Parties

Construtora Norberto Odebrecht S.A. (CNO) and Braskem S.A. (Braskem)

Relationship with the issuer

Braskem and CNO are both subsidiaries of Odebrecht S.A.

Purpose

The parties entered into an Alliance Agreement on May 26, 2014, which establishes the general conditions for contracting engineering, construction and project design services and other activities (ACTIVITIES) to be executed by CNO during conservation and maintenance shutdowns, as well as expansion or modification works at the industrial units.

The services are contracted through Specific Activity Agreements (TAE), which are signed for each specific demand.

The TAEs are drafted by an Integrated Project Team formed by representatives from both Parties, which defines the conditions for the execution of each ACTIVITY, stipulating: (i) the financial schedule of the activities; (ii) the composition of costs, contingency amounts and price breakdown of the activities; (iii) the matrix of responsibilities of the activities; (iv) the work instructions related to the activities; (v) the assumptions used to determine the costs, prices and dates of conclusion of the activities; (vi) the guaranties and responsibilities related to the activities, as well as any other specifications and details related to the execution of the ACTIVITIES.

The amount of each TAE includes all the costs to be incurred with the services to be rendered by CNO, including any costs with third parties that may be contracted to provide materials and services, as well as CNO’s remuneration, which must be reported at the end of each agreement. CNO’s remuneration for the execution of the TAEs under the Alliance Agreement is limited to R$121 million. This remuneration will be calculated as a percentage of the value of the TAE, according to the type of service to be rendered and the payment of a bonus or discount for penalties, which are calculated as the difference between the Final Price and the Target Price.

Based on this system, the total contracted value based on the Alliance Agreement, resulting from the sum of the set of TAEs, will be determined only at the end of the term of the Alliance Agreement. If the ceiling of CNO’s remuneration mentioned above is reached before the end of the Alliance Agreement, a new contract must be negotiated between the parties. The scope of the TAEs entered into in January 2018 is detailed in the following item (Main terms and conditions).

Main terms and conditions

TAE 074:

Scope: Management, Supervision and Execution Services for Construction, Assembly and Commissioning Services, in accordance with items “a” and “d” of Clause 2.1 of the Alliance Agreement executed by and between Braskem and Odebrecht, to be performed on Blast Furnaces BA-4102, BA-1101, installation of protective barriers of Blast Furnaces BA-1101 and BA-1112, repowering of Boiler GV-D and repowering of the tertiary superheater (SH 3) of GV-D at the Q1-BA Plant, including supply of the equipment, by CNO, to be executed at the Chemicals Units of BRASKEM in the municipality of Camaçari, Bahia.

Duration: from Jan. 15, 2018 to Aug. 30, 2018.

Total price for TAE 074: thirteen million, two hundred three thousand, three hundred seventy-seven reais and forty-five centavos (R$13,203,377.45).

TAE 075:

Scope: Management, Supervision and Execution Services of the type Provision of Construction, Assembly and Commissioning Services, in accordance with items “a” and “d” of Clause 2.1 of the Alliance Agreement executed by and between Braskem and Odebrecht, to be performed on Pyrolysis Furnaces BA-223, BA-205, BA-211 and BA-212, Blast Furnace BF-902, including supply of the equipment, by CNO, to be executed at Chemicals Unit 03 of BRASKEM in the municipality of Santo André, São Paulo.

Duration: from Jan. 29, 2018 to Feb. 28, 2019.

Total price for TAE 075: thirteen million, seven hundred fifty-seven thousand, twelve reais and six centavos (R$13,757,012.06).

TAE 080:

Scope: Management, Supervision and Execution Services of the Assembly and Commissioning Services, in accordance with items “a” and “d” of Clause 2.1 of the Alliance Agreement entered into by and between Braskem and Odebrecht, to be performed during the Emergency Recovery Services for Area A-12 of Plant PE 06, including supply of the equipment, by CNO, in the municipality of Triunfo, Rio Grande do Sul.

Duration: from Jan. 1, 2018 to May 31, 2018.

Total Price for TAE 080: eleven million, one hundred fifty-one thousand, eight hundred thirty-four reais and twenty-seven centavos (R$ 11,151,834.27).

TAE 081:

Scope: Management, Supervision and Execution Services for Construction, Assembly and Commissioning Services, in accordance with items “a” and “d” of Clause 2.1 of the Alliance Agreement executed by and between Braskem and Odebrecht, to be performed for the Maintenance Intervention Services, including Pre-Assembly and Assembly of tubing, assembly, disassembly and support of scaffoldings, intervention in industrial equipment during Pre-Shutdown, Shutdown and Post-Shutdown of the Chemicals 2 Plant, including supply of the equipment, by CNO, in the municipality of Triunfo, Rio Grande do Sul.

Duration: from Jan. 29, 2018 to Jul. 30, 2018.

Total Price for TAE 081: nine million, three hundred forty-eight thousand, five hundred sixty-one reais and eighty-nine centavos (R$9,348,561.89).

The main terms and conditions of said Alliance Agreement were approved in PD.CA/BAK-03/2014, at a meeting of the Board of Directors of Braskem held on May 7, 2014.

Date of signing of TAE

Execution of TAE 074: Jan. 12, 2018

Execution of TAE 075: Jan. 29, 2018

Execution of TAE 080: Jan. 29, 2018

Execution of TAE 081: Jan. 29, 2018

Any participation by the counterparty, its partners or managers in the issuer’s decision-making process or in the negotiation of the transaction as representatives of the issuer

The Alliance Agreement, which provides for the execution of TAEs, was deliberated at a meeting of the Board of Directors of Braskem S.A., whose members include one director and one alternate director on the board of the direct parent company of Construtora Norberto Odebrecht/the counterparty.

However, no manager of CNO or its parent company participated in negotiations of the transaction as a representative of the issuer.     

Detailed justification of the reasons why the management of the issuer believes the transaction was carried out on an arm’s length basis or involves adequate compensatory payment

The commercial conditions established in said TAE were based on industry standards, considering the volumes contracted and technical conditions. Braskem conducted a comparative analysis of its routine agreements, maintenance shutdown agreements and market proposals, in particular, an analysis of labor costs, charges, contractual management fees and profit, and the CNO proposal was found technically and commercially competitive. Furthermore, the execution of the Services requires compliance with rigorous cost and deadline targets, as well as high quality and productivity technical standards, with strict compliance with environmental, health and safety standards, and CNO fulfilled all these requirements. CNO holds vast experience in executing the Services under other previous alliance agreements and its performance reviews have always been positive.

The decision-making process involved an analysis and negotiation of the proposal prepared by CNO by the respective Executive Officers of Braskem.