee fulfill the conditions of technical guarantee and satisfactory economic solvency to assume, in whole or in part, the obligations arising from the assignment. Without such requirements, the other party would incur in a commercial risk substantially greater than the one assumed. The non-assigning party shall be incumbent upon determining, at its sole criteria, if the assignee fulfill the necessary conditions to the implementation of the proposed assignment, provided that, in case the non-assigning party disagrees with the assignment, it shall be incumbent upon evidencing the lack or insufficiency of the conditions presented against the proposed assignee. |
15.1.1.1 | Without prejudice to the provisions above and, if demanded, the User shall obtain previously to the assignment of the Agreement , all and any authorizations of the competent public bodies necessary for such assignment, including authorization of the competent public body linked to the Priority Program of Thermoelectricity . |
15.1.2 | In case of an authorized assignment according to this Article, the assigning party shall actually transfer to the assignee, in whole or in part, the rights and obligations established in the Agreement . | ||
15.1.3 | Provided that the requirements established in this Articles are fulfilled, the Parties agree to formalize any and all agreement and other documents necessary for the assignment, as requested, as well to give reasonable mutual assistance in the formalization of any assignment. |
15.2 | In addition to the fulfillment of the terms of the legislation in force and of the provisions of this Article, the Party that whishes to transfer its rights and/or obligations under this Agreement shall express its intention by means of delivery of Notice to the other Party . |
15.2.1 | Within ninety (90) days following the date of receipt of the Notice referred to in item 15.2, the non-assigning Party shall give its authorization or justify its refusal. |
15.2.1.1 | The lack of formal unfavorable manifestation within the term set forth in item 15.2.1 shall be considered as full agreement with the assignment by the omitting Party . | ||
15.2.1.2 | In case of a refusal by the non-assigning Party that is considered ungrounded by the assigning Party , the subject shall be submitted to a decision of the Arbitration Tribunal . |
15.3 | This Agreement , as well as the rights and obligations arising hereof, may not be pledged or in any other way encumbered by any of the Parties , except with the written prior agreement of the other Party |
16.1 | The provisions set forth in this Agreement are limited to the supply of Gas as contemplated herein, and shall not be deemed to constitute novation of any arrangement, covenant or agreement of a similar nature already existing between the Parties , which shall remain unchanged, except for the Short-Term Agreement . | |
16.2 | Any and all forbearance with respect to the observance by the Parties of the terms and conditions set forth in this Agreement shall not operate as change or novation of the provisions agreed upon. | |
16.3 | Comgás and the User decide to ratify the end of the term of the Short-Term Agreement in view of the execution of this Agreement , considering that the Short-Term Agreement set forth that its final term would occur on January 20, 2006 or on the execution date of this Agreement, whichever occurs first. |
17.1 | Default by the User | |
Subject to the provisions of subitem 17.1.1, if the User , at any time, fails to (i) pay, in whole or in part, until its maturity date, the amount corresponding to any Collection Document submitted to the User by Comgás in view of this Agreement or, (ii) for disputed amounts, failed to proceed in accordance with the provisions of item 11.8, (iii) establish, update, reestablish and/or renew the Guarantee , according to the provisions and terms contained in item 11.9 and its subitems, then, the default by the User shall be deemed to have occurred on the maturity date of the respective Collection Document . After ten (10) days counted as of the date of the default by the User, Comgás may, at any time from such moment on, at its sole criteria, foreclose the Guarantee in the amount corresponding to the |
totality of the amount in delay on the date of foreclosure of the referred Guarantee . After thirty (30) days counted as of the date of default by the User , Comgás may suspend the delivery of Gas to the User , subject to the provisions of item 17.1.5 below, until the amount not paid, added by the corresponding financial charges (as provided for in item 11.6) is: |
i. | paid to Comgás on a final basis or | ||
ii. | paid to Comgás subject to potential refund. |
17.1.1 | It shall not be considered a default by the User the non-payment of any Collection Document issued by Comgás on the allegation of noncompliance with a commitment of Take or Pay, Ship or Pay and Distribution Take or Pay and/or a commitment of Article Ten, of which the User is released in the corresponding period in accordance with items 17.2 (final part), 17.2.1 and 17.2.2. | ||
17.1.2 | The suspension of the supply of Gas as provided for in item 17.1 shall not release the User from any other obligation in relation to this Agreement and may not be invoked by the User as a reason for the termination hereof and not even for the suspension of the commitments of Take or Pay, Ship or Pay or Distribution Take or Pay and the commitments of Article Ten. | ||
17.1.3 | Any possible forbearance by Comgás in the term to start the suspension of delivery of Gas referred to in item 17.1 shall not be deemed a waiver of right, and such suspension may start at any time following that term, while said default persists. | ||
17.1.4 | The suspension shall not be applicable to the Amounts Paid and Not Taken ( APNT ) of Gas , which will continue being reintegrated in accordance with the rules of item 9.5.3 and their subitems. | ||
17.1.5 | The decision of suspending the supply of Gas in accordance with this item shall be informed to the User within ten (10) days in advance. |
17.2 | Default by Comgás | |
Exception made to the events provided for in subitem 17.2.1, if Comgás any time fails to: (i) pay, in whole or in part, until its maturity date, the amount corresponding to any Collection Document submitted to Comgás by the User in view of this Agreement or, (ii) for disputed amounts, proceed in accordance with the provisions of item 11.8, then, the default by the User shall be deemed to have occurred on the maturity date of the respective Collection Document . After thirty (30) days counted as of the date of default by Comgás , the User s Take or Pay, Ship or Pay and |
Distribution Take or Pay commitments and the commitments established in Article Ten shall be suspended until the amount not paid added by the corresponding financial charges (as provided for in item 11.6) is: |
i. | paid to the User on a final basis or | ||
ii. | paid to the User subject to potential refund. |
17.2.1 | It shall not be considered a default by Comgás the non-payment of any Collection Document issued by the User directly or indirectly as a result of the suspension of the supply of Gas caused by a default of the User as provided for in item 17.1 and its applicable subitems. | ||
17.2.2 | The suspension of the commitments of Take or Pay, Ship or Pay and Distribution Take or Pay and those provided for in Article Ten, in accordance with item 17.2 and/or subitem 17.2.1, does not release Comgás from any obligation pertaining to this Agreement and may not be invoked by Comgás as a reason for its termination. |
B) | Termination | |
17.3 | Termination for the Users default | |
After thirty (30) days have elapsed from any default by the User referred to by item 17.1 which has not been fully cured, Comgás may unilaterally terminate this Agreement , by sending a Notice to that effect to the User. |
17.3.1 | In the event of termination of the Agreement in accordance with item 17.3 ¾ the occurrence of default is evidenced, according to the Agreement , in order to give cause to said termination ¾ , the User : |
i. | shall be obliged to pay to Comgás , as the sole indemnification applicable in such case, the amount of losses and direct damages incurred by Comgás , excluding any indirect damages and/or loss of profits, resulting from such termination for default, and the Parties agree and determine that the amounts of the losses and direct damages incurred by Comgás will include the amount of the indemnification payable by Comgás to the Supplier for termination of the Supplier-Comgás Agreement in view of the termination of this Agreement; the total amount of such payments shall be limited to the current amount of the remainder of the Agreement calculated only based on the Gas Price - according to the regular remaining effectiveness term or one hundred and twenty (120) months, whichever is shorter, at the discount rate agreed by the Parties or defined in Arbitration in case the Parties fail to reach an agreement on such rate, on a pro rata die basis; |
ii. | shall be responsible to pay all its pending debt toward Comgás under this Agreement. |
17.3.1.1 | The Parties agree that the indemnification set forth in item 17.3.1 (i) represents the totality of indemnification that may be demanded by Comgás , even if it sustain greater losses, and nothing else shall be claimed in court or out-of-court. |
i. | After thirty (30) days have elapsed from any default by Comgás referred to in item 17.2 which has not been fully cured; | ||
ii. | exception made to Fortuitous Case or Force Majeure, if Comgás, without prejudice to the obligations provided for in item 9.9, fails to comply with its obligation of providing the User with the Gas subject of this Agreement for a term greater than sixty (60) consecutive Days or ninety ( 90 ) alternate Days in each twelve (12)- Month period. |
17.4.1 | In the event of termination of the Agreement in accordance with item 17.4 the occurrence of default is evidenced, according to the Agreement , in order to give cause to said termination ¾ , Comgás : |
i. | shall be obliged to pay to the User , as the sole indemnification applicable in such case, the amounts of losses and direct damages incurred by the User , excluding any indirect damages and/or loss of profits-, resulting from such termination for default; the total amount of such payments shall be limited to the current amount of the remainder of the Agreement calculated only based on the Gas Price according to the regular remaining effectiveness term or one hundred and twenty (120) months, whichever is shorter, at the discount rate agreed by the Parties or defined in Arbitration in case the Parties fail to reach an agreement on such rate, on a pro rata die basis; | ||
ii. | shall remain responsible to pay all its pending debt towards the User under this Agreement, as well as the amount corresponding to any possible residual amount of Amount Paid and Not Taken (APNT) of Gas , multiplied by the amount of the portion pertaining to the commodity in the Gas Price (PC) in effect on the day of termination multiplied by the latest Exchange Rate published before the original maturity of the respective Collection Document provided for in item 11.4. |
17.4.1.1 | The Parties agree that the indemnification set forth in item 17.4.1 (i) represents the totality of indemnification that may be demanded against Comgás , even if the User sustain greater losses, and nothing else shall be claimed in court or out of court. |
a) | with no liability whatsoever of any Party towards the other Party : |
(i) | upon mutual agreement between the Parties ; or | ||
(ii) | by the impossibility of consumption or supply of Gas under this Agreement or under the Supplier-Comgás Agreement as a result of an Fortuitous Case or Force Majeure lasting for a continued period longer than twelve (12) months; |
b) | with liability of the Party that causes the termination: |
i. | unilateral termination with no fault of the other Party ; | ||
ii. | transfer, partially or totally, to any third parties of the rights and obligations arising of this Agreement , in violation of the provisions of Article Fifteen; | ||
iii. | in view of a relevant violation of any contractual provision that, under the terms of this Agreement, is not subject to payment by means of a Collection Document and which has not been cured within the term of ninety (90) days counted as of the receipt of Notice by the defaulting Party; | ||
iv | in the event of termination of the Supplier-Comgás Agreement for any reason (except for the reason provided for in item (a) (ii) above), including, but not limited to, for default of either party in such agreement or by unilateral termination by any of the parties. In this case, the liability for the termination of this Agreement will be attributed to Comgás ; or | ||
v. | application for bankruptcy by any of the Parties, if any of the Parties is decreed bankrupt, application for court or out of court reorganization by any of the Parties, if said applications are not abandoned, denied or lose their efficacy, as applicable, within the time set forth in the law or within 60 (sixty) days after they are started, whichever occurs first; or | ||
vi. | loss of the applicable licenses by any of the Parties. | ||
To these events, analogously and as applicable, the provisions of items 17.3.1, 17.3.1.1, 17.4.1. and 17.4.1.1 shall apply. |
17.7 | The User agrees and acknowledges that it is exclusively responsible for the business relationship with EnergyWorks do Brasil Ltda. or any successor or assigning party thereto, including for the gas supply and the gas quality. Comgás may only be held liable for any default in this Agreement exclusively before the User and subject to the limits of liability provided for herein. The User shall hold Comgás harmless from any actions or claims filed by third parties, including, without limitation, by EnergyWorks do Brasil Ltda., grounded on the supply of Gas subject of this Agreement or of any sub-products resulting from the supply of Gas subject of this Agreement . The User also undertakes to compensate Comgás if it may be bound to pay any indemnification to any third parties, including to EnergyWorks do Brasil Ltda., as a result of such actions or claims. The amounts to be compensated by the User to Comgás shall include all the indemnification possibly paid by Comgás , as well as all the costs incurred by Comgás , including attorneys fees. |
18.1 | For all legal purposes arising of the Agreement , the Parties indicate below their respective domiciles, the only places where all Notices to be made in relation to the Agreement will be valid: |
i. |
Companhia de gás de são paulo Comgás
Rua das Olimpíadas, 205 10° andar São Paulo SP CEP 04551-000 |
||
ii. |
Corn Products Brasil Ingredientes Industriais Ltda
Rua Paula Bueno, 2935 Mogi Guaçu SP CEP 13841-010 |
18.2 | Any of the Parties will be entitled to change its domicile upon Notice sent to the other party with fifteen (15) days in advance of such change. | |
18.3 | Any Notice required or allowed, under the terms of this Agreement , will be considered as received upon its delivery by facsimile transmission or by means of e-mail, in both circumstances, provided that it is confirmed by means of registered sending or, in case of personal delivery, at the time of its receipt. |
19.1 | Disputes |
19.1.1 | In the event of any disputes relating to the interpretation or performance of this Agreement , prior to taking any other measure the Parties shall seek a solution by consensus. To this end, either Party shall send Notice to the other for the Parties to meet in order to pursue such solution by consensus within no more than 30 days after receipt of Notice , which period may be extended only by agreement between the Parties . Within such period, the Parties shall also agree whether the dispute involves a technical issue that should be submitted to an Expert Proceeding . If the Parties so agree or if it is expressly set forth in the Agreement that the dispute must be submit to an Expert Proceeding , prompt action shall be taken for designation of an Expert pursuant to item 19.3.2. | ||
19.1.2 | If a consensus solution is not reached during the period specified in subsection 19.1.1 above or if the Parties come to a consensus that the dispute does not involve a technical issue requiring submission to an Expert Proceeding , then the dispute in question shall be resolved by an Arbitration Tribunal , which shall apply in the resolution of the dispute the substantive laws of Brazil ( Arbitration ). |
19.2.1 | An Arbitration shall be governed, in all its procedural aspects, by the UNCITRAL Arbitration Rules and shall take place in the City of São Paulo. The administration of the Arbitration shall be conducted by the Brazil-Canadá Commerce Chamber (BCCC). Arbitration shall necessarily be based on law, and judgment based on equity or on the general principles of law or on custom and usage shall be prohibited. In the case of a conflict between the UNCITRAL Rules and the rules contained in this Agreement , the latter shall prevail. | ||
19.2.2 | The language utilized in the Arbitration and the decision handed down in connection therewith shall be the Portuguese language. | ||
19.2.3 | The Arbitration Tribunal shall be composed of three (3) members who (i) shall have at least ten (10) years of experience in matters relating to the subject matter of the Arbitration , and (ii) shall have no conflict of interest with the subject matter of the Arbitration , provided further that the Parties shall observe the following provisions: |
i. | the Party asserting the dispute ( First Party ) shall send Notice to the other Party ( Second Party ), clearly stating the object of the dispute and informing the name of the Arbitrator selected by it ( First Arbitrator ); |
ii. | within thirty (30) days from receipt of the Notice mentioned above, the Second Party shall inform to the First Party , also by Notice , the name of the Arbitrator selected by it ( Second Arbitrator ). If the Second Party fails to act within said time limit, the First Party may request that the President of the BCCC appoint the Second Arbitrator ; | ||
iii | within fourteen (14) days from the appointment of the Second Arbitrator , both Arbitrators shall appoint a Third Arbitrator , who shall preside over the proceedings; and | ||
iv. | if there is no consensus as to the appointment of the Third Arbitrator , such appointment shall be made by the President of the BCCC. The Third Arbitrator shall be proficient in the Portuguese language. |
19.2.4 | In the event that the UNCITRAL Rules are silent as to any procedural aspects, such omissions shall be resolved by the arbitrators by reference, in the following order, to: |
a) | to Law No. 9.307/96; and | ||
b) | to the Brazilian Code of Civil Procedure. |
19.2.5 | Within ninety (90) Days from commencement of Arbitration , the Arbitrators shall issue a well-reasoned award ( Arbitration Award ). | ||
19.2.6 | The Arbitration Award shall indicate and describe in detail the liabilities of the Parties , as well as the portion of legal fees and expenses and Arbitration costs awarded to each Party . The Arbitration Award shall be in writing and shall be binding on the Parties , which specifically waive any judicial review thereof. | ||
19.2.7 | The Parties reserve the right to bring legal actions in the Brazilian courts to (a) ensure institution of Arbitration , (b) seek temporary injunctive relief for the protection of their rights prior to institution of Arbitration , provided that any such action shall not be deemed a waiver of Arbitration as the sole method for resolution of conflicts between the Parties and (c) enforce any decision issued by the Arbitration Tribunal , including without limitation the Arbitration Award . In any such event the courts mentioned in item 19.5 shall be the courts of competent jurisdiction. |
19.3.1 | Once the Parties have agreed that a dispute is to be submitted to an Expert Proceeding under item 19.1.1 above or there is an express contractual provision establishing that a dispute must be submitted to an Expert Proceeding , the provisions listed in items 19.3.2 through 19.3.7.2 shall apply to such Expert Proceeding . | ||
19.3.2 | Appointment of the Expert |
(a) | a Party wishing to submit a dispute to an Expert shall give Notice of such intent to the other Party , stating in detail the reasons for the dispute; | ||
(b) | by mutual agreement, the Parties shall within twenty-one (21) days from delivery of the Notice referred to in the preceding item appoint the Expert that shall be responsible for reviewing the matters under dispute; | ||
(c) | if within the term specified in the preceding item the Parties are unable to reach a consensus as to the Expert to be appointed, then the Party asserting the dispute shall, within five (5) days, request in writing that the President of the Institute of Technological Research (IPT) appoint an Expert . Such appointment shall be made within thirty (30) days from receipt of written request therefor; | ||
(d) | either Party may object one time to the Expert appointed by the President of IPT. In the case of such an objection, the procedure described in letter (c) of item 19.3.2 above shall be repeated. After each Party has exercised its right to object as aforesaid, the procedure described in letter (c) of item 19.3.2 above shall be repeated once again and the Expert appointed in this manner shall necessarily be accepted by the Parties . | ||
(e) | the terms of the instrument of appointment of the Expert shall be agreed between the Expert and the Parties and shall be set forth in a writing to be executed by the Expert and the Parties , provided further that the Expert and the Parties shall cooperate in order to have such document finalized as soon as reasonably possible; | ||
(f) | in the event of impediment, refusal or absence of response for a period of fourteen (14) days, a procedure for appointment of another Expert , should this be the wish of the Parties : |
(i) | shall resume at the phase where the last name was selected; | ||
(ii) | shall be repeated accordingly until an Expert that accepts and is able to assume his/her functions is appointed or until the Parties decide to discontinue the procedure for appointment or the submission of the dispute to an Expert ; |
(g) | if there is a dispute between the Parties over the fees to be paid to the Expert , such fees shall be determined by the President of IPT, and the Parties shall necessarily abide by such determination and, except as otherwise specifically provided for herein or in a separate agreement for such purpose, the corresponding costs shall be borne equally by both Parties ; | ||
(h) | if new facts arise or are disclosed that may cast a doubt on the impartiality or qualification of the Expert with respect to the dispute, including his/her omission regarding the provision of item 19.3.3, or if any Party finds that there is a material risk of conflict of interests that may influence the decision of the Expert , then either Party may within seven (7) days from the date on which it became aware of such fact, disclosure or omission, request that the President of IPT make a decision as to the removal of the Expert or not; | ||
(i) | in his/her decision the President of IPT shall take into account any conditions which the requesting Party may wish to impose; | ||
(j) | if the President of IPT decides to remove the Expert , he/she shall appoint a replacement. In such case the procedures specified in letters (d) to (f) above shall also be applicable with respect to the confirmation and appointment of the new Expert . |
(i) | shall be qualified through technical education, experience and training to issue an opinion regarding the dispute; | ||
(ii) | shall not have a conflict of interests, before or after accepting the appointment; and | ||
(iii) | shall not, at the time of appointment and during his activities as the Expert with regard to such dispute, hold a position as officer, head of department, employee, services provider, directly or through a third party, or consultant of either Party or an Affiliate Company thereof, nor shall he/she have held or will held any such position during the three (3) years preceding or following his/her appointment as Expert . |
19.3.4 | Confidentiality |
19.3.4.1 | The employees or professional consultants of the Expert shall prior to receiving any information, data or documents referred to in item 19.3.4 above specifically undertake in writing with the Expert to maintain them on a strictly confidential basis. |
19.3.5 | Obligations and Prerogatives of the Expert |
(i) | impartially decide the dispute, based solely upon the facts and data furnished by the PARTIES; | ||
(ii) | decide the dispute within the time limit assigned therefor, which shall not exceed sixty (60) days from the confirmation of his appointment, excluding Days corresponding to delay in receiving information requested or answers to queries or notices given to either Party ; | ||
(iii) | submit in writing to the Parties , prior to the expiration of the time limit established in the preceding item, a draft of the document in which he/she shall set forth his decision of the dispute, indicating the basis therefor; | ||
(iv) | keep and ensure the confidentiality referred to in item 19.3.4; | ||
(v) | give ten (10) days prior Notice to the other Party of any meeting he/she intends to conduct with a Party , so as to enable such other Party to attend the meeting; | ||
(vi) | return to the submitting Party all documents (and copies thereof) submitted in connection with his/her duties, once they are completed. |
19.3.5.1 | The Expert shall disregard all information submitted to him after a period of thirty (30) days from his appointment, except for information delivered to comply with a specific request, which information shall be delivered within no more than ten (10) days from the request made by the Expert . | ||
19.3.5.2 | The Expert shall be entitled, in addition to the rights contained in the instrument of his appointment, to request the Parties to deliver any additional information he/she deems necessary for the resolution of the dispute, as well as to retain for such purpose any expert or independent consultant, subject to the determination of its fees within the reasonable limits practiced in the market. |
19.3.6 | Obligations and Rights of the Parties |
19.3.6.1 | Each Party shall have, with respect to the Expert and the other Party , the following set of obligations in connection with submission of a dispute to Expert Proceeding : |
(i) | send to the Expert , within thirty (30) days from his appointment, documentation containing information necessary for the resolution of the dispute; | ||
(ii) | make available to the Expert , within ten (10) days from the corresponding request, all additional specific information that the Expert may deem necessary to conduct his activities; | ||
(iii) | send concurrently to the other Party copies of the documentation containing the information referred to in the preceding two clauses; | ||
(iv) | bear its costs for remittance of information to the Expert and the other Party , as well as its expenses with legal counsel, consultants, witnesses, employees and other persons involved in the proceeding; | ||
(v) | bear fifty percent (50%) of the common costs and expenses of the Expert Proceeding , which shall include: |
| the fees of the Expert ; | ||
| the fees of any independent consultant called by the Expert ; | ||
| the costs of selection and appointment of the Expert , if made with the intermediation of the President of IPT; |
(vi) | abide by the final decision of the Expert , except in the event of fraud or error with respect to the LAW or material facts or in the event of demonstrable inadequacy in the consideration of such facts. |
19.3.6.2 | The rights of each Party include: |
(i) | the right to take part in any meeting of the Expert with the other Party , as long as it communicates to the Expert in writing that it intends to participate in such meeting within five (5) Days from the receipt of the Notice referred to in item 19.3.5(v); | ||
(ii) | the right to comment upon or contest information sent by the other Party to the Expert , as long as it does so in writing within fourteen (14) Days from receipt of such information; and | ||
(iii) | specifically in respect of a dispute submitted to Expert Proceeding , the right to commence Arbitration proceedings at any time before execution of the instrument for appointment of Expert referred to in item 19.3.2(e). |
19.3.7 | Other Provisions |
19.3.7.1 | After a final decision is rendered, the prevailing Party shall be reimbursed by the Party prevailed upon for all documented costs incurred by the prevailing Party in connection with the Expert Proceeding . | ||
19.3.7.2 | Law 9,307 of September 22, 1996 shall apply on a supplementary basis to this section to the extent that such Law does not conflict with this section. |
19.4 | Tripartite Arbitration |
19.4.1
The
Parties
recognize that the resolution of certain claims, disputes or
controversies arising out of or relating to this
Agreement
may have implications for the performance by
Supplier
of its obligations under the
Comgás-Supplier Agreement
; likewise, the resolution of certain claims,
disputes or controversies arising out of or relating to the
Comgás-Supplier
Agreement
may have implications for the rights and obligations of the
Parties
under this
Agreement
. Accordingly, in the event of
commencement of arbitration proceedings under this
Agreement
, whose outcome
may have implications for the rights and/or obligations of
Supplier
under the
Comgás-Supplier Agreement
, or in the event the resolution of a dispute by
arbitration under the
Comgás-Supplier Agreement
may have implications for the
rights and/or obligations of the
Parties
under this
Agreement
, it is
agreed that: (a) the
Parties
and/or
Supplier
may consolidate in a
single
Tripartite Arbitration
the disputes arising out of this
Agreement
and the disputes arising out of the
Comgás-Supplier
Agreement
, (b) the
Comgás-Supplier Agreement
shall confer on the
User
the right to join any arbitration conducted under the
Comgás-Supplier
Agreement
that meets the requirements in this item; (c)
Supplier
may join
any
Arbitration
conducted under this
Agreement
that meets the
requirements in this item; and (d)
Comgás
may require that the
User
join any arbitration conducted under the
Comgás-Supplier Agreement
that meets
the requirements in this item (each a
Tripartite Arbitration
).
19.4.2
In the event arbitration is commenced under the
Comgás-Supplier Agreement
,
Comgás
shall give
Notice
of such fact to the
User
within no
more than 5 days from such commencement. In such case or in the case of
Arbitration
instituted under item 19.1.2 hereof, the
Parties
shall
within no more than sixty (60) days from request for
Arbitration
confirm
institution of
Tripartite Arbitration
. In the event the
Parties
decide
to consolidate arbitrations and in the event the
Parties
and
Supplier
join a
Tripartite Arbitration
, the
Parties
shall abandon any separate
arbitration then pending whose subject matter is encompassed by such
Tripartite
Arbitration
and shall assert any and all claims and counterclaims with regard to
their dispute(s) in such
Tripartite Arbitration
, in keeping with the procedures
established for such
Tripartite Arbitration
.
19.4.3
In the event the
Parties
and
Supplier
are unable to come to a
consensus as to institution of
Tripartite Arbitration
within the period mentioned
in item 19.4.2 above, then the
Parties
and
Supplier
shall refer the
matter to BCCC. After five (5) days have elapsed from expiry of the period mentioned in
item 19.4.2 above, the
Parties
and
Supplier
shall submit in writing to
BCCC their defenses and answers, as the case may be, with respect to institution of
Tripartite Arbitration
. Within five (5) days from receipt of the defenses or
answers of the
Parties
, BCCC shall appoint a sole
Arbitrator
to resolve
the dispute. Within three (3) days, the
Parties
and
Supplier
shall
confirm the appointment of the
Arbitrator
or shall repudiate such appointment
solely on the basis of item 19.2.3. Should a
Party
or
Supplier
so
repudiate, BCCC shall appoint a new
Arbitrator
that meets the requirements in
subitem 19.2.3 within three (3) days from receipt of repudiation by such
Party
or
Supplier
. Once appointment of the
Arbitrator
is confirmed, he or she
shall within no more than fifteen (15) days make a decision as to the conduct of
Tripartite Arbitration
, which decision shall necessary cover the following
points: (i) whether the conflict involves common factual and legal matters or,
alternatively, whether
Supplier
holds information necessary for resolution of the
conflict or the solution to be adopted, (ii) in the case of
Arbitration
requested
or commenced under this
Agreement
, whether the conflict involves contractual
rights or obligations of
Supplier
warranting its joining the proceedings or,
alternatively, in the case of arbitration requested or commenced under the
Comgás-Supplier Agreement
, whether the conflict involves contractual rights or
obligation of the
User
warranting its joining the proceedings, (iii) whether a
Party
shall be adversely affected by institution of
Tripartite
Arbitration
, and (iv) if separation of the disputes may pose a risk that conflicting
decisions be rendered as regards this
Agreement
and the
Comgás-Supplier
Agreement
.
19.4.4
Tripartite Arbitration
shall be conducted by five (5) arbitrators, the
User
to appoint the first
Arbitrator
,
Comgás
to appoint the
second
Arbitrator
and
Supplier
to appoint the third
Arbitrator
within thirty (30)
Days
after receipt of
Notice
confirming initiation of
Tripartite Arbitration
. The two (2) remaining
Arbitrators
shall be
appointed by mutual agreement as among the
Arbitrators
appointed by the
Parties
and
Supplier
. If a
Party
or
Supplier
fails to
appoint its
Arbitrator
, such appointment shall be made by BCCC in keeping with
the criteria set forth in subitem 19.2.3(iv).
19.4.5
Decisions rendered in
Tripartite Arbitration
proceedings shall produce uniform
effects on this
Agreement
and on the
Comgás-Supplier Agreement
.
19.4.6
To the extent not inconsistent with the terms of item 19.4 and its subitems, the terms
and conditions set forth in Item 19.2 shall apply to
Tripartite Arbitration
,
including as regards applicable rules and regulations, place of
Arbitration
and effects of the
Arbitration
AWARD.
IL
|
- | is the maximum limit of payments to be made by Comgás ; | ||
|
||||
DCA
|
- | is the Daily Contracted Amount; | ||
|
||||
N
|
- | is the number of days of effectiveness of the Agreement, calculated as of the execution date of the Agreement up to the final date set forth in item 13.1; | ||
|
||||
GP
|
is the Gas Price in force on the date of occurrence of each event of payment converted to Reais per Cubic Meter at the Reference Conditions according to the Exchange Rate of the last business day of the Month of payment of a certain indemnification. | |||
|
||||
K
|
- | Is the percentage of use of the IL, which shall vary from 0 to 1, and, on the execution date of this Agreement , shall correspond to 1. At each payment made by Comgás for penalties and/or indemnification, under the terms of this Agreement , a new K factor shall be determined by the reduction of (i) the percentage corresponding to such payment in relation to the value 0.065 x DCA x N x GP from the (ii) previous K factor. |
(sgd.)
Paulo César Nunes de Souza
Logistics and Human Resources Officer |
(sgd.)
André Lopes de Araújo
Industrial Market, VNG and Great Commerce Officer |
(sgd.)
Gilberto Sabatini Affonso
Finance and Administration Officer |
(sgd.)
Alberto Yoshio Nakata
Attorney |
§ | WITNESSES: |
(sgd.)
Carlos Edgard Montagna
Tax ID (CPF) :070,846,528-50 |
(sgd.)
José Wagner Rodrigues da Silva
Tax ID (CPF) : 063,391,588-20 |
§ | PC B US$ 1.101/MMBTU | ||
§ | PT B US$ 1.374/MMBTU, |
§ | PC i = PC B x | PPI 1 | i | |||
PPI 0 | ||||||
§ | PT i = PT B x | PPI 1 | , where: | |||
PPI 0 |
PC
i
|
- | Is the amount of the portion pertaining to the commodity at the Commercial Supply Start-up ; | ||
PT
i
|
- | Is the amount of the portion pertaining to Transportation at the Commercial Supply Start-up ; | ||
PPI
1
|
- | Is the Producer Price Index , Industrial Commodities published by the U.S. Department of Labor, Bureau of Labor Statistics related to the month preceding the month of the Commercial Supply Start-up ; | ||
PPI
0
|
- | Is the Producer Price Index, Industrial Commodities published by the U.S. Department of Labor, Bureau of Labor Statistics related to the month of March 2000. |
§ | PC i = PC B x | PPI i | , | |||
PPI 0 | ||||||
§ | PT i = PT B x | PPI i | , | |||
PPI 0 |
PC
i
|
- | Is the amount of the portion pertaining to the commodity adjusted and applicable to each twelve (12)-month period; | ||
PT
i
|
- | Is the amount of the portion pertaining to Transportation adjusted and applicable to each twelve (12)-month period |
PPI
i
|
- | Is the Producer Price Index , Industrial Commodities published by the U.S. Department of Labor, Bureau of Labor Statistics related the month preceding the adjustment month; | |||
PPI
0
|
- | Is the Producer Price Index, Industrial Commodities published by the U.S. Department of Labor, Bureau of Labor Statistics related to the month of March 2000; |
I.4) The amounts of each portion previously defined shall be converted from US$/MMBTU to R$/MMBTU through the Exchange Rate of the day preceding the maturity day of the invoice pertaining to the gas supply. |
Year Ended | ||||
(in thousands, except per share data) | December 31, 2005 | |||
Basic
|
||||
Shares outstanding at the start of the period
|
74,528 | |||
Weighted average of new shares issued during the period
|
| |||
Weighted average of treasury shares issued during the period
for exercise of stock options, other stock compensation plans,
and acquisitions
|
909 | |||
Weighted average of treasury shares purchased during the period
|
(785 | ) | ||
|
||||
Average shares outstanding basic
|
74,652 | |||
|
||||
Effect of Dilutive Securities
|
||||
Average dilutive shares outstanding assuming dilution
|
912 | |||
|
||||
Average shares outstanding diluted
|
75,564 | |||
|
||||
Net income
|
$ | 89,594 | ||
|
||||
Income Per Common Share Basic
|
||||
Net income
|
$ | 1.20 | ||
|
||||
Income Per Common Share Diluted
|
||||
Net income
|
$ | 1.19 |
32
(in millions, except ratios) | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||
Income before income taxes and minority interest
|
$ | 148.4 | $ | 145.1 | $ | 135.4 | $ | 117.1 | $ | 102.1 | ||||||||||
Fixed charges
|
43.1 | 39.7 | 43.5 | 41.4 | 62.1 | |||||||||||||||
Capitalized interest
|
(4.8 | ) | (2.6 | ) | (2.0 | ) | (1.3 | ) | (2.0 | ) | ||||||||||
|
||||||||||||||||||||
Total
|
$ | 186.7 | $ | 182.2 | $ | 176.9 | $ | 157.2 | $ | 162.2 | ||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
RATIO OF EARNINGS TO FIXED CHARGES
|
4.33 | 4.59 | 4.07 | 3.80 | 2.61 | |||||||||||||||
|
||||||||||||||||||||
|
||||||||||||||||||||
FIXED CHARGES:
|
||||||||||||||||||||
Interest expense on debt
|
$ | 40.7 | $ | 37.4 | $ | 41.1 | $ | 39.3 | $ | 60.5 | ||||||||||
Amortization of discount on debt
|
1.0 | 1.1 | 1.1 | 0.9 | 0.2 | |||||||||||||||
Interest portion of rental expense on operating leases
|
1.4 | 1.2 | 1.3 | 1.2 | 1.4 | |||||||||||||||
|
||||||||||||||||||||
Total
|
$ | 43.1 | $ | 39.7 | $ | 43.5 | $ | 41.4 | $ | 62.1 | ||||||||||
|
33
34
(in millions) | 2005 | 2004 | Increase | % Change | ||||||||||||
North America
|
$ | 1,422 | $ | 1,419 | $ | 3 | | % | ||||||||
South America
|
603 | 556 | 47 | 8 | % | |||||||||||
Asia/Africa
|
335 | 308 | 27 | 9 | % | |||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 2,360 | $ | 2,283 | $ | 77 | 3 | % | ||||||||
|
35
Favorable | Favorable | |||||||||||||||
(Unfavorable) | (Unfavorable) | |||||||||||||||
(in millions) | 2005 | 2004 | Variance | % Change | ||||||||||||
North America
|
$ | 59 | $ | 87 | $ | (28 | ) | (32 | )% | |||||||
South America
|
101 | 98 | 3 | 3 | % | |||||||||||
Asia/Africa
|
53 | 48 | 5 | 10 | % | |||||||||||
Corporate expenses
|
(30 | ) | (33 | ) | 3 | 9 | % | |||||||||
|
||||||||||||||||
Total
|
$ | 183 | $ | 200 | $ | (17 | ) | (8 | )% | |||||||
Plant closing costs (a)
|
| (21 | ) | 21 | 100 | % | ||||||||||
|
||||||||||||||||
|
||||||||||||||||
Operating income
|
$ | 183 | $ | 179 | $ | 4 | 2 | % | ||||||||
|
(a) | Includes a $19 million write-off of fixed assets and a $2 million charge for employee termination costs pertaining to the Companys manufacturing optimization initiative in Mexico and South America. See also Note 6 of the Notes to the Consolidated Financial Statements. |
36
37
(in millions) | 2004 | 2003 | Increase | % Change | ||||||||||||
North America
|
$ | 1,419 | $ | 1,329 | $ | 90 | 7 | % | ||||||||
South America
|
556 | 495 | 61 | 12 | % | |||||||||||
Asia/Africa
|
308 | 278 | 30 | 11 | % | |||||||||||
|
||||||||||||||||
Total
|
$ | 2,283 | $ | 2,102 | $ | 181 | 9 | % | ||||||||
|
38
Favorable | Favorable | |||||||||||||||
(Unfavorable) | (Unfavorable) | |||||||||||||||
(in millions) | 2004 | 2003 | Variance | % Change | ||||||||||||
North America
|
$ | 87 | $ | 68 | $ | 19 | 28 | % | ||||||||
South America
|
98 | 83 | 15 | 18 | % | |||||||||||
Asia/Africa
|
48 | 54 | (6 | ) | (11 | )% | ||||||||||
Corporate expenses
|
(33 | ) | (31 | ) | (2 | ) | (6 | )% | ||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | 200 | $ | 174 | $ | 26 | 15 | % | ||||||||
Plant closing costs (a)
|
(21 | ) | | (21 | ) | (100 | )% | |||||||||
|
||||||||||||||||
|
||||||||||||||||
Operating income
|
$ | 179 | $ | 174 | $ | 5 | 3 | % | ||||||||
|
(a) | Includes a $19 million write-off of fixed assets and a $2 million charge for employee termination costs pertaining to the Companys manufacturing optimization initiative in Mexico and South America. See also Note 6 of the Notes to the Consolidated Financial Statements. |
39
40
(in millions) | 2005 | 2004 | ||||||
Net income
|
$ | 90 | $ | 94 | ||||
Depreciation
|
106 | 102 | ||||||
Write-off of fixed assets plant closures
|
| 19 | ||||||
Deferred income taxes
|
(16 | ) | (9 | ) | ||||
Minority interest in earnings
|
3 | 8 | ||||||
Changes in working capital
|
60 | (37 | ) | |||||
Other
|
2 | (11 | ) | |||||
|
||||||||
|
||||||||
Cash provided by operations
|
$ | 245 | $ | 166 | ||||
|
Capital expenditures
|
$ | (143 | ) | |
Repurchases of common stock
|
(39 | ) | ||
Payments on debt
|
(47 | ) | ||
Proceeds from issuance of common stock
|
14 | |||
Dividends paid (including dividends to
minority interest shareholders)
|
(22 | ) |
41
(in millions) | Payments due by period | |||||||||||||||||||||||
Less | More | |||||||||||||||||||||||
Note | than 1 | 2 3 | 4 5 | than 5 | ||||||||||||||||||||
Contractual Obligations | reference | Total | year | years | years | years | ||||||||||||||||||
Long-Term Debt
|
8 | $ | 483 | $ | 10 | $ | 273 | $ | 200 | $ | | |||||||||||||
Operating Lease
Obligations
|
9 | 109 | 23 | 40 | 29 | 17 | ||||||||||||||||||
Purchase
Obligations *
|
534 | 74 | 70 | 58 | 332 | |||||||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Total
|
$ | 1,126 | $ | 107 | $ | 383 | $ | 287 | $ | 349 | ||||||||||||||
|
* | The purchase obligations relate principally to power supply agreements, including take or pay energy supply contracts, which help to provide us with an adequate power supply at certain of our facilities. |
42
43
44
Return on Capital Employed | (dollars in millions) | 2005 | 2004 | ||||||
Total stockholders equity
|
$ | 1,210 | $ | 1,081 | |||||
Add:
|
|||||||||
Cumulative translation adjustment
|
257 | 292 | |||||||
Minority interest in subsidiaries
|
17 | 18 | |||||||
Redeemable common stock
|
29 | 33 | |||||||
Total debt
|
528 | 568 | |||||||
Less:
|
|||||||||
Cash and cash equivalents
|
(116 | ) | (101 | ) | |||||
|
|||||||||
Capital employed (a)
|
$ | 1,925 | $ | 1,891 | |||||
|
|||||||||
|
|||||||||
Operating income
|
$ | 183 | $ | 179 | |||||
Adjusted for:
|
|||||||||
Income taxes (at effective tax rates of 37.5% in
2005 and 30% in 2004)
|
(69 | ) | (54 | ) | |||||
|
|||||||||
Adjusted operating income, net of tax (b)
|
$ | 114 | $ | 125 | |||||
|
|||||||||
|
|||||||||
Return on Capital Employed (b
¸
a)
|
5.9 | % | 6.6 | % | |||||
|
Debt to EBITDA ratio | (dollars in millions) | 2005 | 2004 | ||||||
Short-term debt
|
$ | 57 | $ | 88 | |||||
Long-term debt
|
471 | 480 | |||||||
|
|||||||||
Total debt (a)
|
$ | 528 | $ | 568 | |||||
|
|||||||||
Net income
|
$ | 90 | $ | 94 | |||||
Add back:
|
|||||||||
Minority interest in earnings
|
3 | 8 | |||||||
Provision for income taxes
|
55 | 43 | |||||||
Interest expense, net of interest income of $5 and
$3, respectively
|
32 | 33 | |||||||
Depreciation
|
106 | 102 | |||||||
|
|||||||||
EBITDA (b)
|
$ | 286 | $ | 280 | |||||
|
|||||||||
|
|||||||||
Debt to EBITDA ratio (a ÷ b)
|
1.8 | 2.0 | |||||||
|
45
Debt to Capitalization percentage | (dollars in millions) | 2005 | 2004 | ||||||
Short-term debt
|
$ | 57 | $ | 88 | |||||
Long-term debt
|
471 | 480 | |||||||
|
|||||||||
Total debt (a)
|
$ | 528 | $ | 568 | |||||
|
|||||||||
Deferred income tax liabilities
|
$ | 128 | $ | 177 | |||||
Minority interest in subsidiaries
|
17 | 18 | |||||||
Redeemable common stock
|
29 | 33 | |||||||
Stockholders equity
|
1,210 | 1,081 | |||||||
|
|||||||||
Total capital
|
$ | 1,384 | $ | 1,309 | |||||
|
|||||||||
Total debt and capital (b)
|
$ | 1,912 | $ | 1,877 | |||||
|
|||||||||
|
|||||||||
Debt to Capitalization percentage (a
¸
b)
|
27.6 | % | 30.3 | % | |||||
|
Operating Working Capital as a percentage of Net Sales | (dollars in millions) | 2005 | 2004 | ||||||
Current assets
|
$ | 685 | $ | 684 | |||||
Less: Cash and cash equivalents
|
(116 | ) | (101 | ) | |||||
Deferred income tax assets
|
(13 | ) | (30 | ) | |||||
|
|||||||||
Adjusted current assets
|
$ | 556 | $ | 553 | |||||
|
|||||||||
|
|||||||||
Current liabilities
|
$ | 424 | $ | 462 | |||||
Less: Short-term debt
|
(57 | ) | (88 | ) | |||||
Deferred income tax liabilities
|
(1 | ) | | ||||||
|
|||||||||
Adjusted current liabilities
|
$ | 366 | $ | 374 | |||||
|
|||||||||
|
|||||||||
Operating working capital (a)
|
$ | 190 | $ | 179 | |||||
|
|||||||||
|
|||||||||
Net sales (b)
|
$ | 2,360 | $ | 2,283 | |||||
|
|||||||||
|
|||||||||
Operating Working Capital as a percentage
of Net Sales (a
¸
b)
|
8.1 | % | 7.8 | % | |||||
|
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
Corn Products International, Inc.:
Chicago, Illinois
March 8, 2006
For the Years ended December 31, 2005, 2004 and 2003
Consolidated Statements of Income
Years Ended December 31,
(in millions, except per share amounts)
2005
2004
2003
$
2,559
$
2,461
$
2,269
199
178
167
2,360
2,283
2,102
2,028
1,929
1,778
332
354
324
158
158
149
(9
)
(4
)
1
21
149
175
150
183
179
174
35
34
39
148
145
135
55
43
49
3
8
10
$
90
$
94
$
76
74.7
73.4
72.0
75.6
74.7
72.4
$
1.20
$
1.28
$
1.06
1.19
1.25
1.06
Consolidated Balance Sheets
As of December 31,
(in millions, except share and per share amounts)
2005
2004
$
116
$
101
287
284
258
258
11
11
13
30
685
684
114
112
344
331
2,639
2,479
3,097
2,922
(1,823
)
(1,711
)
1,274
1,211
359
353
3
42
11
9
57
68
$
2,389
$
2,367
$
57
$
88
1
263
261
103
113
424
462
110
116
471
480
128
177
17
18
29
33
1
1
1,068
1,047
(36
)
(4
)
(1
)
(2
)
(251
)
(321
)
429
360
1,210
1,081
$
2,389
$
2,367
Consolidated Statements of Comprehensive Income
Years ended December 31,
(in millions)
2005
2004
2003
$
90
$
94
$
76
12
(26
)
9
24
(8
)
10
35
57
58
(1
)
(1
)
(2
)
$
160
$
116
$
151
Consolidated Statements of Stockholders Equity and Redeemable Equity
STOCKHOLDERS EQUITY
Additional
Accumulated Other
Redeemable
Common
Paid-In
Treasury
Deferred
Comprehensive
Retained
Common
(in millions)
Stock
Capital
Stock
Compensation
Income (Loss)
Earnings
Stock
$
1
$
1,015
$
(48
)
$
(4
)
$
(418
)
$
224
$
58
76
(15
)
9
10
8
5
1
(9
)
9
58
(2
)
$
1
$
1,006
$
(35
)
$
(3
)
$
(343
)
$
285
$
67
94
(19
)
(26
)
(8
)
1
(1
)
30
7
2
34
(34
)
57
(1
)
$
1
$
1,047
$
(4
)
$
(2
)
$
(321
)
$
360
$
33
90
(21
)
12
24
5
(39
)
7
7
5
1
4
(4
)
35
(1
)
$
1
$
1,068
$
(36
)
$
(1
)
$
(251
)
$
429
$
29
Consolidated Statements of Cash Flows
Years ended December 31,
(in millions)
2005
2004
2003
$
90
$
94
$
76
106
102
101
19
(16
)
(9
)
4
3
8
10
(1
)
(1
)
(1
)
3
1
24
(14
)
12
5
(34
)
(11
)
31
11
48
(11
)
(3
)
245
166
236
(143
)
(104
)
(83
)
7
1
1
21
(5
)
(68
)
(48
)
1
(141
)
(149
)
(130
)
(47
)
(41
)
(65
)
3
47
7
(22
)
(23
)
(20
)
(39
)
14
30
5
(91
)
13
(73
)
2
1
1
15
31
34
101
70
36
$
116
$
101
$
70
At December 31,
(in millions)
2005
2004
$
129
$
131
62
61
168
161
$
359
$
353
(in millions, except per share amounts)
Years Ended December 31,
2005
2004
2003
$
90
$
94
$
76
1
1
1
(4
)
(4
)
(3
)
$
87
$
91
$
74
$
1.20
$
1.28
$
1.06
$
1.16
$
1.23
$
1.03
$
1.19
$
1.25
$
1.06
$
1.15
$
1.21
$
1.02
(in millions)
2005
2004
$
47
$
88
10
$
57
$
88
(in millions)
2005
2004
$
254
$
254
199
199
28
27
$
481
$
480
10
$
471
$
480
Year
Minimum Lease Payment
$
23
21
19
17
12
17
(in millions)
2005
2004
2003
$
(30
)
$
9
$
11
178
136
124
$
148
$
145
$
135
$
5
$
6
$
4
2
1
1
64
45
40
$
71
$
52
$
45
$
(11
)
$
(5
)
$
(3
)
(3
)
(2
)
3
9
(7
)
(2
)
$
(16
)
$
(9
)
$
4
$
55
$
43
$
49
(in millions)
2005
2004
$
21
$
17
1
5
1
18
8
8
19
6
15
13
12
13
$
77
$
80
(18
)
(8
)
$
59
$
72
$
154
$
159
5
2
13
8
4
4
$
172
$
177
$
113
$
105
2005
2004
2003
35.0
%
35.0
%
35.0
%
(2.4
)
(6.0
)
1.9
(1.5
)
0.2
0.3
5.4
1.1
1.5
(1.1
)
(1.0
)
1.0
.8
(1.7
)
37.5
%
30.0
%
36.0
%
US Plans
Non-US Plans
(in millions)
2005
2004
2005
2004
$
67
$
63
$
97
$
85
2
2
2
2
4
4
6
5
(4
)
(3
)
(4
)
(5
)
4
1
15
3
3
7
$
73
$
67
$
119
$
97
$
51
$
43
$
81
$
70
4
3
12
6
8
8
5
4
(4
)
(3
)
(4
)
(5
)
3
6
$
59
$
51
$
97
$
81
$
(14
)
$
(16
)
$
(22
)
$
(16
)
13
9
28
18
2
3
1
6
5
$
1
$
(4
)
$
12
$
8
US Plans
Non-US Plans
(in millions)
2005
2004
2005
2004
$
(4
)
$
$
(16
)
$
(12
)
11
12
10
10
(2
)
(2
)
(5
)
(5
)
(6
)
(6
)
(1
)
(1
)
$
(1
)
$
4
$
(12
)
$
(8
)
US Plans
Non-US Plans
(in millions)
2005
2004
2005
2004
$
73
$
67
$
9
$
13
68
63
11
12
59
51
2
US Plans
Non-US Plans
(in millions)
2005
2004
2003
2005
2004
2003
$
2
$
2
$
2
$
2
$
2
$
2
4
4
3
6
5
5
(3
)
(3
)
(2
)
(5
)
(5
)
(5
)
$
3
$
3
$
3
$
3
$
2
$
2
US Plans
Non-US Plans
2005
2004
2005
2004
5.40
%
5.75
%
5.25
%
6.25
%
2.75
%
2.75
%
3.50
%
4.50
%
US Plans
Non-US Plans
2005
2004
2003
2005
2004
2003
5.75
%
6.0
%
6.75
%
5.25
%
6.5
%
6.5
%
7.25
%
7.5
%
8.25
%
7.25
%
8.5
%
8.5
%
2.75
%
3.0
%
3.75
%
3.50
%
4.5
%
4.5
%
US Plans
Non-US Plans
Asset Category
2005
2004
2005
2004
52
%
52
%
49
%
57
%
47
%
47
%
46
%
39
%
1
%
1
%
5
%
4
%
100
%
100
%
100
%
100
%
(in millions)
US Plans
Non US Plans
$
5
$
6
4
5
4
5
6
5
4
6
24
30
(in millions)
2005
2004
$
44
$
43
1
1
3
3
(2
)
(1
)
(2
)
(2
)
$
44
$
44
(8
)
(11
)
1
1
$
37
$
34
(in millions)
2005
2004
2003
$
1
$
1
$
1
3
3
2
$
4
$
4
$
3
2005
2004
5.40
%
5.75
%
2005
2004
2003
5.75
%
6.0
%
6.75
%
US
Non US
(in millions)
Plans
Pans
$
2
$
2
2
2
2
11
1
(in millions)
2005
2004
$
240
$
241
52
49
(5
)
(6
)
$
287
$
284
$
102
$
107
115
112
41
39
$
258
$
258
$
32
$
33
5
5
17
16
15
15
11
18
23
26
$
103
$
113
$
86
$
84
5
18
19
14
$
110
$
116
(in millions)
2005
2004
2003
$
1
$
1
$
1
1
(3
)
2
6
2
1
$
9
$
4
$
(1
)
$
37
$
36
$
40
(5
)
(3
)
(1
)
3
1
$
35
$
34
$
39
*
Interest capitalized amounted to $5 million, $3 million and $2 million in 2005, 2004 and 2003,
respectively.
(in millions)
2005
2004
2003
$
31
$
34
$
41
62
46
43
(4
)
(34
)
9
8
(Shares of common stock, in thousands)
Issued
Held in Treasury
Redeemable Shares
Outstanding
75,320
3,912
3,827
67,581
(542
)
542
(16
)
16
(400
)
400
34
(34
)
75,320
2,988
3,827
68,505
(2,600
)
2,600
(31
)
31
(5
)
5
(2,195
)
2,195
35
(35
)
75,320
792
1,227
73,301
(7
)
7
(1
)
1
(997
)
997
1,742
(1,742
)
75,320
1,529
1,227
72,564
Weighted
Stock Option
Stock Option
Average
Shares of
(shares in thousands)
Shares
Price Range
Exercise Price
Restricted Stock
6,300
$6.95 to $16.56
$
14.17
436
1,062
14.88 to 16.92
16.85
16
(378
)
6.95 to 16.16
12.45
(26
)
(97
)
14.32 to 16.16
15.08
(26
)
6,887
6.95 to 16.92
14.67
400
1,071
17.65 to 24.70
24.66
31
(2,196
)
6.95 to 16.92
13.88
(91
)
(40
)
14.32 to 16.92
16.06
(15
)
5,722
10.12 to 24.70
16.83
325
4
21.23 to 21.23
21.23
6
(997
)
10.23 to 17.65
15.07
(138
)
(87
)
11.37 to 24.70
20.63
(18
)
4,642
$10.12 to $24.70
$
17.14
175
Average Remaining
Options
Weighted Average
Contractual Life
Options
Weighted Average
Range of Exercise Prices
Outstanding
Exercise Price
(Years)
Exercisable
Exercise Price
19
$
10.52
0.7
19
$
10.52
882
13.11
4.0
882
13.11
1,139
14.41
6.3
1,139
14.41
1,579
16.56
5.1
1,579
16.56
1,023
24.68
8.8
513
24.70
4,642
$
17.14
6.0
4,132
$
16.21
(in millions)
2005
2004
2003
$
1,422
$
1,419
$
1,329
603
556
495
335
308
278
$
2,360
$
2,283
$
2,102
$
59
$
87
$
68
101
98
83
53
48
54
(30
)
(33
)
(31
)
(21
)
$
183
$
179
$
174
$
1,394
$
1,411
$
1,386
559
521
468
436
435
362
$
2,389
$
2,367
$
2,216
$
73
$
74
$
76
23
20
18
10
8
7
$
106
$
102
$
101
$
78
$
58
$
31
48
31
30
17
15
22
$
143
$
104
$
83
Notes:
a.
Sales between geographic regions for each of the periods presented are
insignificant and therefore are not presented.
b.
Includes earnings from non-controlled affiliates accounted for under the
equity method as follows: South America $1 million in each of 2005, 2004 and
2003.
c.
Includes a $19 million write-off of fixed assets and a $2 million charge for
employee termination costs pertaining to the Companys manufacturing
optimization initiative in Mexico and South America. See also Note 6.
d.
Includes investments in non-controlled affiliates accounted for under the
equity method as follows: South America $5 million at December 31, 2005 and
$4 million at December 31, 2004 and 2003.
Net Sales
(in millions)
2005
2004
2003
$
710
$
765
$
738
450
383
331
262
271
260
322
288
251
186
187
170
114
106
102
316
283
250
$
2,360
$
2,283
$
2,102
Long-lived Assets
(in millions)
2005
2004
2003
$
428
$
407
$
406
382
401
426
176
173
165
160
125
112
252
243
212
120
117
116
183
175
171
$
1,701
$
1,641
$
1,608
(in millions, except per share amounts)
1
st
QTR
2
nd
QTR
3
rd
QTR
4
th
QTR
$
613
$
647
$
664
$
636
47
51
52
50
$
566
$
596
$
612
$
586
73
90
88
82
17
27
23
23
$
0.22*
$
0.35
$
0.31
$
0.32
$
0.22*
$
0.35
$
0.31
$
0.31
(in millions, except per share amounts)
1
st
QTR
2
nd
QTR
3
rd
QTR
4
th
QTR
$
592
$
616
$
633
$
620
42
44
46
46
$
550
$
572
$
587
$
574
95
92
83
85
26
30
24
14
**
$
0.35
$
0.40
$
0.33
$
0.19
**
$
0.35
$
0.40
$
0.32
$
0.19
**
*
Per share amounts have been adjusted for the 2-for-1 stock split effective January 25, 2005.
**
Includes a charge of $21 million ($15 million, after-tax, or $0.20 per diluted common share) to
write-off fixed assets and record employee termination costs associated with a manufacturing
optimization initiative in Mexico and South America (see also Note 6). Additionally, the Company
reduced its annual effective income tax rate to 30 percent (from 33 percent used for the nine
months ended September 30, 2004) to reflect the favorable impact of new tax legislation in various
countries in which the Company conducts business.
1
st
QTR
2
nd
QTR
3
rd
QTR
4
th
QTR
$
30.20
$
26.30
$
24.85
$
24.44
25.60
20.11
16.00
19.40
25.99
23.76
20.17
23.89
$
0.07
$
0.07
$
0.07
$
0.07
$
20.04
$
23.29
$
23.80
$
27.92
17.22
19.81
20.63
22.72
20.00
23.28
23.05
26.78
$
0.06
$
0.06
$
0.06
$
0.07
*
Per share amounts have been adjusted for the 2-for-1 stock split effective January 25, 2005.
(in millions, except per share amounts)
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
$
2,360
$
2,283
$
2,102
$
1,871
$
1,887
$
1,865
$
1,735
$
1,448
$
1,418
$
1,524
90
94
76
63
57
48
77
43
(75
)
23
(3
)
(1
)
2
90
94
76
63
57
48
74
43
(76
)
25
$
1.20
$
1.28
$
1.06
$
0.89
$
0.80
$
0.68
$
1.03
$
0.59
$
(1.05
)
$
0.32
(0.04
)
(0.02
)
0.03
$
1.20
$
1.28
$
1.06
$
0.89
$
0.80
$
0.68
$
0.99
$
0.59
$
(1.07
)
$
0.35
$
0.28
$
0.25
$
0.21
$
0.20
$
0.20
$
0.20
$
0.18
$
0.08
$
261
$
222
$
153
$
138
$
(120
)
$
69
$
104
$
46
$
(83
)
$
151
1,274
1,211
1,187
1,154
1,293
1,407
1,349
1,298
1,057
1,057
2,389
2,367
2,216
2,068
2,240
2,339
2,217
1,956
1,676
1,676
528
568
550
600
756
720
544
404
350
350
29
33
67
58
64
47
57
50
1,210
1,081
911
770
793
913
973
1,009
992
1,033
73.8
74.5
72.3
71.4
70.8
70.5
73.9
75.1
71.2
$
106
$
102
$
101
$
103
$
127
$
135
$
122
$
95
$
95
$
88
143
104
83
78
94
143
162
91
100
192
92
81
81
72
82
78
84
67
69
61
*
All share and per share amounts have been adjusted for the 2-for-1 stock split
effective January 25, 2005 . Additionally, all periods prior to 2000 have
been retroactively restated to reflect the change in accounting for inventories effective
January 1, 2000.
**
Amounts have been restated to reflect the reclassification of redeemable
common stock from stockholders equity for periods from 1998 through 2002.
/s/ Richard J. Almeida
|
||
Richard J. Almeida
|
||
|
||
/s/ Luis Aranguren
|
||
Luis Aranguren
|
||
|
||
/s/ Guenther E. Greiner
|
||
Guenther E. Greiner
|
||
|
||
/s/ Ronald M. Gross
|
||
Ronald M. Gross
|
||
|
||
/s/ Karen L. Hendricks
|
||
Karen L. Hendricks
|
||
|
||
/s/ Bernard H. Kastory
|
||
Bernard H. Kastory
|
||
|
||
/s/ Gregory B. Kenny
|
||
Gregory B. Kenny
|
||
|
||
/s/ Barbara A. Klein
|
||
Barbara A. Klein
|
||
|
||
/s/ William S. Norman
|
||
William S. Norman
|
||
|
||
/s/ James M. Ringler
|
||
James M. Ringler
|
||
|
||
/s/ Samuel C. Scott III
|
||
Samuel C. Scott III
|
1. | I have reviewed this annual report on Form 10-K of Corn Products International, Inc.; | ||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15 (f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the Registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: March 8, 2006
|
/s/ Samuel C. Scott III | |
|
||
|
Samuel C. Scott III | |
|
Chairman, President and Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of Corn Products International, Inc.; | ||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15 (f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the Registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: March 8, 2006
|
/s/ Cheryl K. Beebe | |
|
||
|
Cheryl K. Beebe | |
|
Vice President and Chief Financial Officer |
/s/ Samuel C. Scott III
|
||
Samuel C. Scott III
|
||
Chief Executive Officer
|
||
March 8, 2006
|
/s/ Cheryl K. Beebe
|
||
Cheryl K. Beebe
|
||
Chief Financial Officer
|
||
March 8, 2006
|