EXHIBIT 10(m)
EXECUTION COPY
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AGREEMENT OF PURCHASE AND SALE
BY AND BETWEEN
CMS ENTERPRISES COMPANY,
CMS GENERATION HOLDINGS COMPANY and
CMS INTERNATIONAL VENTURES, LLC,
COLLECTIVELY AS SELLER,
AND
LUCID ENERGY, L.L.C. and
NEW ARGENTINE GENERATION COMPANY, LLC
COLLECTIVELY AS BUYER,
DATED AS OF
MARCH 12, 2007
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS.................................................... 2
Section 1.1 Specific Definitions................................... 2
ARTICLE II SALE AND PURCHASE............................................. 9
Section 2.1 Agreement to Sell and Purchase......................... 9
Section 2.2 Deliveries by the Parties.............................. 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER..................... 12
Section 3.1 Corporate Organization; Qualification.................. 12
Section 3.2 Authority Relative to this Agreement................... 13
Section 3.3 Equity Interests; Assumed Indebtedness................. 13
Section 3.4 Consents and Approvals................................. 15
Section 3.5 No Conflict or Violation............................... 15
Section 3.6 Financial Information.................................. 15
Section 3.7 Contracts.............................................. 16
Section 3.8 Compliance with Law.................................... 16
Section 3.9 Permits................................................ 17
Section 3.10 Litigation............................................. 17
Section 3.11 Employee Matters....................................... 17
Section 3.12 Labor Relations........................................ 18
Section 3.13 Intellectual Property.................................. 18
Section 3.14 Representations with Respect to Environmental
Matters................................................ 19
Section 3.15 Tax Matters............................................ 20
Section 3.16 Insurance.............................................. 22
Section 3.17 Regulatory Matters..................................... 22
Section 3.18 Absence of Certain Changes or Events................... 22
Section 3.19 Absence of Undisclosed Liabilities..................... 24
Section 3.20 Property............................................... 24
Section 3.21 Brokerage and Finders' Fees............................ 24
Section 3.22 Corporate and Accounting Records....................... 24
Section 3.23 Affiliated Transactions................................ 25
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Section 3.24 Certain Practices...................................... 25
Section 3.25 No Other Representations or Warranties................. 26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER................... 26
Section 4.1 Corporate Organization; Qualification.................. 26
Section 4.2 Authority Relative to this Agreement................... 26
Section 4.3 Consents and Approvals................................. 27
Section 4.4 No Conflict or Violation............................... 27
Section 4.5 Litigation............................................. 28
Section 4.6 Brokerage and Finders' Fees............................ 28
Section 4.7 Investment Representations............................. 28
Section 4.8 Regulation Matters..................................... 28
Section 4.9 No Other Representations or Warranties................. 29
ARTICLE V COVENANTS OF THE PARTIES....................................... 29
Section 5.1 Notification to the CNDC; Negative Antitrust Decision;
Transfer of Equity Interests to a Third Purchaser...... 29
Section 5.2 Further Assurances..................................... 32
Section 5.3 Employee Matters....................................... 32
Section 5.4 Tax Covenants.......................................... 34
Section 5.5 Intercompany Accounts.................................. 38
Section 5.6 Surrender of Intellectual Property..................... 38
Section 5.7 Maintenance of Insurance Policies...................... 39
Section 5.8 Preservation of Records................................ 40
Section 5.9 Public Statements...................................... 40
Section 5.10 Certain Transactions................................... 40
Section 5.11 Use of Corporate Name; Transitional Use of Seller's
Name................................................... 41
Section 5.12 Use of Information Technology.......................... 41
Section 5.13 Confidentiality........................................ 41
Section 5.14 Actions Relating to Entities........................... 42
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ARTICLE VI SURVIVAL; INDEMNIFICATION..................................... 42
Section 6.1 Survival............................................... 42
Section 6.2 Indemnification........................................ 43
Section 6.3 Calculation of Damages................................. 45
Section 6.4 Procedures for Third-Party Claims...................... 45
Section 6.5 Procedures for Inter-Party Claims...................... 46
ARTICLE VII MISCELLANEOUS PROVISIONS..................................... 47
Section 7.1 Interpretation......................................... 47
Section 7.2 Disclosure Letters..................................... 48
Section 7.3 Payments............................................... 48
Section 7.4 Expenses............................................... 48
Section 7.5 Choice of Law.......................................... 48
Section 7.6 Assignment............................................. 48
Section 7.7 Notices................................................ 48
Section 7.8 Resolution of Disputes................................. 50
Section 7.9 Language............................................... 52
Section 7.10 No Right of Setoff..................................... 52
Section 7.11 Time is of the Essence................................. 52
Section 7.12 Specific Performance................................... 52
Section 7.13 Currency Matters....................................... 52
Section 7.14 Entire Agreement....................................... 52
Section 7.15 Binding Nature; Third Party Beneficiaries.............. 53
Section 7.16 Counterparts........................................... 53
Section 7.17 Severability........................................... 53
Section 7.18 Headings............................................... 53
Section 7.19 Waiver................................................. 53
Section 7.20 Amendment.............................................. 54
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EXHIBITS
A ASSIGNMENT OF QUOTAS AGREEMENT
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INDEX OF DEFINED TERMS
Action................................................................... 2
Affected Employees....................................................... 2
Affiliate................................................................ 2
Agreement................................................................ 2
Antitrust Approval....................................................... 2
Antitrust Law............................................................ 2
Applicable Law........................................................... 2
AR$...................................................................... 2
Business Day............................................................. 3
Buyer Disclosure Letter.................................................. 3
Claims................................................................... 3
CNDC..................................................................... 3
Code..................................................................... 3
Confidentiality Agreement................................................ 3
CTM...................................................................... 3
Cut-off.................................................................. 3
Damages.................................................................. 3
Direct Equity Interests.................................................. 3
Distribution............................................................. 3
Dollars or $............................................................. 3
Employees................................................................ 4
Entities................................................................. 4
Environmental Laws....................................................... 4
Environmental Permit..................................................... 4
EWG...................................................................... 4
Exchange Act............................................................. 4
FERC..................................................................... 4
FPA...................................................................... 4
FUCO..................................................................... 4
GAAP..................................................................... 5
Generation............................................................... 5
Governmental Authority................................................... 5
Hazardous Substances..................................................... 5
Hidroinvest SPA.......................................................... 5
Indebtedness............................................................. 5
Indirect Equity Interests................................................ 5
Intellectual Property.................................................... 5
Knowledge of Buyer....................................................... 6
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Knowledge of Seller...................................................... 6
Liabilities.............................................................. 6
Liens.................................................................... 6
Material Adverse Effect.................................................. 6
Negative Antitrust Decision.............................................. 7
Operating................................................................ 7
Ownership Percentage..................................................... 7
Pension Plans............................................................ 7
PermittedLiens........................................................... 7
Person................................................................... 8
Representatives.......................................................... 8
Seller Disclosure Letter................................................. 8
Subsidiary............................................................... 8
Tax Return............................................................... 9
Taxes.................................................................... 9
TGM...................................................................... 9
USFCPA................................................................... 9
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ANNEXES
I EQUITY INTERESTS
II ASSUMED INDEBTEDNESS
III COPY OF THE HIDROINVEST SPA
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AGREEMENT OF PURCHASE AND SALE
This AGREEMENT OF PURCHASE AND SALE, dated as of March 12, 2007, is made
and entered into by and between CMS Enterprises Company and CMS Generation
Holdings Company, each a Michigan corporation, and CMS International Ventures,
L.L.C., a Michigan limited liability company (collectively, the "Seller"), and
Lucid Energy, LLC ("Lucid") and New Argentine Generation Company, LLC, a
Delaware limited liability company ("Newco" and collectively with Lucid, the
"Buyer").
WITNESSETH:
WHEREAS, Seller and Lucid have entered into that certain Common Agreement
dated as of the date hereof (the "Common Agreement"), pursuant to which Seller,
directly or through Affiliates of Seller, agreed to sell, and Lucid, directly or
through Affiliates of Lucid, agreed to acquire, upon the terms and conditions
set forth in this Agreement certain Argentina-based natural gas transmission and
marketing and independent power production businesses (the "Argentine
Businesses"), and upon the terms and conditions entered into contemporaneously
herewith, Michigan-based natural gas transmission, gathering, storage and
processing businesses (the "Michigan Businesses");
WHEREAS, Seller and Buyer intend that the transactions contemplated by the
agreements relating to the sale of the Michigan Business will be consummated if
and only if the sale of the Argentine Businesses is consummated;
WHEREAS, the Argentine Businesses are conducted through various Argentine
legal entities, the equity participations in which are owned, directly or
indirectly and in relevant amounts, by Seller ("Equity Interests" as described
on Annex I);
WHEREAS, Buyer desires to purchase, and Seller desires to sell to Buyer,
the Equity Interests, and Seller desires to assign, and Buyer desires to assume,
certain intercompany Indebtedness as described in Annex II (the "Assumed
Indebtedness"), in each case upon the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, in consideration of the foregoing, the representations,
warranties, covenants and agreements set forth in this Agreement, and other good
and valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Specific Definitions.
For purposes of this Agreement, the following terms shall have the meanings set
forth below:
"Action" shall mean any administrative, regulatory, judicial
or other formal proceeding, action, Claim, suit,
investigation or inquiry by or before any
Governmental Authority, arbitrator or mediator, at
law or at equity.
"Affected Employees" shall mean the Employees on the date hereof.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Exchange
Act.
"Agreement" shall mean this Agreement of Purchase and Sale,
together with the Seller Disclosure Letter, Buyer
Disclosure Letter, Annexes I, II and III and
Exhibits hereto, as the same may be amended or
supplemented from time to time in accordance with
the provisions hereof.
"Antitrust Approval" is the approval of the Acquisition without
undertakings by the Republic of Argentina
Secretariat of Internal Trade, or any agency or
tribunal that may replace it in the future or that
may be declared by a res judicata judgment to be
empowered to issue a final decision on the
Acquisition, approving the same under the Antitrust
Law.
"Antitrust Law" as regards the Republic of Argentina means Law No.
25,156 (as amended), Decree No. 89/2001, Resolution
No. 40/2001 of the former Secretariat of Competition
and Consumer Defense, Resolution No. 164/2001 of the
former Secretariat of Competition, Deregulation and
Consumer Defense, Resolution No. 26/2006 of the
former Secretariat of Technical Coordination and any
other law or regulation, administrative resolution
and judicial decision addressing competition issues,
including but not limited to the competition
clearance of mergers, acquisitions or other business
combinations.
"Applicable Law" shall mean any statute, treaty, code, law,
ordinance, executive order, rule or regulation
(including a regulation that has been formally
promulgated in a rule-making proceeding but, pending
final adoption, is in proposed or temporary form
having the force of law); guideline or notice having
the force of law; or approval, permit, license,
franchise, judgment, order, decree, injunction or
writ of any Governmental Authority applicable to a
specified Person or specified property, as in effect
from time to time.
"AR$" shall mean Argentine Pesos.
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"Business Day" shall mean any day that is not a Saturday, Sunday or
other day on which banks are required or authorized
by law to be closed in the City of New York.
"Buyer Disclosure Letter" shall mean the Buyer Disclosure Letter delivered to
Seller concurrently with this Agreement, which is an
integral part of this Agreement.
"Claims" shall mean any and all claims, lawsuits, demands,
causes of action, investigations and other
proceedings (whether or not before a Governmental
Authority).
CNDC" shall mean Comision Nacional de Defensa de la
Competencia.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Confidentiality shall mean the confidentiality agreement entered
Agreement" into by and between the EE Group and CMS Enterprises
Company dated October 23, 2006.
"CTM" shall mean Centrales Termicas Mendoza S.A.
"Cut-off" shall mean December 31, 2006.
"Damages" shall mean judgments, settlements, fines, penalties,
damages, Liabilities, losses or deficiencies, costs
and expenses, including reasonable attorney's fees,
court costs, expenses of arbitration or mediation,
and other out-of-pocket expenses incurred in
investigating or preparing the foregoing; provided,
however, that "Damages" shall not include
incidental, indirect or consequential damages,
damages for lost profits or other special, punitive
or exemplary damages unless such Damages are deemed
to be direct damages of an Indemnified Party in
connection with a Third-Party Claim.
"Direct Equity Interests" shall mean the equity interests held directly by the
Seller as described in Annex I.
"Distribution" shall mean: (a) any dividend, distribution,
repayment or repurchase of share capital, capital
contribution or other return of capital to such
Person's shareholders or equivalent holders of its
ownership interests; (b) any repayment of any loan
owed to an Affiliate of such Person; and (c) any
loan made to an Affiliate of such Person, in each
case, other than to any of the Entities.
"Dollars or $" shall mean dollars of the United States of America.
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"Employees" shall mean all employees employed by the Argentine
Businesses, including employees on short-term
disability, military leave, maternity leave or
paternity leave and other approved leaves of absence
from active employment as set forth in Section
1.1(a) of the Seller Disclosure Schedule.
"Entities" shall mean each of the following Argentine
sociedades anonimas and sociedades de
responsabilidad limitada, as the case may be: CMS
Operating S.R.L., CMS Centrales Termicas S.A., CMS
Generation S.R.L., CMS Comercializadora de Energia
S.A., Cuyana S.A. de Inversiones, Central Termicas
Mendoza S.A., CMS Ensenada S.A. and Transportadora
de Gas del Mercosur S.A.
"Environmental Laws" shall mean all foreign, federal, state and local
laws, regulations, rules and ordinances in effect
and existence as of the closing Date where the
Argentine Businesses currently operate relating to
pollution or protection of human health or the
environment, natural resources or safety and health,
including laws relating to releases or threatened
releases of Hazardous Substances into the
environment (including ambient air, surface water,
groundwater, land, surface and subsurface strata).
"Environmental Permit" shall mean any Permit, formal exemption,
identification number or other authorization issued
by a Governmental Authority pursuant to an
applicable Environmental Law.
"EWG" shall have the meaning set forth for the term
"exempt wholesale generator" at Section 366.1 of
FERC's regulations (18 C.F.R. 366.1).
"Exchange Act" shall mean the United States Securities Exchange Act
of 1934, as amended.
"FERC" shall mean the United States Federal Energy
Regulation Commission.
"FPA" shall mean the United States Federal Power Act, as
amended.
"FUCO" shall have the meaning set forth for the term
"foreign utility company" at Section 366.1 of FERC's
regulations (18 C.F.R. 366.1).
"GAAP" shall mean Argentine generally accepted accounting
principles
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as in effect from time to time, applied on a
consistent basis.
"Generation" shall mean CMS Generation S.R.L.
"Governmental Authority" shall mean any executive, legislative, judicial,
tribal, regulatory, taxing or administrative agency,
body, commission, department, board, court,
tribunal, arbitrating body or authority of the
United States or any foreign country, or any state,
local or other governmental subdivision thereof.
"Hazardous Substances" shall mean any chemicals, materials or substances
defined as or included in the definition of
"hazardous substances", "hazardous wastes",
"hazardous materials", "hazardous constituents",
"restricted hazardous materials", "extremely
hazardous substances", "toxic substances",
"contaminants", "pollutants", "toxic pollutants", or
words of similar meaning and regulatory effect under
any applicable Environmental Law.
"Hidroinvest SPA" shall mean that certain Stock Purchase Agreement
between CMS Generation Co. and Generation, as
sellers, and Empresa Nacional de Electricidad S.A. -
ENDESA CHILE, as buyer, dated March 8, 2007, the
copy of which is attached as Annex III to this
Agreement.
"Indebtedness" of any Person shall mean (a) all liabilities and
obligations of such Person for borrowed money or
evidenced by notes, bonds or similar instruments,
(b) obligations in respect of the deferred purchase
price of property or services (other than any amount
that would constitute current assets) to the extent
that such amount would be accrued as a liability on
a balance sheet prepared in accordance with GAAP,
(c) obligations in respect of capitalized leases,
(d) obligations in respect of letters of credit,
acceptances or similar obligations, (e) obligations
under interest rate cap agreements, interest rate
swap agreements, foreign currency exchange contracts
or other hedging contracts, (f) any accrued or
unpaid interest or breakage fees related to any of
the foregoing and (g) any guarantee of the
obligations of another Person with respect to any of
the foregoing.
"Indirect Equity shall mean the equity interests held indirectly by
Interests" the Seller as described in Annex I.
"Intellectual Property" shall mean all Argentine and foreign (a) patents and
patent applications, (b) trademarks, service marks,
logos, slogans, and
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trade dress, (c) copyrights, (d) software (excluding
commercial off-the-shelf software), and (e) all
confidential and proprietary information and
know-how.
"Knowledge of Buyer" shall mean, with respect to Lucid, the knowledge,
after due inquiry, of those Persons set forth in
Section 1.1(b) of the Buyer Disclosure Letter, and
with respect to Newco, the knowledge, after due
inquiry, of those Persons set forth in Section
1.1(c) of the Buyer Disclosure Letter.
"Knowledge of Seller" shall mean the knowledge, after due inquiry, of
those Persons set forth in Section 1.1(b) of the
Seller Disclosure Letter.
"Liabilities" shall mean any and all debts, liabilities,
commitments and obligations, whether or not fixed,
contingent or absolute, matured or unmatured,
liquidated or unliquidated, accrued or unaccrued,
known or unknown, whether or not required by GAAP to
be reflected in financial statements or disclosed in
the notes thereto.
"Liens" shall mean any mortgage, pledge, lien (statutory or
otherwise and including, without limitation,
environmental, ERISA and tax liens), security
interest, easement, right of way, limitation,
encroachment, covenant, claim, restriction, right,
option, conditional sale or other title retention
agreement, charge or encumbrance of any kind or
nature (except for any restrictions arising under
any applicable securities laws).
"Material Adverse Effect" shall mean actions, circumstances or omissions that
have an effect, individually or in the aggregate,
that is materially adverse to (a) the business,
operations, financial condition or assets of the
Entities, taken as a whole or (b) the ability of
Seller to consummate the transactions contemplated
hereby, in each case, other than any effect
resulting from, relating to or arising out of: (i)
the negotiation, execution, announcement of this
Agreement and the transactions contemplated hereby,
including the impact thereof on relationships,
contractual or otherwise, with customers, suppliers,
distributors, partners, joint owners or venturers
and employees, (ii) any action taken by Seller, the
Entities, Buyer or any of their respective
representatives or Affiliates required or permitted
to be taken by the terms of this Agreement or
necessary to consummate the transactions
contemplated by this Agreement, (iii) the general
state of the industries in Argentina in which the
Entities operate (including (A) pricing levels, (B)
changes in the national, regional or local wholesale
or retail markets for
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natural gas or electricity in Argentina, (C) changes
in the national, regional or local natural gas
pipeline systems in Argentina, (D) changes in the
Argentine national, regional or local markets for
the distribution of electricity, (E) rules,
regulations or decisions of Governmental Authorities
or the courts affecting the natural gas transmission
or independent power production industries in
Argentina as a whole and (F) any condition described
in the Seller Disclosure Letter, (iv) general legal,
regulatory, political, business, economic, capital
market and financial market conditions (including
prevailing interest rate levels), or conditions
otherwise generally affecting the industries in
which the Entities operate, (v) any change in law,
rule or regulation or GAAP or interpretations
thereof applicable to the Entities, Seller or Buyer,
(vi) acts of God, national or international
political or social conditions or (vii) general
economic conditions in Argentina; provided, that,
for purposes of determining a "Material Adverse
Effect", any effect on the business, financial
conditions or assets of the business of any Person
shall include only the portion of such effect
attributable to the ownership interests of the
Entities and their Affiliates and shall exclude any
portion of such effect attributable to the ownership
interest of any third party in such Person.
"Negative Antitrust shall mean a resolution by the Republic of Argentina
Decision" Secretariat of Internal Trade, or any agency or
tribunal that may replace it in the future or that
may be declared by a res judicata judgment to be
empowered to issue a final decision on the
Acquisition, either prohibiting the Acquisition or
conditioning it to the fulfilment of any unduly
burdensome undertakings, in each case, exclusively
based on the Antitrust Law.
"Operating" shall mean CMS Operating S.R.L.
"Ownership Percentage" shall mean, with respect to any Subsidiary, the
percentage of the equity represented by securities
or ownership interests, or, in the case of a
partnership, the percentage of the profits and
losses of such partnership, owned directly or
indirectly by Seller as of the date hereof.
"Pension Plans" shall mean all Plans providing pensions,
superannuation benefits or retirement savings,
including pension plans, top up pensions or
supplemental pensions.
"Permitted Liens" shall mean (a) zoning, planning and building codes
and other
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applicable laws regulating the use, development and
occupancy of real property and permits, consents and
rules under such laws; (b) encumbrances, easements,
rights-of-way, covenants, conditions, restrictions
and other matters affecting title to real property
which do not materially detract from the value of
such real property or materially restrict the use of
such real property; (c) leases and subleases of real
property; (d) all easements, encumbrances or other
matters which are necessary for utilities and other
similar services on real property; (e) Liens to
secure Indebtedness reflected on the Financial
Statements or Indebtedness incurred in the ordinary
course of business, consistent with past practice,
after the date thereof, (f) Liens for Taxes and
other governmental levies not yet due and payable
or, if due, (i) not delinquent or (ii) being
contested in good faith by appropriate proceedings
during which collection or enforcement against the
property is stayed and with respect to which
adequate reserves have been established and are
being maintained to the extent required by GAAP, (g)
mechanics', workmen's, repairmen's, materialmen's,
warehousemen's, carriers' or other Liens, including
all statutory Liens, arising or incurred in the
ordinary course of business, (h) original purchase
price conditional sales contracts and equipment
leases with third parties entered into in the
ordinary course of business, (i) Liens that do not
materially interfere with or materially affect the
value or use of the respective underlying asset to
which such Liens relate, and (j) Liens which are
reflected in any Material Contract.
"Person" shall mean any natural person, corporation, company,
general partnership, limited partnership, limited
liability partnership, joint venture,
proprietorship, limited liability company, or other
entity or business organization or vehicle, trust,
unincorporated organization or Governmental
Authority or any department or agency thereof.
"Representatives" shall mean accountants, counsel or representatives.
"Seller Disclosure shall mean the Seller Disclosure Letter delivered to
Letter" Buyer concurrently with this Agreement, which is an
integral part of this Agreement.
"Subsidiary" of any entity means, at any date, any Person (a) the
accounts of which would be consolidated with and
into those of the applicable Person in such Person's
consolidated financial statements if such financial
statements were prepared in accordance with GAAP as
of such date or (b) of which
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securities or other ownership interests representing
more than fifty percent (50%) of the equity or more
than fifty percent (50%) of the ordinary voting
power or, in the case of a partnership, more than
fifty percent (50%) of the general partnership
interests or more than fifty percent (50%) of the
profits or losses of which are, as of such date,
owned, controlled or held, directly or indirectly by
the applicable Person or one or more subsidiaries of
such Person.
"Tax Return" shall mean any report, return, declaration, or other
information required to be supplied to a
Governmental Authority in connection with Taxes
including any claim for refund or amended return.
"Taxes" shall mean all taxes, levies or other like
assessments, including income, gross receipts,
excise, value added, real or personal property,
withholding, asset, sales, use, license, payroll,
social security (including payments and
contributions to pension funds) transaction,
capital, business, corporation, employment, net
worth and franchise taxes, or other governmental
taxes of any kind whatsoever imposed by or payable
to any U.S. or foreign, federal, state, provincial
or local taxing authority, whether computed on a
separate, consolidated, unitary, combined or any
other basis; and whether imposed as transferee,
successor, by contract or otherwise; in each
instance such term shall include any interest,
penalties or additions to tax attributable to any
such Tax.
"TGM" shall mean Transportadora de Gas del Mercosur S.A.
"US FCPA" shall mean the United States Foreign Corrupt
Practices Act of 1977, as amended.
ARTICLE II
SALE AND PURCHASE
Section 2.1 Agreement to Sell and Purchase.
(a) In accordance with the terms of this Agreement and
simultaneously with the payment of the Purchase Price in accordance with
Section 2.1(b) of this Agreement, (i) Buyer shall purchase, acquire and
accept from Seller, and Seller shall sell, convey, assign, transfer and
deliver to Buyer, the Equity Interests, free and clear of all Liens, and
(ii) Buyer shall purchase and assume from Seller, and Seller shall sell and
assign to Buyer, the Assumed Indebtedness, free and clear of all Liens (the
"Acquisition").
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(b) As of the date hereof, Buyer shall pay to Seller, in
consideration for (i) the purchase of the Equity Interests pursuant to
Section 2.1(a)(i) and (ii) the assignment and assumption of the Assumed
Indebtedness pursuant to section 2.1(a)(ii), an amount in cash equal to
$125,000,000 less the amount paid to CMS Generation Co. under the
Hidroinvest SPA (the "Purchase Price"), by wire transfer of same day funds
to an account or accounts and in such amounts as designated by Seller.
Section 2.2 Deliveries by the Parties.
(a) Simultaneously with the confirmation of receipt of the
Purchase Price by Seller's bank, Seller shall deliver or cause to be
delivered, in form and substance satisfactory to Buyer (unless previously
delivered), the following items:
(i) the appropriate notices of transfer of the Direct Equity
Interests signed by the holders of record and addressed to each of the
relevant Entities whose Equity Interests are being transferred;
(ii) certified copies of all resolutions of the boards of
directors of Seller approving the entering into and completion of the
transactions contemplated by this Agreement;
(iii) certified copies of the registration of Seller at the
Superintendency of Corporations (Inspeccion General de Justicia), in
accordance with Section 123 of Argentine Corporate Act No 19.550;
(iv) except for TGM, (x) all organizational documents
(estatutos); (y) all books of minutes of meeting and resolutions of
shareholders, quotaholders, directors and managers (and any committees);
and (z) the share certificate books (libro de registro de accionistas), if
applicable;
(v) except for the resignations of those officers listed in
Section 2.2(a)(v) of the Seller Disclosure Letter, written resignations,
effective as of the date hereof, from each of the regular and alternate
directors, and of the regular and alternate managers, as the case may be,
and, when applicable, and statutory supervisors (sindicos) of any of the
Entities appointed by Seller;
(vi) written evidence of the signing by the directors and
statutory auditors (sindicos) appointed by Seller of the minutes which are
pending in the shareholders' and board of directors' minutes books of the
Entities;
(vii) official reports stating that CMS International Ventures
LLC and CMS Generation Holdings Company are not subject to any restriction
to sell and transfer their interests in Operating and Generation, in
compliance with Section 127 of General Resolution 7/2005 passed by the
Superintendency of Corporations (Inspeccion General de Justicia). The
above-mentioned reports shall be granted by the competent authority with
jurisdiction in the City of Buenos Aires and should be dated up to ten (10)
days prior to the date hereof;
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(viii) officer's certificates of CMS International Ventures, LLC
and CMS Generation Holdings Company stating that, according to the laws of
the State of Michigan, United States of America, it is not possible to
comply with Section 127, 4th paragraph of General Resolution 7/2005 passed
by the Superintendency of Corporations (Inspeccion General de Justicia)
based on the fact that there is no governmental authority that can issue
such certificate;
(ix) duly executed instruments of transfer, assignment and
assumption of the Assumed Indebtedness, and all underlying documentation
evidencing the rights and obligations of the creditors and obligors
thereunder (the "Assumed Indebtedness Documents"), in form and substance
acceptable to Buyer; and
(x) a certificate of incumbency and authority of Seller dated the
date hereof.
(b) Simultaneously with the confirmation of receipt of the
Purchase Price by Seller's bank, Seller and Buyer shall enter into the
relevant Assignment of Quotas Agreements substantially in the form of the
Agreement attached hereto as Exhibit B to perfect the transfer of Seller's
quotas in Operating and in Generation to Buyer.
(c) As of the date hereof, Buyer shall deliver or cause to be
delivered to Seller (unless previously delivered), the following items:
(i) the Purchase Price by wire transfer of same day funds to an
account or accounts and in such amounts as designated by Seller in writing;
and
(ii) a certificate of incumbency and authority of Buyer dated the
date hereof.
(d) As of the date hereof, Seller shall cause the board of
directors or managers of the Entities, as the case may be, to call
shareholders' or quotaholders' meetings (as applicable) of the Entities
wholly owned, directly or indirectly, by Seller to be held on the date
hereof and shall cause such shareholders or quotaholders meetings to (i)
accept the resignation of the regular and alternate directors and of the
regular and alternate managers, as the case may be, and, when applicable,
statutory supervisors (sindicos) originally nominated by Seller or its
Affiliates and, if applicable, replace the officers appointed by Seller who
have not resigned to their offices as of the date hereof; (ii) approve the
performance of the resigning directors and managers, as the case may be,
and statutory supervisors (sindicos); (iii) appoint regular and alternate
directors and regular and alternate managers, as the case may be, and, when
applicable, statutory supervisors (sindicos) designated by Buyer; (iv)
change, pursuant to Buyer's instructions, the Entities' legal address (sede
social) and corporate name (denominacion social) in order to eliminate
references to "CMS"; (v) amend the requisite organizational documents to
authorize each of the Entities to guarantee the debt (actual or contingent)
of any Person (including any Person directly or indirectly
11
controlling, controlled by, under common control with or otherwise
affiliated to, such Entities) and to pledge, mortgage or otherwise encumber
(including, without limitation, by way of trust assignment or security
assignment) any of its present or future assets of any kind as security for
the debt (actual or contingent) of any Person (including any person
directly or indirectly controlling, controlled by, under common control
with or otherwise affiliated to, such Entities); and (vi) amend the by-laws
of each of Operating and Generation in order to eliminate the reference to
the identity of each quotaholders from the articles of the by-laws.
(e) Simultaneously with the confirmation of receipt of the
Purchase Price by Seller's bank, Seller shall cause the board of directors
of CTM to convey (i) a special class "A" shareholders' meeting to be held
on the date hereof to (A) accept the resignation of the regular and
alternate directors and statutory supervisors (sindicos) nominated by class
"A" shareholders; and (B) appoint regular and alternate directors and
statutory supervisors (sindicos) designated by class "A" shareholders; (ii)
a special class "B" shareholders' meeting to be promptly held after the
date hereof to (A) accept the resignation of the regular and alternate
directors and statutory supervisors (sindicos) nominated by class "B"
shareholders and (B) appoint regular and alternate directors and statutory
supervisors (sindicos) designated by class "B" shareholders; and (iii) an
ordinary shareholders meeting to be promptly held after the date hereof in
order to consider and approve the performance of the resigning officers.
Buyer undertakes to approve the performance of the regular and alternate
directors and statutory supervisors (sindicos) appointed by class "A" and
class "B" shareholders in the relevant general shareholders' meeting of
CTM.
(f) Simultaneously with the confirmation of receipt of the
Purchase Price by Seller's bank, Seller shall cause the members of the
board of directors of TGM appointed by Class "C" shareholders to request a
calling of a board of directors' meeting in order to convey (i) a special
Class "C" shareholders' meeting to be promptly held after the date hereof
to (A) accept the resignation of the regular and alternate directors
nominated by Class "C" shareholders and (B) appoint regular and alternate
directors designated by Class "C" shareholders; and (ii) an ordinary
shareholders' meeting to be promptly held after the date hereof in order to
consider and approve the performance of the resigning officers. Buyer
undertakes to approve the performance of the regular and alternate
directors appointed by Seller in the relevant general shareholders' meeting
of TGM.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
Section 3.1 Corporate Organization; Qualification. Each Seller is duly
organized and validly existing and in good standing under the Laws of its
governing jurisdiction. Each of the Entities is duly organized and validly
existing and in good standing under the Laws of its governing jurisdiction
and each (a) has the requisite power
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to carry on its businesses as currently conducted and (b) is duly qualified
to do business in each of the jurisdictions in which the ownership,
operation or leasing of its properties or assets or the conduct of its
business requires it to be so qualified, except where the failure to be so
qualified would not have a Material Adverse Effect.
Section 3.2 Authority Relative to this Agreement.
Each Seller has full corporate power and authority to execute and
deliver this Agreement and the other agreements, documents and instruments
to be executed and delivered by it in connection with this Agreement and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the other agreements,
documents and instruments to be executed and delivered in connection with
this Agreement and the consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by all the necessary
action on the part of each Seller (as applicable), and no other corporate
or other proceedings on the part of Seller are necessary to authorize this
Agreement and the other agreements, documents and instruments to be
executed and delivered in connection with this Agreement or to consummate
the transactions contemplated hereby and thereby. This Agreement and the
other agreements, documents and instruments to be executed and delivered in
connection with this Agreement have been duly and validly executed and
delivered by Seller and assuming that this Agreement and the other
agreements, documents and instruments to be executed and delivered in
connection with this Agreement constitute legal, valid and binding
agreements of the Buyer are enforceable against Seller in accordance with
their respective terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally or
general principles of equity.
Section 3.3 Equity Interests; Assumed Indebtedness.
(a) Except as set forth in Section 3.3(a) of the Seller
Disclosure Letter, the Equity Interests are duly authorized, validly issued
and fully paid and were not issued in violation of any preemptive rights.
Except as set forth in Section 3.3(a) of the Seller Disclosure Letter, (i)
there are no equity interests of the Entities authorized, issued or
outstanding or reserved for any purpose and (ii) there are no (A) existing
options, warrants, calls, preemptive rights, subscriptions or other rights,
agreements, arrangements or commitments of any character, relating to the
Entities, obligating Seller or any of its Affiliates to issue, transfer or
sell, or cause to be issued, transferred or sold, any additional equity
interest in the Entities, (B) outstanding securities of Seller or its
Affiliates that are convertible into or exchangeable or exercisable for any
equity interest in the Entities, (C) options, warrants or other rights to
purchase from Seller or its Affiliates any such convertible or exchangeable
securities or (D) outstanding Liabilities to pay any additional amounts on
the equity interests or in respect of the capital of the Entities,
including any Liabilities in respect of obligations to make capital
contributions to any of the Entities, or (E) other than this Agreement,
contracts, agreements or arrangements of any kind relating to the issuance
of any equity
13
interest in the Entities, or any such options, warrants or rights, pursuant
to which, in any of the foregoing cases, Seller or its Affiliates are
subject or bound.
(b) Except as set forth in Section 3.3(b) of the Seller
Disclosure Letter, Seller owns all of the issued and outstanding Equity
Interests and has good, valid and marketable title to the Equity Interests,
free and clear of all Liens or other defects in title, and the Equity
Interests have not been pledged or assigned to any Person. The Equity
Interests owned by Seller are not subject to any restrictions on
transferability other than those imposed by this Agreement and by
applicable securities laws. Following the transfer of the Equity Interests
to Buyer, Buyer will own all of the issued and outstanding Equity Interests
and will have good and valid title to the Equity Interests, free and clear
of all Liens.
(c) Section 3.3(c) of the Seller Disclosure Letter sets forth, as
of the date hereof, a list of each of the Entities, including its name, its
jurisdiction of organization, its authorized and outstanding capital stock
(or equivalent equity interest) and the percentage of its outstanding
capital stock (or quota) owned by the Seller and/or the Entities, as
applicable. Except as set forth in Section 3.3(c) of the Seller Disclosure
Letter, the shares of outstanding capital stock or other equity interests
or quotas, as the case may be, of the Entities are duly authorized, validly
issued, fully paid and nonassessable, and are held of record by Seller and
the Entities as set forth in Section 3.3(c) of the Seller Disclosure
Letter, free and clear of Liens. Except as set forth in Section 3.3(c) of
the Seller Disclosure Letter, there are no (i) existing options, warrants,
calls, preemptive rights, subscriptions or other rights, agreements,
arrangements or commitments of any character, relating to the capital stock
or partnership interest of the Entities, obligating Seller, the Entities,
or any of their Affiliates to issue, transfer or sell, or cause to be
issued, transferred or sold, any equity interest in any of the Entities,
(ii) outstanding securities of Seller, the Entities, or their Affiliates
that are convertible into or exchangeable or exercisable for any of capital
stock or partnership interest of any of the Entities, (iii) options,
warrants or other rights to purchase from Seller, the Entities, or their
Affiliates any such convertible or exchangeable securities or (iv) other
than this Agreement, contracts, agreements or arrangements of any kind
relating to the issuance of any equity interest of any of the Entities, or
any such options, warrants or rights, pursuant to which, in any of the
foregoing cases, Seller, any of the Entities or its Affiliates are subject
or bound.
(d) Except as set forth in Section 3.3(d) of the Seller
Disclosure Letter, there are no Persons (other than an Entity) in which any
of the Entities owns any equity or other similar interest.
(e) Seller represents and warrants that it is the legal and
beneficial owners of the Assumed Indebtedness, free and clear of any Lien.
Seller has delivered to Buyer true and complete copies of all Assumed
Indebtedness Documents. Seller further represents and warrants that any and
all representations and warranties given by Seller or any of its Affiliates
in the Assumed Indebtedness Documents are true and correct in all material
respects.
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Section 3.4 Consents and Approvals.
Except as otherwise provided in Section 5.1(a) of this Agreement or
as set forth in Section 3.4 of the Seller Disclosure Letter, Seller
requires no consent, approval or authorization of, or filing, registration
or qualification with, any Governmental Authority, or any other Person as a
condition to the execution and delivery of this Agreement or the
performance of the obligations hereunder, except where the failure to
obtain such consent, approval or authorization of, or filing of,
registration or qualification with, any Governmental Authority, or any
other Person would not have a Material Adverse Effect.
Section 3.5 No Conflict or Violation.
Except as set forth in Section 3.5 of the Seller Disclosure Letter,
the execution, delivery and performance by the Seller of this Agreement
does not:
(a) violate or conflict with any provision of the organizational
documents or bylaws of Seller or any of the Entities;
(b) violate any applicable provision of a law, statute, judgment,
order, writ, injunction, decree, award, rule or regulation of any
Governmental Authority, except where such violation would not have a
Material Adverse Effect; or
(c) violate, result in a breach of, constitute (with due notice
or lapse of time or both) a default or cause any obligation, penalty or
premium to arise or accrue under any Material Contract, lease, loan,
mortgage, security agreement, trust indenture or other material agreement
or instrument to which Seller or any of the Entities is a party or by which
any of them is bound or to which any of their respective properties or
assets is subject, except for violations, breaches or defaults that would
not have a Material Adverse Effect.
(d) result in the imposition or creation of any material Lien
upon or with respect to any of the properties or assets owned or used by
the Entities; or
(e) result in the cancellation, modification, revocation or
suspension of any material Permits or in the failure to renew any material
Permit.
Section 3.6 Financial Information.
(a) Prior to the date hereof, Seller has made available to Buyer
or its representatives the audited combined balance sheet of each of the
Entities as of December 31, 2005, and the audited combined statements of
income and cash flows of each of the Entities for each of the two years
ended December 31, 2004 and 2005, together with the related notes thereto,
accompanied by the reports thereon of Seller's accountants, as well as such
audited combined balance sheet and statements of income and cash flows of
each of the Entities (except Generation and TGM) as of and for the two
years ended December 31, 2005 and 2006, (collectively, the "Financial
Statements").
15
(b) The Financial Statements were prepared in accordance with
GAAP, consistently applied throughout the periods indicated and fairly
present, in all material respects, the combined financial position, results
of operations and cash flows of each of the Entities, as of the dates
thereof and for the periods covered thereby, in each case, except as
disclosed in the Financial Statements (or the notes thereto) or in Section
3.6(b) of the Seller Disclosure Letter.
(c) As reflected in the Financial Statements as of December 31,
2006, there was approximately $50,000,000 of unencumbered cash and cash
equivalents held by the Entities (excluding TGM and Generation).
(d) As the date hereof, $26,900,000 collected by Generation under
the Hidroinvest SPA as purchase price of the Hidroinvest S.A. shares sold
by Generation thereunder are held in the an account of Operating for the
benefit of Generation.
Section 3.7 Contracts.
(a) Section 3.7(a) of the Seller Disclosure Letter sets forth a
list of each material contract, lease or similar agreement or instrument to
which any of the Entities (except for TGM) is a party, other than (i) any
purchase or sale orders arising in the ordinary course of business, and
(ii) any contract involving the payment or receipt of less than $350,000 in
any one year (each contract set forth in Section 3.7(a) of the Seller
Disclosure Letter being referred to herein as a "Material Contract").
(b) Section 3.7(b) of the Seller Disclosure Letter sets forth a
list of each contract that any of the Entities has with Seller or with any
Affiliate of Seller that is not one of the Entities.
(c) Except as set forth in Section 3.7(c) of the Seller
Disclosure Letter, each Material Contract is a valid and binding agreement
of the Entities party thereto and, to the Knowledge of Seller, is in full
force and effect.
(d) Except as set forth in Section 3.7(d) of the Seller
Disclosure Letter, there is no default by Seller or any Entity under any
Material Contract to which it is a party, and Seller has no Knowledge of
any default by any counterparties under any Material Contract, other than
defaults which have been cured or waived and which would not have a
Material Adverse Effect.
Section 3.8 Compliance with Law.
Except for Environmental Laws and Tax laws, which are the subject of
Section 3.14 and Section 3.15, respectively, and except as set forth in
Section 3.8 of the Seller Disclosure Letter, the Entities are in compliance
with all federal, state, local or foreign laws, statutes, ordinances,
rules, regulations, judgments, orders, writs, injunctions or decrees of any
Governmental Authority applicable to their respective properties, assets
and businesses except where such noncompliance would not have a Material
Adverse Effect.
16
Section 3.9 Permits.
Except as set forth in Section 3.9 of the Seller Disclosure Letter,
Seller and the Entities have all permits, licenses, certificates of
authority, orders and approvals of, and have made all filings applications
and registrations with Governmental Authorities necessary for the conduct
of their respective business operations as presently conducted
(collectively, the "Permits"), except for those Permits the absence of
which would not, individually or in the aggregate, have a Material Adverse
Effect.
Section 3.10 Litigation.
Except as identified in Section 3.10 of the Seller Disclosure Letter,
there are no Actions before any Governmental Authority or arbitration panel
or tribunal pending or in progress or, to the Knowledge of Seller,
threatened, against Seller, the Entities, or any of their respective
Affiliates or any executive officer or director thereof relating to the
Equity Interests or Assumed Indebtedness or the respective assets or
businesses of the Entities, except as would not, individually or in the
aggregate, have a Material Adverse Effect. None of Seller, the Entities, or
any of their respective Affiliates are subject to any outstanding judgment,
order, writ, injunction, decree or award entered in an Action to which such
Person was a named party relating to the Equity Interests or Assumed
Indebtedness or the respective assets or businesses of such Persons, except
as would not, individually or in the aggregate, have a Material Adverse
Effect.
Section 3.11 Employee Matters.
(a) Section 3.11(a) of the Seller Disclosure Letter lists all
material employee benefit and compensation plans and contracts and deferred
compensation, stock option, stock purchase, stock appreciation rights,
stock-based incentive bonus, severance, employment, change in control,
vacation or fringe benefit programs, policies, agreements, arrangements or
plans maintained by the Entities for the benefit of any of their current or
former Employees (collectively, the "Plans"). True and complete copies of
all material Plans, and all amendments thereto have been provided or made
available to Buyer or its representatives.
(b) To the Knowledge of Seller:
(i) each Plan is registered, funded, administered and invested,
as applicable, in substantial compliance with the current terms of such
Plan, and in accordance with Applicable Laws;
(ii) for any Plan where contributions are required to be made in
accordance with an actuarial valuation report, all minimum contributions
required to be made to such Plan have been made or will be timely made in
accordance with the actuarial report most recently filed with the
applicable Governmental Entity;
(iii) for any Plan where contributions are not required to be
made in accordance with an actuarial valuation report, all contributions
required to be made to such Plan have been made;
17
(iv) no event has occurred respecting any qualified Plan that
would result in the revocation of the registration of such Plan or could
otherwise reasonably be expected to adversely affect the tax status of any
such Plan; and
(v) each of the Entities have made all contributions to the
Pension Plans to which the Entities are required to make contributions.
(c) With respect to each Plan, (i) no material Action is pending
or, to the Knowledge of Seller, threatened and (ii) to the Knowledge of
Seller no facts or circumstances exist that would give rise to any material
Actions.
(d) Except as set forth in Section 3.11(d) of the Seller
Disclosure Letter, in the three (3) years prior to the date hereof there
have been no partial or full wind-ups declared in respect of any Pension
Plan.
(e) Except as set forth in Section 3.11(e) of the Seller
Disclosure Letter, none of Seller or the Entities has made any written
promise to create any Plan or to improve or change the benefits provided
under any Plan.
(f) Except as set forth in Section 3.11(f) of the Seller
Disclosure Letter, the consummation of the transactions contemplated hereby
will not (i) cause any of the Entities to be obliged to pay to any current
or former employee or officer of any of the Entities any termination pay,
severance pay, unemployment compensation or any other payment; or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due to any such employee or officer.
Section 3.12 Labor Relations.
Except as set forth in Section 3.12 of the Seller Disclosure Letter,
(i) none of the Entities is a party to any labor or collective bargaining
agreements, and there are no labor or collective bargaining agreements
which pertain to any employees of the Entities, (ii) within the preceding
eighteen (18) months, there have been no representation or certification
proceedings, or petitions seeking a representation proceeding, pending or,
to the Knowledge of Seller, threatened in writing to be brought or filed
with any other labor relations tribunal or authority with respect to the
Entities and (iii) within the preceding twelve (12) months, to the
Knowledge of Seller, there have been no organizing activities involving the
Entities with respect to any group of their respective employees; (iv)
there are no pending or, to the Knowledge of Seller, threatened strikes,
work stoppages, slowdowns or lockouts against the Entities, or their
respective Employees or involving any of the Entities' facilities; and (v)
there are no pending unfair employment practice charges, grievances or
complaints filed or, to the Knowledge of Seller, threatened to be filed
with any Governmental Authority based on the employment or termination of
employment by the Entities of any employee.
Section 3.13 Intellectual Property.
(a) Subject to the provisions of Section 5.6 of this Agreement,
Section 3.13(a) of the Seller Disclosure Letter sets forth a list of all
material Argentine
18
and foreign: (i) patents and patent applications; (ii) trademark
registrations and applications; and (iii) copyright registrations and
applications, owned by the Entities. The foregoing schedules set forth at
Section 3.13(a) of the Seller Disclosure Letter are complete and accurate
in all material respects. To the Knowledge of Seller, the Entities have
taken all steps necessary to maintain these rights and have not taken any
action that would constitute abandonment thereof, including, but not
limited to, making any and all necessary filings with any governmental
authority, administrative office, or other entity, and paying any and all
necessary fees.
(b) Except as set forth on Section 3.13(b) of the Seller
Disclosure Letter or as would not have a Material Adverse Effect:
(i) the foregoing registrations are in effect and subsisting;
(ii) each of the Entities owns all of the rights and interests in
and has title to, or has validly licensed to it all of the Intellectual
Property used by such Person;
(iii) the Entities are the owners or authorized users of all the
Intellectual Property required to operate their respective businesses as
currently operated, free and clear of all Liens;
(iv) no Intellectual Property owned or used by the Entities is
subject to any outstanding judgment, injunction, order, decree or agreement
restricting the use, licensing or sublicensing thereof by any of such
Persons. There are no claims or actions pending or, to the Knowledge of
Seller, threatened against any of the Entities by any Person arising out of
or relating to any Intellectual Property owned or used by such Persons;
(v) the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not breach,
violate or conflict with any instrument or agreement governing any
Intellectual Property owned or used by the Entities, and will not cause the
forfeiture or termination or give rise to a right of forfeiture or
termination of any Intellectual Property owned or used by such Entities,
except for the forfeiture or termination of such Intellectual Property as
would not materially and adversely affect business, operations, financial
condition or assets of the Entities, taken as a whole; and
(vi) To the Knowledge of Seller, no third party is infringing
upon, misappropriating, or otherwise violating rights to the Intellectual
Property owned by the Entities.
Section 3.14 Representations with Respect to Environmental Matters.
To the Knowledge of Seller, and except as set forth in Section 3.14 of
the Seller Disclosure Letter or as would not, individually or in the
aggregate, have a Material Adverse Effect:
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(a) The Entities are in compliance with all applicable
Environmental Laws;
(b) The Entities have all of the Environmental Permits required
in order to conduct their operations in accordance with applicable laws or,
where such Environmental Permits have expired, have applied for a renewal
of such Environmental Permits in a timely fashion;
(c) The Entities are in compliance with the Environmental Permits
issued to them;
(d) There is no pending or threatened written Claim, lawsuit, or
administrative proceeding against the Entities under or pursuant to any
Environmental Law;
(e) None of the Entities is a party or subject to any
administrative or judicial order, decree or other agreement with a
Governmental Authority under or pursuant to any applicable Environmental
Law;
(f) None of the Entities has received written notice from any
third party, including any Governmental Authority, alleging that any of the
Entities has been or is in violation or potentially in violation of any
applicable Environmental Law or otherwise may be liable under any
applicable Environmental Law; and
(g) With respect to the real property that is currently owned or
leased by the Entities, there have been no spills or discharges of
Hazardous Substances on or underneath any such real property.
The representations and warranties set forth in this Section 3.14 are
Seller's sole and exclusive representations and warranties related to
environmental matters.
Section 3.15 Tax Matters.
Except for matters set forth on Section 3.15 of the Seller Disclosure
Letter, and limited to the Knowledge of Seller with respect to TGM:
(a) Each of the Entities and each consolidated, combined,
unitary, affiliated or aggregate group of which any of the Entities is or
was a member has timely filed all Tax Returns that it was required to file.
All such returns are correct and complete in all material respects. All
Taxes owed by any of the Entities have been paid, whether or not shown as
due on any such filed Tax Returns. None of the Entities currently is the
beneficiary of any extension of time within which to file any Tax Return.
No claim or assertion has ever been made by a taxing authority in a
jurisdiction where any of the Entities does not file Tax Returns that such
Entity is or may be subject to taxation by that jurisdiction. There are no
Tax liens on the assets of any of the Entities, other than Permitted Liens.
20
(b) The charges, accruals and reserves for Taxes reflected on the
December 31, 2006 Financial Statements are adequate to cover all
liabilities for Taxes of the Entities (except TGM), through the date of
such Financial Statements. The charges, accruals and reserves for Taxes for
TGM reflected on the December 31, 2005 Financial Statements are adequate to
cover all liabilities for Taxes of TGM through the date of such Financial
Statements. Since December 31, 2006, the Entities have not incurred any
liability for Taxes relating to transactions outside the ordinary course of
business or otherwise inconsistent with past custom and practice.
(c) Each of the Entities has withheld and paid all material Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, former employee, independent contractor, creditor,
stockholder, affiliate, customer, supplier or other third party.
(d) There is no dispute or claim concerning any Tax liability of
an Entity either claimed or raised by any taxing authority in writing.
Section 3.15(d) of the Seller Disclosure Letter lists all United States
federal, state, local and non-United States Tax Returns with respect to
Taxes determined by reference to net income filed with respect to each
Entity for any taxable period ended on or after January 1, 2002, indicates
those Tax Returns that have been audited and indicates those Tax Returns
that currently are the subject of audit. No other Tax audits or other
administrative or judicial Tax proceedings with respect to Taxes of the
Entities are pending or are being conducted. No Entity has waived any
statute of limitations in respect of Taxes or agreed to any extension
thereof that is currently in effect.
(e) Section 3.15 of the Seller Disclosure Letter sets out the
classification for United States federal income tax purposes of each of the
Entities.
(f) Each of the Entities that is subject to VAT (or sales Tax) is
registered for VAT, is a taxable person and has complied in all material
respects with the requirements of the Laws relating to VAT. All VAT returns
and payments due in respect of the VAT group of which the Entities are
members have been made.
(g) To the Knowledge of Seller, all stamp, transfer and
registration Taxes have been paid in respect of documents in the
enforcement of which each of the Entities is interested.
(h) None of the Entities has any liability for the Taxes of any
person other than itself under Section 1.1502-6 of the Treasury Regulations
(or any similar provision of state, local or foreign law), as a transferee
or successor, by contract or otherwise. No Entity has extended or waived
the application of any statute of limitations of any jurisdiction regarding
the assessment or collection of any Tax. None of the Entities is a party to
any Tax sharing or Tax indemnity agreements or similar arrangements
pursuant to which Buyer or its Affiliates would have any obligation to make
payments after the date hereof or surrender or share any Tax attributes or
benefits.
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(i) None of the Entities has made an election under Section
897(i) of the code to be treated as a United States corporation for
purposes of Section 897, 1445 and 6039C of the Code.
(j) None of the Entities (i) has an investment in U.S. property
within the meaning of Section 956 of the Code, (ii) is engaged in a United
States trade or business for U.S. federal income Tax purposes, or (iii) is
a passive foreign investment company within the meaning of the Code; and
(k) None of the Entities is a "surrogate foreign corporation"
within the meaning of Section 7874(a)(2)(B) of the Code or is treated as a
U.S. corporation under Section 7874(b) of the Code.
Section 3.16 Insurance.
(a) Section 3.16(a) of the Seller Disclosure Letter sets forth a
true and complete list of all current policies of all material property and
casualty insurance, insuring the properties, assets, employees and/or
operations of the Entities (collectively, the "Policies"). To the Knowledge
of Seller, all premiums payable under such Policies have been paid in a
timely manner and the Entities, as applicable, have complied in all
material respects with the terms and conditions of all such Policies.
(b) As of the date hereof, Seller has not received any written
notification of the failure of any of the Policies to be in full force and
effect. To the Knowledge of Seller, none of the Entities is in default
under any provision of the Policies, and except as set forth in Section
3.16(b) of the Seller Disclosure Letter, there is no claim by the Entities
or any other Person pending under any of the Policies as to which coverage
has been denied or disputed by the underwriters or issuers thereof.
Section 3.17 Regulatory Matters.
Seller is not a "public utility" as such term is defined in the FPA,
as amended, or the regulations of the FERC promulgated thereunder. No
Entity is a "public utility" as such term is defined in the FPA or the
regulations of the FERC promulgated thereunder. Each Entity that directly
owns or operates facilities used for the generation, transmission, or
distribution of electric energy for sale or the distribution at retail of
natural or manufactured gas for heat, light, or power is a FUCO, or, to the
extent that an Entity's activities are limited to the business of owning or
operating electric generating facilities and selling electricity at
wholesale such Entity is either an EWG or FUCO.
Section 3.18 Absence of Certain Changes or Events.
(a) Except as set forth in Section 3.18(a) of the Seller
Disclosure Letter, each Entity has conducted its respective businesses in
the ordinary course of business, consistent with past practice in all
material respects, since the date of the latest Financial Statements for
such Entity as described in Section 3.6.
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(b) Except as set forth in Section 3.18(b) of the Seller
Disclosure Letter, or in the Financial Statements, and the notes thereto,
there has not been with respect to each of the Entities any event or
development or change which has resulted or would reasonably be likely to
result in a Material Adverse Effect.
(c) Section 3.18(c) of the Seller Disclosure Letter sets forth a
true and complete list of the Distributions made by each Entity since the
date of the latest Financial Statements for such Entity as described in
Section 3.6.
(d) Except as set forth in Section 3.18(d) of the Seller
Disclosure Letter, since the date of the latest Financial Statements for
each Entity, such Entity has not:
(i) granted any severance or termination pay to, or entered
into, extended or amended any employment, consulting, severance or other
compensation agreement with, or otherwise increased the compensation or
benefits provided to any of its officers or other employees whose annual
salary base is in excess of $100,000;
(ii) sold, leased, licensed, mortgaged or otherwise disposed
of any properties or assets material to its business having a fair market
value in excess of $100,000 individually or $400,000 in the aggregate,
other than (A) sales made in the ordinary course of business, consistent
with past practice; or (B) sales of obsolete or other assets not presently
utilized in its business;
(iii) made any capital expenditure in excess of 10% of the
annual budgeted capital expenditures;
(iv) paid, repurchased, discharged or satisfied any of its
material Claims, Liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than in the ordinary course of
business, consistent with past practice;
(v) (A) incurred or assumed or guaranteed any long-term
debt, or except in the ordinary course of business consistent with past
practice, incurred or assumed or guaranteed short-term Indebtedness (other
than intercompany Indebtedness) exceeding $100,000 in the aggregate; (B)
modified the terms of any Indebtedness or other liability, other than
modifications of short-term debt in the ordinary course of business,
consistent with past practice; or (C) assumed, guaranteed, endorsed or
otherwise became liable or responsible (whether directly, contingently or
otherwise) for the material obligations of any other Person; or
(vi) authorized any of, or committed or agreed to take any
of, the actions referred to in the paragraphs (i) through (v) above.
(e) Except as set forth in Section 3.18(e) of the Seller
Disclosure Letter, since the date of the latest Financial Statements for
each Entity, such Entity has not incurred any material Tax liability
outside the ordinary course of
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business, made or changed any election for Tax purposes, changed any annual
accounting period for Taxes, filed any amended Tax Return, entered into any
closing agreement for Tax purposes, settled any Tax claim or assessment
relating to any Entity, surrendered any right to claim a refund of Taxes,
consented to any extension or waiver of the limitation period applicable to
any Tax claim or assessment relating to any Entity, or taken any other
action relating to the filing of any Tax Return or the payment of any Tax,
if such election, adoption, change, amendment, agreement, settlement,
surrender, consent or other action would have the effect of increasing the
Tax liability of any Entity for any period ending after the Cut-off or
decreasing any Tax attribute of any Entity existing on the Cut-off.
Section 3.19 Absence of Undisclosed Liabilities.
None of the Entities has any Liabilities (whether absolute, accrued,
contingent or otherwise) except those Liabilities (a) disclosed and
reserved against in the Financial Statements (or notes thereto) as required
by GAAP, (b) set forth in Section 3.19 of the Seller Disclosure Letter, (c)
incurred in the ordinary course of business since the date of the latest
Financial Statements for such Entity as described in Section 3.6 or (d)
which would not result in a Material Adverse Effect.
Section 3.20 Property.
Except as set forth in Section 3.20 of the Seller Disclosure Letter,
each of the Entities has valid title to or leases, free and clear of any
Liens (other than Permitted Liens), all assets used or held for use by each
of the Entities, except for such assets the failure of which to so own or
lease would not, individually or in the aggregate, have a Material Adverse
Effect.
Section 3.21 Brokerage and Finders' Fees.
None of Seller, the Entities, or any of their Affiliates or their
respective stockholders, partners, directors, officers or employees, has
incurred, or will incur any brokerage, finders' or similar fee in
connection with the transactions contemplated by this Agreement.
Section 3.22 Corporate and Accounting Records.
The minute books of the Entities previously made available to Buyer
contain true, complete and accurate records of all meetings and accurately
reflect all other corporate action of their respective stockholders and
board of directors (including committees thereof). Each of the Entities
maintains adequate records which accurately and validly reflect
transactions conducted by such Entity in reasonable detail, and maintains
accounting controls, policies and procedures sufficient to ensure that such
transactions are (a) executed in accordance with its management's general
or specific authorization and (b) recorded in a manner which permits the
preparation of financial statements in accordance with Applicable Law and
applicable regulatory accounting requirements,
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Section 3.23 Affiliated Transactions.
Except as described in Section 3.23 of the Seller Disclosure Letter,
and except for trade payables and receivables arising in the ordinary
course of business consistent with past practices for purchases and sales
of goods or services consistent with past practice, none of the Entities
have been a party over the past twelve (12) months to any material
transaction or agreement with Seller or any Affiliate of Seller (other than
the Entities) and no director or officer of Seller or its Affiliates (other
than the Entities), has, directly or indirectly, any material interest in
any of the assets or properties of the Entities.
Section 3.24 Certain Practices.
None of the Entities or any of their respective Representatives has
corruptly (within the meaning of the US FCPA or any other similar
Applicable Law) or otherwise illegally offered or given, and, to the
Knowledge of Seller, no Person has corruptly (within the meaning of the US
FCPA or any other similar applicable Law) or otherwise illegally offered or
given on behalf of the Entities, anything of value to: (i) any official of
a Governmental Authority, any political party or official thereof, or any
candidate for political office; or (ii) any other Person, in any such case
while knowing, or having reason to know, that all or a portion of such
money or thing of value may be offered, given or promised, directly or
indirectly, to any official or employee of a Governmental Authority, any
political party or official thereof, or candidate for political office for
the purpose of the following: (x) influencing any action or decision of
such Person, in his or her official capacity, including a decision to fail
to perform his or her official function; (y) inducing such Person to use
his or her influence with any Governmental Authority to affect or influence
any act or decision of such Governmental Authority to assist any of the
Entities in obtaining or retaining business for, or with, any Governmental
Authority or to secure an improper advantage; or (z) where such payment
would constitute a bribe, kickback or illegal or improper payment to assist
any of the Entities in obtaining or retaining business for, or with, or
directing business to, any Person or in securing any improper advantage.
There have been no false or fictitious entries made in the books or records
of any of the Entities relating to any illegal payment or secret or
unrecorded fund and none of the Entities has established or maintained a
secret or unrecorded fund. Each Entity keeps books, records and accounts
which in reasonable detail which accurately and fairly reflect the
transactions and dispositions of its assets. Each of the Entities has
devised and maintained a system of internal accounting controls sufficient
to provide reasonable assurances that: (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary (x) to permit preparation of
financial statements in conformity with GAAP or any other criteria
applicable to such statements; and (y) to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences
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Section 3.25 No Other Representations or Warranties.
Except for the representations and warranties contained in this
Article III, none of Seller, the Entities, or any other Person makes any
other express or implied representation or warranty on behalf of Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Each Buyer hereby represents and warrants to Seller as follows:
Section 4.1 Corporate Organization; Qualification.
Such Person (a) is a limited liability company duly organized and
validly existing under the Laws of its jurisdiction of formation, (b) has
the requisite power to carry on its businesses as currently conducted and
(c) is duly qualified to do business in each of the jurisdictions in which
the ownership, operation or leasing of its properties or assets or the
conduct of its business requires it to be so qualified, except where the
failure to be so qualified would not materially and adversely affect the
ability of, or timing for, Buyer to consummate the transactions
contemplated by this Agreement.
Section 4.2 Authority Relative to this Agreement.
Such Person has full corporate or similar power and authority to
execute and deliver this Agreement and the other agreements, documents and
instruments to be executed and delivered by it in connection with this
Agreement and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement and the
other agreements, documents and instruments to be executed and delivered in
connection with this Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by
all the necessary action on the part of such Person and no other
organization or similar proceedings on the part of such Person are
necessary to authorize this Agreement and the other agreements, documents
and instruments to be executed and delivered in connection with this
Agreement or to consummate the transactions contemplated hereby and
thereby. This Agreement and the other agreements, documents and instruments
to be executed and delivered in connection with this Agreement have been
duly and validly executed and delivered by such Person and assuming that
this Agreement and the other agreements, documents and instruments to be
executed and delivered in connection with this Agreement constitute legal,
valid and binding agreements of the Seller are enforceable against such
Person in accordance with their respective terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally or general principles of equity.
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Section 4.3 Consents and Approvals.
Except as otherwise provided in Section 5.1(a) of this Agreement or
as set forth in Section 4.3 of the Buyer Disclosure Letter, such Person
requires no consent, approval or authorization of, or filing, registration
or qualification with, any Governmental Authority, or any other Person as a
condition to the execution and delivery of this Agreement or the
performance of the obligations hereunder, except where the failure to
obtain such consent, approval or authorization of, or filing of,
registration or qualification with, any Governmental Authority, or any
other Person would not materially and adversely affect the ability of, or
timing for, such Person to consummate the transactions contemplated by this
Agreement.
Section 4.4 No Conflict or Violation.
Except as set forth in Section 4.4 of the Buyer Disclosure Letter, the
execution, delivery and performance by such Person of this Agreement does
not:
(a) violate or conflict with any provision of the organizational
documents of such Person;
(b) violate any applicable provision of a law, statute, judgment,
order, writ, injunction, decree, award, rule or regulation of any
Governmental Authority, except where such violation would not materially
and adversely affect the ability of, or timing for, such Person to
consummate the transactions contemplated by this Agreement; or
(c) violate, result in a breach of, constitute (with due notice
or lapse of time or both) a default or cause any material obligation,
penalty or premium to arise or accrue under any material contract, lease,
loan, agreement, mortgage, security agreement, trust indenture or other
material agreement or instrument to which such Person is a party or by
which it is bound or to which any of its properties or assets is subject,
except as would not materially and adversely affect the ability of, or
timing for, such Person to consummate the transactions contemplated by this
Agreement.
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Section 4.5 Litigation.
Except as identified in Section 4.5 of the Buyer Disclosure Letter,
there are no Actions before any Governmental Authority or arbitration panel
or tribunal pending or in progress or, to Knowledge of such Person,
threatened, against such Person, or any of their respective Affiliates or
any executive officer or director thereof, except as would not materially
and adversely affect the ability of, or timing for, such Person to
consummate the transactions contemplated by this Agreement. Neither such
Person nor any of its Affiliates is subject to any outstanding judgment,
order, writ, injunction, decree or award entered in an Action to which such
Person was a named party, except as would not materially and adversely
affect the ability of, or timing for, such Person to consummate the
transactions contemplated by this Agreement.
Section 4.6 Brokerage and Finders' Fees.
Neither such Person nor any of its Affiliates, or their respective
members, stockholders, partners, directors, officers or employees, has
incurred, or will incur any brokerage, finders' or similar fee in
connection with the transactions contemplated by this Agreement.
Section 4.7 Investment Representations.
(a) Such Person is acquiring the Equity Interests to be acquired
by it hereunder for its own account, solely for the purpose of investment
and not with a view to, or for sale in connection with, any distribution
thereof in violation of the federal securities laws or any applicable
foreign or state securities law.
(b) Such Person understands that the acquisition of the Equity
Interests to be acquired by it pursuant to the terms of this Agreement
involves substantial risk. Such Person and its officers have experience as
an investor in securities and equity interests of companies such as the
ones being transferred pursuant to this Agreement and acknowledges that it
can bear the economic risk of its investment and has such knowledge and
experience in financial or business matters that such Person is capable of
evaluating the merits and risks of its investment in the Equity Interests
to be acquired by it pursuant to the transactions contemplated hereby.
(c) Such Person understands that the Equity Interests to be
acquired by it hereunder have not been registered under the Securities Act
on the basis that the sale provided for in this Agreement is exempt from
the registration provisions thereof. Such Person acknowledges that such
securities may not be transferred or sold except pursuant to the
registration and other provisions of applicable securities laws or pursuant
to an applicable exemption therefrom.
(d) Such Person acknowledges that the offer and sale of the
Equity Interests to be acquired by it in the transactions contemplated
hereby has not been accomplished by the publication of any advertisement.
Section 4.8 Regulation Matters.
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Such Person is not (a) "public utility," or a "holding company in a
holding company system that includes a transmitting utility or an electric
utility", as such terms are defined in the FPA or the regulations of the
FERC promulgated thereunder.
Section 4.9 No Other Representations or Warranties.
Except for the representations and warranties contained in this
Article IV, neither such Person nor any other Person makes any other
express or implied representation or warranty on behalf of such Person.
ARTICLE V
COVENANTS OF THE PARTIES.
Section 5.1 Notification to the CNDC; Negative Antitrust Decision;
Transfer of Equity Interests to a Third Purchaser.
(a) Notification of the Acquisition to the CNDC. Within seven (7)
days from the date hereof, and at any subsequent date that may be required
by instruction of the CNDC, Seller and Buyer shall cooperate with one
another and file all notifications, applications, registrations, filings,
declarations and reports required under the Antitrust Law relating to the
Acquisition, and use their reasonable efforts to take, or cause to be taken
all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable to obtain the Antitrust Approval.
(b) Negative Antitrust Decision.
(i) Buyer hereby expressly acknowledges and undertakes that the
entire risk as to a Negative Antitrust Decision and/or the issuance of any
resolution, decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, oral or in writing, in each case pursuant to
Antitrust Law, that may prohibit, prevent or restrict the consummation of
the Acquisition rests exclusively with Buyer.
(ii) Buyer shall be the sole responsible party to perform any and
all actions required by the Negative Antitrust Decision including, but not
limited to, (i) a divesture of Buyer's or the Entities' businesses, product
lines or assets in favor of a third party, at its own risk, cost and
expense; and (ii) appointment of the management of the Entities following
directives by the CNDC or other antitrust authority. Notwithstanding
anything contained herein to the contrary, none of Seller or its Affiliates
shall be required to (i) divest any of its respective businesses, product
lines or assets that are not transferred to Buyer or (ii) take or agree to
take any other action or agree to any limitation that could reasonable be
expected to (a) result in a adverse effect on its business, assets,
condition (financial or otherwise) or (b) deprive any Seller of any benefit
of the Acquisition.
(iii) Each party shall promptly give to the other party notice of
all information in its possession regarding the Negative Antitrust Decision
or its
29
consequences and promptly transmit to the other party a copy of all
documents received or sent in that respect. Each party shall also promptly
respond to any reasonable request for information from the other party on
the Negative Antitrust Decision or its consequences.
(c) Transfer of Equity Interests to a Third Purchaser.
(i) Notwithstanding Section 5.1(f), upon issuance of a Negative
Antitrust Decision prohibiting the transfer of the Equity Interests to
Buyer, Buyer shall negotiate the sale and transfer of the Equity Interests
to a third party regarding whom the Antitrust Approval may be obtained (the
"Third Purchaser").
(ii) If legally required and for the exclusive purpose of
transferring the Equity Interests to the Third Purchaser, each Seller
hereby grants special irrevocable powers of attorney to Buyer and/or the
Persons whom Buyer may appoint to (i) take all reasonable actions to obtain
the relevant Antitrust Approval; (ii) notify the transfer of the Equity
Interests to the Ente Nacional Regulador de la Electricidad and to the
Republic of Argentina Secretariat of Energy; (iii) subscribe the relevant
documentation and make the relevant filings to record the transfer of the
Equity Interests on their respective official ownership records; and (iv)
collect from the Third Purchaser the purchase price of the Shares (it being
understood that if such purchase price were to exceed the Purchase Price,
then the excess shall be exclusively for Buyer's benefit). It is hereby
expressly agreed that the irrevocable powers of attorney provided for in
this Section 5.1(c) are granted for a period beginning on the date of
issuance of the Negative Antitrust Decision preventing the Acquisition and
ending on the date which is ten (10) years from the date hereof; it being
understood that the irrevocability of the special power of attorney granted
herein is based on both parties' interests.
(iii) Notwithstanding anything contained herein to the contrary,
from the transfer of the Equity Interests to Buyer pursuant to this
Agreement until the transfer of the Equity Interests to a Third Purchaser,
as the case may be, Buyer will have, to the fullest extent permitted by
law, complete control of the assets and businesses of the Entities. In
furtherance of the foregoing, Seller shall execute and deliver, or cause to
be executed and delivered, all such documents and instruments and shall
take, or cause to be taken, all such further or other actions, as Buyer may
reasonably deem necessary to permit Buyer to have complete control of the
Entities as from the date hereof.
(d) Waiver by Buyer. Seller will not be held liable for any loss
or damage arising out of any of the events provided for in Section 5.1(b)
hereof and/or the transfer of the Equity Interests to the Third Purchaser,
including, but not limited to, any difference between the Purchase Price
and the purchase price of the Equity Interests ultimately collected by
Buyer from the Third Purchaser. Buyer hereby irrevocably and
unconditionally waives to file any legal action and/or claim, judicial,
non-judicial or of any other nature, against any Seller or any other third
party directly or indirectly based on the fact that the Equity Interests
were sold at a price lower than the Purchase Price.
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(e) Waiver by Seller. Each Seller hereby irrevocably and
unconditionally waives any right it may have against Buyer based on the
fact that the Shares were sold to the Third Purchaser at a price higher
than the Purchase Price.
(f) Indemnification.
(i) Subject only to the terms and limitations set forth in this
Section 5.1 and not those set forth in Article VI, Buyer shall jointly and
severally indemnify, defend and hold harmless Seller Indemnified Parties
(whether or not also indemnified by any other Person under any other
document) from and against any penalties, fines, administrative sanctions,
costs and expenses (including reasonable attorneys' fees as provided in
(ii) below) which directly relate to, or arise out of, any of the events
provided for in Section 5.1(b), including fines, penalties and/or
administrative sanctions imposed, or handed down, by the CNDC, the
Secretariat of Internal Trade and/or any other agency, tribunal or court
because the Acquisition is ultimately deemed to breach the Antitrust Law
(an "Antitrust Claim").
(ii) Within five (5) days following the receipt by Seller of an
Antitrust Claim, Seller shall promptly give notice to each Buyer in
writing. Buyer shall assume and control the defense of an Antitrust Claim
with counsel of their own choice it being understood, however, that each
Seller may retain, at its own cost, separate co-counsel and participate
fully in the defense of the Antitrust Claim with full access to all
relevant information.
(iii) If an Antitrust Claim implies a fine, penalty and/or an
administrative sanction to any Seller, then at Seller's option Buyer shall
be jointly and severally liable to (i) pay the amount of the relevant fine,
penalty and/or an administrative sanction; or (ii) deposit in escrow at
Seller's satisfaction the amount of the relevant fine, penalty and/or an
administrative sanction. If Buyer fails to timely pay or deposit the
relevant amount of the fine, penalty and/or an administrative sanction, the
outstanding amount thereof shall bear default interest at a rate equal to
LIBOR plus two per cent (2%) per annum.
(iv) Notwithstanding Section 5.1(f)(iii), any and all expenses
and/or costs incurred by any Seller pursuant to Section 5.1(b), Section
5.1(c) and Section 5.1(f) (including, but not limited to, fines, penalties
and/or an administrative sanctions) shall be reimbursed by Buyer upon
request by Seller within five (5) Business Days from the date of the
request. If Buyer fails to timely reimburse the expenses and/or costs
incurred by any Seller, the outstanding amount thereof shall bear default
interest at a rate equal to LIBOR plus two per cent (2%) per annum.
(v) If Seller and Buyer are found jointly liable of any Antitrust
Claim, Buyer shall be the sole responsible for the settlement of said
Antitrust Claim and Buyer hereby waives any recoverability right it may
have against any Seller.
(vi) This Section 5.1 shall exclusively govern all Antitrust
Claims. For the avoidance of doubt, indemnity limitations contemplated in
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Section 6.2 hereof shall not apply to the indemnity undertakings assumed by
Buyer in this Section 5.1 regarding Antitrust Claims.
(g) Fees, Costs and Expenses. Except for Buyer's obligation to
pay all fees, costs and expenses (including, without limitation, reasonable
legal fees) incurred by the parties in connection with any Antitrust Claim,
each of the parties shall pay all fees, costs and expenses (including,
without limitation, reasonable legal fees) incurred by it in connection
with the filings made with the CNDC in order to obtain the Antitrust
Approval.
Section 5.2 Further Assurances.
On and after the date hereof, Seller and Buyer shall cooperate and use
their respective reasonable best efforts to take or cause to be taken all
appropriate actions and do, or cause to be done, all things necessary or
appropriate to consummate and make effective the transactions contemplated
hereby, including the execution of any additional documents or instruments
of any kind, the obtaining of consents which may be reasonably necessary or
appropriate to carry out any of the provisions hereof and the taking of all
such other actions as such party may reasonably be requested to take by the
other party hereto from time to time, consistent with the terms of this
Agreement, in order to effectuate the provisions and purposes of this
Agreement and the transactions contemplated hereby and thereby.
Section 5.3 Employee Matters.
(a) Subject to the following provisions, Buyer shall maintain the
employment of all Affected Employees following the date hereof for at least
a period of twelve (12) months as from the date hereof and subject to the
existence of proper grounds for Buyer for termination or restructuring
thereof.
(b) Subject to Section 5.3(c) and Section 5.3(d) below, on the
date hereof (unless previously done), Seller shall give notice to all
Affected Employees that the active participation of the Affected Employees
in those employee benefit plans, programs and arrangements that are not
sponsored by the Entities or that are not listed in Section 3.11(a) of the
Seller Disclosure Letter (such plans, programs and arrangements, the
"Seller Plans") shall terminate on the date hereof, and the Entities shall
terminate participation of Affected Employees in the Seller Plans as of the
date hereof. Each of the Entities shall be solely responsible for all
obligations and Liabilities under each employee benefit plan listed in
Section 3.11(a) of the Seller Disclosure Letter in existence as of the
date hereof, or that they establish, maintain or contribute to, on or after
the date hereof, and no such obligations or Liabilities shall be assumed or
retained by Seller or its Affiliates. In addition, Seller shall retain all
Liabilities and assets with respect to current and former employees of the
Entities under the Pension Plan for Employees of Consumers Energy and Other
CMS Energy Companies. Notwithstanding the foregoing, any Affected Employee
who is unable to report to work with Buyer as of the date hereof due to
disability (each, a "Disabled Employee"), shall continue to be eligible for
any applicable long-term disability and life insurance coverage pursuant to
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Seller's plans until such Disabled Employee returns to active employment
with Buyer or any of the Entities; provided, however, that in order to be
eligible for such benefits, each such Disabled Employee, pending approval
for long-term disability benefits or return to active employment, must
continue to pay all applicable long-term disability and life insurance
premiums due following the date hereof for such coverage pursuant to
Seller's long-term disability plan and life insurance plans. Buyer shall,
or shall cause the Entities to, (A) pay Disabled Employees who are on
short-term disability as of the date hereof the short-term disability
benefits, if any, that apply under the Buyer's plans, provided, however,
that such benefits need not be provided to the extent that they would
duplicate benefits paid under the Seller Plans, and (B) honor any
continuing pay or salary obligations and return to work obligations that
apply to any such Disabled Employees.
(c) Buyer and the Entities shall be responsible for all
Liabilities and obligations under the Worker Adjustment and Retraining
Notification Act and similar foreign, state and local rules, statutes and
ordinances resulting from the actions of Buyer and the Entities after the
date hereof. Buyer agrees to hold Seller harmless for any breach of such
responsibility and Buyer's indemnification of Seller in this regard
specifically includes any Claim by the Affected Employees for back pay,
front pay, benefits or compensatory or punitive damages, any Claim by any
Governmental Authority for penalties regarding any issue of prior
notification (or lack thereof) of any plant closing or mass layoff
occurring after the date hereof and Seller's costs, including reasonable
attorney's fees, in defending any such Claims.
(d) CMS Energy Corporation or its Affiliates shall retain all
assets that are accumulated through the date hereof under Financial
Accounting Standards Board Statement 106 (and deposited in various VEBA
accounts and 401(h) accounts of Seller or its Affiliates). Further, Seller
or its Affiliates shall retain the liability for PBOP for the benefit of
former employees of the Entities who are retirees of the Entities as of the
date hereof, and Affected Employees who are eligible to retire and
qualified for benefits under PBOP as of the date hereof, and Seller or its
Affiliates shall retain the responsibility for providing post-retirement
benefits (other than pension) to such employees pursuant to the eligibility
requirements of the Seller Plans.
(e) Nothing in this Section 5.3 shall (i) create any third party
beneficiary right in any current or former Employees, any beneficiary or
dependent thereof, or any collective bargaining or other labor
representation thereof, or (ii) constitute an amendment to any Plan.
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Section 5.4 Tax Covenants.
(a) Section 338(g) Elections. Except with the express written
consent of Seller, which can be withheld in Seller's sole and absolute
discretion, Buyer shall not make any election under Section 338(g) of the
Code (or any analogous provision of state, local, or foreign income tax
law) with respect to the deemed purchase of the assets of any of the
Entities.
(b) Tax Return Filings, Refunds, and Credits.
(i) Seller shall timely prepare and file (or cause such
preparation and filing) with the appropriate Tax authorities all Tax
Returns with respect to the Entities which are Subsidiaries of the Seller
for Tax periods that end on or before the Cut-off or that otherwise are
required to be filed (taking into account any extensions) on or before the
date hereof (the "Seller Returns"), and will pay (or caused to be paid) by
such Entities all Taxes due with respect to the Seller Returns. The Seller
Returns shall be prepared in accordance with past practice, except as
required by applicable law. Seller shall make such income Tax Return
sufficiently in advance of the due date for filing any such income Tax
Returns to provide Buyer with a meaningful opportunity to review and
comment on such income Tax Returns before filing.
(ii) Buyer shall timely prepare and file (or cause such
preparation and filing) with the appropriate Tax authorities all Tax
Returns (the "Straddle Period Returns") with respect to the Entities which
are Subsidiaries of the Seller for all Tax periods ending after the Cut-off
that include the Cut-off (the "Straddle Period") except for Tax Returns
required to be filed (taking into account any extension) on or before the
date hereof. Except as otherwise required by applicable law, all Straddle
Period Returns shall be prepared in accordance with past practice. Buyer
shall provide Seller with copies of any Straddle Period Returns at least
forty-five (45) days prior to the due date thereof (giving effect to any
extensions thereto), accompanied by a statement (the "Straddle Statement")
setting forth and calculating in reasonable detail the Pre- Cutoff Taxes as
defined below. If Seller agrees with the Straddle Period Return and
Straddle Statement, Seller shall pay to Buyer (or Buyer shall pay to
Seller, if appropriate) an amount equal to the Ownership Percentage of Pre-
Cut-off Taxes as shown on the Straddle Statement not later than two (2)
Business Days before the due date (including any extensions thereof) for
payment of Taxes with respect to such Straddle Period Return. If, within
fifteen (15) days of the receipt of the Straddle Period Return and Straddle
Statement, Seller notifies Buyer that it disputes the manner of preparation
of the Straddle Period Return or the amount calculated in the Straddle
Statement, then Buyer and Seller shall attempt to resolve their
disagreement within the five (5) days following Seller's notification or
Buyer of such disagreement. If Buyer and Seller are unable to resolve their
disagreement, the dispute shall be submitted to a mutually agreed upon
nationally recognized independent accounting firm, whose expense shall be
borne equally by Buyer and Seller, for resolution, if possible, within
twenty (20) days of such submission. If the parties have not agreed on an
independent accounting firm within fifteen days following Seller's
notification of Buyer of such disagreement, on the request of any party
such independent accounting firm shall be appointed by the ICC Centre.
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Any independent accounting firm appointed by the ICC Centre shall be an
impartial and disinterested senior partner in an internationally recognized
accounting firm. The decision of such accounting firm with respect to such
dispute shall be binding upon Buyer and Seller, and Seller shall pay to
Buyer (or Buyer shall pay to Seller, if appropriate) an amount equal to the
Pre- Cut-off Taxes as decided by such accounting firm not later than two
(2) Business Days before the due date (including any extensions thereof)
for payment of Taxes with respect to such Straddle Period Return.
(iii) From and after the date hereof, Buyer and its Affiliates
(including the Entities) will not file any amended Tax Return, carryback
claim, or other adjustment request with respect to the Entities for any Tax
period that includes or ends on or before the Cut-off unless Seller
consents in writing; provided, however, that (i) such prohibition shall not
apply (A) to any amended Tax Return filed to address any Tax matter
excepted out of the Seller's tax representations and warranties in Section
3.15, or (B) to address any Tax matter for which, at the time of filing
such amended Tax Return, Seller's indemnification obligations under Section
6.2 hereof shall have expired, except, with respect to the foregoing
subparagraph (B) only, as would have, in Seller's reasonable opinion, an
adverse effect with regard to any Tax Returns filed by Seller and/or
Seller's Affiliates (not including the Entities) and (ii) with respect to
any Straddle Period Return, such consent shall not be unreasonably
withheld, or conditioned, provided Buyer has made arrangements to the
reasonable satisfaction of Seller to make Seller whole for any detriment or
cost incurred (or to be incurred) by Seller as a result of such amended
Straddle Period Return.
(iv) For purposes of this Agreement, in the case of any Taxes of
the Entities that are payable with respect to any Straddle Period, the
portion of any such Taxes that constitutes "Pre- Cut-off Taxes" shall be
the excess of (A) (i) in the case of Taxes that are either (x) based upon
or related to income or receipts or (y) imposed in connection with any
sale, transfer or assignment or any deemed sale, transfer or assignment of
property (real or personal, tangible or intangible) be deemed equal to the
amount that would be payable if the Tax period ended on the Cut-off and
(ii) in the case of Taxes (other than those described in clause (i))
imposed on a periodic basis with respect to the business, property, shares,
quota holdings or assets of the Entities, be deemed to be the amount of
such Taxes for the entire Straddle Period (or, in the case of such Taxes
determined on an arrears basis, the amount of such Taxes for the
immediately preceding Tax period) multiplied by a fraction the numerator of
which is the number of calendar days in the portion of the Straddle Period
ending on the Cut-off and the denominator of which is the number of
calendar days in the entire Straddle Period over (B) any prepayment or
advances of Taxes or any payments of estimated Taxes with respect to the
Straddle Period. For purposes of clause (i) of the preceding sentence, any
exemption, deduction, credit or other item that is calculated on an annual
basis shall be allocated to the portion of the Straddle Period ending on
the Cut-off on a pro rata basis determined by multiplying the total amount
of such item allocated to the Straddle Period by a fraction, the numerator
of which is the number of calendar days in the portion of the Straddle
Period ending on the Cut-off and the denominator of which is the number of
calendar days in the entire Straddle Period. Pre-Cut-off Taxes include any
Taxes attributable to a Person that is treated as a partnership for federal
income tax purposes as
35
if such Person allocated Tax items to its partners in a manner consistent
with this Section 5.4(b)(iv). In the case of any Tax based upon or measured
by capital (including net worth or long-term debt) or intangibles, any
amount thereof required to be allocated under this Section 5.4(b)(iv) shall
be computed by reference to the level of such items on the Cutoff. The
parties hereto will, to the extent permitted by Applicable Law, elect with
the relevant Tax authority to treat a portion of any Straddle Period as a
short taxable period ending as of the close of business on (i) the Cut-off
date or (ii) the date hereof, as applicable. For purposes of this
Agreement, "Post- Cut-off Taxes" shall include any Taxes of the Entities
that are payable with respect to a Straddle Period, except for the portion
of any such Taxes that constitutes Pre-Cut-off Taxes.
(v) Seller and Buyer shall reasonably cooperate in preparing and
filing all Tax Returns with respect to the Entities, including maintaining
and making available to each other all records reasonably necessary in
connection with Taxes of the Entities and in resolving all disputes and
audits with respect to all Tax periods relating to Taxes of the Entities.
(vi) For a period of seven (7) years after the date hereof, the
Seller and its representatives shall have reasonable access to the books
and records (including the right to make extracts thereof) of the Entities
to the extent that such books and records relate to Taxes and to the extent
that such access (i) is in the power of Buyer using reasonable best efforts
and (ii) may reasonably be required by Seller in connection with matters
relating to or affected by the operation of the Entities prior to the
Cut-off. Such access shall be afforded by Buyer upon receipt of reasonable
advance notice and during normal business hours. If Buyer shall desire to
dispose of any of such books and records prior to the expiration of such
seven-year period, Buyer shall, prior to such disposition, give Seller a
reasonable opportunity, at Seller's expense, to segregate and remove such
books and records as Seller may select.
(vii) For a period of seven (7) years after the date hereof,
Buyer and its representatives shall have reasonable access to the books and
records (including the right to make extracts thereof) of Seller to the
extent that such books and records relate to Taxes of an Entity or Taxes of
Seller and its Affiliates attributable to such Persons' investment in an
Entity that are reasonably necessary for Buyer and its members to compute
their Taxes (including, for the avoidance of doubt, such Person's share of
each Entity's previously taxed income, earnings and profits, and any deemed
dividend from such Person's sale of any Entity under Section 1248 of the
Code, and any information necessary to comply with Proposed Regulations
Section 1.959-1(d) and Proposed Regulations Section 1.959-3 or any
successor regulation and to the extent that such access (i) is within the
power of Seller using reasonable best efforts and (ii) may reasonably be
required by Buyer in connection with matters relating to or affected by the
operation of any Entity after the Cut-off. Such access shall be afforded by
Seller upon receipt of reasonable advance notice and during normal business
hours. If Seller shall desire to dispose of any such books and records
prior to the expiration of such seven year period, Seller shall, prior to
such disposition, give Buyer reasonable opportunity, at Buyer's expense, to
segregate and remove such books and records as Buyer may select.
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(viii) If an Indemnified Party actually receives a refund or
credit or other reimbursement with respect to Taxes for which it would be
indemnified under this Agreement, the Tax Indemnified Party shall pay over
such refund or credit or other reimbursement to the Tax Indemnifying Party.
(ix) Buyer shall not, and to the extent within the power of Buyer
using reasonable best efforts, cause any Entity to not, make, amend or
revoke any Tax election if such action would reasonably be expected to
adversely affect any of Seller or its Affiliates with respect to any Tax
period ending on or before the date hereof or for the portion of any
Straddle Period prior to the Cut-off or any Tax refund or credit with
respect thereto, except (A) to the extent such amendment or revocation
relates to any Tax matter excepted out of the Seller's tax representations
and warranties in Section 3.15 or as relates to (B) any Tax matter which,
at the time such election is made or revoked, Seller's indemnification
obligations under Section 6.2 hereof shall have expired, except, with
respect to the foregoing subparagraph (B) only, as would have, in Seller's
reasonable opinion, an adverse effect with regard to any tax returns filed
by Seller and/or Seller's Affiliate (not including the Entities). Seller
shall not, and shall cause any Entity to not, make, amend or revoke any Tax
election if such action would reasonably be expected to adversely affect
any of Buyer or its Affiliates with respect to any Tax period beginning
after the date hereof or for the portion of any Straddle Period after the
Cut-off or any Tax refund or credit with respect thereto.
(c) Certain Payments. Buyer and Seller agree to treat (and cause
their Affiliates to treat) any payment under this Section 5.4 as an
adjustment to the Purchase Price for all Tax purposes.
(d) Transfer and Similar Taxes. Notwithstanding any other
provisions of this Agreement to the contrary, all transfer, stamp,
registration and similar Taxes (collectively, "Transfer Taxes") incurred in
connection with the transactions contemplated by this Agreement shall be
borne 50% by Buyer and 50% by Seller and Buyer shall accurately file all
necessary Tax Returns and other documentation with respect to Transfer
Taxes and timely pay all such Transfer Taxes. If required by Applicable
Law, Seller will join in the execution of any such Return. Buyer shall
provide copies of any Tax Returns with respect to Transfer Taxes to Seller
no later than ten (10) days after the due dates of such Tax Returns. Seller
shall pay its portion of the Transfer Taxes to Buyer prior to the due date
of such Transfer Taxes.
(e) Termination of Tax Sharing Agreements. On the date hereof,
Seller shall cause all Tax sharing agreements between Seller or any of its
Affiliates (that is not one of the Entities) on the one hand, and any of
the Entities on the other hand, to be terminated, and all obligations
thereunder shall be settled, and no additional payments shall be made under
any provisions thereof after the date hereof.
(f) Actions Affecting Seller's Liability for Taxes. Except as
otherwise set forth in Section 5.4(f) of the Seller Disclosure Letter, on
or before December 31, 2007, Buyer (i) shall not sell, liquidate, merge or
otherwise dispose of any Entity, and (ii) shall cause each Entity which is
a Subsidiary of Buyer not to sell,
37
liquidate, merge or otherwise dispose of any other Entity or to dispose of
a significant portion of its assets outside of the ordinary course of
business, in each case, in a manner which by virtue of such transaction
being a taxable transaction of such Entity for U.S. tax purposes would
increase the U.S. Subpart F income of Seller or its Affiliates or the
deemed dividend recognized by Seller or its Affiliates under Section 1248
of the Code (such Subpart F income or deemed dividend hereinafter referred
to as the "Seller Tax Amount"), when netted or combined with any other
transaction involving an Entity which affects the Seller Tax Amount. For
the avoidance of doubt, this Section 5.4(f) shall not limit Buyer's rights
under Section 5.4(b) to address any Tax matter excepted out of the Seller's
Tax representations and warranties under Section 3.15.
Section 5.5 Intercompany Accounts.
Except with respect to the Assumed Indebtedness, all of which is
detailed in Section 5.5 of the Seller Disclosure Letter that will remain
outstanding as of the date hereof or be assumed by Buyer at the date
hereof, (i) Seller shall, and shall cause its Affiliates (other than the
Entities) to, pay in full all intercompany accounts payable to the
Entities; and (ii) Seller shall cause the Entities to pay in full all
intercompanies accounts payable to the Seller and its Affiliates (other
than the Entities), in each case before the date hereof, and in each case
in a manner that does not increase any Tax Liability or decrease any Tax
assets of any Entity.
Section 5.6 Surrender of Intellectual Property.
On the date hereof Seller shall cause each of Operating and CMS
Ensenada S.A., as the case may be, to surrender its right, title, and
interest in and to all trademarks, trademarks applications, domain names,
renewal applications, and Intellectual Property listed in Section 5.6 of
the Seller Disclosure Letter, as well its commercial name, trade name,
reputation and all its good will associated with its name, its trademarks
and its Intellectual Property. As from the date hereof, Buyer shall cause
each of Operating and CMS Ensenada S.A. to do their best efforts to obtain
the final surrender of such Intellectual Property.
Section 5.7 Maintenance of Insurance Policies.
(a) Seller and Buyer agree that Casualty Insurance Claims
relating to the businesses of the Entities (including reported claims and
including incurred but not reported claims) will remain with the Entities
immediately following the date hereof. For purposes hereof, "Casualty
Insurance Claims" shall mean workers' compensation, auto liability, general
liability and products liability claims and claims for damages caused to
the facilities of the Entities generally insured under all risk, real
property, boiler and mechanical breakdown insurance coverage. The Casualty
Insurance Claims are subject to the provisions of policies of insurance
with insurance carriers and contractual arrangements with insurance
adjusters maintained by Seller or its Affiliates prior to the date hereof
(collectively, the "Insurance Policies").
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(b) With respect to the Casualty Insurance Claims, the following
procedures shall apply: (i) Seller shall use reasonable best efforts to
make recovery under the relevant Insurance Policy and ensure that each of
its Affiliates shall take such steps as Buyer reasonably requires to make
and/or pursue any such claim (including giving notice of the claim to the
insurer at the request of Buyer) and to assist Buyer and the Entities in
making the claim; (ii) to the extent that recovery is made, Seller shall
ensure that any proceeds actually received by Seller or its Affiliates that
are not Entities are promptly paid to the applicable Entity which suffered
the insured event giving rise to the Casualty Insurance Claim (or to Buyer
on behalf of such Entity) and in any case within fifteen (15) Business Days
of the receipt of such proceeds; and (iii) Seller or its Affiliates shall
continue to administer, adjust, settle and pay, on behalf of the Entities,
all Casualty Insurance Claims with dates of occurrence prior to the date
hereof. Casualty Insurance Claims to be paid by Seller hereunder shall
include all costs necessary to settle claims including compensatory,
medical, legal and other allocated expenses.
(c) The parties acknowledge that the Insurance Policies may
provide coverage for workers' compensation, auto liability, general
liability and products liability claims and claims for damages not related
to the Entities ("Non-Entity Casualty Insurance Claims"). Seller agrees
that, when administering, settling and paying Casualty Insurance Claims, it
shall endeavor to provide that the economic benefits of the Insurance
Policies are shared equitably among the Casualty Insurance Claims and the
Non-Entity Casualty Insurance Claims (including, without limitation, by
ensuring that coverage limits are equitably allocated or reserved among
such claims or potential claims).
(d) Seller makes no representation or warranty with respect to
the applicability, validity or adequacy of any Insurance Policies, and
Seller shall not be responsible to Buyer or any of its Affiliates for the
failure of any insurer to pay under any such Insurance Policy.
(e) Nothing in this Agreement is intended to provide or shall be
construed as providing a benefit or release to any insurer or claims
service organization of any obligation under any Insurance Policies. Seller
and Buyer confirm that the sole intention of this Section 5.7 is to divide
and allocate the benefits and obligations under the Insurance Policies
between them as of the date hereof and not to effect, enhance or diminish
the rights and obligations of any insurer or claims service organization
thereunder. Nothing herein shall be construed as creating or permitting any
insurer or claims service organization the right of subrogation against
Seller or Buyer or any of their Affiliates in respect of payments made by
one to the other under any Insurance Policy.
(f) If Buyer requests a copy of an Insurance Policy relating to a
pending or threatened Casualty Insurance Claim, Seller shall provide a copy
of all relevant insurance policies which insure such Casualty Insurance
Claims within five (5) Business Days, provided, that if Seller cannot
provide such policy within five (5) days after exercising reasonable best
efforts to locate such policy, Seller shall continue to
39
exercise its reasonable best efforts to provide such policy to Buyer as
soon as possible thereafter.
Section 5.8 Preservation of Records. Buyer acknowledges and agrees
that Seller may, from time to time, in the normal course of investigating,
prosecuting and/or defending various ongoing matters which may relate to
the Entities or the businesses thereof, including its obligations pursuant
to Section 6.2 of the Agreement, have, and will continue to have, a need
(i) to refer to, and to use as evidence, certain books, records and other
data, including electronic data maintained in computer files, relating to
the Entities and /or their businesses and (ii) for the support and
cooperation of present or former employees of the Entities in the event
that such Persons' assistance or participation is needed to aid in the
defense or settlement of the such matters. Buyer agrees that it shall, at
its own expense, preserve and keep the records held by it relating to the
respective businesses of the Entities that could reasonably be required
after the consummation of the transaction contemplated in this Agreement by
Seller for a period of five (5) years; provided, however, that upon
expiration of such period, as applicable, Buyer shall give written notice
to Seller if it or the custodian of such books and records proposes to
destroy or dispose of the same. Seller shall have the opportunity for a
period of thirty (30) days after receiving such notice to elect to have
some or all of such books and records delivered, at Seller's expense and
risk, to a location chosen by Seller. In addition, Buyer shall make such
records available to Seller as may reasonably be required by Seller in
connection with, among other things, any insurance claim, legal proceeding
or governmental investigation relating to the respective businesses of
Seller and its Affiliates, including the Entities. Seller agrees to
maintain the confidentiality of all information provided by Buyer or the
Entities hereunder.
Section 5.9 Public Statements. No public or private release,
announcement or regulatory filing concerning the transaction contemplated
hereby shall be issued by any of the parties without the prior consent of
the other parties (which consent shall not unreasonably withheld), except
for such press release, announcement, or regulatory filing as is required
by law, court process or stock exchange rule to be made by the party
proposing to issue the same, in which case such party shall use its
reasonable best efforts to consult in good faith with the other party prior
to the issuance of any such press release, announcement or filing.
Section 5.10 Certain Transactions. Buyer shall not, and shall not
permit any of its Subsidiaries to, acquire or agree to acquire by merging
or consolidating with, or by purchasing a substantial portion of the assets
of or equity in, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets if the
entering into of a definitive agreement relating to, or the consummation of
such acquisition, merger or consolidation would reasonably be expected to
(a) impose any material delay in the obtaining of, or significantly
increase the risk of not obtaining, any authorizations, consents, orders,
declarations or approvals of any Governmental Authority (other than any
authority competent under the Antitrust Law) necessary to consummate the
transactions contemplated by this Agreement or the expiration or
termination of any applicable waiting period, (b) significantly increase
the risk of any Governmental
40
Authority (other than any authority competent under the Antitrust Law)
entering an order prohibiting the consummation of the transactions
contemplated by this Agreement, (c) significantly increase the risk of not
being able to remove any such order on appeal or otherwise or (d)
materially delay or prevent the consummation of the transactions
contemplated by this Agreement.
Section 5.11 Use of Corporate Name; Transitional Use of Seller's Name.
As soon as reasonably practicable following the date hereof, but in no
event later than sixty (60) days following the date hereof, Buyer shall
cause each of the Entities to make any necessary legal filings with the
appropriate Governmental Authorities to register the change in their
corporate names. Buyer and its Affiliates shall hold harmless and indemnify
Seller and any of its Affiliates against all Damages resulting from or
arising in connection with the use by Buyer or any of its Affiliates of the
"CMS" name as provided in this Section 5.12.
Section 5.12 Use of Information Technology. Seller will ensure the
e-mail forwarding service from the Argentine Employees inboxes to the new
inboxes placed at the Buyer's servers for a period of three (3) months from
the date hereof. The following services will remain running for at least
one (1) month: (a) Internet access; (b) VPN access; (c) incoming and
outgoing e-mails to / from the Seller's current e-mail accounts; and (d)
blackberry access. Seller will also provide the users id's and passwords
for all the installed communication equipments, and upgrade the
administration levels of the Argentine servers to the maximum privileges.
Should Buyer request an extension for any time period provided herein, such
services shall be provided solely at Seller's discretion and at a
reasonable cost to be agreed upon by Buyer and Seller.
Section 5.13 Confidentiality. Buyer will hold, and will cause its
Representatives to hold, in confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of Law, all
confidential documents and information concerning the Seller furnished to
Buyer in connection with the transactions contemplated by this Agreement,
except to the extent that such information can be shown to have been (i)
previously known on a non-confidential basis by Buyer, (ii) in the public
domain through no fault of Buyer or (iii) later lawfully acquired by Buyer
from sources other than the Seller; provided that Buyer may disclose such
information to its Representatives in connection with the transactions
contemplated by this Agreement so long as such Persons are informed by
Buyer of the confidential nature of such information and are directed by
Buyer to treat such information confidentially. The obligation of Buyer to
hold any such information in confidence shall be satisfied if it exercises
the same care with respect to such information as it would take to preserve
the confidentiality of their own similar information.
Section 5.14 Actions Relating to Entities.
Seller shall use its reasonable best efforts to cooperate with Buyer
after the date hereof, to:
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(a) comply with all Argentine foreign holding company regulations
in respect of Seller's holdings in each of the Entities (including, without
limitation, Art. 220 of Resolution 7/05 of the IGJ) and related laws and
regulations and provide evidence reasonably satisfactory of such
compliance;
(b) register all past capital increases and decreases of each the
Entities with the IGJ, to the extent such capital increases and decreases
have not been duly registered;
(c) fund all necessary reserve amounts (including reserve amounts
legally required to be funded) which have not been duly funded in
connection with dividends declared by each of the Entities;
(d) register with the Banco Central de la Republica Argentina,
and otherwise comply with all applicable Argentine foreign exchange
regulations (including, without limitation, Communication A3602, as
amended, of the Argentine Central Bank and Decree 616/05 and its
implementing regulations) relating to, the United States
Dollars-denominated indebtedness of each of the Entities set forth in
Section 3.7(b) of the Seller Disclosure Letter; and
(e) deliver to Buyer all the original counterparts of the United
States Dollars-denominated indebtedness of each of the Entities set forth
in Section 3.7(b) of the Seller Disclosure Letter.
ARTICLE VI
SURVIVAL; INDEMNIFICATION
Section 6.1 Survival.
(a) All representations and warranties contained herein shall
survive for a period of twelve (12) months following the date hereof except
for the representations and warranties of Seller set forth in Sections 3.1,
3.2 and 3.3, and of Buyer in Sections 4.1 and 4.2, which shall survive
indefinitely (such time periods set forth above are referred to herein as
the relevant "Indemnity Period"). The parties intend to shorten the statute
of limitations and agree that no claims or causes of action may be brought
against Seller, Buyer or any of their respective directors, officers,
employees, Affiliates, controlling persons, agents or representatives based
upon, directly or indirectly, any of the representations and warranties
contained in this Agreement after the Indemnity Period; provided that if a
written notice of claim for indemnification is made during the applicable
Indemnity Period in accordance with this Article VI, such claim shall
survive until its resolution.
(b) All covenants and agreements contained herein that by their
terms are to be performed in whole or in part, or which prohibit actions,
42
subsequent to the date hereof, shall survive the consummation of the
transaction contemplated hereby in accordance with their terms.
Section 6.2 Indemnification.
(a) Subject to the limitations set forth in this Article VI,
subsequent to the date hereof, Seller shall indemnify, defend, save and
hold harmless Buyer and its Affiliates, their respective successors and
permitted assigns, and their officers and directors (collectively, the
"Buyer Indemnified Parties"), from and against any and all Damages incurred
by a Buyer Indemnified Party arising out of, resulting from or incurred in
connection with:
(i) any breach or inaccuracy of any representation or warranty of
Seller contained in this Agreement, in each case, when made or deemed made;
(ii) any breach in any material respect by Seller of any covenant
or agreement contained in this Agreement; and
(iii) the matters set forth on Section 6.2(a)(iii) of the Seller
Disclosure Letter.
(b) Subject to the limitations set forth in this Article VI,
subsequent to the date hereof, each Buyer shall indemnify, defend, save and
hold harmless Seller and its Affiliates, their respective successors and
permitted assigns, and their officers and directors (collectively, the
"Seller Indemnified Parties") from and against any and all Damages to the
extent incurred by the Seller Indemnified Party arising out of, resulting
from or incurred in connection with:
(i) any breach or inaccuracy of any representation or warranty of
such Buyer contained in this Agreement, in each case, when made or deemed
made. For the avoidance of doubt, it is expressly understood that each of
Lucid and Newco shall be severally, and not jointly, liable for Damages
incurred by a Seller Indemnified Party as a result of a breach or
inaccuracy of any representation or warranty made by such Person or for the
breach of confidentiality obligations governed by Section 5.13 and, as a
result, a Seller Indemnified Party shall not be entitled to make a Claim,
seek contribution, assert joint and several liability or otherwise seek
indemnification against the other Buyer based on such breach or inaccuracy
or breach of confidentiality obligations; and
(ii) any breach in any material respect by Buyer of any covenant
or agreement contained in this Agreement.
(c) Any Person providing indemnification pursuant to the
provisions of this Section 6.2 is referred to herein as an "Indemnifying
Party," and any Person entitled to be indemnified pursuant to the
provisions of this Section 6.2 is referred to herein as an "Indemnified
Party."
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(d) Seller's indemnification obligations shall not apply to any
Claim for Damages unless and until the aggregate of all such Damages
exceeds one percent (1%) of the Purchase Price (the "Threshold Amount"), in
which event Seller's indemnity obligations shall apply to all Claims for
Damages in excess of the Threshold Amount, subject to a maximum liability
to Seller, in the aggregate, of $25,000,000 (the "Cap Amount"); provided,
however, that (i) any Claims for Damages for breach of the representations
and warranties set forth in Section 3.1, Section 3.2, and Section 3.3,
shall not be subject to the Threshold Amount, Cap Amount, or Minimum Claim
Amount (as defined below); and (ii) Seller's indemnification obligations
contained in Section 6.2(a)(iii) shall not be subject to the Threshold
Amount and the Minimum Claim Amount. Damages relating to any single breach
or series of related breaches of Seller's representations and warranties
shall not constitute Damages, and therefore shall not be applied towards
the Threshold Amount or be indemnifiable hereunder, unless such Damages
relating to any single breach or series of related breaches exceed $100,000
(the "Minimum Claim Amount").
(e) Buyer's indemnification obligations contained in Section
6.2(b)(i) shall not apply to any Claim for Damages unless and until the
aggregate of all such Damages equals the Threshold Amount, in which event
Buyer's indemnification obligation contained in Section 6.2(b)(i) shall
apply to all Claims for Damages in excess of the Threshold Amount, subject
to a maximum liability to the Buyer, in the aggregate, of the Cap Amount.
Damages relating to any single breach or series of related breaches of
Buyer's representations and warranties shall not constitute Damages, and
therefore shall not be applied towards the Threshold Amount or be
indemnifiable hereunder, unless such Damages relating to any single breach
or series of related breaches exceed the Minimum Claim Amount.
(f) The indemnification obligations of each party hereto under
this Section 6.2 shall inure to the benefit of the Buyer Indemnified
Parties and Seller Indemnified Parties, and such Buyer Indemnified Parties
and Seller Indemnified Parties shall be obligated to keep and perform the
obligations imposed on an Indemnified Party by this Section 6.2, on the
same terms as are applicable to such other party.
(g) In all cases in which a Person is entitled to be indemnified
in accordance with this Agreement, such Indemnified Party shall be under a
duty to take all commercially reasonable measures to mitigate all losses.
(h) All amounts paid by Seller or Buyer, as the case may be,
under this Article VI shall be treated as adjustments to the Purchase Price
for all Tax purposes.
(i) Notwithstanding any other provision of this Agreement, in no
event shall any Indemnified Party be entitled to indemnification pursuant
to this Article VI to the extent any Damages were attributable to such
Indemnified Party's own gross negligence or willful misconduct.
44
(j) The remedies provided in this Article VI shall be deemed the
sole and exclusive remedies of the parties, from and after the date hereof,
with respect to this Agreement and the transactions contemplated hereby.
Section 6.3 Calculation of Damages.
(a) The amount of any Damages suffered by any party hereto shall
be reduced by (i) any amount that is reserved for sums held in reserve in
respect of the indemnifiable event on the balance sheet of the Entities, as
applicable, as of December 31, 2006, to the extent such Damages are
suffered by a Buyer Indemnified Party, (ii) any amount that an Indemnified
Party is entitled to receive with respect thereto under any third party
insurance coverage or from any other party alleged to be responsible
therefore or (iii) any Tax Benefit realized by an Indemnified Party or its
Affiliates. For purposes of this Agreement, "Tax Benefit" shall mean the
Tax savings attributable to any deduction, expense, loss, credit or refund
to the indemnified party or its Affiliates, when incurred or received;
provided, however, that if such benefit is reasonably expected to arise or
be utilized after the year in which indemnification occurs pursuant to this
Agreement, then it means the present value of such Tax savings (calculated
using the one Prime Rate (as published in The Wall Street Journal on the
first Business Day of the taxable year in which the indemnification occurs)
and a Tax rate equal to the sum of the highest marginal Argentine corporate
income Tax rate or rates applicable to ordinary income or capital gain, as
the case may be, in effect for the taxable period in issue).
(b) If an Indemnified Party makes a claim for indemnification
under this Article VI, the Indemnified Party shall use its reasonable best
efforts to collect any amounts available under such insurance coverage and
from such other party alleged to have responsibility. If an Indemnified
Party receives an amount under insurance coverage or from such other party
with respect to Damages at any time subsequent to any indemnification
provided by Seller or Buyer, as the case may be, pursuant to this Article
VI, then such Indemnified Party shall promptly reimburse the Indemnifying
Party for any payment made or expense incurred by the Indemnifying Party in
connection with providing such indemnification up to such amount received
by the Indemnified Party, but net of any expenses incurred by the
Indemnified Party in collecting such amount. To the extent the Indemnifying
Party makes any indemnification payment pursuant to this Article VI in
respect of Damages for which an Indemnified Party has a right to recover
against a third party (including an insurance company), the Indemnifying
Party shall be subrogated to the right of the Indemnified Party to seek and
obtain recovery from such third party; provided, however, that if the
Indemnifying Party shall be prohibited from such subrogation, the
Indemnified Party shall seek recovery from such third party on the
Indemnifying Party's behalf and pay any such recovery to the Indemnifying
Party net of expenses.
Section 6.4 Procedures for Third-Party Claims. The obligations of any
Indemnifying Party to indemnify any Indemnified Party under this Article VI
with respect to Claim for Damages by third parties (including Governmental
Entities) (a "Third-Party Claim"), shall be subject to the following terms
and conditions:
45
(a) The Indemnified Party shall give the Indemnifying Party
written notice of any such Third-Party Claim reasonably promptly after
learning of such Third-Party Claim, and the Indemnifying Party may, at its
option, undertake the defense thereof by representatives of its own
choosing and reasonably acceptable to the Indemnified Party, and shall
provide written notice of any such undertaking to the Indemnified Party.
Failure to give prompt written notice of a Third-Party Claim hereunder
shall not affect the Indemnifying Party's obligations under this Article
VI, except to the extent that the Indemnifying Party is actually prejudiced
by such failure to give prompt written notice. The Indemnified Party shall,
and shall cause its employees and representatives to, cooperate reasonably
with the Indemnifying Party in connection with the settlement or defense of
such Third-Party Claim and shall provide the Indemnifying Party with all
available information and documents concerning such Third-Party Claim. The
Indemnifying Party shall provide the Indemnified Party with copies of all
non-privileged communications and other information in respect of the
Third-Party Claim and, with respect to any Third-Party Claim for Taxes,
shall allow Buyer to participate at its own expense in defense of the claim
under the reasonable control of the Indemnifying Party. If the Indemnifying
Party, within thirty (30) days after written notice of any such Third-Party
Claim, fails to assume the defense of such Third-Party Claim, or, after
assuming defense, negligently fails to defend and fails to call after
reasonable written notice of the same, the Indemnified Party against whom
such Third-Party Claim has been made shall (upon further written notice to
the Indemnifying Party) have the right to undertake the defense, compromise
or settlement of such Third-Party Claim on behalf of and for the account
and risk, and at the expense, of the Indemnifying Party, subject to the
right of the Indemnifying Party to assume the defense of such Third-Party
Claim at any time prior to settlement, compromise or final determination
thereof upon written notice to the Indemnified Party.
(b) Anything in this Section 6.4 to the contrary notwithstanding,
(i) the Indemnified Party shall not settle a Third-Party Claim for which it
is indemnified without the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld, conditioned or delayed
and (ii) the Indemnifying Party shall not enter into any settlement or
compromise of any action, suit or proceeding, or consent to the entry of
any judgment for relief other than monetary damages to be borne by the
Indemnifying Party, without the prior written consent of the Indemnified
Party, which consent shall not be unreasonably withheld, conditioned or
delayed.
Section 6.5 Procedures for Inter-Party Claims.
In the event that an Indemnified Party determines that it has a Claim
for Damages against an Indemnifying Party hereunder (other than as a result
of a Third-Party Claim), the Indemnified Party shall give reasonably prompt
written notice thereof to the Indemnifying Party, specifying the amount of
such Claim and any relevant facts and circumstances relating thereto, and
such notice shall be promptly given even if the nature or extent of the
Damages is not then known. The notification shall be subsequently
supplemented within a reasonable time as additional information regarding
the Claim or the nature or extent of Damages resulting therefrom becomes
available to the Indemnified
46
Party. Any failure to give such reasonably prompt notice or supplement
thereto or to provide any such facts and circumstances will not waive any
rights of the Indemnified Party, except to the extent that the rights of
the Indemnifying Party are actually materially prejudiced thereby. The
Indemnified Party and the Indemnifying Party shall attempt to negotiate in
good faith for a thirty-day (30-day) period regarding the resolution of any
disputed Claims for Damages. If for any reason, such dispute cannot be
resolved by negotiation, on the request of any party it shall be resolved
by arbitration in accordance with Section 7.8 herein. Promptly following
the final determination of the amount of any Damages claimed by the
Indemnified Party, the Indemnifying Party, subject to the limitations of
the Minimum Claim Amount, Threshold Amount and the Cap Amount, shall pay
such Damages to the Indemnified Party by wire transfer of immediately
available funds.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1 Interpretation.
(a) Unless the context of this Agreement otherwise requires, (a)
words of any gender include the other gender; (b) words using the singular
or plural number also include the plural or singular number, respectively;
(c) the terms "hereof," "herein," "hereby" and derivative or similar words
refer to this entire Agreement; (d) the terms "Article," "Section" and
"Exhibit" refer to the specified Article, Section and Exhibit of this
Agreement, respectively; and (e) "including," shall mean "including, but
not limited to"; and (v) the words "asset" and "property" shall be
construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties (whether real or personal).
Unless otherwise expressly provided, any agreement, instrument, law or
regulation defined or referred to herein means such agreement, instrument,
law or regulation as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent
and (in the case of a law or regulation) by succession of comparable
successor law and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein.
(b) For purposes of Article III and all covenants and obligations
of Seller hereunder including indemnification obligations of Article VI,
all representations, warranties, covenants and obligations made by Seller
shall be deemed to be jointly and severally made by each Seller entity.
(c) For purposes of Article V, in the event that Seller shall be
obligated to cause, or use its reasonable best efforts to cause, an
Affiliate over which it does not have voting control to act or not act,
directly or indirectly through the exercise of equity voting rights or
contractual and other rights, it shall be obligated to exercise all of its
contractual and other rights to cause such action or inaction by such
Affiliate.
47
Section 7.2 Disclosure Letters.
The Seller Disclosure Letter and the Buyer Disclosure Letter are
incorporated into this Agreement by reference and made a part hereof.
Section 7.3 Payments.
All payments set forth in this Agreement are in United States Dollars.
Such payments shall be made by wire transfer of immediately available funds
or by such other means as the parties to such payment shall designate.
Section 7.4 Expenses.
Except as expressly set forth herein, or as agreed upon in writing by
the parties, each party shall bear its own costs, fees and expenses,
including the expenses of its representatives, incurred by such party in
connection with this Agreement and the transaction contemplated hereby and
thereby.
Section 7.5 Choice of Law.
THIS AGREEMENT, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR
CHOICE OF LAWS OR ANY OTHER LAW THAT WOULD MAKE THE LAWS OF ANY OTHER
JURISDICTION OTHER THAN THE STATE OF NEW YORK APPLICABLE HERETO.
Section 7.6 Assignment.
This Agreement may not be assigned by either party without the prior
written consent of the other party; provided, however, that without the
prior written consent of the other party, each party shall have the right
to assign its rights and obligations under this Agreement to any third
party successor to all or substantially all of its entire business.
Section 7.7 Notices.
All demands, notices, consents, approvals, reports, requests and other
communications hereunder must be in writing, will be deemed to have been
duly given only if delivered personally or by facsimile transmission (with
confirmation of receipt) or by an internationally-recognized express
courier service to the parties at the following addresses or telephone or
facsimile numbers and will be deemed effective upon delivery; provided,
however, that any communication by facsimile shall be confirmed by an
internationally-recognized express courier service.
48
(i) If to the Seller:
CMS Enterprises Company
One Energy Plaza
Jackson, Michigan 49201
Attention: General Counsel
Telephone: (517) 788-0550
Facsimile: (517) 788-1671
With a required copy to:
Miller, Canfield, Paddock and Stone, PLC
101 North Main Street, 7th Floor
Ann Arbor, Michigan 48104
Attention: Michael D. VanHemert
Telephone: (734) 668-7117
Facsimile: (734) 747-7147
(ii) If to Buyer:
(a) Lucid Energy, LLC
30078 Schoenherr, Suite 150
Warren, Michigan
Attention: Rai Bhargava/Manouch Daneshvar
Telephone: (586) 445-2300
Facsimile: (586) 445-1782
With a required copy to:
Ufer & Spaniola, P.C.
5440 Corporate Drive, Suite 250
Troy, Michigan 48098-2648
Attention: Gerald Van Wyke, Esquire
Telephone: (248) 641-7000
Facsimile: (248) 641-5120)
(b) New Argentine Generation Company, L.L.C.
410 Park Avenue, Suite 510,
New York, NY 10022
Attention: Authorized Person
Telephone: (212) 751-9233
Facsimile: (212) 355-3594
49
With a required copy to:
Garrigues
410 Park Avenue, Suite 510,
New York, NY 10022
Attention: Xavier Ruiz
Telephone: (212) 751-9233
Facsimile: (212) 355-3594
Citigroup Financial Products Inc.
390 Greenwich Street
7th Floor
NY, NY 10013
Attention: Al Valma
Telephone: 212-657-8195
Facsimile: 212-657-9042
Attention: Michael Triolo
Telephone: 212-723-1305
Facsimile: 212-723-8036
or to such other address as the addressee shall have last furnished in
writing in accord with this provision to the addressor.
Section 7.8 Resolution of Disputes.
Except for the resolution of disputes that shall be resolved in
accordance with the procedures set forth in Sections 5.1 and 6.5 herein,
all disputes arising out of or relating to this Agreement or any Related
Agreement or the breach, termination or validity thereof or the parties'
performance hereunder or thereunder ("Dispute") shall be resolved as
provided by this Section 7.8.
(a) If the Dispute has not been resolved by executive officer
negotiation within thirty (30) days of the disputing party's notice
requesting negotiation, or if the parties fail to meet within twenty (20)
days from delivery of said notice, such Dispute shall be submitted to and
finally settled by arbitration in accordance with the Rules of Arbitration
of the International Chamber of Commerce in New York ("ICC") then in effect
(the "Rules"), except as modified herein.
(b) The arbitration shall be held, and the award shall be
rendered, in the English language. There shall be three arbitrators, one of
whom shall be nominated by each of Buyer and Seller in accordance with the
Rules. The two party appointed arbitrators shall have thirty (30) days from
the confirmation of the nomination
50
of the second arbitrator to agree on the nomination of a third arbitrator
who shall serve as chair of the arbitral tribunal. On the request of any
party, any arbitrator not timely appointed in accordance with this
Agreement or the Rules shall be appointed by the ICC.
(c) The award shall be final and binding upon the parties as from
the date rendered, and shall be the sole and exclusive remedy between the
parties regarding any claims, counterclaims, issues, or accounting
presented to the arbitral tribunal. Judgment upon any award may be entered
and enforced in any court having jurisdiction over a party or any of its
assets. For the purpose of the enforcement of an award, the parties
irrevocably and unconditionally submit to the jurisdiction of a competent
court in any jurisdiction in which a party may have assets and waive any
defenses to such enforcement based on lack of personal jurisdiction or
inconvenient forum. This Agreement and the rights and obligations of the
parties shall remain in full force and effect pending the award in any
arbitration proceeding hereunder.
(d) The Parties agree that any court action or proceeding to
compel or in support of arbitration or for provisional remedies in aid of
arbitration, including but not limited to any action to enforce the
provisions of this Section 7.8, for temporary injunctive relief to maintain
the status quo or prevent irreparable harm prior to the appointment of the
arbitral tribunal, shall be brought exclusively in the federal or state
courts located in New York, New York (the "New York Courts"). The Parties
hereby unconditionally and irrevocably submit to the exclusive jurisdiction
of the New York Courts for such purpose, and to the non-exclusive
jurisdiction of the New York Courts in any action to enforce any
arbitration award rendered hereunder, and waive any right to stay or
dismiss any such actions or proceedings brought before the New York Courts
on the basis of forum non conveniens or improper venue. Without prejudice
to such provisional remedies as may be available under the jurisdiction of
a national court, the arbitral tribunal shall have full authority to grant
provisional remedies and to direct the parties to request that any court
modify or vacate any temporary or preliminary relief issued by such court,
and to award damages for the failure of any party to respect the arbitral
tribunal's orders to that effect.
Section 7.9 Language.
The parties confirm that it is their wish that this Agreement and any
other documents related hereto or thereto, including notices, schedules and
authorizations, have been and shall be drawn up in the English language
only.
Section 7.10 No Right of Setoff.
Neither party hereto nor any Affiliate thereof may deduct from, set
off, holdback or otherwise reduce in any manner whatsoever any amount owed
to it hereunder or pursuant to any Related Agreement against any amounts
owed hereunder of pursuant to any Related Agreement by such Persons to the
other party hereto or any of such other party's Affiliates.
51
Section 7.11 Time is of the Essence.
Time is of the essence in the performance of the provisions of this
Agreement.
Section 7.12 Specific Performance.
Each party acknowledges and agrees that any breach of any provision of
this Agreement would cause irreparable harm to the other party. Each party,
without prejudice to any rights to judicial relief it may otherwise have,
shall be entitled to equitable relief, including injunction and specific
performance. Each party agrees that it will not oppose the granting of such
relief on the basis that the other party has not suffered irreparable harm
or that the other party has an adequate remedy at Law. Each party agrees
that it will not seek and agrees to waive any requirement for the securing
or posting of a bond in connection with the other party's seeking or
obtaining such relief.
Section 7.13 Currency Matters.
(a) Each Party's obligations hereunder to make payments in
Dollars shall not be discharged or satisfied by any tender or recovery
pursuant to any judgment expressed in or converted into any currency other
than Dollars.
(b) The obligation of any Party to pay in Dollars those amounts
specified to be due in Dollars under this Agreement shall not be deemed to
have been novated, discharged or satisfied by any tender of (or recovery
under judgment expressed in) any currency other than Dollars. Additionally,
all amounts due under this Agreement shall be payable and paid in the
United States.
Section 7.14 Entire Agreement.
This Agreement, together with the Seller Disclosure Letter, Buyer
Disclosure Letter, Annexes I, II and III, Exhibits hereto, the
Confidentiality Agreement, and the closing letter between Seller and Buyer
dated the date hereof constitute the entire agreement between the parties
hereto with respect to the subject matter herein and supersede all previous
agreements, whether written or oral, relating to the subject matter of this
Agreement and all prior drafts of this Agreement, all of which are merged
into this Agreement. No prior drafts of this Agreement and no words or
phrases from any such prior drafts shall be admissible into evidence in any
action or suit involving this Agreement. In the case of any material
conflict between any provision of this Agreement and any other Related
Agreement, this Agreement shall take precedence.
Section 7.15 Binding Nature; Third Party Beneficiaries.
This Agreement shall be binding upon and inure solely to the benefit
of the parties hereto and their respective successors (whether by operation
of law or otherwise) and permitted assigns. Except as expressly provided
herein, none of the provisions of this Agreement shall be for the benefit
of or enforceable by any third party, including any creditor of either
party or any of their Affiliates. Except as expressly provided herein, no
such third party shall obtain any right under any provision of this
Agreement or shall by
52
reasons of any such provision make any Claim in respect of any Liability
(or otherwise) against either party hereto.
Section 7.16 Counterparts.
This Agreement may be executed in two (2) or more counterparts, each
of which, when executed, shall be deemed to be an original and both of
which together shall constitute one and the same document. Any counterpart
or other signature to this Agreement that is delivered by facsimile or
electronic mail shall be deemed for all purposes as constituting good and
valid execution and delivery by such party of this Agreement.
Section 7.17 Severability.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any applicable present or future law, and if the rights
or obligations of either party under this Agreement will not be materially
and adversely affected thereby, (i) such provision shall be fully
severable, (ii) this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part
hereof, (iii) the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom and (iv) in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as a part of this Agreement, a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
Section 7.18 Headings.
The headings used in this Agreement have been inserted for convenience
of reference only and do not define or limit the provisions hereof.
Section 7.19 Waiver.
Any term or condition of this Agreement may be waived at any time by
the party that is entitled to the benefit thereof, but no such waiver shall
be effective unless set forth in a written instrument duly executed by or
on behalf of the party or parties waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by law or otherwise afforded, will
be cumulative and not alternative.
Section 7.20 Amendment.
This Agreement may be altered, amended or changed only by a writing
making specific reference to this Agreement and signed by duly authorized
representatives of each party.
53
IN WITNESS WHEREOF, Seller and Buyer, by their duly authorized
officers, have executed this Agreement as of the date first written above.
CMS ENTERPRISES COMPANY
By: /s/ Thomas W. Elward
------------------------------------
Name: Thomas W. Elward
Title: President and Chief Operating
Officer
CMS GENERATION HOLDINGS COMPANY
By: /s/ Thomas W. Elward
------------------------------------
Name: Thomas W. Elward
Title: President and Chief Executive
Officer
CMS INTERNATIONAL VENTURES, L.L.C.
By: /s/ Thomas W. Elward
------------------------------------
Name: Thomas W. Elward
Title: President
(Collectively, the Seller)
LUCID ENERGY, LLC
By: /s/ Manouch Daneshvar
------------------------------------
Name: Manouch Daneshvar
Title: President, COO and Secretary
NEW ARGENTINE GENERATION COMPANY, LLC
By: /s/ Rai Bhargava
------------------------------------
Name: Rai Bhargava
Title: Chairman and Chief Executive
Officer
NEW ARGENTINE GENERATION COMPANY, LLC
By: /s/ Manouch Daneshvar
------------------------------------
Name: Manouch Daneshvar
Title: President, Chief Operating
Officer and Secretary
(Collectively, the Buyer)
54
ANNEX I
EQUITY INTEREST
DIRECT EQUITY INTEREST
(i) 312,234,100 quotas of CMS Operating S.R.L. owned by CMS
International Ventures, L.L.C.
(ii) 43,176,438 quotas of CMS Operating S.R.L. owned by CMS Generation
Holding Company (12,1483% of the capital)
(iii) 62,055,630 quotas of CMS Generation S.R.L. owned by CMS
International Ventures, L.L.C.
(iv) 6,895,070 quotas of CMS Generation S.R.L. owned by CMS Generation
Holdings Company
(v) 121,999 shares of CMS Comercializadora de Energia S.A. owned by
CMS Enterprises Company
(vi) 1 share of CMS Comercializadora de Energia S.A. owned by CMS
Generation Holdings Company
(vii) 22,500 shares of CMS Centrales Termicas S.A. owned by CMS
Enterprises Company
(viii) 2,500 shares of CMS Centrales Termicas S.A. owned by CMS
Generation Holdings Company
(ix) 80,060 shares of CMS Ensenada S.A. owned by CMS Generation
Holdings Company
INDIRECT EQUITY INTEREST
(i) 37,931,940 shares of CMS Ensenada S.A. owned by CMS Operating
S.R.L.
(ii) 272,890,208 shares of Cuyana S.A. de Inversiones owned by CMS
Operating S.R.L.
(iii) 8,440,145 shares of Cuyana S.A. de Inversiones owned by CMS
Centrales Termicas S.A.
(iv) 141,946,679 class A shares and 115,772,224 class B shares of
Centrales
55
Termicas Mendoza S.A. owned by Cuyana S.A. de Inversiones.
(v) 8,702,400 class C shares of Transportadora de Gas del Mercosur
S.A. owned by CMS Operating S.R.L.
56
ANNEX II
ASSUMED INDEBTEDNESS
(i) Promissory Notes from CMS Ensenada S.A. to CMS Enterprises
Company dated (a) January 15, 2004; (b) July 15, 2004; and (c)
July 7, 2005 in the amounts of US$825,421, US$2,003,898, and
US$577,042, respectively plus accrued interests.
(ii) Promissory Note from Transportadora de Gas del Mercosur S.A. to
CMS international Ventures L.L.C. - current balance is US$
7,807,814.45 as of January 31, 2007.
(iii) Promissory Note from Transportadora de Gas del Mercosur S.A. to
CMS Operating SRL - current balance is US$ 277,011.51 as of
January 31, 2007.
(iv) Promissory Note from CMS Generation Investment Company VI to
Cuyana S.A. de Inversiones dated December 21, 2005 - current
balance is US$12,484,339 plus accrued interests.
(v) Intercompany Account Payable to CMS International Ventures,
L.L.C. from CMS Operating S.R.L. in the amount of US$ 4,543,034
as of February 28, 2007.
57
ANNEX III
COPY OF THE HIDROINVEST SPA
58
Purchase Agreement
between
CMS Generation Co.,
CMS Generation S.R.L.
and
Empresa Nacional de Electricidad SA -ENDESA CHILE
signed on
March 8, 2007
This Purchase Agreement (this "Agreement") is entered into in the City of Buenos
Aires on March 9, 2007 by and between:
CMS Generation Co. a corporation organized and existing under the laws of
Michigan, United States of America, with its registered office at One Energy
Plaza, Jackson, Michigan 49201, United States of America, herein represented by
Mr. Bemardo Velar de lrigoyen in his capacity as Attorney-in-fact;
CMS Generation S.R.L. a sociedad de responsabilidad limitade organized and
existing under the laws of the Republic of Argentina, with its registered office
at Ing. E. Butty 220, 8th floor, City of Buenos Aires, Argentina, herein
represented by Mr. Bernardo Velar de Irigoyen in his capacity as Presidente de
la Genercia (collectively with CMS Generation Co., the "Sellers" or "CMS"); and
Empresa Nacional de Electricidad S.A. - ENDESA CHILE, a sociedad anonima
organized and existing under the laws of the Replubic of Chile, with its
registered office at Santa Rosa 76, Santiago, Replublic of Chile, herein
represented by Mr. Carlos Manuel Martin Vergara in his capacity as Secretary of
the Board of Directors and Attorney-in-fact (the "Buyer" and, together with the
Sellers, the "Parties").
WITNESSETH:
A. WHEREAS, CMS Generation Co. owns beneficially and of record 7,405,768 class
"B" shares of Hidroelectrica El Chocon S.A. "(HECSA") representing 2.48% of the
issued and outstanding voting stock of HECSA (including all political an
deconomic rights relating thereto, the "HECSA Shares").
B. WHEREAS, CMS Generation S.R.L. owns beneficially and of record 2,734,110
class "R" shares and 1,733,390 class "L" shares of Hidroinvest S.A.
("Hidroinvest") representing in the aggregate 25% of the issued and outstanding
voting stock of Hidroinvest (including all political and economic rights
relating thereto, the "Hidroinvest Shares" and, together with HECSA Shares, the
"Shares").
C. WHEREAS, Hidroinvest owns beneficially and of record 152,277,866 class "A"
shares and 23,866,723 class "B" shares of HECSA representing in the aggregate
59% of the issued and outstanding voting stock of HECSA.
D. WHEREAS, Endesa Argentina S.A., a corporation organized and existing under
the laws of the Republice of Argentina, and a subsidiary of Buyer, currently
owns beneficially and of record 6,379,590 class "R" shares and 6,116,146 class
"L" shares of Hidroinvest and 18,493,689 class "B" shares of HECSA.
E. WHEREAS, CMS Generation Co. is the sole and exclusive holder of that certain
promissory note issued by Hidroinvest on September 22, 1995 for a face value of
US$18.582.429,32 (as the same may have been subsequently modified, amended or
extended, together with all instruments and agreements related thereto the
copies of which are attached hereto as Annex E, the "Promissory Note" and,
collectively with the Shares, the "Assets").
F. WHEREAS, pursuant to the terms set forth.in Section 2.10. of the Shareholders
Agreement (as defined below), Sellers have granted to Buyer, and Buyer has
accepted, an offer to buy the Assets.
G. WHEREAS, the Parties declare that, notwithstanding the rights granted to CMS
as a minority shareholder as set forth in the by-laws and the Shareholders
Agreement (as defined in Article VI herein) , Buyer - through Endesa Argentina
S.A. - currently has exclusive economic and legal control over Hidroinvest and
HECSA, directly and indirectly, respectively. Therefore, Sellers and Buyer deem
that the transfer of the Shares from Sellers to Buyer (the "Stock Transaction")
is not subject to the mandatory notice regime established in Article 8, Law No.
25,156, based on the fact that neither the nature nor the content of the
Buyers's current control over Hidroinvest and HECSA shall be altered. Moreover,
the Parties highlight that, as Buyer currently owns almost 70% of the capital
stock and votes of Hidroinvest, the Stock Transaction should be regarded as
exempted from the prior authorization procedure set forth in the abovementioned
regulation, according to Article 10, item (a), Law No. 25,156.
H. WHEREAS, notwithstanding the above, and without prejudice to the execution
and closing of the Stock Transaction as provided herein below, Buyer deems
reasonable and advisable to seek a confirmation from the Secretary of Domestic
Commerce or the competent authority pursuant to the applicable laws (the
"Competent Authority") of the validity of the criteria stated in Recital G
above, through the advisory opinion (opinion consu/tiva) procedure established
in Decree No. 89/2001 and the Annex to Resolution No. 26/2006 of the Technical
Coordination Secretary (the "Request").
I. WHEREAS, the Sellers acknowledge and agree to the filing of the Request to be
performed by the Buyer, as set forth in this Agreement.
J. WHEREAS, subject to the terms and conditions hereof, the Sellers desire to
sell the Assets to the Buyer and the Buyer desires to purchase the Assets from
the Sellers.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the Parties hereto agree as
follows:
I. SALE AND PURCHASE OF THE ASSETS. PURCHASE PRICE
1.1. Purchase and Sale of the Assets. Simultaneously with the payment of the
Purchase Price (as defined below) in accordance with this Article I the Sellers
shall sell, assign and transfer all of the Assets to the Buyer, and the Buyer
shall accept such sale, assignment and transfer in consideration for the
Purchase Price.
1.2. Purchase Price. The purchase price of the Assets is Fifty Million United
States Dollars (US $50,000,000) (the "Purchase Price").
1.3. Allocation of the Purchase Price. The Purchase Price shall be paid by Buyer
on the date hereof in immediately available funds by wire transfers to the
account of each Seller in the following proportions:
1.3.1. Six Million, Nine Hundred Thousand, United States Dollars (US
$6,900,000) to the following account:
CMS Generation Company
One Energy Plaza
Jackson, Michigan 49201
Tax ID No. 38-2698677
Bank: Wachovia Bank, NA
Location: Charlotte, NC
SWIFT: PNBP US 33
ABA #: 053 000 219
Acct Name: CMS Enterprises Company
Acct #: 2000028332279
in consideration for the HECSA Shares;
1.3.2. Twenty Six Million, Nine Hundred Thousand United States Dollars (US
$26,900,000) to the following account:
CMS Generation SRL
Avda. E. Madero 900 8[degree sign] Piso
Buenos Aires, Argentina
Tax ID No. 98-0391308
Acct Name: CMS Operating S.R.L.
Bank: Citibank, N.A.
Location: New York, NY
ABA: 021000089
A/C: 3683-3063
SWIFT: CITIUS33
in consideration for the Hidroinvest Shares; and
1.3.3. Sixteen Million, Two Hundred Thousand United States Dollars (US
$16,200,000) to the account indicated in 1.3.1 above, in consideration for the
Promissory Note.
II. DELIVERIES BY THE SELLERS
Upon payment of the Purchase Price, CMS shall proceed as follows:
2.1. Sellers shall notify the transfer of the Shares to Hidroinvest and HECSA,
as the case may be, substantially in the form attached hereto as Exhibit 2.1,
pursuant to the terms of Artide 215 of the Argentine Companies Law. Sellers
shall deliver to Buyer a copy of such notice.
2.2. Sellers shall deliyerto Hidroinvest and HECSA, with copy to the Buyer, the
written resignations of all of the directors and syndics of Hidroinvest and
HECSA appointed by CMS, substantially in the form attached hereto as Exhibit
2.2.
2.3. CMS Generation Co. shall deliver to the Buyer the Promissory Note duly
endorsed in favor of the Buyer. Simultaneously with such endorsement, CMS
Generation Co. shall notify Hidroinvest of the assignment of the credit under
the Promissory Note in favor of the Buyer. A notary public shall certify the
authenticity of the endorsing signature and the corresponding capacity of the
signing officer.
III. FILING OF THE REQUEST
3.1. The Buyer shall file, within three (3) days as of the date hereof, the
Request with the Competent Authority.
3.2. The Sellers acknowledge and agree to the filing of the Request pursuant to
the terms attached hereto as Exhibit 3.2. As required by the applicable
regulations, the Request will be signed both by Sellers and Buyer.
3.3. In the event the Competent Authority issues a Resolution instructing the
Parties to make a formal filing under the terms of Article 8 of Law 25.156,
Sellers shall timely perform or cause to be performed all acts which are
necessary under the relevant laws and regulations, as required by the Competent
Authority, in order to fully cooperate with Buyer in obtaining a favorable
ruling. Counsel for Buyer shall lead the filing process with the permanent
cooperation of counsel for the Sellers. Sellers and their counsel shall equally
cooperate with Buyer and its counsel in the event that the Competent Authority
requested any kind of information or documents atter the filing of the Request
and prior to issuing its advisory opinion (opini6n consultiva).
IV. REPRESENTATIONS BY THE SELLERS
4.1. Representations by CMS Generation Co. CMS Generation Co. represents and
warrants to the Buyer that (i) it has good, valid, marketable and exdusive title
to the HECSA Shares; (ii) it has the right and legal power and authority to sell
the HECSA Shares to Buyer and to enter into and/or perform its obligations under
this Agreement (and all commitments contemplated hereunder); (iii) the HECSA
Shares are validly issued, fully paid and non-assessable; and (iv) none of the
HECSA Shares has been issued in violation of any transfer restrictions.
4.2. Representations by CMS Generation S.R.L CMS Generation S.R.L represents and
warrants to the Buyer that (i) it has good, valid, marketable and exclusive
title to the Hidroinvest Shares; (ii) it has the right and legal power and
authority to sell the Hidroinvest Shares to Buyer and to enter into and/or
perform its obligations under this Agreement (and all commitments contemplated
hereunder); (iii) the Hidroinvest Shares are validly issued, fully paid and
non-assessable; and (IV) none of the Hidroinvest Shares has been issued in
violation of any transfer restrictions.
4.3. Representations by CMS Generation Co. CMS Generation Co. represents and
warrants to the Buyer as of the date hereof that (i) it is the sole and
exclusive' holder of the Promissory Note; and it has the right and legal power
and authority to assign and transfer the Promissory Note to Buyer and to enter
into and/or perform its obligations under this Agreement (and all commitments
contemplated hereunder), without need of any authorization from third parties.
4.4. Additional Representations by the Sellers. In addition to the limited
representations made by the Sellers in this Article IV, Sellers do not make any
representation nor grant any express or tacit warranty in connection with the
Assets, HECSA, or Hidroinvest. Buyer expressly releases the Sellers and the
directors and syndics of HECSA and Hidroinvest appointed by the Sellers for any
damage that Buyer and/or HECSA and/or Hidroinvest may suffer as a consequence of
the existence of any liability, hidden or not, of HECSA and/or Hidroinvest
and/or with regard to the financial statements of the HECSA and/or Hidroinvest
and waives any claim against the Sellers and the directors and syndics of HECSA
and/or Hidroinvest appointed by the Sellers in connection with the participation
of the Sellers in the management of HECSA and/or Hidroinvest.
V. REPRESENTATIONS BY THE BUYER
Buyer represents and warrants to the Sellers that it has full right and legal
power and authority to purchase the Assets from each of the Sellers and enter
into and/or perform its obligations under this Agreement and all commitments
contemplated hereunder.
VI. ADDITIONAL COVENANT BY THE BUYER
6.1. Darwin Tag Along Right. Buyer acknowledges, understands and agrees that
pursuant to that certain Addendum No. IV to the Contrato para la Participacion
en la Licitacion de Hidroelectricas Alicura S.A., El Chocon S.A., Cerros
Colorados S.A. y Piedra de Aguila S.A. entered into by and between
Hidroelectricidad S.A., Energia Hidraulica S.A., CMS Generation S.A., Sawgrass
Limited, Latin American Capital Partners Limited, C.I. Global Fund, C.I.
Emerging Markets Fund, The South America Fund IV and Darwin Holdings, Inc. on
December 5, 1994 (the "Shareholders Agreement"), as a consequence of this
Agreement Darwin Holdings, Inc. shall have the tag along right to sell the whole
or part of its shares in Hidroinvest to the Buyer (the "Darwin Shares").
6.2. Covenant by Buyer. Buyer expressly covenants and agrees to purchase the
whole or a part of the Darwin Shares upon requirement of Darwin Holdings, Inc.,
in accordance with the terms and conditions of the Shareholders Agreement.
VII. MISCELLANEOUS
7.1. Partial Invalidity. If, at any time, any provision of this Agreement is or
becomes illegal, invalide or unenforceable in any respect under any law of any
jurisdiction, neither the legality, validty or enforceability of the remaining
provisions nor the legality, validity or enforceability of such provision under
the law of any other jurisdiction will in any way be affected or impaired.
7.2. Assignment. This Agreement shall not be assigned in whole or in part
without the prior written consent of the other Parties.
7.3. Entire Agreement. This Agreement constitutes the entire agreement among the
Parties pertaining to the subject matter contained herein and supersedes all
prior agreements, representations and understandings of the Parties, whether
written or oral.
7.4. Interpretation. Buyers and Sellers have each had this Agreement reviewed by
experienced and qualified counsel and the opportunity to negotiate fully all of
the provisions of this Agreement.
7.5. Amendment and Waiver. No supplement to, or modification, or amendment of,
this Agreement shall be binding unless it is in writing and executed by all of
the Parties. No waiver shall be binding unless executed in writing by the Party
against whom the waiver is to be effective. No waiver or any of the provisions
of this Agreement shall be demed, or shall constitute a continuing waiver. No
failure or delay by any Party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
7.6. Notices. All notices, requests, demands, waivers and other communications
required to be given under this Agreement shall be in writing and shall be
deemed to have been duly given on (i) the date of service if served personally
on the party to whom notice is to be given; (ii) the date sent if given by
confirmed facsimilie transmission addressed to the party to whom notice is to be
given and a confirming copy is mailed to the party to whom notice is to be given
by first class mail; (iii) the day after sending if sent to the party to whom
notice is to be given by private courier for next day delivery; or (ii) the
third day after mailing if mailed to the party to whom notice is to be given by
certified mail, return receipt requested, and property addressed as follows:
If to the Sellers:
CMS Energy
Ingeniero Butty 220 8degrees Piso
(C1106ACU) -City of Buenos Aires, Argentina
Attention: Silvina Indart
Telephone: +(54 11) 4316 0860
Facsimile: + (54 11) 4316 0818
With a ..copy to:
CMS Enterprises Company
One Energy Plaza
Jackson, Michigan 49201
Attention: Sharon A. Mcllnay
Telephone: + (1 517) 788 0550
Facsimile: + (1 517) 788 1671
If to the Buyer:
Empresa Nacional de Electricidad S.A.
Santa Rosa 76, Santiago
Republic of Chile
Attention: Rafael Mateo Alcala
Telephone: + (562) 630.9157
Facsimile: + (562) 378.4780
VIII. APPLICABLE LAW. DISPUTE RESOLUTION
8.1. This Agreement shall be interpreted and performed in accordance with the
laws of the Republic of Argentina.
8.2. The Parties shall make their best efforts to amicably settle any
controversy, dispute or claim arising between them with respect to or relating
to the execution of this Agreement, or the breach, termination or validity
thereof (the "Dispute'). If, notwithstanding the foregoing, any Party considers
that such dispute cannot be amicably settled through negotiations, it may notify
in writing the other Parties its intention to settle the Dispute as provided
herein (a "Notice of Dispute"). The Dispute shall be finally settled under the
Rules of Arbitration of the ICC. There shall be three (3) arbitrators, one
appointed by the Sellers, one appointed by Buyers and the third appointed by the
ICC unless the Parties mutually agree to appoint such third arbitrator before it
is appointed by the ICC. The Dispute shall be finally settled solely and
exclusively by the aforesaid arbitration proceeding. The arbitration shall take
place in Geneva and shall be conducted in English.
IN WITNESS WHEREOF, the Parties have duly executed three (3) counterparts. each
of which shall be deemed an original but all of which shall constitute one and
the same instrument, as of the place and date first above written.
CMS GENERATION CO.
By: /s/ Bernardo Velar de Irigoyen
Name: Bernardo Velar de Irigoyen
Title: Attorney-in-fact
CMS GENERATION S.R.I.
By: /s/ Bernardo Velar de Irigoyen
Name: Bernardo Velar de Irigoyen
Title: Attorney-in-fact
EMPRESA NACIONAL DE ELECTRICIDAD SA
By: /s/ Carlos Manuel Martin Vergara
Name: Carlos Manuel Martin Vergara
Title: Secretary of the Board and
Attorney-in-fact
ANNEX E
PROMISSORY NOTE
No.3
U.S.$18,582,429.32 Date: September 22, 1995
FOR VALUE RECEIVED, the undersigned, HlDROINVEST S.A., an Argentine
corporation ("sociedad anonima") having its legal domicile at Suipacha No. 268,
Floor 12, (1355) Buenos Alres, Republic of Argentina, (the "Borrower"), hereby
promises to pay to the order of CMS GENERATION CO., having its pnncipal domicile
at Fair1ane Plaza South, 330 Town Center Drive, Suite 1000, Dearborn, Michigan,
United States of America 48126 (the "Lender") the principal sum of
U.S.$18,582,429.32 (Eighteen million, five hundred eighty-two thousand, four
hundred twenty-nine with 32/100 United States dollars). Such payment shall be
made on September 22, 1996. Use of the proceeds from this payment will be
utilized to payoff the amount owed under Promissory Note No. 1, dated as of
January 20, 1994, which had a maturity date on October 31, 1995.
The unpaid principal hereof shall bear interest from the dale hereof until
payment in full at the rate por annum resulting from adding two hundred (200)
basis points (2 %) to the rate at which United States dollar deposits of one
hundred and eighty (180) days and for amounts approximately equal to the unpaid
principal amount hereof are offered in the London interbank eurodollar market
("LIBOR") three (3) days prior to the date hereof as reported by Reuters,
provided, however, that if the resulting interest rate includes fractions not
divisible into eighths the said interest rate shall be rounded upward to the
nearest one-eight of one percent (1/8 of 1 %). Interest shall be paid together
with principal on September 22, 1996.
The Borrower shall make each payment under this Promissory Note in
immediately available funds not later than 12:00 noon (New York City time) on
the day when due in lawful money of the United States of America (in freely
transferable United States dollars) to the Lender or subsequent holder hereof at
a bank located in the City of New York, State of New York or elsewhere in the
United States of America, as the Lender or subsequent holder hereof shall
designate by written notice to the Borrower or at a bank located elsewhere in
the United States of America as the Lender or subsequent holder hereof shall
designate by written notice to the Borrower.
Computations of Interest shall be made on the basis of a year of three
hundred and sixty (360) days and for the actual number of days elapsed hereunder
(including the first day and excluding the last day).
If any amount shall become payable hereunder on a day which is not a day on
which banks are open for business in the City of London, the City of New York
and the City of Buenos Aires (any such day being herein called a "Business
Day"), such payment shall be made on the next succeeding Business Day unless
such Business Day shall fall in the next succeeding calendar month, in which
case, such payment shall be made on the next preceding Business Day and without
prejudice to the due date of any future payments.
It is an essential condition of this Promissory Note that all payments
hereunder be made in United States dollars ('Dollars'). To the extend that, at
the time Borrower is required to make any payments hereunder, the Borrower is
unable (1) to purchase Dollars with Argentine currency or to transfer the
Dollars so purchased in order to make such payments as required hereunder by
reason of the introduction of currency exchange restrictions in the Republic of
Argentina affecting the availability, convertibility or transferability of
foreign exchange to or by Argentine residents or (ii) to apply funds in freely
convertible non-Argentine currencies held by the Borrower outside the Republic
of Argentina, the Lender or subsequent holder hereof may, in its sole discretion
and pursuant to written notice to the Borrower, require the Borrower either (A)
to procure Dollars with "Bonos Externos de la Republica Argentina" ("External
Bonds') in an amount such that the Lender or subsequent holder of this
Promissory Note receives the full and complete amount of such payment in Dollars
on the date and in the manner herein provided or (B) on the date of such
payment, to deliver to the Lender or subsquent holder hereof, at the place
designated for payment at the opening of business, (x) External Bonds of the
series then most traded in the Buenos Aires Stock Exchange ("Bolsa de Comercio
de Buenos Aires") in an amount such that, in the sole judgement of the Lender or
subsequent holder hereof, when sold in the New York market for Dollars (in the
spot market on such date), would produce, net of any commissions, taxes or costs
of any nature, the Dollar amount required to be paid on such date as stated in
this Promissory Note and (y) written instructions to dispose of such External
Bonds on such date in the name and on behalf of the Borrower and apply the
proceeds thereof to such payment hereunder, provided, however, that such
Instructions shall fully discharge, indemnify, defend and hold harmless the
Lender or subsequent holder hereof with respect to any liability whatsoever to
the Borrower it might otherwise incur in connection with the performance of such
instructions and, provided, further, that if as a result of such sale the net
amount received by the Lender or subsequent holder hereof is less than the
Dollar amount due hereunder, the obligation of the Borrower to make payment
hereunder shall not be extinguished to the extent of such difference and, upon
the demand of the Lender or subsequent holder hereof, the Borrower shall
immediately deliver to the Lender or subsequent holder hereof such additional
External Bonds as the Lender or subsequent holder hereof may deem necessary to
compensate for such difference in the same series and under the same conditions
as the previous delivery. In either case, the Borrower shall pay for its own
account, and indemnify, defend and hold the Lender or subsequent holder hereof
harmless from any claim or liability which it may incur by reason or any
Argentine or foreign transfer, stamp, documentary or any other tax, commission
or other cost of any nature incurred in connection with any such payment or
delivery.
If as a result of any legal rule or of any resolution of any authority the
Lender or subsequent holder hereof determines that the cost to it of making or
maintaining the loan instrumented herein is increased or any amount received or
receivable by the Lender or subsequent holder hereof under this Promissory Note
is reduced, then the Borrower will immediately pay to the Lender or subsequent
holder hereof any additional amount(s) that the Lender or subsequent holder
hereof determines will compensate it for the effect of such increased cost, or
reduction in amount, plus lost profits.
If the Borrower defaults in the payment of the principal, interest thereon
or any other sums payable pursuant hereto, whether of fees, expenses or
otherwise, the interest on such defaulted amounts (to the extent permitted by
law) up to the day of actual payment (after as well as before judgment) shall
accrue at a rate per annum resulting form adding four hundred (400) basis points
(4%) to LlBOR. Such rate shall accrue on a day-to-day basis and be payable by
the Borrower on the demand of the Lender or subsequent holder hereof.
If any of the following events ("Events of Default") shall occur and be
continuing: (i) the Borrower shall fail to pay the principal amount hereof or
interest thereon on or any sum due hereunder when the same becomes due and
payable; (ii) the Borrower shall fail to pay (A) any debt for borrowed money in
excess of five million Dollars (U.S.$5,000,000.00) whether at scheduled maturity
by acceleration or otherwise or (B) any of its other indebtedness when due
(whether at scheduled maturity, by acceleration or otherwise) in connection with
accumulative amounts equal to or in excess of five million Dollars
(U.S.$5,000,000.00), if the effect of said failure is to accelerate, or to
permit the acceleration (after the giving of notice or passage of time or both)
of, the maturity of such indebtedness, or such indebtedness shall be declared to
be due and payable, or required to be prepaid, prior to the stated maturity
thereof; (iii) the Borrower shall fail to perform or observe any other provision
of this Promissory Note; or (iv) the Borrower (1) shall generally not, or be
unable to, or shall admit in writing its inability to, pay its debts as such
debts become due; or (2) shall make any assignment for the benefit of creditors,
or petition or apply to any tributal for the appointment of a custodian,
receiver or trustee for it or substantial part of its assets; or (3) shall
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (4) shall have had any such
petition or application filed or any such proceeding shall have been commenced
against it, in which adjudication or appointment is made or order for relief is
entered, or which petition, application or proceeding remains undismissed for a
period of thirty (30) days or more after notice thereof has been given to the
Borrower; or (5) by any act or omission shall indicate its consent to, approval
of or acquiescence in any such petition, application or proceeding or order for
relief for the appointment of a custodian, receiver or trustee for all or any
substantial part of its property, or (6) shall suffer any such custodianship,
receivership or trusteeship to continue undischarged for a period of thirty (30)
days or more; then, (y) in the case of an Event of Default other than the ones
referred to in clause (iv) above the Lender or subsequent holder hereof may, by
notice to the Borrower, declare the outstanding principal under this Promissory
Note, and all interest accruing thereon and all other amounts payable hereunder
to be forthwith due and payable whereupon all such principal, interest and other
amounts shall become and be forwith due and payabfe, without presentment, demand
protest or further notice of any kind, all of which are hereby waived by the
Borrower; and (z) in the case of an Event of Default referred to in clause (iv)
above, the principal outstanding under this Promissory Note and all interest
accruing thereon and all other amounts payable hereunder shall automatically be
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.
Section 1. Taxes. (a) Any and all payments made by the Borrower hereunder
shall be made free and clear of and without deduction for any present or future
taxes, levies, imposts, deductions, charges, or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on the overall net
income of the Lender or subsequent holder hereof (all such non-exduded taxes
being hereinafter referred to as "Taxes"). If the Borrower shall be required by
law to make any such deduction from any payment hereunder, (i) the sum payable
shall be increased as may be necessary so that after making all required
deduction under this Section 1, the Lender or subsequent holder hereof receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions. and (iii) the Borrower shall
pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present of future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery, registration of, performance or enforcement or otherwise with respect
to this Promissory Note (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify the Lender or subsequent holder hereof for
the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts, payable under this
Section 1 paid by the Lender or subsequent holder hereof or any liability
(including penalties, adjustments for inflation, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within thirty
(30) days from the date the Lender or subsequent holder hereof makes written
demand therefor.
(d) Within thirty (30) days after the date of any payment of Taxes or Other
Taxes, the Borrower will furnish to the Lender or subsequent holder hereof the
original or certified copy of a receipt evidencing payment thereof. If no Taxes
or Other Taxes are payable in respect of any payment, the Borrower will furnish
to the Lender or subsequent holder hereof a certificate from each appropriate
authority, or an opinon of counsel acceptable to the Lender or suosequent holder
hereof, in either case stating that such payment is exempt from or not subject
to Taxes or Other Taxes.
(e) Without prejudice to the survival or any other agreement of the
Borrower hereunder the agreements and obligations of the Borrower contained in
subsections (a) through (d) above (and any compensation for increased costs or
reductions of amounts receivable by the Lender or subsequent holder hereof as
provided herein above) shall survive the payment in full of principal and
interest hereunder.
Section 2. Consent to jurisdiction. Waiver of Immunities. (a) The Borrower
hereby irrevocably submits to the non-exclusive jurisdiction of any New York
State or Federal Court sitting in New York City over any action or preceeding
arising out of or relating to this Promissory Note.
(b) Nothing in this Section 2 shall affect the right of the Lender or
subsequent holder hereof to bring any action or proceeding against the Borrower
or its propertv in the courts of any other jurisdictions, including, without
limitation, the Courts sitting in the City of Buenos Aires, Argentina .
(c) To the extent that the Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment in aid of execution, attachment prior to
judgment, execution or otherwise) with respect to itself or its properties,
assets or revenues, the Borrower hereby irrevocably waives such immunity in
respect of its obligations aring out of or relating to this Promissory Note.
Section 3. Process Agent. The Borrower hereby designates and appoints CT
Corporation System (the "Process Agent"), with an office on the date hereof at
1633 Broadway, New York, New York 10019, as its agent to receive on its.behalf
and on behalf of its property, service of any and all process which may be
served in any suit, action, or proceeding any New York State or Federal court
sitting in New York City pursuant to Section 2 (a) hereof. Said designation and
appointment shall be irrevocable until all principal of and interest on this
Promissory Note and all other sums payable hereunder have been paid in full in
accordance with the terms hereof. The-Borrower convenants and agrees that it
shall take any and all action including, without limitation, the filing of any
and all documents, that maybe necessary to continue the foregoing designation
and appointment in full force and effect and to cause such agent to continue to
act as agent. If the Process Agent shall cease to so act, the Borrower covenants
and agrees that it shall irrevocably designate and appoint without delay another
such agent satisfactory to the Lender or subsequent holder hereof and shall
promptly deliver evidence in writing of such other agent's acceptance of such
appointment which shall, if necessary, include a waiver by such agent of any
immunity, sovereign or otherwise, which it may have with respect to any service
of process.
Section 4. Costs and Expenses. The Borrower agrees to pay on demand all
losses, costs and expenses, if any, in connection with the performance and/or
enforcement of this Promissory Note, including, without limitation, legal costs
and expenses evidenced to have been sustained by the Lender or subsequent holder
hereof as a result of a default hereunder.
Section 5. Waiver of Presentment. The Borrower hereby waives diligence,
presentment, notice of dishonor, demand, protest and notice of any kind
whatsoever.
Section 6. No Waiver of Rights. No failure or delay by the Lender in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, not shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies otherwise provided by law.
Section 7. Amendment, Change, Modification, or Waiver. No amendment,
change, modification, or waiver to this Promissory Note shall be valid unless
executed in writing by an officer of CMS Generation Co. In the event the
amendment, change, modification, or waiver involves an extension of the period
by which the interest together with the principal must be paid, this extension
can be for no more than 364 days at one time. Such an extension must be executed
on the form attached hereto as Schedule 1.
Section 8. Governing Law. This Note shall be governed by, and construed in
accordance with the internal laws of the State of New York, United States of
America.
This Promissory Note has not been registered under the Securities Act of
1993, as amended (the "Securities Act") or any securities laws of the States of
the United States and unless so registered, may not be offered or sold except
pursuant to an exemption from or in a transaction not subject to, the
registration requirements of the Securities Act and applicable state securities
laws.
IN WITNESS WHEREOF, the Borrower has caused this Promissory Note to be
executed by its duly authorized representative as of the day and year first
above written.
HIDROINVEST SA
By: /s/ Francisco A. Mezzadri
Name: Francisco A. Mezzadri
Title: Vice President
ALLONGE
THIS ENDORSENIENT IS TO BE ATTACHED TO AND MADE A PART OF THAT CERTAIN
Promissory Note No. 3, (the "Note") dated September 22, 1995, made by
Hidroinvest S.A., to CMS Generation Co, the original payee, in the original
principal amount of U.S. $18,582,429.32 Such Note is hereby transferred pursuant
to the following endorsement, without recourse or warranty, with the same force
and effect as if such endorsement were set forth at the end of such Note:
PAY TO THE ORDER OF:
__________________________
__________________________
By: /s/ AM Wright
Name: Alan M. Wright
Title: Executive Vice President,
Chief Financial Officer &
Chief Administrative Officer
This Allonge shall be attached to the Note described above and is hereby
made a part WHEREOF.
SCHEDULE 1
Amendment to Promissory Note No 3. dated September 22, 1995, issued by
Hidroinvest S.A. in favor of CMS Generation Co.
Gentlemen:
Pursuant to the terms and conditions of the above-referenced Promissory Note
(the "Note"), I, (name) in my capacity as (title), of CMS Generation Co. hereby
authorize the extension of the date upon which the unpaid principal and interest
must be paid to (new date).
All 0ther terms and conditions of the Note remain unchanged, unless authorized
in written.
Signed: Date:
-------------------------------- ---------------
(Name)
Amendment No.1 to Promissory Note No.3, dated September 22, 1995, issued by
Hidroinvest S.A. in favor of CMS Generation Co.
Gentlemen:
Pursuant to the terms and conditions of the above-referenced Promissory Note
(the "Note"), I, Nicholas A. Vlisides, in my capacity as Assistant Treasurer of
CMS Generation Co. hereby authorize the extension of the date upon which the
unpaid principal and interest must be paid to September 22, 1997.
All other terms and conditions of the Note remain unchanged, unless authorized
in writing.
Signed: /s/ N A Vlisides Date: September 20, 1996
Nicholas A. Vlisides
SCHEDULE 1
Amendment to Promissory Note No.3, dated September 22, 1995, issued by
Hidroinvest S.A. in favor of CMS Generation Co.
Gentlemen:
Pursuant to the terms and conditions of the above-referenced Promissory Note
(the "Note"), Laura L. Mountcastle, in my capacity as Vice President and
Treasurer of CMS Generation Co. hereby authorize the extension of the date upon
which the unpaid principal and interest must be paid to September 22, 2003.
All other terms and conditions of the Note remain unchanged, unless authorized
in writing.
Signed: /s/ Laura L Mountcastle Date: 10/28/02
Laura L. Mountcastle
Vice President and Treasurer
Buenos Aires, 8 de marzo de 2007
Senor
Presidente de
Hidroinvest SA
Presente
De nuestra consideracian:
TRANSFERENCIA DE ACCIONES
Tenemos el agrado de dirigimos a ustedes, a fin de comunicarles
que en el dia de la fecha CMS Generation S.RL. transfiria des millones
setecientos treinta y cuatro mil ciento diez (2.734.110) acciones clase "R" y un
millan setecientos treinta y tres mil trescientos noventa (1.733.390) acciones
clase "L" emitidas p~r Hidroinvest SA a favor de Empresa Nacional de
Electricidad SA -ENDESA CHILE, una sociedad constituida de acuerdo a las leyes
de la Republica de Chile, domiciliada en Santa Rosa 76, Santiago, Republica de
Chile.
En consecuencia, solicitamos de confonnidad con el articulo 215
de la ley N" 19.550, registrar la lransferencia de las mencionadas acciones
clase "R" y "L" en ellibro de registro de acciones de Hidroinvest SA a favor de
Empresa Nacional de Electricidad SA -ENDESA CHILE.
Sin otro particular, saludamos a ustedes atentamente.
/s/ CMS Generation S.R.L.
CMS Generation S.R.L.
Buenos Aires, 8de marzo de 2007
Senor
Presidente de
Hidroelectrica EI Chocon SA
Presente
De nuestra consideracion:
TRANSFERENCIA DE ACCIONES
Tenemos el agrado de dirigimos a ustedes, a fin de
comunicarlesque en el dia de la fecha CMS Generation Co. transfirio siete
millones cuatrocientos cinco mil setecientos sesenta yocho (7.405.768) acciones
clase "S" emitidas por Hidroelectrica EI ChocOn S.A. a favor de Empresa Nacional
de ElectriCidad SA -ENDESA CHILE, una sociedad constituida de acuerdo a las
leyes de la Republica de Chile, domiciliada en Santa Rosa 76, Santiago,
Republica de Chile.
En consecuencia, solicitamos de conformidad con el articulo 215
de la ley N" 19.550, registrar la transferencia de las mencionadas acciones
clase UB" en ellibro de registro de acciones de Hidroelectrica EI Chocon SA a
favor de Empresa Nacional de Electricidad SA -ENDESA CHILE.
Sin otro particular, saludamos a ustedes atentamente .
/s/ CMS Generation Co.
CMS Generation Co.
EXHIBIT 2.2
8 de Marzo de 2007
Presidente del directorio de
Hidroinvest S.A
Sr. Rafael Mateo Alcala
Avda. Espana 3301
(1107) Ciudad de Eluenos Aires
De mi consideracion,
PRESENTA RENUNCIA
Comunico a usted mi renuncia indedinable al cargo de Sindico
Titular del directorio de Hidroinvest S.A. a partir de hoy.
Atentamente,
/s/ Silvina Indart
Silvina Indart
Sindico Titular
8 de Marzo de 2007
Presidente del directorio de
Hidroinvest S.A
Sr. Rafael Mateo Alcala
Avda. Espana 3301
(1107) Ciudad de Buenos Aires
De mi consideracion.
PRESENTA RENUNCIA
Comunico a usted mi renuncia indeclinable al cargo de Director
Suplente del directorio de Hidroinvest S.A. a partir de hoy.
Alentamente.
/s/ Hector S. Falzone
Hector S. Falzone
Director Suplente
8 de Marzo de 2007
Presidente del diredorio de
Hidroinvest S.A.
Sr. Rafael Mateo Alcala
Avda. Espana 3301
(1107) Ciudad de Buenos Aires
De mi consideracion,
PRESENTA RENUNCIA
Comunico a usted mi renuncia indeclinable al cargo de Director
Titular del directorio de Hidroinvest S.A. a partir de hoy.
Atentamente,
/s/ Carlos Priocipi
Carlos Priocipi
Director Titular
8 de Marzo de 2007
Presidente del directorio de
Hidroinvest S.A.
Sr. Rafael Mateo Alcala
Avda. Espana 3301
(1107) Ciudad de Buenos Aires
De mi consideracion,
PRESENTA RENUNCIA
Comunico a usted mi renuncia indeclinable al cargo de Vice
Presidente del directorio de Hidroinvest S.A a partir de hoy.
Atentamente,
/s/ Bernardo Velande Ingoyen
Bernardo Velande Ingoyen
Vice Presidente
8 de Marzo de 2007
Presidente del directorio de
Hidroelectrica EI Chocon SA
Sr. Rafael Mateo Alcala
Avda. Espana 3301
(1107) Ciudad de Buenos Aires
De mi consideracion,
PRESENT A RENUNCIA
Comunico a usted mi renunda indeclinable al cargo de Sindico
Titular del directorio de Hidroelectrica EI Chacon SA a partir de hoy.
Atentamente,
/s/ Silvina Indart
Silvina Indart
Sindico Titular
8 de Marzo de 2007
Presidente del directorio de
Hidroelectrica El Chocon S.A.
Sr. Rafael Mateo Alcala
Avda. Espana 3301
(1107) Ciudad de Buenos Aires
De mi consideracion,
PRESENTA RENUNCIA
Comunico a usted eclinable al cargo de Director Suplente del
directorio de Hidroelectrica S.A. a partir de hoy.
Atentamente,
/s/ Carlos Principi
Carlos Principi
Director Suplente
8 de Marzo de 2007
Presidente del directorio de
Hidroelectrica EI Chocon S.A
Sr. Rafael Mateo Alcala
Avda. Espana 3301
(1107) Ciudad de Buenos Aires
De mi consideracion,
PRESENTA RENUNCIA
Comunico a usted mi renuncia indeclinable al cargo de Vice
Presidente del directorio de Hidroelectrica El Chocon SA. a partir de hoy.
Atentamente,
/s/ Bernardo Velarde Ingoyen
Bernardo Velarde Ingoyen
Vice Presidente
EXHIBIT 3.2
EXHIBIT 2.1
SOLICITA OPINION CONSULTIVA
Buenos Aires, 9 de marzo de 2007
Senor
Presidente de la
Comision Nacional de Defensa de la Competencia
Secretaria de Comercio Interior
Dr. Jose Sbatella
Av. Julio A. Roca 651, Piso 4, Sector 16
Ciudad Autonoma de Buenos Aires
S _____________ / D ______________
De nuestra consideracion:
Marcela !nes Anchava y Bernardo A. lriberri, en representacion de EMPRESA
NACIONAL DE ELECTRICIDAP S.A.. (en adelante "Endesa Chile") con domicilio en
Santa Rosa 76, Santiago, Republica de Chile, constituyendo domicilio especial a
los fines de esta presentacion en las oficinas del Estudio Cardenas, Di Cio,
Romero, Tarsitano & Lucero sitas en Reconquista 360, piso 6degrees, Ciudad de
Buenos Aires, y Bernardo Velar de Irigoyen, en su caracter de Presidente de la
Gerencia de CMS Generation S.R.L. y de apoderado de CMS Generation Co. (ambas
designadas conjuntamente como "CMS"), con domicilios en Ingeniero Butty 220 Piso
8degrees, Buenos Aires y One Energy Plaza, Jackson, Michigan, Estados U nidos de
America respectivamente, constituyendo dornicilio especial a los fines de esta
presentacion en Ingeniero Butty 220 Piso 8degrees, Buenos Aires, se presentan y
dicen:
I. Personeria
Que se adjunta como Anexo I el poder especial otorgado por Endesa Chile y, como
Anexo 2, copia del acta de designacion del representante legal de CMS Generation
SRL (Presidente de la Gerencia) y del poder otorgado por CMS Generation Co., a
favor de los suscriptos, con facultades suficientes para esta presentacion.
II. Objecto
Que por la representacion invocada venimos a solicitar a esa
Comision Nacional de Defensa de la Competencia (la "Comision") una opinion
consultiva en los Mrminos del Articulo 8 del Decreto 89/2001 reglamentario de la
Ley 25. 156 (texto seglin Decreto PEN 39612001) (la "Ley de Defensa de la
Competencia',) y de la Resolucion 26/2006 de la Secretaria de Coordinacion
Tecnica, solicitando se declare que la operacion que se describe a continuacion
no se encuentra sujeta al control previo estable.cido en el articulo 8 de la Ley
de Defensa de la Competencia.
III. Descripcion de la Operacion
1. Antecedentes de las partes y de las sociedades objeto de la operacion.
Endesa Argentina S.A., sociedad controlada por Endesa Chile, con domicilio en
Suipacha 268 Piso 12, Buenos Aires, Argentina, es actualmente accionista
mayoritaria de HIDROINVEST S.A. ("HIDROINVEST"), ..compania en la que tiene el
69,93% del capital y de los votos.
CMS tiene actualmente el 25% del capital y de los votos de HIDROINVEST.
HIDROINVEST es una sociedad inversora constituida en ocasion de convocarse el
Concurso Intemacional para la Concesion de las centrales hidroelectricas
anterionnente operadas por HIDRONOR, y resulto adjudicataria en 1993 del paquete
de control (59%) de CENTRAL HIDROELECTRICA EL CHOCON S.A. ("HECSA"). Dicho
paquete de control se compone de la totalidad de las Acciones Clase "A" de
HECSA, representativas del 51 % del capital social de esta Ultima, asi como de
Acciones Clase B, representativas del 8%.
ENDESA ARGENTINA tiene ademas una participacion directa en el capital accionario
de HECSA del 6,19% (Acciones Clase B), en tanto que CMS Generation Co., una
sociedad constituida y domiciliada en el Estado de Michigan, Estados Unidos de
America es tambien titular de acciones Clase B de HECSA representativas del
2,48% de su capital.
2. La operacion bajo consulta
En cumplimiento de una c\ausula contenida en el acuerdo de accionistas de
HIDROINVEST (al que nos referiremos mas adelante), e\ 5 de febrero de 2007 CMS
confirio a ENDESA CHILE una opcion preferente de compra de la totalidad de sus
participaciones en HIDROINVEST, al tiempo que CMS Generation Co. hizo 10 propio
con respecto a las acciones que esta posee en HECSA (la "Operacion"). El plazo"
para aceptar la oferta era de diez dias corridos.
El 15 de febrero de 2007, ENDESA CHILE ejerci61a opci6n de compra.
Finalmente, el 8 de marzo de 2007 se concluyo la Operacion, produciendose la
transferencia de las acciones objeto de la misma a ENDESA CHILE.
La presente solicitud de Opinion Consultiva se rea1iza -con efectos suspensivos
- -dentro del plazo previsto en el articulo 8degrees de la Ley de Defensa de la
Competencia.
Como consecuencia de la Operacion, el conjunto economico ENDESA CHILE-ENDESA
ARGENTINA ("ENDESA") incrementa su participacion en HIDROINVEST que ha pasado
del 69,93% al 94,93% de las acciones y votos de dicha compaiiia, en tanto que en
HECSA su participaci6n direcfa se acrecienta del 6,19% al 8,67% del capital y
votos de dicha compania.
2.a) EI control en HECSA
El incremento de participacion de ENDESA en HECSA como consecuencia de la
Operacion no modifica en absoluto el control de dicha compaiiia en manos de
HIDROlNVEST.
Como se anticipara, es en virtud de las propias nonnas que rigieron la
privatizacion de HIDRONOR que el control sobre HECSA es ejercido por
HIDROINVEST. Esta situacion, que se mantiene desde la adjudicacion en 1993, no
variaria en nada can motivo de 1a Operacion.
De acuerdo con el Articulo 20 del Estatuto Social de HECSA, del cual se acompana
copia como Anexo 3, HIDROINVEST tiene derecho a designar cinco de los ocho
directores de 1a sociedad concesionaria, la Clase B designa dos directores y el
Programa de Propiedad Participada (PPP), titular de la Clase C, designa al
director restante. El Operador de HECSA, designado bajo el Contrato de Concesion
y el respectivo Pliego es ENDESA CHILE. En las asambleas de HECSA, HIDROINVEST
esti en condiciones en todo momento de formar la voluntad social, aclanindose
por otra parte que con relacion a HECSA no se ha suscripto acuerdo de
accionistas alguno. La adquisicion por parte de ENDESA del 2,48% de
piuticipacion directa anterionnente de propiedad de eMS Generation Co. (acciones
Clase B), no modi fica en modo alguno la situacion de control actualmente
ejercida por ENDESA a traves de HIDROINVEST.
2.b) EI control en HIDROINVEST
En HIDROThiVEST tanto la mayoria absoluta de las acciones (casi el 70%) como el
control - en el sentido en que !o ha entendido esa Comision -estaban ya, con
anterioridad a la Operacion, en poder de ENDESA. De acuerdo a las disposiciones
del acuerdo de accionistas vigente entre ENDESA CHILE Y CMS (el "Acuerdo de
Accionistas"), y al Estatuto Social de HIDROINVEST el Directorio de esta ultima
se compone de ocho miembros, correspondiendole a ENDESA, antes de la Operacion,
la designacion de seis:directores y a CMS dos. Se acompana como Anexo 4 copia
del Estatuto de HIDROINVEST. El Acuerdo de Accionistas y sus tres modificaciones
se acompana en copia como Anexo 5.
El Acuerdo de Accionistas, en disposiciones que fueron reflejadas en el Estatuto
Social de HIDROINVEST (Articulos Octavo y Decimocuarto), contenia ciertos
mecanismos de protecci6n de la rninoria habituales en este lipo de estructuras.
Esa proteccion se materializaba mediante la fijacion de una mayoria agravada
para la aprobaci6n de detenninadas decisiones a nivel del Directorio y de la
Asamblea de Accionistas las cuales tenian por objeto preservar la inversi6n del
socio minoritario en la compania
En el caso del Directorio, se requiere el voto favorable de siete directores
para:
(i) la aprobacion de cualquier modificacion o suplemento al presupuesto
operativo anual o al presupuesto de capital;
(ii) la celebracion, terrninacion o modificacion de cualquier contrato de venta
de energia y/o potencia de HECSA que tenga una duraci6n de mils de un ano;
(iii) la contrataci6n de cualquier credito, sea por HIDROlNVEST o por HECSA si
(a) el plazo de la deuda es superior a un ano; (b) sumonto excede US $1.000.000,
o (c) la deuda no puede ser servida con los flujos de caja proyectados;
(iv) la aprobacion de la memoria y los estados contables anuales;
(v) la designacion de los auditores externos de HIDROINVEST y de HECSA, y
(vi) Ia designacion del gerente de administracion y finanzas, aunque el Acuerdo
de Accionistas dispone que dicho cargo sera cubierto por una persona designada
por ENDESA. En caso de no ser aceptada la propuesta inicial, ENDESA debera
presentar una terna de personas.
En las Asambleas de Accionistas, se necesita una mayoria del 76% del capital con
derecho a voto para aprobar:
(i) cualquier emision de nuevas acciones, sea por HIDROINVEST o por HECSA;
(ii) la aprobacion de la memoria y los estados contables anuales;
(iii) cualquier modificacion a los estatutos de HIDROINVEST o de HECSA; o
fusion, consolidacion, disolucion o liquidacion de cualquier porcion de los
activos de HIDROINVEST o de HECSA que sean necesarios para que cualquiera de
esras companias pueda seguir sus negocios dentro del curso ordinario, y
(iv) las modificaciones a la politica de dividendos tanto en HIDROINVEST como en
HECSA.
Para modificar el estatuto social de HIDROINVEST se requiere unanimidad.
De confonnidad con reiterada doctrina e1aborada por la Comision, la nocion de
control debe construirse no solo atendiendo a la participacion de los
accionistas en el capital de una compafiia sino rambien a las relaciones de
control internas y externas y a las de hecho y de derecho.
En la Opinion Consultiva No. 124 (del 6 de julio de 2001) la Comision desarrollo
en extenso los conceptos de control exclusivo y control conjunto ya referidos en
anteriores Opiniones Consultivas y dictamenes de coocentraciones. En dicha
oportunidad considero que la adquisicion de control depende de una serie de
circunstancias de hecho y de derecho, las que deben ser analizadas caso por
caso.
Con particular referencia a la nocion de control compartido, la Comision dijo en
el caso alii tratado que esta situacion puede darse cuando se requiere eI
acuerdo de los accionistas para acordar sobre temas estrategicos para la
compania
En tal senti do, de acuerdo al criterio de la Comision, el poder de bloquear
decisiones que detenninan la estrategia competitiva de la compania otorga aI
accionista influencia significativa o sustancial sobre la misma
En la Operacion traida a consideracion de esa Comision los derechos de veto del
minoritario se relacionaban con medidas protectivas de su inversion (entre
ellos, modificacion de estatutos, politica de dividendos, decisiones acerca de
la fusion, consolidacioo, disolucion o liquidacion de cualquier porcion de los
activos).
La Comision tiene dicho que "Esta proteccion nonnal de los derechos de los
accionistas minoritarios guarda relacion con las decisiones que afectan a la
esencia misma de la empresa, tales como: modificaciones de los estatutos,
aumento o reduccion del capital, liquidacion, etc." (Opinion Consultiva No. 124)
Notese que la estrategia de inversion, comercial y competitiva de la compafiia,
temas estos a los cuales la Comision adjudica importancia decisiva para
detenninar la existencia o no de control comun por parte de dos 0 mas
accionistas, no eran asuntos que se encontrasen sujetos aI requisito de la
mayoria calificada, ni en HIDROINVEST oi -por via refleja -en la propia HECSA.
En materia de presupuesto por ejemplo, se requiere el voto del minoritario sOlo
para las modificaciones o suplementos del mismo, pero no para su preparacion y
aprobacion. Es decir que la prerrogativa apunta a la proteccion del accionista
para supuestos de apartamiento del presupuesto nonnal de la compania,
partiendose de la base de que ese presupuesto ha side aprobado por mayoria
simple (prevaleciendo asi la voluntad del controlante Endesa). Sin perjuicio de
lo anterior, notese que en la pnictica eI presupuesto fijado se mantiene
constante a lo largo del ano.
Notese que los derechos de preparacion y aprobacion del presupuesto por parte de
ENDES A son mayores aun a aquellos que la Comision tuvo oportunidad de analizar
en la Opinion Consultiva Ndegrees 219 del 21 de marzo de 2006, oportunidad en la
que la rnayoria concluyo que el accionista minoritario no adquiria control
conjunto. Mas especificarnente, esa Opinion Consultiva (con cita a la Opinion
Consultiva Ndegrees 35/00 del 10 de marzo de 2000) considero a los votos de
accionistas minoritarios en lo relacionado a desvios presupuesta" rios y excesos
de niveles de endeudamiento como acciones defensivas no constitutivas de
control.
EI presupuesto anual consta de un presupuesto economico, un presupuesto
financiero y un presupuesto de inversiones.
En el presupuesto economico se proyecta el margen variable en funcion de una
serie de simulaciones del funcionarniento del MEM (Mercado EJectrico
Mayorista). Los costos incluyenbasicamente los costos de personal y los
servicios contratados.
El presupuesto financiero constituye una proyeccion de caja en funcion del
presupuesto economico y de inversiones.
En relacion con el presupuesto de inversiones, es de destacar que el Pliego de
la Licitacion preveia y el Contrato de Concesion especificamente contempla en su
articulo 31, un regimen de inversiones ob1igatorias.
Por lo tanto, la realizacion de las inversiones obligatorias no es materia
disponible para los accionistas, sino que constituye una obligacion contractuaJ
ya predeterminada. Adicionalmente, es importante destacar que las inversiones no
obligatorias no han superado historicamente la suma de US $1.000.000 por ano.
En consecuencia, la preparacion y aprobacion del presupuesto economico,
financiero y de inversiones, solo requiere rnayoria simple, aJcanzada por
ENDESA.
Cuando el derecho de veto se refiere a inversiones, la Comision ha dicho en la
recordada Opinion Consultiva No. 124 "Su importancia depende, en primer lugar,
del nivel de las inversiones sujetas a la aprobacion de las empresas matrices y,
en segundo lugar, del papel que desempeilen las inversiones en el mercado en que
opera la empresa. (...) La po[{tica de inversion de una empresa constituye
generalmente un elemento importante para demostrar la existencia de control en
comun. Sin embargo, es probable que en algunos mercados la inversion no
desempeile un papel significativo en el comportamiento competitivo de una
empresa. "
Siguiendo con el criterio de la Opinion Consultiva Ndegrees 124, en el mercado
en que opera la empresa las inversiones no obligatorias -reiteramos, (micas
disponibles para los accionistas-, no son relevantes y no desempeii.an un papel
significativo en el comportamiento competitivo de la empresa. Por otra parte,
aquellas inversiones obiigatorias ya han side ejecutadas.
En materia de endeudarniento, aspecto este que tiene tambien relacion con las
inversiones, se requiere mayoria calificada para eI caso en que (a) el plazo de
la deuda sea superior a un ano; (b) su monte exceda US$ 1.000.000,0 (c) la deuda
no pueda ser servida con los flujos de caja proyectados. Es decir que el
minoritario solo puede bloquear decisiones en materia de endeudamiento a ser
contraido fuera del curso ordinario de los negocios.
Es importante destacar, que conforme los tenninos de la Licitacion, el
adjudicatario asumio como condicion de la misma, el pasivo de HECSA. Ese pasivo
asumido es el (mico pasivo financiero de la empresa.
En cuanto a la aprobacion de los estados contables anuales y la designacion del
gerente de administracion y finanzas, queda claro que se trata de decisiones
alejadas de la estrategia competitiva de HIDROINVEST. En efecto, resulta
evidente que la.posibilidad de un eventual veto de la aprobacion de los estados
contables en su conjunto estli dirigida a proteger la inversion del accionista
minoritario para casos extremos y no a lograr una modificacion en cuestiones
especificas del negocio de la sociedad. Y a fin de afianzar este derecho a una
contabilidad que refleje adecuadarnente la operaciones de la empresa es que se
previo la posibilidad de escoger un candidato aceptable para la gerencia de
administracion y finanzas de entre los propuestos por ENDESA.
Por todo lo hasta aqui expuesto las consuItantes entienden que la realizacion de
la Operacion no ha traido aparejado un cambio en la naturaleza del control de
HIDROINVEST por cuanto ENDESA ya disponia del control exclusivo de dicha
compania.
Sin peIjuicio de 10 seiialado hasta aqui, cabe destacar que atm cuando se
considerara que la Operacion hubiese producido un cambio en la naturaleza del
control en HIDROINVEST, la misma estaria de todos modos exenta de la obligacion
de notificacion en virtud de 10 expresamente normado por eI Articulo 10 inciso
(a) de la Ley de Defensa de la Competencia.
En efecto, de acuerdo con 10 previsto por dicha norma, se encuentran exentas de
la notificacion obligatoria prevista en eI Articulo 8 de la Ley de Defensa de la
Competencia aqueUas operaciones en las cuales " ... el comprador ya poseia mas
del cincuenta por ciento (50%) de las acciones".
En nuestro caso, la tenencia de ENDESA en HIDROINVEST antes de la Operacion ya
superaba largamente el porcentaje previsto en la norma citada, por 10 que la
Operacion quedaria exenta del regimen de control de concentraciones economicas.
En tal sentido, la Comision sostuvo que " ... a pesar que en dertos casos puede
operar un cambio en la naturaleza del control, aI pasar de ser este un control
ejercido en conjunto por dos 0 mas personas a ser un control ejercido en forma
excJusiva por solo una persona, en todos los casos en los que el comprador posea
mas del 50% de las acciones, la adquisicion estara exenta de la obligacion de
notificar, prevista en el Articulo 8 de la Ley No. 25.156, por aplicacion del
articulo 10 inciso a). (Opinion Consultiva No. 63, voto de la mayoria)
Asimismo la Comision tiene dicho que"... siendo voluntad clara y expresa del
legislador exceptuar de la notificacion obligatoria a aquellas adquisiciones de
empresas en los casos en que el comprador posea previamente mas del 50% de las
acciones, deviene iI).necesario analizar si opera o no un cambio en la
naturaleza del control, ya que aUn si ese fuera el caso, igualmente la operacion
estaria exenta de la notificacion obligatoria, por imperio de la Ley." (Opinion
Consultiva No. 72)
De hecho, de las seis oportunidades en que en conocimiento de las presentantes
la Comision se expidio mediante la emision de Opiniones Consultivas sobre la
aplicabilidad de la exencion del articulo 10 inciso a) a casos en los que el
accionista mayoritario no tenia control exclusivo de la compaiiia, en cinco de
elias (Opiniones Consultivas Ndegrees 53 del 18 de julio de 2000, 63 de128 de
agosto de 2000, 72 del 30 de agosto de 2000, 129 del 26 de julio de 2001 Y 144
del 18 de octubre de 2001) concluyo que la exencion resultaba aplicable. En la
Ultima Opinion Consultiva sobre el particular (No 189 del 19 de julio de 2004)
opine> en forma distinta, pero sin perjuicio de considerar las presentantes que
la opinion alii sostenida no se ajusta a 10 que dispone la ley, se destaca que
el caso en cuestion, a diferencia de la Operacion, existia una duda razonable
acerca del cambio de control del adquirente sobre la compaiiia objeto.
El criterio supra expuesto surge no solo de la propia letra de la norma sino
ademas de una logica irrefutable si tenemos en cuenta que el analizar la
aplicabilidad o no de una exencion presupone que ya ha existido un cambio de
controll. Esto significa que el propio legislador tuvo la intencion de permitir
a las partes eximirse de la notificacion obligatoria en aquellos casos en que
aful existiendo un cambio de control, el comprador ya tuviera mas del 50% de las
acciones de la compaiiia en cuestion.
Una interpretacion contraria nos conduciria a dejar vado de contenido el ambito
de aplicacion de la exencion consagrada por el inciso a). En efecto, si el
comprador ya tenia el control exclusivo de la compaiiia, ningful incremento de
su participacion implicara un cambio de control y, por 10 tanto, el analisis se
cortara alIi no habiendo necesidad de preguntarse si resulta aplicable 0 no la
exencion. Por otro lado, siempre siguiendo esta linea interpretativa, a nuestro
juicio erronea, si el adquirente compartia el control de la compaiiia en
cuestion pero un incremento de su participacion produce un cambio en la
naturaleza del
- ----------
1 Notese que la ITase introductoria del articulo 10 adelanta que las
exenciones se aplican a las operaciones sujetas a "fa notificaci6n
obligatoria del articulo anterior", las cuales -por remision al articulo 8
y de este ultimo a su vez al 6-no son mas que las ;'concentraciones
econ6micas'l.
control, pasando de tal modo a un control exdusivo, la aplicacion de la exenci6n
del inciso a) estaria descartada
Ademas, si se argumentase que no es aplicable la exencion aqui feferida porque
no puede presumirse que ellegislador haya querido "liberar" de la notificacion
obligatoria a cambios de un control compartido a un control exclusivo por los
eventuales efectos anticompetitivos de esos actos, cabe preguntarse, por
ejemplo, porque el inciso e) del mismo articulo tambien exime a determinadas
tomas de control (compartido 0 exclusivo) cuando no se superan determinados
montos. Y claramente no puede responderse ese interrogante sosteniendo que esas
ultimas operaciones nunca pueden causar un petjuicio a la competencia, puesto
que ello dependeni del tamafio del mercado re1evante involucrado.
Algo similar puede sostenerse con fespecto a la exencion del inciso d). Que una
empresa no haya registrado actividad en los ultimos 12 meses no implica
automaticarnente, por ejemplo, que no pudiera recapturar su participacion de
mercado cipidamente en manos de un comprador apto.
El inciso c) podr1a analizarse bajo la misma optica. Si bien en principio puede
imaginarse que la "primer adquisicion de un tinico adquirente extranjero" no
produciria peIjuicios a la competencia, puede no seT ese el caso. Imagincmos por
ejemplo la compra de un determinado monopolio, creado no mediante una
adquisicion notificada ante la Comision sino por el crecimiento orgamco de la
empresa De no encontrarse exenta de notificacion, la Comision podrla entender
que e1 acto quedaria alcanzado por la prohibici6n del articulo 7 de la Ley de
Defensa de la Competencia, aunque fuese el monopolio existente, y. no la
concentracion per se, el que generase el poder de mercado que el regimen de
concentraciones economicas pretende evitar. A todo evento, el hecho de que un
eventual comprador no tenga activos en la Argentina no implica que pueda ser
dominante en otras partes del mundo y convertirse nipidamente en dominante en
nuestro pais a traves de la operaci6n exenta
El punto que se pretende demostrar es que el articulo 10 enumera una serie de
adquisiciones que, por motivos de promocion de inversiones, reduccion del uso de
la maquinaria estatal del control de concentraciones u otros, el legislador
pretendi6 exceptuar del regimen de notificacion obligatoria, con 10 cual no cabe
aceptar una opinion que sostenga que iinicamente se trata de exenciones
"didlicticas", "inocuas" 0 sin ninguna utili dad pcictica.
Un criterio de interpretacion que nos conduce lisa y lIanamente a dejar sin
ambito de aplicaci6n la expresa letra de la ley resulta violatorio del principio
constitucional de legalidad y debe ser, por 10 tanto, descartado sin mas.
Entendemos que alii donde la letra de la ley resulta clara se impone aplicarla
sin necesidad de recurrir a mayores interpretaciones y que, ademas. no resulta
aceptable una interpretacion de la exencion del articulo 10 a) de la Ley de
Defensa de la Competencia que equivalgo a sostener que el legislador quiso
vaciar de contenido a la referida exencion, o darle un contenido distinto al que
claramente surge del texto legal.
Esta es la pacifica doctrina de nuestro mas Alto Tribunal, al sostener por
ejemplo que "...esta Corte ha resuelto en reiteradas oportunidades que no es
admisible una interpretacion que equivafga a la prescindencia del lexto legal
(Folios: 300:687 y 301:958), desde fa omision que fa primerafoente de
hermeneutica de la ley es su letra (Fallos: 299:167, entre otros). Por olra
parte, se ha sostenido que fa inconsecuencia, Ia Jalta de prevision o
involuntaria no se suponen en ellegislador y por eslo se reconoce como principio
que las posiciones (Fallos: 300:1080), en tanto cuando la ley emplea
determinados terminos u [eyes deben inlerpretarse siempre evitando darles un
sentido que ponga en pugna sus disomite, en un caso concreto, hacer referencia a
un aspecto, es la regia mas segura de exegesis fa de que esos (erminos 0 su
inclusion no son superjluos, sino que se ha realizado ello con aIgUn propOsito,
por cuanto, en definitiva, elfin primordial del inftirprete es dar pleno tos
caratulados "Parada, Aidee v. Norambuena, Luis Elias sfdanos y peljuicios").
eJecto ala voluntad dellegislador (FolIos: 299:167, entre otros}." (Fallos
315:727, en autos caratulados "Parada, Aidee v. Norambuena, Luis Elias sl darios
y perjuicios").
En consecuencia, a nuestro criterio la Operacion bajo amilisis resultaria en
todo caso exenta, en virtud de 1a aplicacion de la expresa prevision contenida
en e1 Articulo 10 inciso a) de la Ley de Defensa de la Competencia.
IV. Petitorio
Por las razones expuestas, entendemos que la Operacion no se encuentra
comprendida dentro del regimen de notificacion obligatoria de concentraciones
econ6micas nonnada en el articulo 8 y concordantes de \a Ley de Defensa de la
Competencia, solicitando desde ya sea as! confirmado en la opinion consultiva a
emitirse.
Quedamos a su disposicion para cualquier ac!aracion o ampliacion que estime
pertinente.
Saludarnos a usted con atenta consideracion,
EMPRESA NACIONAL CMS GENERATION CO. CMS GENERATION SRL
DE ELECTRICIDAD S.A.
______________________ /s/ /s/
ASSIGNMENT OF QUOTAS AGREEMENT
Between:
CMS International Ventures, LLC, with domicile at One Energy Plaza, Jackson,
Michigan 49201, United Stated of America, registered on September 3, 2002, with
Inspection General de Justicia, according to section 123 of the Law No. 19,550,
under No. 1462, book 56 Volume "B" of Estatutos Extranjeros, with special
domicile at Ing. Butty 220, 8 floor City of Buenos Aires, Argentine Republic,
herein represented by Bernardo Velar de Irigoyen in his capacity as attorney in
fact; and
CMS Generation Holdings Company domiciled at One Energy Plaza, Jackson, Michigan
49201, United Status of America, registered with Inspeccion General de Justicia
under section 123 of law No. 19,550 on January 5, 1994, under No. 21 book "B" of
Estatutos Extranjeros, with special domicile in Ing. Butty 220, 8 floor, City of
Buenos Aires Argentine Republic, herein represented by Bernardo Velar de
Irigoyen in his capacity as attorney in fact (together with CMS International
Ventures, LLC the "Assignors")-, and,
New Argentine Generation Company LLC, with domicile at Ing. Butty 275, 11 floor,
City of Buenos Aires, represented by Guillermo Pablo Reca in his capacity as
authorized (the "Assignee" and, collectively with the Assignors, the "Parties").
WITNESSETH
A. Whereas, Assignors own _______ quotas ____________ with the Public Registry
of Commerce of __________., a sociedad de responsabilidad limitada organized
under the laws of the Argentine Republic, registered with the Inspeccion General
de Justicia under No. _____, Volume 117 of SRL, with domicile at Ing. Butty 220,
8 floor. City of Buenos Aires (the "Company"), (the "Quotas").
B. Whereas, pursuant to the transfer of certain assets of the Assignors (and
affiliated companies of the Assignors) to the Assignee to be executed on the
date hereof (the "Transaction"). Assignors desire to seil the Quotas to the
Assignee and the Assignee desire to acquire the Quotas from Assignors.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Assignment of Quotas Agreement
(the "Agreement"), the Parties hereto agree as follows:
I
ASSIGNMENT OF QUOTAS
1.1. The Assignors hereby irrevocable assign and transfer the Quotas to
Assignee, and the Assignee hereby accept such assignment and transfer:
1.2. The price of the Quotas was paid by the Assignee to the Assignors by wire
transfer made pursuant to the Transaction, the reception of which is hereby
acknowledged by the Assignors.
II
REPRESENTATIONS BY THE ASSIGNORS
The Assignors hereby represent and warrant that (i) they have valid title to the
Quotas, which have not been transferred to any third party; and (ii) they have
the right and legal power and authority to enter into and/or perform the
obligations under this Agreement.
III
REPRESENTATIONS AND COVENANTS BY THE ASSIGNEE
The Assignee represents and warrants that he has the right and legal power and
authority to enter into and/or perform the obligations under this Agreement.
IV
APPLICABLE LAY. DISPUTE RESOLUTION
4.1. This Agreement shall be interpreted and performed in accordance with the
laws of the Republic of Argentina.
4.2 All disputes arising out of or relating to this Agreement or any Related
Agreement or the breach, termination or validity thereof or the parties'
performance hereunder or thereunder ("Dispute") shall be resolved as follows:
(i) If the Dispute has not been resolved by executive officer negotiation within
thirty (30) days of the disputing party's notice requesting negotiation, or if
the parties fail to meet within twenty (20) days from delivery of said notice,
such Dispute shall be submitted to and finally settled by arbitration in
accordance with the Rules of Arbitration of the International Chamber of
Commerce in New York ("ICC") then in effect (the "Rules"), except as modified
herein.
(ii) The arbitration shall be held, and the award shall be rendered, in the
English language. There shall be three arbitrators, one of whom shall be
nominated by each of Buyer and Seller in accordance with the Rules. The two
party appointed arbitrators shall have thirty (30) days from the confirmation of
the nomination of the second arbitrator to agree on the nomination of a third
arbitrator who shall serve as chair of the arbitral tribunal. On the request of
any party, any arbitrator not timely appointed in accordance with this Agreement
or the Rules shall be appointed by the ICC.
(iii) The award shall be final and binding upon the parties as from the date
rendered, and shall be the sole and exclusive remedy between the parties
regarding any claims, counterclaims, issues, or accounting presented to the
arbitral tribunal. Judgment upon any award may be entered and enforced in any
court having jurisdiction over a party or any of its assets. For the purpose of
the enforcement of an award, the parties irrevocably and unconditionally submit
to the jurisdiction of a competent court in any jurisdiction in which a party
may have assets and waive any defenses to such enforcement based on lack of
personal jurisdiction or inconvenient forum. This Agreement and the rights and
obligations of the parties shall remain in full force and effect pending the
award in any arbitration proceeding hereunder.
(iv) The Parties agree that any court action or proceeding to compel or in
support of arbitration or for provisional remedies in aid of arbitration,
including but not limited to any action to enforce the provisions of this
section, for temporary injunctive relief to maintain the status quo or prevent
irreparable harm prior to the appointment of the arbitral tribunal, shall be
brought exclusively in the federal or state courts located in New York, New York
(the "New York Courts"). The Parties hereby unconditionally and irrevocably
submit to the exclusive jurisdiction of the New York Courts for such purpose,
and to the non-exclusive jurisdiction of the New York Courts in any action to
enforce any arbitration award rendered hereunder, and waive any right to stay or
dismiss any such actions or proceedings brought before the New York Courts on
the basis of forum non conveniens or improper venue. Without prejudice to such
provisional remedies as may be available under the jurisdiction of a national
court, the arbitral tribunal shall have full authority to grant provisional
remedies and to direct the parties to request that any court modify or vacate
any temporary or preliminary relief issued by such court, and to award damages
for the failure of any party to respect the arbitral tribunal's orders to that
effect.
V
MISCELLANEOUS
5.1. Domicile. The Parties establish domicile in those stipulated at the
beginning of this Agreement.
5.2. Expenses. Except as otherwise specified in this Agreement, all costs and
expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
or the transactions contemplated herein shall be paid by the Parties incurring
in such costs and expenses.
5.3. Language. This Agreement is made in two (2) equally valid original copies
in Spanish and English. In case of any discrepancy between the Spanish and
English texts of this Agreement, the former shall prevail.
5.4. Authorizations: The Parties undertake to perform any and all reasonable
actions that were necessary to perfect the transfer of the Quotas to Assignees
and hereby authorize Siro Pablo Astolfi, Javier Rodriguez Galli, Susana J.
Ripoll, Diego H. Cavanagh, Romina Benvenuti, Ezequiel Braun Pellegrini and Juan
Manuel Recio in order that acting either jointly or separately any one of them
file the registration of the assignment of the Quotas with the Registro Publico
de Comercio of the City of Buenos Aires. For said purpose they will have the
necessary authority, to file writs, reply office actions, collect documents, and
to perform any actions that may be necessary to duly comply with their duty.
IN WITNESS WHEREOF the Parties sign fourth identical originals to one sole
effect, one for each of the Parties and a fourth one to be filed with the
Inspection General de Justicia, in the City of Buenos Aires, on March 12, 2007
CMS INTERNATIONAL VENTURES, LLC
CMS GENERATION HOLDINGS COMPANY
NEW ARGENTINE GENERATION COMPANY LLC
CONTRATO DE CESION DE CUOTAS
Entre:
CMS International Ventures, LLC, con domicilio en One Energy Plaza, Jackson,
Michigan 49201, Estados Unidos de America, inscripta en la Inspection General de
Justicia en los terminos del articulo 123 de la ley No. 19.550 el 3 de
septiembre de 2002, bajo el Ndegrees 1462 del libro 56 Tomo "B" de Estatutos
Extranjeros, con domicilio constituido en la Republica Argentina en Ing. Butty
220, piso 8degrees, Ciudad de Buenos Aires, representada en este acto por
Bernardo Velar de Irigoyen en su caracter de apoderado; y
CMS Generation Holdings Company con domicilio en One Energy Plaza, Jackson,
Michigan 49201, Estados Unidos de America, inscripta en la Inspection General de
Justicia en los terminos del articulo 123 de la ley 19.550 el 5 de enero de
1994, bajo el Ndegrees 21 del libra B de Estatutos Extranjeros, con domicilio
constituido en la Republica Argentina en Ing. Butty 220, piso 8degrees, Ciudad
de Buenos Aires, representada en este acto por Bernardo Velar de Irigoyen en su
caracter de apoderado (junto a CMS International Ventures, LLC los "Cedentes");
por una parte y por la otra,
New Argentine Generation Company LLC, con domicilio en Ing. Butty 275, piso
11degrees, Ciudad de Buenos Aires, representada en este acto por Guillermo Pablo
Reca en su caracter de autorizado (el "Cesionario" y, junto a los Cedentes, las
"Partes").
CONS1DERANDO:
A. Que los Cedentes son en conjunto titulares de 68.938.700 cuotas que fueron
emitidas conforme decisiones asamblearias de fechas 30 de junio de 2005 y 27 de
diciembre de 2006, a la fecha pendientes de registration por ante el Registro
Publico de Comercio, de CMS Generation S.R.L. una sociedad de responsabilidad
limitada, con domicilio en Ing. Butty 220. piso 8degrees, Ciudad de Buenos
Aires, constituida de conformidad con las leyes de la Republica Argentina en la
Inspection General de Justicia bajo el numero 8163, libra 117 de SRL (la
"Sociedad") (las "Cuotas").
B. Que, en el marco de la transferencia de ciertos activos de los Cedentes (y de
companias vinculadas a los Cedentes) al Cesionario a tener lugar en el dia de la
fecha (la "Transaction"), los Cedentes desean ceder a el Cesionario las Cuotas y
el Cesionario desea adquirir las Cuotas de los Cedentes.
EN CONSECUENCIA, considerando los mutuos compromises, acuerdos, declaraciones y
garantias contenidos en este Contrato de Cesion de Cuotas (el "Contrato"), las
Partes acuerdan lo siguiente:
CESION DE CUOTAS
1.1. Los Cedentes ceden y transfieren en forma irrevocable y el Cesionario
acepta la cesion de las Cuotas
1.2. El precio de las Cuotas fue abonado por el Cesionario a los Cedentes
mediante transferencias bancarias efectuadas en el marco de la Transaction,
dandose los Cedentes por recibidos de su importe.
II
DECLARACIONES DE LOS CEDENTES
Los Cedentes declaran que (i) las Cuotas son de su propiedad y que no las nan
transferido a ningun tercero; y (ii) tienen la capacidad que se requiere para
suscribir, ejecutar y cumplimentar las obligaciones previstas en este Contrato.
III
DECLARACIONES Y OBLIGACIONES DEL CESIONARIO
El Cesionario declara que tienen la capacidad que se requiere para suscribir,
ejecutar y cumplimentar las obligaciones previstas en este Contrato.
IV
LEY APLICABLE. SOLUCION DE CONTROVERSIAS
4.1. Este Contrato esta sujeto y sera interpretado de acuerdo a las leyes de la
Republica Argentina.
4.2. Todas las desavenencias o disputas que deriven de este Contrato o que
guarden relation con este, asi como aquellas desavenencias que se origen en
relation a su rescision, resolution, extincion, validez o incumplimiento (la
"Disputa") seran resueltas de la siguiente forma:
(i) Cualquiera de las Partes notificara de manera fehaciente a la otra su
voluntad de iniciar negociaciones tendientes a resolver la Disputa. Si en el
plazo de treinta (30) dfas de recibida la notification mencionada, la Disputa no
es resuelta mediante negociaciones directas y/o si en el Plazo de veinte (20)
dias de recibida la notification senalada las Partes no se reunen con ese fin,
la Disputa sera resuelta mediante arbitraje de conformidad con las reglas de
arbitraje vigentes (las "Reglas") de la Camara de Comercio International ("CCI")
con sede en Nueva York, excepto en cuanto fueran modificadas en este Contrato
- -5-
(ii) El idioma del procedimiento arbitral asi como su laudo sera el Ingles. Se
designaran tres (3) arbitros, dos de los cuales seran elegidos por las Partes,
(uno por los Cedentes y otro por el Cesionario). Los arbitros designados por las
Partes deberan en el plazo de treinta (30) dias contados a partir de la
confirmation de la election del segundo arbitro ponerse de acuerdo en la
designation de un tercer arbitro, el cual sera nombrado presidente del tribunal
arbitral. A pedido de cualquiera de las Partes, el arbitro que no haya sido
elegido en la forma y en los plazos previstos en el presente y/o de conformidad
con las Reglas sera directamente designado por la CCI.
(iii) El laudo sera final y obligatorio para las Partes y sera la unica y
exclusiva solution, procedimiento y/o action entre las Partes con respecto a
cualquier reclamo, demanda, contra demanda, situation y/o tema que haya sido
considerado por el tribunal arbitral. La ejecucion del laudo puede ser iniciada
y ejecutada en cualquier tribunal que tenga jurisdiction sobre cualquiera de las
Partes y/o sobre cualquiera de sus bienes. A fin de ejecutar el laudo las Partes
irrevocablemente y sin condiciones se someten a la jurisdiction de cualquier
tribunal competente en cualquier jurisdiction en que las Partes tengan bienes y
renuncian a cualquier defensa tendiente a impedir la ejecucion que este basada
en la ausencia de jurisdiction personal o en la doctrina de la jurisdiction
inapropiada o no conveniente. Este acuerdo asi como los derechos y obligaciones
de las Partes continuaran surtiendo efectos mientras se encuentre pendiente la
decision del tribunal arbitral.
(iv) Cualquier action legal y/o cautelar iniciada por una Parte para obligar a
la otra a someterse al procedimiento arbitral, incluyendo sin limitaciones
cualquier action previa a la constitution del tribunal arbitral que tenga por
objeto hacer cumplir la presente clausula, y/o obtener medidas cautelares
tendientes a preservar el statu quo o para evitar un perjuicio inminente o
irreparable, sera iniciada exclusivamente ante los tribunales federales o
locales de la ciudad de Nueva York, estado de Nueva York, Estados Unidos de
America (los "Tribunales de Nueva York"). Para ello las Partes se someten
incondicionalmente e irrevocablemente a la exclusiva jurisdiction de los
Tribunales de Nueva York. Asimismo, las Partes se someten a la jurisdiction no
exclusiva de los Tribunales de Nueva York para iniciar acciones que tengan por
objeto ejecutar decisiones que ordenen cumplir con el procedimiento arbitral
aqui estipulado. Las Partes renuncian a invocar la defensa de la doctrina de la
jurisdiction inapropiada o no conveniente ("forum non conveniens") y/o la
ausencia de jurisdiction territorial para impedir que las mencionadas acciones o
procedimientos sean iniciadas en los Tribunales de Nueva York. Sin perjuicio de
aquellas medidas preliminares que pudieran estar disponibles en la jurisdiction
de cualquier tribunal national, el tribunal arbitral tendra autoridad para
ordenar medidas cautelares o preliminares y para ordenar a las Partes que
- -5-
soliciten a cualquier tribunal local que modifique o deje sin efecto cualquier
medida cautelar o medida preliminar que haya sido adoptada por dicho tribunal.
El tribunal arbitral podra ordenar a la Parte que incumpla sus decisiones que
indemnice a la otra todos los danos y perjuicios que su incumplimiento genere.
5.1. Domicilio. Las Partes constituyen domicilios especiales en los lugares
indicados al comienzo de este Contrato.
5.2. Gastos. Excepto disposition en contrario en este Contrato, todos los gastos
y costos incluyendo, sin limitation, los honorarios y gastos de asesores
legales, asesores financieros y contables, incurridos en relation con este
Contrato o con las transacciones en el contempladas seran pagados por las Partes
que incurrieron en dichos gastos y costos.
5.3. Idioma. Este Contrato es celebrado en dos (2) ejemplares igualmente validos
en espanol e ingles. En caso de discrepancia entre los textos en espanol e
ingles de este Contrato, la version en espanol prevalecera.
5.4. Autorizaciones. Las Partes se comprometen a realizar todos los actos que
fueran razonablemente necesarios para el perfeccionamiento de la cesion de
Cuotas al Cesionario y autorizan a Siro Pablo Astolfi, Javier Rodriguez Galli,
Susana J. Ripoll, Diego H. Cavanagh, Romina Benvenuti, Ezequiel Braun Pellegrini
y Juan Manuel Recio para que uno cualesquiera de ellos en forma indistinta
tramite la inscription de la presente cesion de Cuotas en el Registro Publico de
Comercio de la ciudad de Buenos Aires, para lo cual quedan facultados para
presentar escritos, contestar vistas, desglosar documentation y realizar cuantos
mas actos sean necesarios para el mejor cumplimiento del presente mandato.
EN FE DE LO CUAL las Partes firman cuatro (4) originates, uno para cada una de
las Partes y un quinto para ser presentado ante la Inspection General de
Justicia, de un mismo tenor y a un solo efecto, en la ciudad de Buenos Aires, a
los 12 dias del mes de marzo de 2007.
EXECUTION COPY
SELLER DISCLOSURE LETTER
Introduction
Reference is made to the Agreement of Purchase and Sale, dated as of March 12,
2007 (the "Agreement") by and between CMS Enterprises Company and CMS Generation
Holdings Company, each a Michigan corporation, and CMS International Ventures,
L.L.C., a Michigan limited liability company (collectively, the "Seller"), and
Lucid Energy, LLC, a Michigan limited liability company and New Argentine
Generation Company, L.L.C. (collectively, the "Buyer").
Capitalized terms used, but not defined herein, have the respective meanings
given to such terms in the Agreement.
This Seller Disclosure Letter (the "Seller Disclosure Letter") sets forth
certain information or agreements intended to be treated as disclosed in the
Seller Disclosure Letter pursuant to the Agreement.
The contents of this Seller Disclosure Letter are qualified in their entirety by
reference to the specific provisions of the Agreement. This Seller Disclosure
Letter is not intended to constitute, and shall not be deemed to constitute,
representations and warranties of Seller except as, and to the extent, provided
in the Agreement. In particular, although this Seller Disclosure Letter may
contain supplementary information not specifically required under the Agreement,
such supplementary information is provided as general information for the
parties to the Agreement and is not separately represented or warranted by
Seller herein or in the Agreement. Moreover, the inclusion of any item hereunder
shall not be deemed an admission by Seller that such item is, or may at anytime
be or have been, material to Seller, or any of the Entities, or the transactions
contemplated by the Agreement, or result in any determination that any matter
has a Material Adverse Effect, nor shall it be deemed an admission of an
obligation or liability to any third party.
Any matter set forth in the Seller Disclosure Letter shall be deemed disclosed
with respect to such other sections of the Agreement or the Seller Disclosure
Letter to which such disclosure on its face would reasonably pertain in light of
the form and substance of the disclosure made. Any matter disclosed in the
Financial Statements shall be deemed disclosed with respect to the pertinent
sections of the Agreement or the Seller Disclosure Letter to which such
disclosure on its face would reasonably pertain in light of the form and
substance of the information contained in the Financial Statements. The section
and subsection references set forth in this Disclosure Letter refer to sections
or subsections of the Agreement to which the disclosure set forth in this Seller
Disclosure Letter is intended to apply. The introductory language and headings
in this Seller Disclosure Letter are inserted for convenience of reference only
and will not create or be deemed to create a different standard for disclosure
than the language set forth in the Agreement.
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The information set forth herein is confidential and is subject to the terms of
the Confidentiality Agreement between the EE Group and CMS Enterprises Company
dated October 23, 2006 to the parties thereto and to the confidentiality
undertaking foreseen in Section 5.13 of the Agreement to the parties thereto.
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SECTION 1.1(A) OF THE SELLER DISCLOSURE LETTER
EMPLOYEES
CMS ENSENADA SA
DATE OF YEARS OF UNION
SURNAME NAME EMPLOYMENT SERVICE POSITION - FUNCTION AFFILIATION
- ----------- ---------------- ---------- -------- ----------------------------------------- -----------
AGUERO GUSTAVO 12-02-1996 10,2 Plant manager No
BARBIER EDGARDO 05-18-1998 8,8 Assistant to the shift chief No
BARQUERO FERNANDO 03-10-1997 10,0 Shift chief No
BISCONTI HORACIO 03-10-1997 10,0 Shift chief No
BORLANDO MARIA PIA 05-24-2001 5,8 Plant secretary No
BRANAS PABLO 08-01-2005 1,6 Assistant to the shift chief No
CASTRO JORGE 03-10-1997 10,0 Mechanical technician No
DEL VECCHIO MARIA A. 06-12-2006 0,7 Accountant No
ESTIVARIZ DIEGO 10-26-1998 8,4 Operations chief No
FRANCECE WALTER 03-10-1997 10,0 Shift chief No
FRANCO SILVIA 01-06-1997 10,2 Administration and Finances chief No
GLAVICH PEDRO 03-10-1997 10,0 Assistant to the shift chief No
GONZALEZ EDGARDO 04-01-1998 8,9 Operating and control engineer No
LATASTE SERGIO 03-10-1997 10,0 Shift chief No
LOPEZ BUSTO MARIA del C. 04-10-2006 0,9 Accountant Analist No
LOSADA RICARDO 03-10-1997 10,0 Shift chief No
MARCHUETA GERARDO 01-20-1997 10,1 Maintenance and Engineer No
MOSCARELLA EUGENIO 04-15-1999 7,9 Assistant to the shift chief No
PERUSIN ALEJANDRO 05-03-2000 6,8 Implementation and control Technician No
SACCON DANIEL 03-10-1997 10,0 Mechanical Engineer No
SILVA JUAN PABLO 03-10-1997 10,0 Assistant to the chief of shift No
SINTES LAURA 08-04-2004 2,6 Responsible for purchases No
TARAS ANDRES 03-10-1997 10,0 Electrical technician
CENTRALES TERMICAS MENDOZA S.A.
DATE OF YEARS OF UNION
SURNAME NAME EMPLOYMENT SERVICE POSITION - FUNCTION AFFILIATION
- ----------- ---------------- ---------- -------- ----------------------------------------- -----------
ALONSO Osvaldo Daniel 05-06-1985 21,8 Control and regulations technician No
AMAYA Jorge German 01-02-1989 18,2 Combined cycle operator No
Hector
AY ALA Fernando 09-24-1973 33,5 Combined cycle operator No
BARBAZZA Oscar Alberto 07-04-2005 1,7 Sr. Accountant analyst No
BARCHIESI Juan 11-01-2005 1,3 Maintenance operator No
BERTAGNO Carlos Hugo 11-01-1994 12,3 General manager No
Eduardo
BLANCO Fernando 05-02-1997 9,8 Sr R & C engineer No
BORDIN Angel Augusto 09-20-1982 24,5 Mecanichal Maitenance Supervisor No
BURGOA Maria Alejandraj 08-03-1990 16,6 Responsible of invoicing and accounts No
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DATE OF YEARS OF UNION
SURNAME NAME EMPLOYMENT SERVICE POSITION - FUNCTION AFFILIATION
- ----------- ---------------- ---------- -------- ----------------------------------------- -----------
CALDERON Marcelino 02-20-2006 1,0 Plant Operator No
CALISE Veronica Maria 11-01-1994 12,3 Secretary Receptionist No
CARAM_ Mariana Isabel 09-18-2006 0,4 Responsible for Applications No
CASTILLO Carlos Alberto 07-21-1997 9,6 Electrical Officer No
CASTRO Victor Manuel 10-05-1983 23,4 Combined cycle operator No
CHACON Rolando Hector 09-20-1982 24,5 Electric Specialized Technician No
CIARALLO Javier 09-01-2005 1,5 Energy Manager No
COMARIN Carlos Alberto 09-20-1982 24,5 Combined cycle operator No
COPPI Cesar Adolfo 10-25-1982 24,4 Combined cycle operator No
CORDERO Nelson Ariel 01-02-2006 1,2 Plant Operator No
DAVOLIO Antonio Ruben 07-10-1971 35,7 Combined cycle operator No
ENRIQUEZ Carlos Daniel 09-15-1997 9,5 Systems No
FUNES Oscar Francisco 11-02-1983 23,3 Combined cycle operator No
GARCIA Enrique Aldo 04-01-1981 25,9 Technical Manager No
GARCIA O Hugo Omar 05-22-1984 22,8 Specialized Mechanical Officer No
GIMENEZ Jose Luis 05-15-2006 0,8 Plant Operator No
GOMEZ Hector Roberto 07-15-1990 16,6 Warehouses chief No
GONZALES Fabian Andres 02-06-2006 1,1 Purchases No
GONZALEZ Walter Horacio 01-02-2006 1,2 Plant Operator No
GRZONA Gustavo Carlos 01-17-1984 23,1 Combined cycle operator No
GUINAZU Adruban Juan 11-01-1997 9,3 Responsible for Security No
Ernesto
HERVIDA Washington 05-22-1972 34,8 Accountability chief No
Leonardo
LAGHEZZA Daniel 03-02-1985 22,0 Operation chief No
LIBERAL Sergio Jose 12-13-1984 22,2 Civil Maintenance Operator No
LUQUEZ Daniel Eduardo 07-29-1975 31,6 Purchaser No
Veronica
MARIOTTI Beatriz 01-02-2006 1,2 Accounts receivable assistant No
MASSIERO Raul Ernesto 11-13-1970 36,3 Cogeneration Manager No
MAZZITELLI Ernesto Eduardo 04-01-1980 26,9 Labor security manager No
MONTERO Jose Arturo 12-26-1972 34,2 Combined cycle operator No
Nestor Ricardo
MORALES Rogue 01-10-1984 23,2 Regulation and control technician No
Gabriel
MORENO Sebastian 01-02-2006 1,2 Plant Operator No
NAHIM Raul Francisco 03-02-1984 23,0 Purchases and logistics chief No
Norberto
ORTEGA Armando 01-05-1984 23,2 Specialized Mechanical Officer No
ORTIZ Angel Daniel 02-27-1998 9,0 Combined cycle operator No
PARIGI Raul Ezio 04-05-1979 27,9 Maintenance, Control and Regulations
Supervisor No
PEREYRA Manuel Adolfo 11-13-1975 31,3 Mechanical Officer No
PEREZ Daniel Roberto 07-10-1974 32,7 Electrical Maintenance Supervisor No
PEREZ Oscar Humberto 01-18-1984 23,1 Combined cycle operator No
PEREZ Gabriel Raul 07-16-1984 22,6 Combined cycle operator No
POPULIN Jorge Jose 11-01-1994 12,3 Administration and finances manager No
RODRIGUEZ Miguel Horacio 11-16-1984 22,3 Combined cycle operator No
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DATE OF YEARS OF UNION
SURNAME NAME EMPLOYMENT SERVICE POSITION - FUNCTION AFFILIATION
- ----------- ---------------- ---------- -------- ----------------------------------------- -----------
ROMERO Jorge Eduardo 01-01-1989 18,2 Combined cycle operator No
SEVILLA Jorge Carlos 01-20-1972 35,1 Combined cycle operator No
SEVILLA Julio Jose 03-02-1990 17,0 Combined cycle operator No
SIMON Mario Gabriel 01-02-2006 1,2 Information technologies clerk No
STROSCIO Juan Antonio 04-24-1979 27,9 Combined cycle operator No
Pamela
ULLOA Alejandra 06-12-2006 0,7 Electrical Engineer No
VAZQUEZ Daniel Omar 02-06-1984 23,1 Human Resources Administration chief No_
VERA Miguel Eduardo 03-17-1971 36,0 Treasurer No
Fernando
VIOLA Sebastian 01-02-2006 1,2 Plant Operator No
WILHELM Roberto Matias 08-08-1983 23,6 Maintenance Manager No
CMS COMERCIALIZADORA DE ENERGIA S.A.
DATE OF YEARS OF UNION
SURNAME NAME EMPLOYMENT SERVICE POSITION - FUNCTION AFFILIATION
- ----------- ---------------- ---------- -------- ----------------------------------------- -----------
ALBERIO Pablo Andres (1) 12-06-2006 0,9 Gas market Sr. analyst No
FALZONE Hector Sergio 08-23-1997 9,5 Business director No
KRAIGHER Milena 11-01-1994 12,3 Secretary No
(1) CMS Comercializadora de Energia S.A. recognized this employee prior 7
(seven) years of service when he was hired.
CMS OPERATING S.R.L.
DATE OF YEARS OF UNION
SURNAME NAME EMPLOYMENT SERVICE POSITION - FUNCTION AFFILIATION
- ----------- ---------------- ---------- -------- ----------------------------------------- -----------
CACHO
BRATTI Florencia 05-02-2006 0,8 Receptionist No
CARBAJAL Alejandro Luis 10-01-1996 10,4 Sr. market analyst No
Jorge Antonio
CASANOVA (1) 04-01-1997 9,9 Systems manager No
COLOMBO Maria Cecilia 03-20-2006 0,9 Jr. accountant No
COSSIO Martin 09-01-1996 10,5 Responsible for applications No
DE Marcela Cecilia
FRANCESCO (2) 04-01-2005 1,9 Assistant for Sox and Internal Control No
ELISSETCHE German Alberto 06-19-1997 9,7 Semi Sr. market analyst No
FERNANDEZ
BARBIERO Martin 02-02-1998 9,1 Responsible for Sox and Internal Control No
FERRETTO Sandro 11-01-2001 5,3 Semi Sr. market analyst No
GALLINO Fernando 07-04-2005 1,7 Administration and finances director No
IMPART Silvina 09-01-2005 1,5 General legal counsel No
KATZ Leonardo Pablo 09-10-1997 9,5 Sr. market analyst No
MOLLERAC Maria Fernanda 04-06-1998 8,9 Assistant
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DATE OF YEARS OF UNION
SURNAME NAME EMPLOYMENT SERVICE POSITION - FUNCTION AFFILIATION
- ----------- ---------------- ---------- -------- ----------------------------------------- -----------
MOLLO Maria Julieta 02-01-1995 12,1 Secretary No
MOLTENI Sergio Andres 02-23-2004 3,0 Jr. administrative No
Leonardo
MONSALVO Ruben 04-21-2004 2,9 Jr. market analyst No
MUNOZ
FERNANDEZ Patricia (3) 03-01-2006 1,0 Secretary No
NACCAREL
LI Alejandra 11-01-1996 10,3 Jr. accountant analyst No
NACCAREL
LI Lilian 05-01-1996 10,8 Accounting Chief No
OCAMPO Maria Angela 08-01 -2006 0,6 Jr. accountant No
PELLE VON
PIESCHEL Carolina 11-27-2006 0,3 Secretary No
PRINCIPI Carlos Arturo 06-02-1995 11,8 Operation and marketing manager No
REINA Carla Irene 01-01-1999 8,2 Jr. accountant analyst No
REY Jorge Andres 11-01-1994 12,3 Human resources manager No
TERRANEO Enrique (3) 08-15-2006 0,5 accountant No
VAZQUEZ Rodrigo 10-17-2005 1,4 General purpose employee No
VELAR DE
IRIGOYEN Bernardo Julio 12-01-1992 14,3 President of the Board of Directors No
VILLA DE
BIGNONE Maria Cristina 07-28-1997 9,6 Responsible for general services No
(1) CMS Operating S.R.L. recognized those employees prior 10 (ten) years of
service when they were hired.
(2) CMS Operating S.R.L. recognized this employee prior 9.5 (nine and a half)
years of service when she was hired.
(3) CMS Operating S.R.L. recognized those employees prior 5 (five) years of
service when they were hired.
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SECTION 1.1(B) OF THE SELLER DISCLOSURE LETTER
KNOWLEDGE OF SELLER
1. WITH REGARD TO ALL ENTITIES
Officer Representation
- ------- --------------
Thomas L. Miller Consulted with regard to representations generally
Thomas Elward Consulted with regard to representations generally
Sharon Mclnlay Consulted with regard to representations generally
Bernardo Velar de Irigoyen Consulted with regard to representations generally
Fernando Gallino Consulted with regard to representations concerning
tax matters, accounting and financial matters
Carlos Principi Consulted with regard to representations generally
Jorge Rey Consulted with regard to representations concerning
employee and labor matters
Mike Weber Consulted with regard to representations concerning
environmental matters
Beverly Berger Consulted with regard to representations concerning
intercompany accounts and notes matters
Jay Silverman Consulted with regard to representations concerning
tax matters
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2. EXCLUSIVELY WITH REGARD TO CMS ENSENADA S.A.
Officer Representation
- ------- --------------
Gustavo Aguero Consulted with regard to representations generally
3. EXCLUSIVELY WITH REGARD TO CENTRALES TERMICAS MENDOZA S.A.
Officer Representation
- ------- --------------
Carlos Bertagno Consulted with regard to representations generally
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SECTION 2.2(A)(V) OF THE SELLER DISCLOSURE LETTER
RESIGNATION OF ENTITIES' OFFICERS
Viviana Soria
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SECTION 3.3(A) OF THE SELLER DISCLOSURE LETTER
EQUITY INTERESTS
Except as set forth in Section 3.3(a) of the Seller Disclosure Letter, the
Equity Interests are duly authorized, validly issued and fully paid and were not
issued in violation of any preemptive rights.
CUYANA S.A. DE INVERSIONES
CMS Centrales Termicas SA. has paid in 25% of the shares subscribed in Cuyana
S.A. de Inversiones pursuant to the capital increase approved on December 27th,
2006. Therefore, there is a commitment to pay the balance thereof (AR$
6,329,933) within two years from the date of subscription.
Except as set forth in Section 3.3(a) of the Seller Disclosure Letter, [...]
(ii) there are no [...] (E) other than this Agreement, contracts, agreements or
arrangements of any kind relating to the issuance of any equity interest in the
Entities, or any such options, warrants or rights, pursuant to which, in any of
the foregoing cases, Seller or its Affiliates are subject or bound.
CENTRALES TERMICAS MENDOZA S.A.
On December 15, 2006, Cuyana S.A. de Inversiones made an offer to acquire the
whole of class "C" shares of Centrales Termicas Mendoza S.A. that are held
through the Programa de Propiedad Participada ("PPP") for an aggregate amount of
AR$ 4,300,000. The offer, which was accepted by an unanimous class "C"
shareholders' meeting of Centrales Termicas Mendoza S.A. held on the same date,
remains subject to the relevant authorizations of Banco de la Nacion Argentina
(trustee of PPP) and Ministerio de Economia de la Nacion (Argentinean Ministry
of Economy). All class "C" shares held through the PPP, which are fully paid,
are currently pledged in favor of the Argentine Government. Once the
authorizations are granted, Cuyana S.A. de Inversiones will be obliged to pay
the purchase price and acquire the shares, which shall be transferred free of
any Liens, including the pledge granted in favor of the Argentine Government.
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SECTION 3.3(B) OF THE SELLER DISCLOSURE LETTER
EQUITY INTERESTS
None.
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SECTION 33(C) OF THE SELLER DISCLOSURE LETTER
LIST OF THE CAPITAL STOCK OF THE ENTITIES
CMS ENSENADA S.A.
Jurisdiction of organization: City of Buenos Aires
Authorized and outstanding capital stock: AR$ 38,012,000
Percentage of its outstanding capital stock owned by the Seller: 100% in
aggregate:
- - 0.2106% (80,060 shares) owned by CMS Generation Holdings Company
- - 99.7893% (37,931,940 shares) owned by CMS Operating S.R.L.
CMS OPERATING S.R.L.
Jurisdiction of organization: City of Buenos Aires
Authorized and outstanding capital stock: AR$ 355,410,538
Percentage of its outstanding capital stock owned by the Seller: 100% in
aggregate:
- - 87,8516% (312,234,100 quotas) owned by CMS International Ventures, L.L.C
- - 12,1483% (43,176,438 quotas) owned by CMS Generation Holding Company
CMS COMERCIALIZADORA DE ENERGIA S.A.
Jurisdiction of organization: City of Buenos Aires
Authorized and outstanding capital stock: AR$ 122,000
Percentage of its outstanding capital stock owned by the Seller: 100 % in
aggregate:
- - 99.99% (121,999 shares) owned by CMS Enterprises Company
- - 0.01% (1 share) owned by CMS Generation Holdings Company
CMS CENTRALES TERMICAS S.A.
Jurisdiction of organization: City of Buenos Aires
Authorized and outstanding capital stock: AR$ 25,000
Percentage of its outstanding capital stock owned by the Seller: 100% in
aggregate:
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- - 90% (22,500 shares) owned by CMS Enterprises Company
- - 10% (2,500 shares) owned by CMS Generation Holdings Company
CMS GENERATION S.R.L.
Jurisdiction of organization: City of Buenos Aires.
Authorized and outstanding capital stock: AR$ 68,950,700
Percentage of its outstanding capital stock owned by the Seller: 100 % in
aggregate:
- - 90% (62,055,630 quotas) owned by CMS International Ventures, L.L.C.
- - 10%o (6,895,070 quotas) owned by CMS Generation Holdings Company
CUYANA S.A. DE INVERSIONES
Jurisdiction of organization: City of Buenos Aires.
Authorized and outstanding capital stock: AR$ 281,330,353
Percentage of its outstanding capital stock owned by the Seller: 100% in
aggregate:
- - 97% (272,890,208 shares) owned by CMS Operating S.R.L.
- - 3% (8,440,145 shares) owned by CMS Centrales Termicas S.A.
NOTE: CMS Centrales Termicas S.A. has paid in capital equivalent to 25% of the
shares subscribed in Cuyana S.A. de Inversiones on December 27th, 2006.
Therefore, there is a commitment to pay the balance thereof (AR$ 6,329,933)
within two years from the date of subscription.
CENTRALES TERMICAS MENDOZA S.A.
Jurisdiction of organization: City of Buenos Aires
Authorized and outstanding capital stock: 278,326,823 shares amount
AR$266,431,572 Percentage of its outstanding capital stock owned by the Seller:
92.9557%
- - 92.5957% (141,946,679 class A shares and 115,772,224 class B shares) owned
by Cuyana S.A. de Inversiones
TRANSPORTADORA DE GAS DEL MERCOSUR S.A.
Jurisdiction of organization: City of Buenos Aires
Authorized and outstanding capital stock: AR$ 43,512,000
EXECUTION COPY
Percentage of its outstanding capital stock owned by the Seller: 20%
- - 20% (8,702,400 class C shares) owned by CMS Operating S.R.L.
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SECTION 3.3(D) OF THE SELLER DISCLOSURE LETTER
EQUITY INTERESTS
CENTRALES TERMICAS MENDOZA S.A.
1. Owns 2 shares of Termoelectrica General San Martin S.A.
2. Owns 2 shares of Termoelectrica Manuel Belgrano S.A.
CMS Centrales Termicas Mendoza S.A. has assigned to the Fondo de Inversiones
Necesarias para la Readaptacion del Mercado Electrico Mayorista (FONINVEMEM)
(Necessary Investment Fund for the Readjustment of the Wholesale Electric
Market) the credits as power compensation against the National Government. In
return for the assignment of said credit Centrales Termicas Mendoza S.A.
acquired shares in Termoelectrica General San Martin and Termoelectrica General
Belgrano (the "Companies") pro rata the assigned credits.
In order to administer the funds transferred to FONINVEMEM by the generating
companies (among others Centrales Termicas Mendoza S.A.) and build two
thermoelectric power stations of 800 MW each ( the FONINVEMEM's purpose), two
trusts have been created (one for each power station: Manuel Belgrano and San
Martin).
Within this context, the Companies are in charge of the building and operation
of both power stations and CMS Centrales Termicas Mendoza S.A. has pledged its
shares in the Companies in favor of said trusts as a guarantee for its actions
regarding the building and construction of the power stations.
EXECUTION COPY
SECTION 3.4 OF THE SELLER DISCLOSURE LETTER
CONSENTS AND APPROVALS
None.
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SECTION 3.5(C) OF THE SELLER DISCLOSURE LETTER
NO CONFLICT OR VIOLATION
CMS ENSENADA S.A.
In accordance with the Acuerdo Transitorio (Transitional Agreement) entered into
by and between CMS Ensenada S.A. and YPF S.A. on December 28, 2002, upon change
of control of CMS Operating S.R.L. by CMS Enterprises Company, CMS Operating
S.R.L.'s guaranty (fianza) of CMS Ensenada S.A.'s obligations under the Oferta
Para el Suministro de Energia Electrica y Vapor (Power and Steam Supply
Agreement) entered into by and between CMS Ensenada S.A. and YPF S.A. on August
16, 1995 shall be replaced within ten days following the Closing Date by one of
the guarantees foreseen in Chapter X of the Power and Steam Supply Agreement.
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SECTION 3.6(B) OF THE SELLER DISCLOSURE LETTER
FINANCIAL STATEMENTS
CMS OPERATING S.R.L.
The financial statements as of December 31st, 2006 have a limitation to the
auditor scope of works regarding the non-availability of the audited financial
statements of Transportadora de Gas del Mercosur S.A. as of the date of issuance
of CMS Operating S.R.L.'s financial statements.
EXECUTION COPY
SECTION 3.7(A) OF THE SELLER DISCLOSURE LETTER
CONTRACTS
CMS ENSENADA S.A.
1. Oferta para el Suministro de Energia y Vapor (Offer for the Provision of
Power and Steam) entered into between CMS Ensenada S.A. and YPF S.A. dated
August 16, 1995.
2. Acuerdo Transitorio (Transition Agreement) entered into between YPF S.A. and
CMS Ensenada S.A. dated December 28, 2002.
3. Carta oferta para la construccion de una linea de transmision (Agreement for
the construction of a transmission line) entered into between CMS Ensenada S.A.
and Empresa Distribuidora La Plata S.A. dated January 7, 1997.
4. Oferta para el Servicio de Asistencia de Transporte (Offer for Transport
Assistance Service) entered into between CMS Ensenada S.A. and Metrogas S.A.
dated July 31, 2006.
5. Oferta para la distribucion del servicio de gas natural (Offer to render
distribution of natural gas service) entered into between CMS Ensenada S.A. and
Camuzzi Gas Pampeana S.A. dated March 18, 1996.
6. Acuerdo de Despacho y Operacion (Dispatch and Operating Agreement) entered
into between Empresa de Energia y Vapor S.A., CMS Ensenada S.A. - UTE and
Camuzzi Gas Pampeana S.A. dated May 14, 1996.
7. Oferta para el Suministro de Piezas y Servicios de Mantenimiento (Offer for
the Provision of Parts and Maintenance Services) entered into between CMS
Ensenada S.A. and General Electric International Inc. dated May 5, 1997.
8. Oferta para el Servicio de Transporte en Firme (Offer for Transportation
Service) entered into between CMS Ensenada S.A. and Transportadora de Gas del
Sur S.A. dated July 21, 1997
9. Operation and Maintenance Agreement (La Plata Cogeneration Facility) entered
into between CMS Operating S.A. and CMS Ensenada S.A., dated May 7, 1997.
10. Promissory Notes from CMS Ensenada S.A. to CMS Enterprises Company dated (i)
January 15, 2004; (ii) July 15, 2004; and (iii) July 7, 2005 in the amounts of
$825,421, $2,003,898, and $577,042, respectively.
CMS COMERCIALIZADORA DE ENERGIA S.A.
1. Oferta para la Contratacion del Servicio de Intercambio y Desplazamiento de
Gas Natural (Offer to Hire a Service for the Exchange and Movement of Natural
Gas) entered into between CMS Comercializadora de Energia S.A. and
Transportadora de Gas del Norte S.A. dated August 3, 2006.
EXECUTION COPY
2. Oferta de Servicio de Transporte (Offer for Transportation Service) entered
into between CMS Comercializadora de Energia S.A. and Metroenergia S.A. dated
July 28, 2006.
3. Oferta para el Servicio de Transporte Interrumpible (Offer for Transportation
Service) entered into between CMS Comercializadora de Energia S.A. and
Transportadora de Gas del Sur S.A. dated August 11, 2006.
4. Oferta de Servicio de Gestion Comercial (Commercial Management Service Offer)
entered into between CMS Comercializadora de Energia S.A. and MetroEnergia S.A.
dated July 28, 2006.
5. Oferta de Venta de Gas (Gas Sale Offer) entered into betweeen CMS
Comercializadora de Energia S.A. and Pluspetrol S.A. dated December 27, 2006.
6. Oferta de Compra de Gas (Gas Purchase Offer) entered into between CMS
Comercializadora de Energia S.A. and A. Mutz S.R.L. dated January 15, 2007.
CENTRALES TERMICAS MENDOZA S.A.
1. Long Terms Parts and Long Term Services Agreement entered into between
Centrales Termicas Mendoza S.A. and General Electric International Inc., General
Electric International Inc. (Argentine Branch) and G.E. Energy Parts Inc. dated
January 31, 2001.
2. Program Parts, Miscellaneous Hardware, Program Management, and Services
Contract entered into between Centrales Termicas Mendoza S.A. and Siemens
Westinghouse Power Corporation, dated January 28, 2005.
3. Steam Generation Services Agreement entered into between Centrales Termicas
Mendoza S.A. and YPF S.A., November 17, 1997 and Amendment for the resolution of
disputes dated July 2, 2001 and Amendment (offer for price adjustment) dated May
12, 2005.
4. Gas Sale and Purchase Agreement entered into between Centrales Termicas
Mendoza S.A. and Total Austral S.A., Bridas Austral S.A. and Deminex Argentina
S.A. by exchange of letters dated June 11, 12 and 14, 1996 and Additional
Clauses: (i) No. i dated June 30, 1997; and (ii) No. 2 dated June 12, 2001.
5. Carta Oferta de Transporte en Firme (Offer Letter for Transportation) entered
into between Centrales Termicas Mendoza S.A. and Transportadora de Gas del Norte
S.A. dated June 25, 1996 and Amendment dated April 22, 2003.
6. Acuerdo para el Servicio de Transporte de Gas (Gas Transportation Service
Agreement) entered into between Centrales Termicas Mendoza S.A. and
Transportadora de Gas de Norte S.A. dated April 5, 2004.
7. Oferta para la Distribucion de Gas (Offer for Gas Distribution) entered into
between Centrales Termicas Mendoza S.A. and Distribuidora de Gas Cuyana S.A.
dated October 1, 1996 and Addendas (amendments) dated (i) May 2, 1997; (ii)
August 3, 1998; (hi) July 4, 2003; and (iv) November 10, 2004.
EXECUTION COPY
8. Agreement for rendering assistance in peak hours entered into between
Distribuidora de Gas Cuyana S.A. and Centrales Termicas Mendoza S.A., October 1,
1996; Acuerdo Complementario (Complementary Agreement) dated August 3, 1998;
Addendas (amendments) dated: (i) December 10, 2001; (ii) July 4, 2003; and (iii)
November 10, 2004.
9. Addenda Ndegrees 4 a los Contratos de Distribucion, Asistencia en Picos y
Complementario para el Servicio de Compresion (Amendment No. 4 to the
Distribution Agreement, Peak Hours Assistance Agreement and Complementary
Agreement for the Compresion Service) entered into between Centrales Termicas
Mendoza S.A. and Distribuidora de Gas Cuyana S.A. dated July 24, 2006.
10. Acuerdo de Balance de Gas (Gas Balance Agreement) entered into between
Distribuidora de Gas Cuyana S.A. and Centrales Termicas Mendoza S.A. dated
August 3, 1998.
11. Contrato de Transporte de Gas (Gas Transportation Agreement) entered into
between Centrales Termicas Mendoza S.A. and Distribuidora de Gas Cuyana S.A.
dated January 31, 2006.
12. Acuerdo Operativo de Desbalances para el Sistema de Distribucion (Operative
Agreement for the Imbalances on the Distribution System) entered into between
Centrales Termicas Mendoza S.A. and Distribuidora de Gas Cuyana S.A. dated
December 15, 2000.
13. Contrato de Operacion (Operating Agreement) entered into between CMS
Operating S.A. and Centrales Termicas Mendoza S.A. in May, 1995 and Amendment I
dated December 11, 2000, Amendment II dated November 12, 2001, Amendment III
dated November 1, 2002, Amendment IV dated December 29, 2003, Amendment V dated
November 1, 2004, Amendment VI dated November 11, 2005 and Amendment VII dated
November 1, 2006.
CMS OPERATING S.R.L.
1. Shareholder Loan Agreement entered into between Transportadora de Gas del
Mercosur S.A., as borrower, and Sofax Banque, Compania General de Combustibles
S.A.,, TECGAS Argentina S.A., PETRONAS Argentina S.A.. CMS Operating S.R.L. and
CMS Internationa] Ventures L.L.C., collectively as lenders, dated August 30,
2001 and amendments thereof dated (i) January 31, 2003; (ii) January 30, 2004,
(iii) September 7, 2004; (iv) January 31, 2005; (v) January 31, 2006; and (vi)
January 31, 2007.
2. Contrato de Desarrollo, Provision, Instalacion y puesta en marcha de Software
de Aplicacion (Application software development, supply, installation and
running agreement) entered into between CMS Operating S.R.L. and Dipros S.A.
dated January 6, 2006.
3. Contrato de Prestamo (Loan Agreement) entered into between CMS Operating S.A.
and CMS Centrales Termicas S.A. dated December 27, 2006.
4. Contrato de Operacion (Operating Agreement) entered into between CMS
Operating S.A. and Centrales Termicas Mendoza S.A. in May, 1995 and Amendment I
dated December 11, 2000,
EXECUTION COPY
Amendment II dated November 12, 2001, Amendment III dated November 1, 2002,
Amendment IV dated December 29, 2003, Amendment V dated November 1, 2004,
Amendment VI dated November 11, 2005 and Amendment VII dated November 1, 2006.
5. Operation and Maintenance Agreement (La Plata Cogeneration Facility) entered
into between CMS Operating S.A. and CMS Ensenada S.A., dated May 7, 1997.
CMS CENTRALES TERMICAS MENDOZA S.A.
13. Contrato de Prestamo (Loan Agreement) entered into between CMS Operating
S.A. and CMS Centrales Termicas S.A. dated December 27, 2006.
CUYANA S.A. DE INVERSIONES
Promissory Note from CMS Generation Investment Company VI to Cuyana S.A. de
Inversiones dated December 21, 2005.Outstanding principal amount $ 12,484,339
plus accrued interests.
EXECUTION COPY
SECTION 3.7(B) OF THE SELLER DISCLOSURE LETTER
CONTRACTS
1. Shareholder Loan Agreement entered into between Transportadora de Gas del
Mercosur S.A., as borrower, and Sofax Banque, Compania General de Combustibles
S.A., TECGAS Argentina S.A., PETRONAS Argentina S.A., CMS Operating S.R.L.. and
CMS International Ventures L.L.C., collectively as lenders, dated August 30,
2001 and amendments thereof dated (i) January 31, 2003; (ii) January 30, 2004,
(iii) September 7, 2004; (iv) January 31, 2005; (v) January 31, 2006; and (vi)
January 31, 2007. The amount owed to CMS International Ventures, L.L.C. and CMS
Operating S.R.L. are evidenced in: (i) promissory note from Transportadora de
Gas del Mercosur S.A. to CMS International Ventures, L.L.C. (the current balance
is $ 7,807,814.45 as of January 31, 2007); and (ii) promissory note from
Transportadora de Gas del Mercosur S.A. to CMS Operating S.R.L. (the current
balance is $ 277,011.51 as of January 31, 2007).
2. Promissory Notes from CMS Ensenada S.A. to CMS Enterprises Company dated (i)
January 15, 2004; (ii) July 15, 2004; and (iii) July 7, 2005 in the amounts of
$825,421, $2,003,898, and $577,042, respectively.
3. Promissory Note from CMS Generation Investment Company VI to Cuyana S.A. de
Inversiones dated December 21, 2005. Outstanding principal amount $ 12,484,339
plus accrued interests.
EXECUTION COPY
SECTION 3.7(C) OF THE SELLER DISCLOSURE LETTER
CONTRACTS
None
EXECUTION COPY
SECTION 3.7(D) OF THE SELLER DISCLOSURE LETTER
CONTRACTS
CMS ENSENADA S.A.
The de-mineralized, de-gasified water provided by YPF S.A. to CMS Ensenada S.A.
for the heat boilers plant pursuant to the Power and Steam Supply Agreement may
not meet the minimum quality requirements to enable the facility to operate
adequately, which could be the reason for corrosion and other malfunctions.
CENTRALES TERMICAS MENDOZA S.A.
Pursuant to that certain Long Term Parts and Term Services Agreement entered
into by and between Centrales Termicas Mendoza S.A. and General Electric
International Inc., General Electric International Inc., (Argentina Branch) and
G.E. Energy Parts on January 31, 2001, Centrales Termicas Mendoza S.A. undertook
to grant a given $ 300,000 bank guaranty from US bank to said parties. As of the
date hereof, the guarantee provided by Centrales Termicas Mendoza S.A. has
expired and is in the process of being renegotiated. G.E. might consider the
lack of guaranty as a breach of the Agreement by Centrales Termicas Mendoza S.A.
EXECUTION COPY
SECTION 3.8 OF THE SELLER DISCLOSURE LETTER COMPLIANCE WITH LAWS
CMS COMERCIALIZADORA DE ENERGIA S.A.
1. CMS Comercializadora de Energia S.A. is not complying with Section 55 of
Resolution No. 7/2005 issued by the Inspection General de Justicia (Commercial
Companies House) regarding plurality of shareholders.
2. Shareholder CMS Enterprises Company has filed the information for 2005 and
2006 in order to comply with Resolution No. 7/2005 and Resolution No. 12/2005
issued by the Inspection General de Justicia (Commercial Companies House) on
February 14, 2007. Final approval by Inspection General de Justicia (Commercial
Companies House) is pending.
3. CMS Comercializadora de Energia S.A. has initiated the filings before the
Inspection General de Justicia (Commercial Companies House) in order to register
the appointment of the members of the Board of Directors for 2006 period. Final
approval by Inspection General de Justicia (Commercial Companies House) is
pending
CMS ENSENADA S.A.
1. CMS Ensenada S.A. is not complying with Section 55 of Resolution No. 7/2005
issued by the Inspection General de Justicia (Commercial Companies House)
regarding plurality of shareholders.
2. Pursuant to the terms of the Transportation Service Agreement entered into
between CMS Ensenada S.A. and Transportadora de Gas del Sur S.A. dated July 21,
1997, Transportadora de Gas del Sur S.A. has applied five separate fines (for an
aggregate amount of AR$ 5,124,754.83) to CMS Ensenada S.A. based on the alleged
imbalances in the volume of natural gas supplied in accordance with Ente
National Regulador del Gas - ENARGAS Resolution Ndegrees 716/98. The amount of
the fines has been disputed by CMS Ensenada S.A. In August 2006, Transportadora
de Gas del Sur S.A. brought an action before ENARGAS in order to settle the
dispute and collect the fines. CMS Ensenada S.A. has rejected Transportadora de
Gas del Sur S.A.'s demands and has sustained that imbalances were caused by gas
supplier's (YPF S.A.) breaches. CMS Ensenada S.A. has requested that YPF S.A.
(the gas supplier) be subpoenaed, which has been accepted by ENARGAS. A
resolution by ENARGAS is pending.
CMS OPERATING S.R.L.
1. The information has been filed with the Inspection General de Justicia
(Commercial Companies House) to register: (i) appointment of managers for 2006
period; and (ii) capital increase and the corresponding by-laws' amendment
approved by the ordinary and extraordinary Quotaholders' meeting held on
December 27, 2006. Final approval by Inspection General de Justicia (Commercial
Companies House) is pending
2. Shareholder CMS International Ventures LLC has filed all the information
required in order to comply with Resolution No. 7/2005 issued by the Inspection
General de Justicia (Commercial
EXECUTION COPY
Companies House) regarding foreign holding companies for 2006 period. Final
approval of Inspection General de Justicia (Commercial Companies House) is
pending.
CMS CENTRALES TERMICAS S.A.
1. The information has been filed with the Inspection General de Justicia
(Commercial Companies House) to register: (i) the capital increase approved by
the shareholders' meeting held on May 5th, 2005; and (ii) the appointment of the
members of the Board of Directors for 2006 period approved by the shareholders'
meeting held on May 22nd, 2006. Final approval of Inspection General de Justicia
(Commercial Companies House) is pending.
2. Shareholder CMS International Ventures LLC has filed all the information
required in order to comply with Resolution No. 7/2005 issued by the Inspection
General de Justicia (Commercial Companies House) regarding foreign holding
companies for 2006 period. Final approval of Inspection General de Justicia
(Commercial Companies House) is pending.
3. CMS Centrales Termicas S.A. is not complying with section 31 of the
Commercial Companies Act No. 19,550 since its shareholding in Cuyana S.A. de
Inversiones exceeds its free reserves and half of its capital stock and
mandatory reserves.
CMS GENERATION S.R.L.
The information has been filed with the Inspection General de Justicia
(Commercial Companies House) to register the capital increase and the
corresponding by-laws' amendment approved by means of the ordinary and
extraordinary quotaholders' meeting held on April 4, 2005. Final approval by
Inspection General de Justicia (Commercial Companies House) is pending.
CUYANA S.A. DE INVERSIONES
The information has been filed with the Inspection General de Justicia
(Commercial Companies House) to register the capital increase approved by the
Ordinary and Extraordinary Shareholders' meeting held on December 27, 2006.
Final approval by Inspection General de Justicia (Commercial Companies House) is
pending.
EXECUTION COPY
SECTION 3.9 OF THE SELLER DISCLOSURE LETTER
PERMITS
None
EXECUTION COPY
SECTION 3.10 OF THE SELLER DISCLOSURE LETTER
LITIGATION
The following claims/lawsuits have been filed against the Entities:
CENTRALES TERMICAS MENDOZA S.A.
1. "Consejo Profesional de Ingenierosy Geologos s/Apremio " (legal proceeding
for purposes of debt collection): File No. 351.365. The amount claimed is AR$
4,000.
2. "Rodriguez, Diego Alberto c/ del Barco, Roberto y otro s/ despido" (firing,
labor claim): File No. 14.999. The amount claimed is AR$ 14,344.
3. "Direction de Defensa del Consumidor s/ C.T.M. S.A. " (National Public Entity
of Consumer Rights): Administrative File. The amount claimed is AR$ 50.
4. Customs' claim against Centrales Termicas Mendoza S.A. (importation of spare
parts subject to dispute as to new or used status of parts): Administrative File
No. 580.749/2003. The amount claimed is AR$ 260,836.
5. "Escardini Graciela Marina c/ Centrales Termicas Mendoza s/despido" (firing,
labor claim) hearing before Labor Court No. 5 of the city of Mendoza. The amount
claimed is AR$ 168,178.
CMS ENSENADA S.A.
1. "Figueroa Claudia Antonia c/ CMS Ensenada S.A. s/ accidente action civil"
(accident, labor claim) hearing before Labor Court No. 21 of the city of Buenos
Aires. The amount claimed is AR$ 151,580.
2. "Figueroa Claudia Antonia c/ CMS Ensenada S.A. s/ cobro de pesos " (accident,
labor claim) hearing before Labor Court No. 50 of the city of Buenos Aires. The
amount claimed is AR$ 94,984.
Note: CMS Ensenada S.A. filed in 1998 a joint-claim against the Organismo de
Control de la Energia Electrica de la Provincia de Buenos Aires for the non
application of a tax rate ("Central Dock Sud S.A. y otros c/ Buenos Aires,
Provincial y otro s/ action declarativa de inconstitucionalidad\ Federal Courts
of La Plata, Secretary No. 4).
CMS OPERATING S.R.L.
1. "Reina Carla Irene c/CMS Opreating S.R.L. s/cobro de pesos" (labor claim)
hearing before Administrative Court of the city of Buenos Aires. A hearing is
expected for March 19, 2007. The claimant requested the Aseguradora de Riesgos
de Trabajo (ART) to attend the hearing. The amount claimed is AR$ 180,000 plus
20% attorney's fees.
EXECUTION COPY
2. "Soria Viviana c/CMS Operating S.R.L. s/ despido" (firing, labor claim)
hearing before Administrative Court of the city of Buenos Aires (SECLO). The
amount claimed is AR$ 848,707.26 plus 20% attorney's fees. This claim related to
items not considered in the final payment and an indemnity letter since the
claimant was director and syndic for different Entities.
In March 9, 2007 the proceeding before the SECLO was already finished and the
parties did not reach a conciliatory agreement.
EXECUTION COPY
Section 3.11(a) of the Seller Disclosure Letter
Employee Matters
Centrales Termicas Mendoza S.A.
1. Employees of Centrales Termicas Mendoza S.A. own 4,205,698 class "C" shares
through the Programa de Propiedad Participada.
2. Section 22 of Centrales Termicas Mendoza S.A.'s by-laws establishes a
dividend distribution of 0.5% of the corporations net profits. This is paid to
the personnel every year according to the distribution set forth thereof.
3. At present, Centrales Termicas Mendoza has two pension or saving plans: (i)
one that includes all personnel comprised in Acta Convencional entered into
between Centrales Termicas Mendoza S.A. and Federation Argentina de Trabajadores
de Luzy Fuerza\ and (ii) the one that includes all personnel comprised in the
Collective Bargaining Agreement No. 788/06 "E" entered into between Centrales
Termicas Mendoza S.A. and Asociacion de Profesionales Universitarios del Aguayla
Energia Electrica.
4. The 70% of the personnel's meal is borne by Centrales Termicas Mendoza S.A.
being the unitary cost between AR$5 and AR$6 per meal.
5. There are plant vehicles (pick-ups, vans and cars), which are used by the
plant's personnel.
6. Centrales Termicas Mendoza S.A pays for the radio and cell phone
communication systems.
7. Internet Service -with access to Centrales Termicas Mendoza S.A.'s server- is
provided to certain employees at their domiciles.
8. The company affords language-training courses for the employees either
totally or partially, depending on the case.
9. Usually and according to the different updating needs, the company affords
training courses, in or out the company.
10. Pending vacations of the staff from Centrales Termicas Mendoza S.A.:
PENDING VACATIONS
TOTAL
PENDING
SURNAME AND NAME COMPANY 2001 2002 2003 2004 2005 DAYS
- ---------------- ----------------------------- ---- ---- ---- ---- ---- -------
ALONSO, OSVALDO CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
AMAYA, JORGE G. CENTRALES TERMICAS MENDOZA SA 0 0 0 1 28 29
AYALA, HECTOR F. CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
BARBAZZA, Oscar Alberto CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
BARCHIESI, Juan CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
BERTAGNO, Carlos Hugo CENTRALES TERMICAS MENDOZA SA 0 0 0 0 21 21
BLANCO, Eduardo F. CENTRALES TERMICAS MENDOZA SA 0 0 0 0 13 13
BORDIN, ANGELA. CENTRALES TERMICAS MENDOZA SA 0 0 2 35 35 72
BURGQA, ALEJANDRA CENTRALES TERMICAS MENDOZA SA 0 0 0 0 3 3
CALDERON, Marcelino CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
CALISE, Veronica CENTRALES TERMICAS MENDOZA SA 0 0 0 0 22 22
CARAM, Mariana CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
CASTILLO, Carlos Alberto CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
CASTRO, VICTOR M. CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
CIARALLQ, Javier CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
COMARIN, CARLOS A. CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
COPPI, CESAR ADOLFO CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
CORDERO, Nelson Ariel CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
CHACON, ROLANDO CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
DAVOLIO, ANTONIO R. CENTRALES TERMICAS MENDOZA SA 0 0 0 30 35 65
ENRIQUEZ, Carlos Daniel CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
FUNES, OSCAR F. CENTRALES TERMICAS MENDOZA SA 0 0 0 0 2 2
GARCIA, ENRIQUE CENTRALES TERMICAS MENDOZA SA 23 35 35 35 35 163
GARCIA, HUGO OMAR CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
GIMENEZ, Jose Luis CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
GOMEZ, HECTOR CENTRALES TERMICAS MENDOZA SA 0 0 0 0 11 11
GONZALES, Fabian Andres CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
GONZALEZ, Walter Horacio CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
GRZONA, GUSTAVO CENTRALES TERMICAS MENDOZA SA 0 0 0 12 35 47
GUINAZU, Asdrubal Juan CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
HERVIDA, ERNESTO CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
LAGHEZZA, LEONARDO CENTRALES TERMICAS MENDOZA SA 0 8 28 28 35 99
LIBERAL, SERGIO J. CENTRALES TERMICAS MENDOZA SA 0 0 0 0 30 30
LUQUEZ, DANIEL CENTRALES TERMICAS MENDOZA SA 0 0 0 27 35 62
MARIOTTI, Veronica Beatriz CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
MAROTTOLI, Jose Antonio CENTRALES TERMICAS MENDOZA SA 0 0 13 21 21 55
MASSIERO, RAUL E. CENTRALES TERMICAS MENDOZA SA 0 0 18 35 35 88
MAZZITELLI, ERNESTO CENTRALES TERMICAS MENDOZA SA 0 0 0 1 35 36
MONTERO, JOSE A. CENTRALES TERMICAS MENDOZA SA 0 0 0 0 31 31
MORALES, RICARDO CENTRALES TERMICAS MENDOZA SA 0 0 0 13 35 48
MORENO, Gabriel Sebastian CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
NAHIM, RAUL CENTRALES TERMICAS MENDOZA SA 0 0 0 35 35 70
ORTEGA, NORBERTO CENTRALES TERMICAS MENDOZA SA 0 0 0 4 35 39
ORTIZ, Angel Daniel CENTRALES TERMICAS MENDOZA SA 0 0 0 0 10 10
PARIGI, RAUL CENTRALES TERMICAS MENDOZA SA 0 0 0 4 35 39
PEREYRA, MANUEL CENTRALES TERMICAS MENDOZA SA 0 0 0 0 1 1
PEREZ, DANIEL R. CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
PEREZ, GABRIEL RAUL CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
PEREZ, OSCAR H. CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
POPULIN, Jorge Jose CENTRALES TERMICAS MENDOZA SA 16 30 30 30 30 136
RODRIGUEZ, MIGUEL H. CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
ROMERO, JORGE E. CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
SEVILLA, JORGE C. CENTRALES TERMICAS MENDOZA SA 0 0 0 0 34 34
SEVILLA, JULIO J. CENTRALES TERMICAS MENDOZA SA 0 0 0 1 28 29
SIMON, Mario Gabriel CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
STROSCIO, JUAN A. CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
TERRANEO, Enrique CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
ULLOA, Pamela Alejandra CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
VAZQUEZ, DANIEL CENTRALES TERMICAS MENDOZA SA 0 0 0 0 5 5
VERA, MIGUEL E. CENTRALES TERMICAS MENDOZA SA 0 16 35 35 35 121
VIOLA, Fernando Sebastian CENTRALES TERMICAS MENDOZA SA 0 0 0 0 0 0
WILHELM, ROBERTO M. CENTRALES TERMICAS MENDOZA SA 22 28 35 35 35 155
CMS Ensenada S.A.
1. CMS Ensenada S.A. pays for cell phone communication system.
2. The 70% of the personnel's meal is borne by CMS Ensenada S.A. being the
unitary cost between AR$5 and AR$6 per meal.
3. There are plant vehicles (pick-ups, vans and cars), which are used by the
plant's personnel.
4. Internet Service -with access to CMS Ensenada S.A.'s sever- is provided to
certain employees at their domiciles.
5. The company affords language-training courses for the employees either
totally or partially, depending on the case.
6. Usually and according to the different updating needs, the company affords
training courses, in or out the company.
7. Pending vacations of the staff from CMS Ensenada S.A.:
PENDING VACATIONS
TOTAL
PENDING
SURNAMES NAME COMPANY 2001 2002 2003 2004 2005 DAYS
- ------------ --------------- --------------- ---- ---- ---- ---- ---- -------
AGUERQ GUSTAVO CMS Ensenada SA 0 0 0 0 0 0
FRANCO SILVIA CMS Ensenada SA 0 0 0 0 0 0
MARCHUETA GERARDO CMS Ensenada SA 0 0 0 0 7 7
BARQUER FERNANDO CMS Ensenada SA 0 0 0 0 0 0
TARAS ANDRES CMS Ensenada SA 0 0 0 0 0 0
LOSADA RICARDO CMS Ensenada SA 0 0 0 0 0 0
SACCON DANIEL CMS Ensenada SA 0 0 0 0 0 0
CASTRO JORGE CMS Ensenada SA 0 0 0 0 0 0
BISCONTI HORACIO CMS Ensenada SA 0 0 0 0 0 0
LATASTE SERGIO CMS Ensenada SA 0 0 0 0 0 0
SILVA JUAN PABLO CMS Ensenada SA 0 0 0 0 0 0
GLAVICH PEDRO CMS Ensenada SA 0 0 0 0 0 0
FRANCECE WALTER CMS Ensenada SA 0 0 0 0 0 0
GONZALEZ EDGARDO CMS Ensenada SA 0 0 0 0 0 0
BARBIER EDGARDO CMS Ensenada SA 0 0 0 0 0 0
ESTIVARIZ DIEGO CMS Ensenada SA 0 0 0 0 21 21
MOSCARELLA EUGENIO CMS Ensenada SA 0 0 0 0 0 0
PERUSIN ALEJANDRO CMS Ensenada SA 0 0 0 0 0 0
BORLANDO MARIA PIA CMS Ensenada SA 0 0 0 0 0 0
SINTES LAURA CMS Ensenada SA 0 0 0 0 0 0
BRANAS PABLO CMS Ensenada SA 0 0 0 0 0 0
LOPEZ BUSTO MARIA del C. CMS Ensenada SA 0 0 0 0 0 0
DEL VECCHIO MARIA A. CMS Ensenada SA 0 0 0 0 0 0
CMS Operating S.R.L
1. The company pays for certain employee assigned cell phones.
2. Internet Service -with access to CMS Operating S.R.L.'s sever- is provided to
certain employees at their domiciles.
3. The company affords language-training courses for the employees either
totally or partially, depending on the case.
4. Usually and according to the different updating needs, the company affords
training courses, in or out the company.
5. Pending vacations of the staff from CMS Operating S.R.L.:
PENDING VACATIONS
TOTAL
PENDING
SURNAMES NAME COMPANY 2001 2002 2003 2004 2005 DAYS
- ------------ --------------- ----------------- ---- ---- ---- ---- ---- -------
ALBERIQ PABLO ANDRES CMS OPERATING SRL 0 0 0 0 0 0
CACHOBRATTI FLORENCIA CMS OPERATING SRL 0 0 0 0 0 0
CARBAJAL ALEJANDRO LUIS CMS OPERATING SRL 0 0 0 0 0 0
CASANOVA JORGE ANTONIO CMS OPERATING SRL 0 0 0 0 29 29
COLOMBO MARIA CECILIA CMS OPERATING SRL 0 0 0 0 0 0
COSSIO MARTIN CMS OPERATING SRL 0 0 0 0 0 0
DE FRANCESCO MARCELA CECILIA CMS OPERATING SRL 0 0 0 0 0 0
ELISSETCHE GERMAN ALBERTO CMS OPERATING SRL 0 0 0 0 0 0
FALZONE HECTOR SERGIO CMS OPERATING SRL 0 0 0 0 0 0
FERNANDEZ
BARBIERO MARTIN CMS OPERATING SRL 0 0 0 0 0 0
FERRETTO SANDRO CMS OPERATING SRL 0 0 0 0 0 0
GALLINO FERNANDO CMS OPERATING SRL 0 0 0 0 0 0
INDART SILVINA CMS OPERATING SRL 0 0 0 0 0 0
KATZ LEONARDO PABLO CMS OPERATING SRL 0 0 0 0 0 0
KRAIGHER MILENA CMS OPERATING SRL 0 0 0 0 14 14
MOLLERACH MARIA FERNANDA CMS OPERATING SRL 0 0 0 0 2 2
MOLLO MARIA JULIETA CMS OPERATING SRL 0 0 0 0 9 9
MOLTENI SERGIO ANDRES CMS OPERATING SRL 0 0 0 0 0 0
MONSALVO LEONARDO RUBEN CMS OPERATING SRL 0 0 0 0 0 0
MUNOZ
FERNANDEZ PATRICIA CMS OPERATING SRL 0 0 0 0 0 0
NACCARELLI ALEJANDRA CMS OPERATING SRL 0 0 0 0 0 0
NACCARELLI LILIAN CMS OPERATING SRL 0 0 0 0 0 0
OCAMPO MARIA ANGELA CMS OPERATING SRL 0 0 0 0 0 0
PRINCIPI CARLOS ARTURO CMS OPERATING SRL 0 0 0 21 28 49
REY JORGE ANDRES CMS OPERATING SRL 11 30 30 30 30 131
TERRANEO ENRIQUE CMS OPERATING SRL 0 0 0 0 0 0
VAZQUEZ RODRIGO CMS OPERATING SRL 0 0 0 0 0 0
VELAR DE
IRIGOYEN BERNARDO JULIO CMS OPERATING SRL 0 0 0 0 0 0
VILLA DE
BIGNONE MARIA CRISTINA CMS OPERATING SRL 0 0 0 0 6 6
CMS Comercializadora de Energia S.A,
1. The company pays for certain employee assigned cell phones.
2. Internet Service -with access to CMS Comercializadora de Energia S.A.'s
sever- is provided to certain employees at their domiciles.
3. The company affords language-training courses for the employees either
totally or partially, depending on the case.
4. Usually and according to the different updating needs, the company affords
training courses, in or out the company.
EXECUTION COPY
Section 3.11(d) of the Seller Disclosure Letter
Employee Matters
None.
EXECUTION COPY
Section 3.11(e) of the Seller Disclosure Letter
Employee Matters
Centrales Termicas Mendoza S.A.
Centrales Termicas Mendoza S.A. has developed a benefit plan for the employees
who are neither comprised under the scope of the pension fund created for those
employees represented by Federation Argentina de Trabajadores de Luz y Fuerza
nor the pension fund created for the personnel represented by Asociacion de
Profesionales Universitario del Agua y la Energia Electrica. There is a formal
engagement with the personnel to put in force this pension plan as from January
1, 2007 and to apply it retroactively from November 1994. The plan
implementation process has been already finished and waits for final approval.
EXECUTION COPY
Section 3.11(f) of the Seller Disclosure Letter
Employee Matters
None.
EXECUTION COPY
Section 3.12 of the Seller Disclosure Letter
Labor Relations
Centrales Termicas Mendoza S.A.
1. Collective Bargaining Agreement entered into between Centrales Termicas
Mendoza S.A. and Federation Argentina de Trabajadores de Luzy Fuerza dated
October 6, 1995.
2. Collective Bargaining Agreement entered into between Centrales Termicas
Mendoza S.A. and Obra Social de los Profesionales del Agua y Energia Electrica
dated December 28, 2005.
3. Collective Bargaining Agreement entered into between Centrales Termicas
Mendoza S.A. and Asociacion de Profesionales del Agua y Energia Electrica dated
December 28, 2005.
EXECUTION COPY
Section 3.13(a) of the Seller Disclosure Letter
Intellectual Property
CMS Operating S.R.L.
Internet Domain Names: (i) ctmendoza.com.ar; and (ii) ctlaplata.com.ar.
Owner: CMS Operating S.A.
Expiration date: July 4,2007.
Centrales Termicas Mendoza S.A.
Trademark application: CTM CENTRALES TERMICAS MENDOZA S.A. with design
Class: 7
Owner: CENTRALES TERMICAS MENDOZA S.A.
Application number: 2674259
Filing date: 30/05/2006
Publication date: 26/07/2006
Bulletin: 2430
Trademark application: CTM CENTRALES TERMICAS MENDOZA S.A. with design
Class: 9
Owner: CENTRALES TERMICAS MENDOZA S.A.
Application number: 2674260
Filing date: 30/05/2006
Publication date: 26/07/2006
Bulletin: 2430
Trademark application: CTM CENTRALES TERMICAS MENDOZA S.A. with design
Class: 37
Owner: CENTRALES TERMICAS MENDOZA S.A.
Application number: 26742601
Filing date: 30/05/2006
Publication date: 26/07/2006
Bulletin: 2430
Comercializadora de Energia S.A.
Trademark: COMESA COMERCIALIZADORA DE ENERGIA S.A.
Class: 36
Owner: COMERCIALIZADORA DE ENERGIA S.A.
Registration number: 1.678.159
Filing date: 23/04/1997
Publication date: 18/06/1997
Expiration Date: 15/09/2010
Bulletin: 1613
Transportadora de Gas del Mercosur S.A.
Trademark: TGM TRANSPORTADORA DE GAS DEL MERCOSUR S A
Class: 27
Owner: Transportadora de Gas del Mercosur S.A.
Registration number: 1.804.329
Filing date: 22/03/1999
Expiration date: 24/08/2011
EXECUTION COPY
Section 3.13(b) of the Seller Disclosure Letter
Intellectual Property
None.
EXECUTION COPY
Section 3.14 of the Seller Disclosure Letter
Representations with Respect to Environmental Matters
CMS Ensenada S.A.
Pursuant to the report issued by Ente Nacional Regulador de la Electricidad
(ENRE) on July 4, 2006 two opportunities of improvements (oportunidades de
mejora) and three observations (observaciones) have been detected, which can be
solved by CMS Ensenada S.A. using the Environmental Management System in force.
Twice a year, CMS Ensenada S.A. informs ENRE on the observations and findings.
In November 2006, ENRE lifted 100% of the observations and one of the findings.
There are 80% of the findings remaining.
Centrales Termicas Mendoza S.A.
Pursuant to the report issued by the Atomic Energy Commission ("Comision
Nacional de Energia Atomica") on June 23, 2005, six opportunities of
improvements (oportunidades de mejora), four observations (observaciones) and
two findings (hallazgos) were detected, as informed through Ente Nacional
Regulador del Gas" note issued on June 23, 2005.
Twice a year, Centrales Termicas Mendoza S.A. informs ENRE on the observations
and findings. In November 2006, ENRE lifted all of the observations, one of the
findings and verified the implementation of all opportunities of improvements.
There is one finding still remaining.
Upon taking over operations of Centrales Termicas Mendoza S.A., an extensive
clean-up of oil-contaminated soil was undertaken. A lined pit was constructed
on-site and oily soil was encapsulated in this pit. There has been no evidence
of release of any contamination from this pit.
EXECUTION COPY
Section 3.15 of the Seller Disclosure Letter
Tax Matters
3.15 (b)
Cuyana S.A. de Inversiones
On January 11, 2007 Cuyana S.A. de Inversiones filed a rectification affidavit
for income tax corresponding to the fiscal year 2004 and 2005 by which it was
recognized a profit stemming from the inflation adjustment of certain
irrevocable contributions reimbursed by Centrales Termicas Mendoza S.A.. As a
result Cuyana S.A de Inversiones paid additional tax for the amount of AR$
22,710,750.
3.15(d)
"There is no dispute or claim concerning any Tax liability of an Entity claimed
or raised by any taxing authority in writing... "
CMS Ensenada S.A.
1. On September 20, 1999, CMS Ensenada S.A. was put on notice of a claim by the
Province of Rio Negro (Direction General de Rentas de la Provincia de Rio Negro)
for failure to pay stamp tax, requiring payment of tax for an aggregate amount
of AR$ 1.09 million and imposing fines on CMS Ensenada S.A. for an aggregate
amount of AR$2.19 million (Exp. 60536-R-98, 60474-R-98 and 60508-R-98).
2. On July 24, 2002, CMS Ensenada S.A. was put on notice of a claim by the
Province of La Pampa (Direction General de Rentas de la Provincia de La Pampa)
requiring payment of stamp tax for an aggregate amount of AR$ 606,439 (Exp.
405/2001).
3. On August 22, 2003, CMS Ensenada S.A. was put on notice of a claim by the
Province of Mendoza (Direction General de Rentas de la Provincia de Mendoza)
requiring the company to register for the payment of gross income tax in such
province (Exp. 17132-O-04).
CMS Operating S.R.L.
On December 13, 2006 the Tax Authority (Administration Federal de Ingresos
Piiblicos) has notified CMS Operating S.R.L. a tax assessment on income tax for
fiscal year 2000 (Resolution 312/2006 DV RR1P). According to the Tax Authority
deemed interest is applicable on the receivables of CMS Operating S.R.L. as a
result of having paid the expenses on behalf of other companies of the CMS group
(resident in Argentina). As a consequence of the assessment, the tax Authority
has determined the new taxable income of the company for tax year 2000 and a
reduction of the losses. On February, 2007 CMS Operating S.R.L. have filed an
appeal against Resolution 312/2006 (DV RR1P) before the National Tax Court
rejecting the tax assessment.
Centrales Termicas Mendoza S.A.
l.On May 5, 2001, Centrales Termicas Mendoza S.A. was put on notice of a claim
by the Province of Corrientes for failure to pay gross income tax in such
province.
2. On October 9, 2001, Centrales Termicas Mendoza S.A. was put on notice of a
claim by the Province of Tucuman for failure to pay gross income tax in such
province.
3. On December 3, 2002, Centrales Termicas Mendoza S.A. was put on notice of a
claim by the City of Parana for non-payment of local taxes dating as of December
2002.
4. On July 16, 2004, the Province of Catamarca initiated a proceeding to verify
compliance by Centrales Termicas Mendoza S.A. with tax obligations in such
province.
5. On October 26, 2006, Centrales Termicas Mendoza S.A. was put on notice of a
claim by the City of San Nicolas for non-payment of local tax in an amount
equivalent to 6% of gross revenues from energy sales.
3.15(d)
"(...) Section 3.15 of the Seller Disclosure Letter list all United States
federal, state, local and non-United States Tax Returns with respect to Taxes
determined by reference to net income filed with respect to each Entity for any
taxable period ended on or after January 1, 2002(...) "
1. IRS Forms 5471 were filed for CMS Ensenada S.A, CMS Centrales Termicas, S.A.,
Cuyana S.A. de Inversiones and Centrales Termicas Mendoza, S.A for 2002-2005,
and final IRS Forms 5471 were filed for CMS Operating, S.A. (now known as CMS
Operating SRL) and CMS Generation, S.A. (now known as CMS Generation SRL) for
2002 (final years ending 12/20/2002). IRS Forms 8865 were filed for CMS
Operating, S.R.L. and CMS Generation S.R.L. for 2002 (short initial years
beginning 12/30/2002) to 2005.
2. Administration Federal de Ingresos Publicos (AFIP) Forms 713 (Formulario de
declaration jurada 713) were filed for all the Entities for 2002 to 2005.
3. CMS Ensenada S.A. filed a rectification affidavit for income tax
corresponding to fiscal years 2003 and 2004.
4. CMS Operating S.R.L. filed rectification affidavit for income tax
corresponding to fiscal year 2002.
5. Cuyana S.A. de Inversiones filed rectification affidavit for income tax
corresponding to fiscal years 2004 and 2005.
3.15(d)
"(...) indicates those Tax returns that have been audited and indicates those
Tax returns that currently are the subject of audit(...) "
CMS Operating S.R.L.' affidavits for income tax corresponding to fiscal years
2003 and 2004 are subject to audit. In addition, CMS Operating S.R.L. has
received a requirement in order to file information regarding certain expenses
made on behalf of third parties during the fiscal years 2001 to 2005.
3.15(e)
All of the Entities are treated as corporations for US tax purposes except for
CMS Operating S.R.L. and CMS Generation S.R.L., which are treated as
partnerships for US tax purposes.
3.15 (h)
CMS Operating S.R.L.
CMS Operating S.R.L. shall pay AR$ 2,748,344 for personal assets tax
attributable to CMS International Ventures LLC and CMS Generation Holding
Company.
CMS Comercializadora de Energia S.A.
CMS Comercializadora de Energia S.A. shall pay AR$ 4,841 for personal assets tax
attributable to CMS Enterprises Co. and CMS Generation Holding Co.
CMS Generation S.R.L.
CMS Generation S.R.L. shall pay AR$ 415,448 for personal assets tax attributable
to CMS International Ventures, L.L.C and CMS Generation Holding Company.
CMS Centrales Termicas S.A.
CMS Centrales Termicas S.A. shall pay AR$ 16,689 for personal assets tax
attributable to CMS Enterprises and CMS Generation Holding Company
CMS Ensenada S.A.
CMS Ensenada S.A. shall pay AR$ 1,265 for personal assets tax attributable to
CMS Generation Holding Company.
EXECUTION COPY
Section 3.16(a) of the Seller Disclosure Letter
Insurance
CMS Ensenada S.A.
1. Foreign DIC/DIL General Liability - International Casualty; Insurance Co.:
Great Northern + Federal Insurer; Expiration date: May 31, 2007; Broker: Marsh
USA; Policy number: 37110040 + 79764046; Annual Premium: $ 51,700; Rate of
exchange: AR$ 3.083; Annual Premium paid: AR$ 159,139.10.
2. International transport insurance; Insurance Co.: Mapfre Argentina S.A.;
Expiration date: April 19, 2007; Broker: Marsh; Policy number: 152-0242876-05;
Insurance coverage: $300,000; Annual Premium: $ 1,522.58; Rate t)f exchange: AR$
3.076; Annual Premium paid: AR$ 4,683.46.
3. Vehicles Insurance; Insurance Co.: La Repiiblica Compafiia Argentina de
Seguros S.A.; Expiration date: March 31, 2007; Broker: Marsh; Policy number:
829566; Insurance coverage: AR$ 170,300; Annual Premium paid: AR$ 7,054.24.
4. Property / Business Interruption / Terrorism; Insurance Co.: La Meridional
Compafiia de Seguros S.A. + Liberty Seguros S.A.; Expiration date: May 31, 2007;
Broker: Marsh; Policy number: 26 + 27; Insurance coverage: $ 106,722,984; Annual
Premium: $ 283,960; Rate of exchange: AR$ 3.079; Annual Premium paid: AR$
874,312.84.
5. Judicial Guarantee / Provisional Measures; Insurance Co.: Aseguradora de
Cauciones S.A.; Expiration date: April 13, 2007; Broker: Marsh; Policy number:
556,380,00,02 + 545,316,00,02; Insurance coverage: AR$ 3,000,000; Annual Premium
paid: AR$ 75,555.22.
6. Civil Responsibility; Insurance Co.: Chubb Argentina de Seguros S.A.;
Expiration date: May 31, 2007; Broker: Marsh; Policy number: 33051; Insurance
coverage: $ 15,000,000; Annual Premium: $ 20,543; Rate of exchange: AR$ 3.09;
Annual Premium paid: AR$ 63,477.87.
7. Mandatory Life Insurance; Insurance Co.: Generali Argentina Compafiia de
Seguros de Vida S.A.; Expiration date: September 3, 2007; Broker: Marsh; Policy
number: 15543; Insurance coverage: AR$ 155,250.
8. Mapfre ART; Insurance Co.: Mapfre Argentina S.A.; Expiration date: April 30,
2007; Broker: Makler; Policy number: 7964601; Insurance coverage: 0.5 per cent
of wage slip.
9. Optional Life Insurance; Insurance Co.: HSBC New York Life, Policy number:
8710, Insurance coverage: 20 salaries, top amount AR$350,000.
CMS Operating S.R.L.
1. Fire of building and content / Robbery of assets in cash desk / Robbery of
general content, fixed electronic equipment, mobile electronic equipment /
Wreckage removal / Others; Insurance Co.; ACE Seguros S.A.; Expiration date:
June 30, 2007; Broker: Marsh; Policy Number: 1528564; Insurance Coverage:
$1,631,410.00; Fee: $ 2,437.05; Surcharge: $190.11; Tax: $ 547.87; Premium Paid:
$ 3,175.03.
2. Civil Responsibilities; Covered with CMS Ensenada Policy, Insurance Co.:
Chubb Argentina de Seguros S.A..
3. Mandatory Life Insurance; Insurance Co.: Generali Argentina Compania de
Seguros de Vida S.A.; Expiration date: September 30, 2007; Broker: Marsh; Policy
number: 17942; Insurance coverage: AR$ 175,500.
4. Mapfre ART; Insurance Co.: Mapfre Argentina S.A.; Expiration date: April, 30,
2007; Broker: Makler; Policy number: 7964601; Insurance coverage: 0.5 per cent
of wage slip.
5. Optional Life Insurance; Insurance Co.: HSBC New York Life, Policy number:
8710, Insurance coverage: 20 salaries, top amount AR$350,000.
Centrales Termicas Mendoza S.A.
1. Collective Life Insurance / Critical Diseases; Insurance Co.: HSBC New York
Life Vida; Broker: Makler; Policy Number: CE01-99-008706; Annual Premium:
$9,452.
2. Civil Responsibilities; Insurance Co.: ACE Seguros S.A.; Expiration Date: May
31, 2007; Broker: Marsh S.A.; Policy Number: 818572; Insurance Coverage: Civil
Responsibility $15,000,000; Annual Premium: $27,041.
3. Operative All Risk Coverage - 75%; Insurance Co.: ACE Seguros S.A. 75%;
Expiration Date: May 31, 2007; Broker: Marsh S.A.; Policy Number: 144374; Cert.
017107; Insurance Coverage: Assets & Stocks $303,481,515; Annual Premium:
$427,291.
4. Operative All Risk Coverage - 25%; Insurance Co.: Royal & Sun Alliance 25%;
Expiration Date: May 31, 2007; Broker: Marsh S.A.; Policy Number: 000200267;
Insurance Coverage: Business Interruption $31,753,481; Annual Premium: $142,611.
5. Vehicles - Civil Responsibilities + others; Insurance Co.: Royal & Sun
Alliance; Expiration Date: May 31, 2007; Broker: Marsh S.A.; Policy Number:
1457288; Insurance Coverage: Civil Responsibility $133,831; Annual Premium:
$2,325.
6. Physical Accidents; Insurance Co.: La Meridional Compania de Argentina de
Seguros S.A. A&G; Expiration Date: July 25, 2007; Broker: Gamasi; Policy Number:
513215; Insurance Coverage: Physical Accidents $970,874; Annual Premium: $333.
7. Mandatory Collective Life Insurance; Insurance Co.: Generali Argentina
Compania de Seguros de Vida S.A.; Expiration Date: October 1, 2007; Broker:
Gamasi; Policy Number: 13864; Insurance Coverage: Life $405,000.
8. Physical Accidents - Eventual Third Parties; Insurance Co.: ACE Seguros S.A.;
Expiration Date: May 31, 2007; Broker: Marsh S.A.; Policy Number: 1225026;
Annual Premium: $120.
9. Labor Risks; Insurance Co.: Mapfre Argentina S.A.; Expiration Date: April 30,
2007; Broker: Makler; Policy Number: 79374-01; Annual Premium: $5,944.
10. Mapfre ART; Insurance Co.: Mapfre Argentina S.A.; Expiration date: April 30,
2007; Broker: Makler; Policy number: 7964601; Insurance coverage: 0.5 per cent
of wage slip.
11. Optional Life Insurance; Insurance Co.: HSBC New York Life, Policy number:
8706, Insurance coverage: 20 salaries, top amount AR$350,000.
CMS Comercializadora de Energia S.A.
1. Mandatory Life Insurance; Insurance Co.: Generali Argentina Compania de
Seguros de Vida S.A.; Expiration date: September 30, 2007; Broker: Marsh; Policy
number: 17941; Insurance coverage: AR$ 20,250.
2. Mapfre ART; Insurance Co.: Mapfre Argentina S.A.; Expiration date: April 30,
2007; Broker: Makler; Policy number: 7964601; Insurance coverage: 0.5 per cent
of wage slip.
3. Optional Life Insurance; Insurance Co.: HSBC New York Life, Policy number:
8708, Insurance coverage: 20 salaries, top amount AR$350,000.
EXECUTION COPY
Section 3.16(b) of the Seller Disclosure Letter
Insurance
None
EXECUTION COPY
Section 3.18(a) of the Seller Disclosure Letter
Absence of Certain Changes or Events
None
EXECUTION COPY
Section 3.18(b) of the Seller Disclosure Letter
Absence of Certain Changes or Events
None
EXECUTION COPY
Section 3.18(c) of the Seller Disclosure Letter
Absence of Certain Changes or Events
1. Cancellation of intercompany account receivable from CMS Enterprises Co to
CMS Comercializadora de Energia S.A. in the amount of U$ 46,741 in concept of
dividend distribution from 2004 and 2005 approved during 2005 and 2006
respectively.
2. Cancellation of account payable from Centrales Termicas Mendoza S.A. to the
Province of Mendoza in the amount of $ 397,824 in concept of dividends from 2005
results approved during 2006.
3. Cancellation of account payable from Centrales Termicas Mendoza S.A. to the
Province of Mendoza in the amount of $ 286,493 in concept of dividend advance
from 2006 results approved during 2006.
4. Cancellation of account payable from Centrales Termicas Mendoza S.A. to the
Programa de Propiedad Participada in the amount of $ 73,460 in concept of
dividends from 2005 results approved during 2006.
5. Cancellation of account payable from Centrales Termicas Mendoza S.A. to the
Programa de Propiedad Participada in the amount of $ 102,006 in concept of
dividend advance from 2006 results approved during 2006.
EXECUTION COPY
Section 3.18 (d) (ii) of the Seller Disclosure Letter
Absence of Certain Changes or Events
CMS Generation S.R.L.
On March 8, 2007, CMS Generation S.R.L. sold and transferred to Empresa Nacional
de Electricidad S.A. - ENDESA CHILE the whole of CMS Generation S.R.L.'s shares
in Hidroinvest S.A. for a purchase price of $ 26,900,000. CMS Generation S.R.L.
will have to pay income tax on capital gains as a consequence of such sale.
EXECUTION COPY
Section 3.18(e) of the Seller Disclosure Letter
Absence of Certain Changes or Events
Cuyana S.A. de Inversiones
On January 11, 2007 Cuyana S.A. de Inversiones filed a rectification affidavit
for income tax corresponding to the fiscal year 2004 and 2005 by which it was
recognized a profit stemming from the inflation adjustment of certain
irrevocable contributions reimbursed by Centrales Termicas Mendoza S.A. As a
result Cuyana S.A de Inversiones paid additional tax for the amount of AR$
22,710,750.
Centrales Termicas Mendoza S.A.
1. Centrales Termicas Mendoza S.A. is currently paying certain duties (Cargo
Fideicomiso I) imposed by Nota ENARGAS No. 6585/05 on the transportation gas
used as fuel for the generation of steam under the Steam Generation Services
Agreement entered into with YPF S.A. on November 17, 1997 (as amended). At
present, such duties are not transferred to YPF S.A. but assumed by Centrales
Termicas Mendoza S.A. Pursuant to Nota ENARGAS No. 3689/07, certain additional
duties (Cargo Fideicomiso II) were imposed on the transportation of gas used as
fuel for the generation of steam, which will be retroactively collected as from
January 1, 2007. Even though such duties have not been invoiced yet, in the
event these new duties were not transferred to YPF S.A., Centrales Termicas
Mendoza S.A. would be deprived from any gain under the Steam Generation Services
Agreement.
2. A claim might arise under the Steam Generation Services Agreement entered
into between Centrales Termicas Mendoza S.A. and YPF S.A., November 17, 1997 and
Amendment for the resolution of disputes dated July, 2, 2001 and Amendment
(offer for price adjustment) dated May 12, 2005, given that Centrales Termicas
Mendoza S.A. is paying for the gas provided by the YPF S.A. at the price
recognized by the Secretary of Energy instead of the price invoiced by YPF S.A..
3. Labor contingencies might derive from services rendered by ten employees of
EXO S.R.L. regarding operating and maintenance of two Centrales Termicas Mendoza
S.A. machines (Turbo Gas ABB and Turbo Vapor Marelli) since the services so
contracted are part of the main activities of the company.
4. Labor contingencies might arise from services rendered by eight employees of
Sanchez y Oguey S.R.L. to Centrales Termicas Mendoza S.A. in relation to the
maintenance of civil works, change of filters and corrective maintenance of
stoves and pipelines since the services so contracted are part of the main
activities of the company.
5. A claim might arise under the Gas Sale and Purchase Agreement entered into
between Centrales Termicas Mendoza S.A. and Total Austral S.A., Bridas Austral
S.A. and Deminex Argentina S.A. ("UTE") by exchange of letters dated June 11, 12
and 14, 1996 (as amended) given that Centrales Termicas Mendoza S.A. is paying
for the gas provided by the UTE thereof at the price recognized by the Secretary
of Energy instead of the price invoiced by the Seller.
6. Labor contingencies might derive from medical services rendered by Dr. Daniel
Massanet to Centrales Termicas Mendoza S.A. since such services might be deemed
a labor agreement. CMS Ensenada S.A.
A claim might arise under the Oferta para el Suministro de Energia y Vapor
(Offer for the Provision of Power and Steam) entered into between CMS Ensenada
S.A. and YPF S.A. dated August 16, 1995 given that CMS Ensenada S.A. has been
paying since May 2006 for the gas provided by YPF S.A. at the price recognized
by the Secretary of Energy instead of the price invoiced by YPF S.A.
CMS Operating S.R.L.
Labor contingencies might arise from services rendered by two employees of
Inaxis S.A. to CMS Operating S.R.L. relating to computer services and
maintenance of networks.
Cuyana S.A. de Inversiones
On December 15, 2006, Cuyana S.A. de Inversiones made an offer to acquire the
whole of class "C" shares of Centrales Termicas Mendoza S.A. that are held
through the Programa de Propiedad Participada ("PPP") for an aggregate amount of
AR$ 4,300,000. The offer, which was accepted by an unanimous class "C"
shareholders' meeting of Centrales Termicas Mendoza S.A. held on the same date,
remains subject to the relevant authorizations of Banco de la Nacion Argentina
(trustee of PPP) and Ministerio de Economia de la Nacion (Argentinean Ministry
of Economy). All class "C" shares held through the PPP, which are fully paid,
are currently pledged in favor of the Argentine Government. Once the
authorizations are granted, Cuyana S.A. de Inversiones will be obliged to pay
the purchase price and acquire the shares, which shall be transferred free of
any Liens, including the pledge granted in favor of the Argentine Government.
EXECUTION COPY
Section 3.20 of the Seller Disclosure Letter
Property
Centrales Termicas Mendoza S.A.
There is a right of way in favor of Agua y Energia Electrica S.E. over the
access road to Centrales Termicas Mendoza S.A.'s premises, according to the
notary deed ndegrees 45 dated April 15, 1996 by notary public Roberto G. Cejas.
CMS Ensenada S.A.
The cogeneration plant operated by CMS Ensenada S.A. pursuant to that certain
Oferta Para el Suministro de Energia Electrica y Vapor (Power and Steam Supply
Agreement) entered into by and between CMS Ensenada S.A. and YPF S.A. on August
16, 1995 is built on land owned by YPF S.A. Asset retirement obligations are
those of CMS Ensenada S.A. upon termination of the Power and Steam Supply
Agreement unless assets are acquired by YPF S.A.
EXECUTION COPY
Section 3.23 of the Seller Disclosure Letter
Affiliated Transactions
1. Please refer to items listed in Sections 3.7(b), Contracts and 5.5,
Intercompany Accounts of this Seller Disclosure Letter
2. Promissory Note from CMS Ensenada S.A. to CMS Enterprises Company dated April
15, 2004 in the amount of $1,678,795 plus accrued interests (obligation repaid
and promissory note cancelled on December 20, 2006.
EXECUTION COPY
Section 5.4(f) of the Seller Disclosure Letter
Actions Affecting Seller's Liability for Taxes
Buyer shall be able to:
1. Transform CMS Operating S.R.L. into a sociedad anonima;
2. Cause Centrales Termicas Mendoza S.A. to pay dividends or make capital
reductions;
3. Merge Cuyana S.A. de Inversiones into CMS Operating S.R.L., being CMS
Operating S.R.L. the survivor entity;
4. Merge CMS Centrales Termicas S.A. into CMS Operating S.R.L., being CMS
Operating S.R.L. the survivor entity; and
5. Merge CMS Operating S.R.L and/or CMS Generation S.R.L. with Sociedad
Argentina de Electricidad S.A. or any of its Affiliates.
EXECUTION COPY
Section 5.5 of the Seller Disclosure Letter
Intercompany Accounts
1. Promissory Notes from CMS Ensenada S.A. to CMS Enterprises Company dated (i)
January 15, 2004; (ii) July 15, 2004; and (iii) July 7, 2005 in the amounts of
$825,421, $2,003,898, and $577,042, respectively plus accrued interests.
2. Promissory Note from Transportadora de Gas del Mercosur S.A. to CMS
international Ventures L.L.C. - current balance is $ 7,807,814.45 as of January
31, 2007.
3. Promissory Note from Transportadora de Gas del Mercosur S.A. to CMS Operating
SRL -current balance is $ 277,011.51 as of January 31, 2007.
4. Promissory Note from CMS Generation Investment Company VI to Cuyana S.A. de
Inversiones dated December 21, 2005 - current balance is $12,484,339 plus
accrued interests.
5. Intercompany Account Payable to CMS International Ventures, L.L.C. from CMS
Operating S.R.L. in the amount of $ 4,543,034 as of February 28, 2007.
EXECUTION COPY
Section 5.6 of the Seller Disclosure Letter
Surrender of Intellectual Property
CMS Operating S.R.L.
Trademark renewal application: CMS ENERGY
Class: 39
Owner: CMS OPERATING S.A.
Application number: 2632955
Filing date: 16/11/2005
Application for renewal of registration No. 1584639. This renewal is pending
ofapproval by the Direction de Marcas del Instituto National de la Propiedad
Industrial (Argentine Trademark Office)
Trademark renewal application: CMS ENERGY
Class: 42
Owner: CMS OPERATING S.A.
Application number: 2632956
Filing date: 16/11/2005
Application for renewal of registration No. 1584212. This renewal is pending
ofapproval by the Direction de Marcas del Instituto National de la Propiedad
Industrial (Argentine Trademark Office)
Trademark: CMS ENERGY
Class: 35
Owner: CMS OPERATING S.A.
Application number: 2632957
Filing date: 16/11/2005
Application for renewal of registration No. 1584209. This renewal is pending
ofapproval by the Direction de Marcas del Instituto National de la Propiedad
Industrial (Argentine Trademark Office)
Internet Domain Names: (i) cmsenergy.com.ar; and (ii) cmscomesa.com.ar
Owner: CMS Operating S.A.
Expiration date: (i) cmsenergy.com.ar: July 4, 2007; and (ii) cmscomesa.com.ar:
July 5, 2007.
CMS Ensenada S.A.
Trademark: LA PLATA COGENERACION CMS ENSENADA S.A.
Class: 40
Owner: CMS ENSENADA S.A.
Registration number: 1.692.127
Filing date: 04/07/1997
Publication date: 20/08/1997
Expiration date: 01/10/2008
Bulletin: 1628
EXECUTION COPY
Section 6.2(a)(iii) of the Seller Disclosure Letter
Indemnification
1. Seller shall indemnify and hold harmless the Buyer for any and all costs,
damages, losses or liabilities (including diminution in value and consequential
damages) arising under or in connection with a final binding decision of a duly
constituted arbitration panel (or such other competent judicial authority) and
arising from claims (whether formal or informal) by Repsol-YPF S.A. made on or
prior to the first anniversary of the Buyer's acquisition of the Equity
Interests relating to CMS Ensenada S.A.'s breach of the Electricity and Steam
Supply Agreement ("ESSA") dated as of August 16, 1995, as amended from time to
time, entered into by and between CMS Ensenada S.A. and Repsol-YPF S.A., due to
the unauthorized change of operator thereunder deemed existing as a consequence
of the transaction contemplated in the Agreement. The Cap Amount shall apply to
any such indemnification obligations of Seller. In any arbitration proceeding
arising as result of such breach under the ESSA, Seller shall be entitled to
control the defense (but not settle without the agreement of the Buyer) of such
claim against Repsol-YPF S.A.. In the event the final arbitration award is in
favor of CMS Ensenada S.A. and entirely disposes of Respsol-YPF S.A.'s claims,
then Buyer shall reimburse Seller's reasonable legal expenses up to an amount of
$200,000 relating to the defense of such claim pursuant to the Agreement, unless
such fees are paid by YPF S.A.. In the event that Buyer submits to Seller for
its approval a tentative settlement with Repsol-YPF S.A., Seller will consider
approval of such settlement in good faith.
2. Seller shall indemnify and hold harmless Buyer from and against any and all
Damages, losses or liabilities incurred by CMS Generation S.R.L. arising out of,
resulting from or incurred in connection with, the Hidroinvest SPA, including
without limitation any result, consequence, obligation, cost, expense, Damage or
loss arising out of any resolution issued by any Governmental Authority in
relation with the Hidroinvest SPA under the Antitrust Law, provided, however,
that Seller shall not be liable for any Tax liabilities arising by virtue of the
transactions consummated pursuant to the Hidroinvest SPA which Buyer has
expressly agreed to assume.
3. Seller shall indemnify and hold harmless Buyer from and against any and all
Damages, losses or liabilities incurred by a Buyer Indemnified Party arising out
of, resulting from or incurred in connection with, any retention letter
delivered by Seller or any of its Affiliates (other than the Entities) to any
Employee, except for any amounts awarded to Viviana Soria in her claim for
retention bonus which shall be indemnified pursuant to item 5 of this Section
6.2(a)(iii).
4. In the event that Buyer is required to fund the benefit plan described under
Section 3.11(e) of this Seller Disclosure Letter for a period preceding the date
hereof, Seller shall be responsible to Buyer for up to $300,000 of such amount
of funding,
5. Seller shall indemnify Buyer from and against any and all Damages, losses or
liabilities arising under or in connection with the claim filed by Viviana Soria
against CMS Operating S.R.L. that is detailed in Section 3.10 of this Seller
Disclosure Letter; provided that Seller must be consulted with regard to and
give its consent to any settlement entered into with Ms. Soria by Operating.
Draft - March 10, 2007
BUYER DISCLOSURE LETTER
Introduction
Reference is made to the Agreement of Purchase and Sale, dated as of March 12,
2007 (the "Agreement") by and between CMS Enterprises Company and CMS Generation
Holdings Company, each a Michigan corporation, and CMS International Ventures,
L.L.C, a Michigan limited liability company (collectively, the "Seller"), and
Lucid Energy, LLC, a Michigan limited liability company and New Argentine
Generation Company, L.L.C, a Delaware limited liability company (collectively,
the "Buyer").
Capitalized terms used, but not defined herein, have the respective meanings
given to such terms in the Agreement.
This Buyer Disclosure Letter (the "Buyer Disclosure Letter") sets forth certain
information or agreements intended to be treated as disclosed in the Buyer
Disclosure Letter pursuant to the Agreement.
The contents of this Buyer Disclosure Letter are qualified in their entirety by
reference to the specific provisions of the Agreement. This Buyer Disclosure
Letter is not intended to constitute, and shall not be deemed to constitute,
representations and warranties of Buyer except as, and to the extent, provided
in the Agreement. In particular, although this Buyer Disclosure Letter may
contain supplementary information not specifically required under the Agreement,
such supplementary information is provided as general information for the
parties to the Agreement and is not separately represented or warranted by Buyer
herein or in the Agreement. Moreover, the inclusion of any item hereunder shall
not be deemed an admission by Buyer that such item is, or may at anytime be or
have been, material to Buyer, or any of the Entities, or the transactions
contemplated by the Agreement, or result in any determination that any matter
has a Material Adverse Effect, nor shall it be deemed an admission of an
obligation or liability to any third party.
Any matter set forth in the Buyer Disclosure Letter shall be deemed disclosed
with respect to such other sections of the Agreement or the Buyer Disclosure
Letter to which such disclosure on its face would reasonably pertain in light of
the form and substance of the disclosure made. The section and subsection
references set forth in this Disclosure Letter refer to sections or subsections
of the Agreement to which the disclosure set forth in this Buyer Disclosure
Letter is intended to apply. The introductory language and headings in this
Buyer Disclosure Letter are inserted for convenience of reference only and will
not create or be deemed to create a different standard for disclosure than the
language set forth in the Agreement.
The information set forth herein is confidential and is subject to the terms of
the Confidentiality Agreement between the EE Group and CMS Enterprises Company
dated October 23, 2006 to the parties thereto and to the confidentiality
undertaking foreseen in Section 5.13 of the Agreement to the parties thereto.
Draft - March 10, 2007
Section 1.1(b) of the Buyer Disclosure Letter
Persons of Knowledge of Lucid
1. Rai Bhargava, Chairman and CEO
2. Manouch Daneshvar, President, COO and Secretary
Persons of Knowledge of New Argentina Generation Company LLC
1. Rai Bhargava, Chairman and CEO
2. Manouch Daneshvar, President, COO and Secretary
Draft - March 10, 2007
Section 4.3 of the Buyer Disclosure Letter
Consent and Approvals
None.
Draft - March 10, 2007
Section 4.4 of the Buyer Disclosure Letter
No conflict or Violation
None.
Draft - March 10, 2007
Section 4.5 of the Buyer Disclosure Letter
Litigation
None